Highways (Works for Residential Developments) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 11 September 2024.)

The Hon. D.G. PISONI (Unley) (16:27): I indicate to the chamber that I am the opposition's lead speaker on this matter. The opposition opposes the Highways (Works for Residential Developments) Amendment Bill, and I will articulate the reasons why we are doing that and what we are concerned about.

Our main concern with the bill is that it grants excessive powers to the Commissioner for Highways and the Minister for Infrastructure and Transport, undermining the role of local councils in managing developments. It certainly appears to be a very heavy-handed response to a very tragic situation with a particular builder who did not fulfil obligations.

We are concerned that the government has gone straight for the sledgehammer. There are many other tools in the box that could have been used that are already in place, and we do not believe that the government has explored those at all. As a matter of fact, it seems to be a flexing of muscles and certainly an overreach of government in this situation. We believe it undermines a critical tier of government: local councils.

We have already seen quite a bit of confusion with the responsibility of local councils when SCAP make decisions for planning, for example in new zones. Being the member for Unley, when there have been height changes, I have experienced the impact that higher density makes on traffic, on rubbish collection and on other processes that are to be managed by local government. Local government has very little say on the input of that SCAP development.

Because we are seeing more and more of these decisions being made outside of council but with council being left holding the can, we are seeing that there is simply not that cooperation between local government and state government, which is very important particularly in development and providing an efficient service, an efficient planning approval service, and an efficient process of providing a choice of housing and a variety of housing in South Australia that matches our changes in diversity, our change in demographics, as our community expands and becomes more sophisticated, if you like.

We know that there are more and more single-person homes now than what there were even 20 years ago. It is important that we meet those, but it has to be a collaboration between the government planning system, infrastructure, transport coordination and, of course, local government.

This bill allows the Commissioner of Highways to complete infrastructure works without council approval or input. It raises the question: does it give them any insight as well? Does the council only get to be aware of what is happening when the job is finished? Local councils who best understand community needs are sidelined in development management and the bill erodes local governance and weakens council's ability to represent their constituents.

People are very quick to criticise local government but I think in general it does serve the community well. It does, in most instances, have an understanding of the local area, where the trouble spots are and where potentially changes could complicate an already complicated situation and so consequently may look at alternatives in managing those changes.

The bill appears to be a reaction to a specific failure in the building industry. The Felmeri developer collapse is the one that comes to mind, where the government spent $3.5 million to cover the cost of a specific group of creditors. I think blind Freddy could see that that was a disaster waiting to happen, where houses were going up before roads were complete. I think there was even a situation where half a road was started on one side of the creek and half a road started on the other side of the creek and they did not join before the whole thing went knees up and the administrators had to move in.

It lacks a clear rationale for why this particular group received financial assistance while other creditors, tradies and builders were left out. This is what happens when governments respond to a media interest—talkback radio—a very populist approach evolves and is developed and consequently the unintended consequences or the precedent that it may set can set up problems in the future. I think that is where this bill is heading. It was a knee-jerk response to a serious situation that had a lot of media interest and consequently we are seeing a sledgehammer brought in to deal with the issue.

It creates an unsustainable precedent for government intervention for future developer failures, leading to expectations of further bailouts. This is very dangerous for any free enterprise economy. In China we are seeing what happens when government policy, government intervention, drives the building industry. We are seeing an oversupply and buildings demolished, without anybody ever living in them in some cities in China, because of excessive government intervention and expectations of residents and developers from government.

The bill enacts checks and balances on the commissioner's powers. There is no mechanism for resolving disputes between councils and the commissioner over the costs for all of their decisions. This, of course, we think is a flaw or an omission in the bill. There must always be some mechanism for dealing with disputes whenever there is a new process that is introduced. You can guarantee that if something is going to go wrong in the delivery of a new process, it will go wrong.

The bill puts smaller regional councils at a financial administrative disadvantage without sufficient safeguards against potential abuse. The bill also introduces new taxation powers on councils and developers, breaking a key election promise by the Malinauskas Labor government not to introduce new taxes and charges. There was an omission in that promise; it should have said, 'Only sneaky ones will be introduced.' This is what I think we are seeing here, because it is something that the government simply cannot continue to do at the taxpayers' cost. It is something that will incur a cost.

