The Victorian Government today introduced a bill in Parliament that aims to weed out a common tactic used by unscrupulous builders to escape sanctions for shoddy works.

So-called “illegal phoenix activity”, where construction firms declare bankruptcy as a way out of trouble before restarting as a new entity, will be made more difficult under the proposed bill.

Expanded powers will be given to the Victorian Building Authority (VBA) to investigate such activity if the Building and Environment Protection Legislation Amendment Bill is passed.

“The Bill strengthens the fit and proper person tests required for practitioner registration by incorporating financial probity requirements. This will allow greater scrutiny of company directors, secretaries and influential persons as part of the registration process,” the Victorian Government says in a statement.

“The VBA will be able to refuse applications for new registration, or renewal of registration, if the applicant is suspected to have engaged in illegal phoenix activity at any time over the previous two years.

“The Bill also expands existing suspension powers for building practitioners responsible for unsafe works to ensure that plumbers and architects can also face immediate suspension. This power was introduced for building practitioners in 2018 and has already been used by the VBA.”

Planning Minister Richard Wynne says the bill would mean “more confidence in the building sector and helping the VBA to weed out those doing the wrong thing”.

The Insurance Council of Australia “supports reforms that offer greater protections to building and apartment owners,” spokesman Campbell Fuller told insuranceNEWS.com.au.

But Builders Collective President Phil Dwyer describes the announcement as “a bit of a smokescreen to make the Government look good”.

“[The VBA] has always had that power through the registration of builders because you can’t have a phoenix company without a registered builder,” he told insuranceNEWS.com.au.

“So there’s always been the registered builder there in all cases, and the VBA has the power to take any registered builder to task.

“It hasn’t been acted on in the past, that’s our belief. If they say they haven’t had the power, what has been the point of the registration?”