The Victorian government has proposed regulations setting out minimum financial requirements (MFRs) for domestic builders. The draft MFR Regulations establish financial thresholds and reporting requirements builders must meet to apply for, and maintain, registration with the Building and Plumbing Commission (BPC).

The key points raised in our submission are:

• We disagree with the assertion that the Regulations are not expected to impose a significant burden on the community or the building industry. Therefore, we strongly recommend a Regulatory Impact Statement is developed.
• The proposed phased transition into the MFR regime presents significant challenges for key stakeholders because of the lack of alignment with annual reporting cycles, and the short intervals between tiers. We recommend that the transition period is extended and transition dates be aligned with financial reporting years.
• Limiting revenue based on net tangible assets may have unintended consequences on the building industry, especially smaller builders trying to grow their business. Furthermore, how “revenue” is determined needs clarification, and the thresholds may need reconsideration.
• We recommend the Regulations contain complete lists of allowable and disallowable assets and liabilities that align with the categories in the accounting standards, and the valuation method is excluded from the Regulations.
• It is imperative that the Regulations, and all prescribed forms, are consistent with the requirements of the relevant Federal Government entities – the Australian Accounting Standards Board (AASB) and the Auditing and Assurance Standards Board (AUASB), as well as the Accounting Professional and Ethical Standards Board (APESB). We recommend the DTP liaises with the AASB, AUASB and APESB in finalising the Regulations and developing the prescribed forms.
• We recommend a post-implementation review (PIR) is conducted subsequently to see if the regime is meeting its objectives and delivering clear benefits.
• The level of implementation support that will be required should not be under-estimated. Extensive guidance will be needed, tailored to different audiences.

Our feedback is informed by our members’ experience of an unusually high volume of recurring issues with Queensland’s similar MFR regime. It has high compliance costs and few clear benefits, leading to a recommendation for its removal, which the government supports in principle.