For this bill to work as the government intended, I can imagine that the government will go straight to a source to pick up that cost. It is not philanthropic legislation; it is legislation to enable the government to recover the full cost and even more perhaps. What is the process for auditing the costs? The government is in control of the contract, the council or somebody else gets the bill and yet they have had no input into the process, including the choice of contractors based on quality, reputation and cost, etc.

Councils, particularly in regional areas, may bear the cost of completing infrastructure for failed developments. The bill prohibits councils from passing these costs on to ratepayers, leaving no clear way to recover these funds. That in itself raises alarm bells, because in the end there is no free money. Consequently, if councils spend money, there is an implication through borrowing to cover that and then rates will go up to cover that borrowing and the interest and the repayment of the capital in that borrowing. The financial strain could lead councils to become more risk averse in approving new developments, impacting regional growth.

At this time we are not looking for a slowdown in the approval process, or a slowdown in developments and infrastructure to support developments, we are actually looking for a speed-up. What is concerning, in our view, particularly in regional South Australia, is that this will freeze councils into the fear of becoming risk averse. Even though those risks might be low and minor, they are actually exaggerated or increased by this bill.

The minister can unilaterally designate areas for intervention, creating a potential for political interference in local planning processes. I have been sitting in this place for 18½ years and for the last 10 years this parliament has been talking about the removal of politics from planning decisions, but what this does is it puts it straight back in.

We know how political this government is about every decision it makes, because it will not release cabinet documents to the Auditor-General for the Auditor-General to do his job, despite the fact that there is a Premier's circular that says that that is an option available to the Auditor-General to ask for those cabinet documents. Those cabinet documents were always supplied by the Marshall government but are never supplied by the Malinauskas government. You have to ask the question: why? On top of that, we have legislation like this that is very heavy-handed and allows everything to be hidden behind a 10-year cabinet document lock-away. Just be aware that that is an implication of this bill.

The bill allows the minister to designate these areas for intervention, and it creates confusion over responsibility for development outcomes and diminishes local planning authority. In this modern world, where so many things are global and people are very aware about what is happening everywhere else in the world through social media and 24-hour news cycles, often they are not quite as aware of what is happening around the corner. This makes it even harder for that local interest and that local input into a local issue.

The public rhetoric of the bill does not match its contents. The bill does not specifically address issues related to failed builders, rogue developers or administrative failures by councils, contrary to government statements. The bill provides broad powers to intervene in developments without requiring builders or councils to have committed any wrongdoing. This is an interesting proposal. The bill provides broad powers to intervene in developments at any time, at any trigger, at any motivation. It is not there just to fix up the situation that we saw with the collapsed building company. For anything the government desires they have this ability to bring in the intervention.

The bill imposes significant legal and financial risks on councils which could lead to new procedures, red tape and delays in the housing development process, contradicting government claims of accelerating development. Of course, I always find it difficult to understand when people say they are bringing in legislation to speed things up. I think that the way you speed things up is to actually remove legislation, streamline legislation. This is another layer of legislation in the planning and development process. It will certainly slow the process down. It could cause blockage in housing approvals, exacerbating the housing crisis rather than solving it.

We know there have been announcements after announcements of housing developments by this government, but we have not seen those houses started. We have not seen people moving into those houses. We have not even seen materials ordered for those houses. In some instances, we have not even seen any sign of SA Water participating in the process of those subdivisions.

The bill appears to have been drafted with insufficient consultation with key stakeholders, including local councils and developers. There has been a lack of engagement, raising concerns about the bill's potential to create more problems than it solves. I guess it is an opportunity for some of those developers to pay their $500 on Friday and bail up the planning minister and Minister for Infrastructure and Transport and explain to them what their concerns are about this bill. I wonder if that will make any difference.

We acknowledge the need to address incomplete residential developments, but we oppose the bill due to its undermining of local councils, lack of oversight, financial burden on communities and potential for political interference. We call for legislative reform that empowers local councils and provides proper oversight to ensure state intervention only when necessary. I think that is the whole thing. I think a big difference between this side of the chamber and the government is that we believe government is there when it is needed. It is not the first place you go to.

