Outdated legislation updated after years of peak body persistence

THE wheels of government can at times grind painfully slow, but with persistence, results can be achieved, which is what Master Builders Victoria (MBV) has just done after consistence advocacy on behalf of the building industry.

The MBV is hailing this as a significant win with key amendments to a revised domestic building contracts Bill, after two years of negotiations with the Victorian government.

The Domestic Building Contracts Amendment Bill 2025 was introduced into Parliament last week, and according to MBV, contains significant improvements to the previous legislation.

MBV chief executive officer Michaela Lihou welcomed the amended legislation, saying it was a major first step in improving the legal contract framework, which had not been updated since 1995.

“Put simply, the old legislation was no longer fit for purpose. It hadn’t kept pace with industry practice, market conditions, or builder and consumer expectations.

“Its rigid contract terms especially around payment stages, preliminary work requirements, and cost escalation clauses created cash flow pressures for builders, added complexity for consumers, and restricted flexibility in managing risk in a volatile market. It just wasn’t working.

“We are pleased to see that the government has listened to the concerns of our members and now made a number of significant changes that we have been lobbying for over the past several years.”

One of the significant changes in the revised legislation is the recognition that the preparation of plans and specifications and bills of quantity should be considered as ‘preliminary works’ and removing them from Major Domestic Building Contracts.

The MBV see this as a significant step forward because it provides clarity for builders about what must be included in a major domestic building contract and ensures they can be properly compensated for the time, expertise and costs involved in preparing plans and specifications.

MBV also advocated for reform to cost escalation clauses in Major Domestic Building Contracts, and says it is pleased the government has listened and now applied it to contracts over $1 million.

“While we consider this a significant win, we will continue to lobby on behalf of our members for cost escalation clauses for contracts under $1 million, which represent the vast majority of contracts annually,” Ms Lihou said.

“We also welcome the transfer of the prescribed payment stages from the Domestic Building Contracts Act which will be placed in regulations, which is a positive outcome as we see it offering a more flexible and realistic solution to some of the cash flow strain many builders have previously been locked into.

“And while it’s appropriate to acknowledge the positive amendments the Victorian government has now introduced, it’s also appropriate to note that we will continue to fight hard for further improvements on behalf of our members.”