MBV CEO Michaela Lihou says she welcomes the review which the government is currently undertaking into the Domestic Building Contracts Act (1995) with consultation set to close on February 28.

“The building and construction landscape has changed markedly over the past few years and we’re all aware of the supply constraints and pricing challenges that the pandemic delivered. While thankfully some of those issues have started to settle, we still need more flexibility than our current fixed priced contracts for everyone’s protection,” she says.

“Nobody wins when inflexible contracts and price increases beyond a builder’s control, push builders over the edge.”

MBV argues cost escalation provisions should be inserted in new Domestic Building Contracts, and they should be extended to contracts both above and below the contract value of $500,000.

“We’d also like to see discussions with banks to facilitate the use of cost escalation clauses and allow for more payment stages to ensure ongoing cash flow, given we know the devastating impacts that cash flow blockages can have.” says Ms Lihou. 

In an attempt to strengthen Australia’s still inconsistent supply chains, MBV is calling on the Government to support the development of a permanent working group, similar to the UK’s Product Availability Group.

“This group would ultilise information from manufacturers and trade associations to track supply and demand and create and improve the accuracy of live data for the delivery of residential, non-residential and civil infrastructure,” says Ms Lihou. 

“As they have found in the UK, ongoing communication throughout the supply chain is essential to assist with reliable delivery dates and to manage expectations about any shortages or allocations.”

“We’re also calling for all the recommendations in the Supply Chain Review Report to be supported and for the Victorian Government to continue to engage with the industry with a commitment to deliver tangible outcomes.”

Funding and support for business and cash flow training specific to the construction industry, and additional funding for the Victorian Small Business Commission to support independent dispute resolution services, are also on MBV’s shopping list.

For the commercial sector, MBV is suggesting a review of Victorian Government contracts to drive greater efficiencies and risk allocations to be shared more equitably between the government and industry across commercial and residential projects, with increased standardisation of contracts.

“And given the size, scale and economic impact of Victoria’s building and construction industry - 12.7 per cent of the state’s Gross Domestic Product in the past financial year – we’re also asking the government to consider creating a dedicated government-led construction leadership council to be established to promote long-term industry collaboration to achieve common goals,” says Ms Lihou. 

“We also believe as one of the largest sectors in our state’s economy, our industry deserves a dedicated Minister for Building, Construction, and Infrastructure to oversee future strategy and the growth of our industry,” says Ms Lihou.

AVAILABLE FOR COMMENT: Master Builders Victoria CEO, Michaela Lihou

MEDIA CONTACT – Leigh McClusky 0411 711 780 [email protected]