We think community, the private sector, business, the economy and those who participate in the free enterprise system are the first place to go to. Let the market sort it out. Let the private sector deal with it. Let the regulatory process deal with it. If none of those work then, yes, there is a role for government, but there is not a role for government as the first option. That experiment failed in the Soviet Union in just 70 years. We need to have less government intervention and a stronger ability for the private sector to deliver for the community.

There are existing insurance bonding mechanisms that could very well be considered, which might make this bill unnecessary if they were utilised correctly. Mechanisms already exist to ensure developers fulfil their obligations, such as councils requiring bonds for development. Instead of granting new powers to the commissioner a mandatory bond system could be introduced. That is a suggestion that has come from the development industry. I think the development industry is very scared of the big government model that is being presented to this parliament for debate at the moment.

I do not have a lot of hope for any change based on concerns being raised in this place by this side of the house. We know the large majority the government has in this chamber and we know that, with the Greens, the Labor Party has control of the upper house as well. We have a situation where anti-business legislation and legislation that is big government has no trouble getting through this parliament the way it is structured at the moment. I ask the public to remember this at the next election, that when you have a government with a very large majority and an arrangement in the upper house you have less scrutiny of what happens in this place. It is important to have a well-resourced and sizeable opposition and an upper house that requires more than just the Greens to negotiate with in order to get legislation through.

I have covered the point about councils being more risk averse in approving developments. As I said earlier, it does not matter what the circumstances are, the commissioner still has the ability to step in. Councils and disputes and building disputes are not new. They have been around for a very long time. When I was growing up in Barnett Street, Salisbury, there were three streets just off Commercial Road that were built on what was formerly farmland. There were a couple of farms around us when I was growing up.

There was Brian Street, Barnett Street and Porter Street, and the middle of Porter Street was the City of Elizabeth boundary. When I was in primary school, Porter Street was the only street out of those three that was a dirt road. The other roads were bitumised. There were Salisbury ratepayers living on the southern side of Porter Street but there were no ratepayers in the Elizabeth city council. This was before the amalgamation and the establishment of the Playford council. Those ratepayers demanded that their street be bitumised, so the Salisbury council's solution was to bitumise half the street. The southern side of the street had bitumen and the northern side that was owned by the City of Elizabeth was not bitumised.

I guess this is the sort of thing that happens when decisions are made for political reasons rather than common sense with the future in mind. It was not long before that whole part across the road from the City of Salisbury side was developed, there were houses there and the whole road needed to be done. So it is scarred in my mind how silly local governments can be at times. Even as a very young child, I remembered that experience. This reminded me of some of the outcomes that could happen when politics is reintroduced into infrastructure and planning decisions. With those remarks, I indicate that the opposition does not support the bill.

The Hon. A. MICHAELS (Enfield—Minister for Small and Family Business, Minister for Consumer and Business Affairs, Minister for Arts) (16:50): I rise today to support the Highways (Works for Residential Developments) Amendment Bill 2024. This bill is just one of the many measures that this government is taking to increase housing in our state. The bill has arisen as a result of what is the heartache of 20 families who were forced to suffer when Felmeri Builders and Developers went into administration.

I note the member for Unley's concerns that we did jump in to help those 20 families. Twenty homes had construction started on them in O'Halloran Hill, and they could not be completed or occupied due to the failure of Felmeri in not constructing the access road to the subdivision and the related services that needed to be installed. Each of those 20 homes represented a future home for a South Australian family down south, and each week that the delayed construction of their homes added up these families incurred additional costs, making the prospect of home ownership much more difficult.

That is why on this side of the chamber we stepped in. We built the access road to ensure that these homes could be completed. We need to ensure that South Australians are protected from poor business practices. One step that has already taken place is the State Planning Commission's practice direction requiring community title developments of more than six lots to complete common driveways before titles for those lots can be issued. Of course, this bill goes further and seeks to protect South Australian taxpayers from being left with the bill to make good where a developer has failed.

The Commissioner of Highways will be able to undertake prescribed works and recover the associated costs from the relevant developer or council that approved the residential development. This will ensure that landowners who are faced by the challenges of a developer going bust are not left with unfinished common infrastructure, like what occurred at O'Halloran Hill, preventing their homes from being built. It also places pressure on local councils to ensure they take the appropriate security over developments they approve.

As I mentioned, the bill is only a small piece of the puzzle that this government is committed to in addressing housing in our state. Earlier this year, the Treasurer and I announced a review to ensure South Australians are properly protected when building a house. Builders are legally required to take out building indemnity insurance (BII) on behalf of home owners when they sign a major building contract. This provides protection to those home owners if the builder dies, disappears or becomes insolvent, like Felmeri, before finishing the building work or for defective work on a completed home for up to five years post completion.

The BII review examines whether the existing BII cover is fit for purpose by looking at factors such as what is covered by BII, the minimum thresholds and addressing gaps in consumer protection. It is also considering issues that have arisen from recent insolvencies, including whether the insurance limit of $150,000 is adequate. The state government, through SAFA, underwrites BII through reinsurance agreements with QBE.

I want to ensure all South Australians have the strongest level of protection possible when building a home. Building a new home should be a time of excitement, and we will be considering what protections should be offered to people to safeguard them throughout the building process as well as what can be done to better support consumers when their builder has failed to comply with legislation governing BII and in cases of substandard work.

We are seeking to strengthen our building laws and increase protections for people to undertake building work as well. We are undertaking the most significant review of our state's building regulations in nearly 20 years. It is important that South Australia's regulatory framework for building and construction work is well placed to meet our current and our future needs.

Our Building and Construction Industry Review will look at ways to achieve this objective with a focus on opportunities to enhance industry compliance, protect and inform consumers, and support building practitioners to deliver high-quality work. Items that will be covered in the discussion paper were identified by a series of round tables that I convened with key industry bodies, state government agencies and training providers. Consumer and business services also contributed suggestions to improve compliance, streamline dispute resolution processes and better protect consumers.

In addition, the review will consider recommendations from the national report, the Building Confidence Report, which was prepared by Professor Shergold and Ms Weir, the Shergold-Weir report. The report was commissioned by the national Building Ministers' Forum and produced a number of recommendations to improve the implementation of the building construction standards in the National Construction Code.

In our paper there are five key areas canvassed, including improving dispute resolution processes, regulating the building and construction industry contracts, reforming licensing and registration, continuing professional development for building workers, and strengthening compliance and enforcement.

South Australians rely on builders and tradies, whether it be for a minor installation or repair through to significant renovations and major building projects like building an entirely new home. It is crucial that we have strong protections in place to protect people when they are making such a significant investment. We are working on building a stronger building and construction industry to ensure the best outcomes for consumers. This bill is part of that and is a step towards making sure that South Australians who are building their dream family home and South Australian taxpayers are not forced to cover the costs of failed businesses. With that, I commend the bill to the house.

Mr TELFER (Flinders) (16:56): I rise to speak on this bill. I take a lot of interest in some of the words the government is using because, on my reading of this piece of legislation, the minister speaks about not wanting taxpayers to be left holding the cost of development, but what this bill does is actually sheet that cost from taxpayer to ratepayer. They are the same people who are going to be left liable, and the risks for us as a state are significant. I thank the member for Unley for the points that he has made as he has looked into this legislation.

I highlight to members in particular the ham-fisted way that this piece of law-making is happening. I get the need, I get the situation, and absolutely I recognise that there needs to be a mechanism in place to make sure that people who invest in their homes are not left with a situation like we saw very obviously with the Felmeri case, but this is not the way to do it.

This is a bill which is amending the Highways Act 1926. I want to walk through a bit of the detail of what is actually within this amendment to try to highlight that inconsistency of trying to shoehorn in this aspect. Honestly, the Highways Act is about roads, highways.

The first point that is made, and when we get to the third clause and the questions that I will be wanting to ask, it deletes subsection (2) of section 26 of the Highways Act, which is talking about the ability of the commissioner to be able to carry out roadwork in a district, provided that the commissioner first gives the council notice in writing of the proposed roadwork and the date on which it is proposed to commence the roadwork. It is all about the roadwork.

This change, this amendment, instead puts in additional aspects. Sure, it is about carrying out a roadwork but it is also about carrying out prescribed works in a designated residential development area—prescribed works. What are these prescribed works? We see it also referenced later on in some of the other changes that are going to be made:

to the extent that such a road is located in a designated residential development area, carry out prescribed works in relation to the road…

Firstly, there is the question about what is going to be the designated residential development area. This is going to be whatever is at the whim of the minister to designate the residential development area. And what are these prescribed works? We see that later on in the definition:

Prescribed works means any 1 or more of the following for the purposes of a designated residential development area:

(a) roadwork;

That is exactly what is already in the Highways Act in the original iteration, so that is fine. Secondly:

(b) works related to the provision of public infrastructure;

Thirdly:

(c) works of a kind prescribed by regulation,

This amendment puts in place the ability for the minister to designate whatever that minister wants as prescribed works—whatever they want as prescribed works. 'The provision of public infrastructure' is pretty broad. What is public infrastructure? Later on, we look in the definition:

Public infrastructure means infrastructure and other facilities used in or in connection with—

(a) the supply of water, or electricity, gas or other forms of energy;

This change means that the minister has the ability, the power, to go in carte blanche, prescribe the public infrastructure of the supply of water, of electricity, of gas or other forms of energy. The bill continues:

(b) the provision of telecommunications;

The power for the minister, through the Highways Act, to come in and put in place telecommunications infrastructure. It is going a long way away from highways and roads. Thirdly:

(c) the provision of stormwater, waste water or sewage management infrastructure; or

(d) the provision of any other service of a kind prescribed by regulation,

This amendment gives the minister the ability to go to an area, go to a development, prescribe it as a designated residential development area and then have the power to decide to invest in any bit of public infrastructure in that development—any bit at all. It is nothing to do with just roads. It is any bit of public infrastructure: the supply of water, the supply of electricity, gas, other forms of energy, the provision of telecommunications, the provision of stormwater, wastewater, sewage management infrastructure or any other service of a kind prescribed by regulation. This gives the opportunity—

Members interjecting:

Mr TELFER: I hear the interjections of the member and I look forward to hearing the contribution that they might make, because the member interjecting recognises and knows local government well, as I do. Later on, we see the cascading effect of this amendment bill, because in those prescribed works the minister has the power to be able to make carte blanche decisions about any of that provision of public infrastructure. Then we see:

Section 26—after subsection (9) insert:

(9a) Any expenses incurred by the Commissioner in carrying out prescribed works in a designated residential development area—

and we have already seen that the minister has the ability to be able to designate a residential development area—

together with interest at the prescribed interest rate, may be recovered from—

(a) the council for the district in which the area is located; or

(b) with the approval of the Minister—the relevant developer,

as a debt due to the Commissioner.

What this amendment is doing to the Highways Act is giving the infrastructure minister the ability to go in and designate the development area, decide what piece of public infrastructure they want to invest in, at whatever level—it could be gold-plated, it could be the most fantastic footpath that goes down the side of the road—incur whatever expenses and then bill the associated council in which the area is located, charge them interest and have that debt due to the highways commissioner.

Not only that, we also see further down the designation that:

(9d) A council cannot raise or recover expenses referred to in subsection (9a) by way of a rate, charge, levy, fee or other amount imposed on ratepayers.

(9e) Without limiting subsection (9d)—

which I just read out—

a council cannot impose a separate rate, service rate or service charge on land used for residential purposes in a designated residential development area for the purpose of raising or recovering expenses referred to in subsection (9a).

So we have a situation where a minister can go in, designate a residential development area, decide what level of infrastructure they are going to be putting in—do not forget that this is public infrastructure, so we are talking about water, electricity, gas, telecommunications, stormwater, wastewater, sewage management infrastructure—and decide to whatever level and to whatever cost, and that cost can then be sheeted directly to the council in which the area is located.

As I said at the start, I get the thought behind this amendment. I get the scenario that we are facing. But to have a situation where a minister has the ability to—let's wander down that scenario. We could have a builder halfway through a development without any sort of public infrastructure in place, and the minister comes in and decides, 'I'm going to put in a road. I'm going to be putting in a nice nine-foot wide footpath on either side. I'm going to get the highest level of wastewater management system in place. I'm going to underground the power infrastructure because that's what's best. I'm going to make sure that they've also got the gas connection that they need. I'm going to do all this infrastructure investment and then bill the council in which the area is located.'

Like I said, I understand the individual circumstances we are looking at. I look forward to hearing the explanations and answers in the committee stage because my reading of this gives whichever minister—and not just the current minister, but future ministers once this is in place—the ability to recover directly from the council in the district in which the area is located.

If you have a significant development with significant cost, the cost will be recovered from the council in the district in which the area is located, and that additional cost to a council cannot be covered with a special rate, cannot be covered with an increase and cannot be covered with a service charge or an additional rate, charge, levy or fee. How are these going to be paid for? We are going to end up having a situation where local government is, potentially, at significant levels of debt without any ability to raise the funding that is needed to not just service the debt but repay the debt.

It might be alright in a council area that may be able to absorb an additional development—that is, a large metropolitan council for which, as a component of their total rate take, it might be only a small component. They may be able to absorb that in their debt levels. But what happens in a situation where we have a developer that is halfway through a development in a regional centre, in a small regional council, and the decision is made by the minister to come in and make them pay for that infrastructure? There are regional councils all throughout South Australia that are already facing a great challenge as far as being able to not just service their existing communities but service the debt that is incurred for some of the investment for infrastructure that they are putting in.

As I said, this is about lawmaking that is for the long term. It may be the intention of the current minister that we would never get to the point or the situation that I am hypothetically talking about. However, if you are putting a law in place that gives the minister what reads to be this level of power, you have to set it up for whatever variety of minister you might find down the track. On my reading, this gives the opportunity for a minister to be able to make whatever decision about whatever expense and directly impose that cost onto a council that they need to incur with interest and without the ability to raise additional money from additional rates or additional service charges. So what I fear with this legislation is that we are going to have a situation where we have a law coming in, well meaning, to try to suit a situation but the risk for me as the shadow local government minister is that it has the potential to undermine local councils.

As we get to a situation with this law in place, as has already been articulated around some of the vagaries of the planning system, do councils then have to be trying to make decisions about which developments they support by trying to work out if a developer is financially viable? If they were making a decision about a development and the process it was going through and they were uncertain about the long-term financial viability of that developer, basically it is a heightened risk for that council. You could have a situation where if there was a developer at higher financial risk—and councils do not have the capacity to be able to judge that sort of thing—they could then be left holding the can, holding the baby, unfortunately, with this piece of legislation.

My worry around the accountability and oversight of this really is writ large within some of these amendments that are being put at the moment. The risk of the financial burden on councils I think is significant. The erosion of the local planning authority is a real risk, and the objectives of what is trying to be achieved through this amendment bill I fear is not what is actually going to be delivered when this is put in place. We actually have a situation where we could have perverse outcomes for future development, perverse outcomes for future house building because of that extra layer of risk, that extra layer of obligation which is now being potentially put onto local government, and we have a situation where those consequences could actually have a negative outcome.

As I said, the capacity of local government budgets ranges from a council with a rate base of a few million dollars up to hundreds of millions of dollars. Sure, those bigger councils might be able to absorb a project like the Felmeri project that we saw, a $5 million project. There could be that potential. But what if we have a situation where we have a $2 million development which then a small council with a small budget does not have the ability to absorb? They already have the pressures that they are facing at the moment with debt levels, they already have the challenges that they are facing with making sure that they are accountable to their local ratepayers as to any rate increase or extending their debt levels, and this adds that extra obligation, that extra risk and that extra uncertainty.

I look at the powers that this puts in place and, as I said, I do not mind the motivation of the minister, and the minister might in his words say we would never get to this hypothetical situation. When something like this is written into a piece of legislation, actually we could get to that hypothetical situation. When we are making laws, we need to have an eye on any perverse potential outcomes.

In the discussions that I have been having, I recognise that there needs to be a solution to make sure that, as I said, for people who are in this situation, as we have seen with one or two of the builders in South Australia, there are proper supports put in place to ensure people are not at the point of losing their potential future family home.

However, to try to crack that nut with the sledgehammer that is this amendment bill I think is poor lawmaking. The rationale behind it is flawed, and I think the potential for this piece of legislation, this change to this legislation of the Highways Act, has the potential to be misused by current or future ministers. It is a long way away from the original of the Highways Act. It is now basically shoehorning in highways and any other public infrastructure within a bill. That definition is broad.

This is why the opposition, in dissecting what is not just the motivation but also the potential outcome for this amendment bill, is looking at—and the government might be well meaning—what the potential risks and outcomes can be for local government, for local communities and for future ratepayers who, unfortunately, with the stipulation that is within this bill are going to have to be doing the heavy lifting, the shouldering of the burden, because you could have a situation where a local government does not have the ability to raise any extra rate or service charge to service the debt that is imposed on them because of the development in this designated area. They have no ability.

We have no insight into how the logistics of that judgement are going to be made around the council not being able to raise or recover expenses referred to by way of a rate, a charge, a levy, a fee or other amount. I am not quite sure, but I am sure I will be enlightened through the committee stage as to how that is actually going to be judged, who is going to be making that call if a council has made a decision to increase a rate level for a broad budget reason or a specific development reason as is set out here within the designated residential development area aspect. Who is going to be making that call? Are we going to have a situation where—I am not sure—it is going to be the Ombudsman or whoever?

It is a pretty interesting little aspect here, which I fear is going to add complication, is going to add risk and is going to actually lead to potentially perverse and poorer outcomes for people who are looking to go into either a first home or extend it.

Ms THOMPSON (Davenport) (17:17): I rise in support of the Highways (Works for Residential Developments) Amendment Bill, a bill that this government introduces to protect families from dodgy developers, failing businesses and enabling councils.

These make-believe scenarios put forward by the member for Flinders are just not really stick. If you are so concerned about the financial burden on councils, all you need to do is speak to them and tell them to make good planning decisions. As long as they do not do the wrong thing, they will be just fine.

Let me paint a picture for you of a realistic situation, one that this bill would actually seek to improve. The collapse of Felmeri Homes in 2023 had wide-reaching consequences, but no-one paid a heavier price than families of the O'Halloran Hill estate on Main South Road in my electorate of Davenport. These families are good people and I can say that because I have come to know them well over the last two years. It is unfortunate, though, that I have grown to know them so well in such devastating and personal circumstances.

Residents of the O'Halloran Hill estate were left with half-built homes, shoddy and incomplete common infrastructure and most notably no road to access their properties. This was not just an inconvenience. It prevented new builders from safely accessing the site's 20 homes, leaving 20 families without roofs over their head and in the middle of a countrywide housing crisis, it meant 20 fewer homes for South Australia's growing population.

Felmeri Homes and its directors bear significant blame for the business's demise, with the liquidator's report finding significant use of funds for non-business related purposes, but they cannot be solely responsible for the impact on the O'Halloran Hill estate residents. At the request of Felmeri Homes, the City of Marion allowed building construction to commence before appropriate shared infrastructure was installed. That should never happen and if they do not do that again, they will be just fine, member for Flinders.

What this meant was that when Felmeri Homes ceased trading, there were half-built homes ready for completion but no safe way to access them. Why permission was granted in the first instance remains a mystery to me, but the outcome is proof of why this highly unusual decision should never have been made. The toll this took on my community can only be described as devastating. The financial impact is apparent, with one resident having borrowed approximately $100,000 to finish a house they had already paid for.

Another resident spent $30,000 addressing defects alone and that is after accessing $150,000 in builder's insurance. All were already paying a mortgage on the home that they could not finish, while also paying rent or a second mortgage elsewhere—thousands of dollars for every month that they could not complete their homes. Some families just could not afford to do that, so they were forced to couch surf with relatives for extended periods of time.

But there was more than just money at stake. Unfinished homes and blown-out deadlines were a cause of anxiety and suffering. For so many their dream of home ownership—for some of them it was their first home ever—had become an absolute nightmare. As a government we could not allow this to continue. It is not government overreach, member for Unley; it is looking after our constituents and that is why the Department for Infrastructure and Transport stepped up to the plate. Remedied Felmeri homes neglected the common infrastructure and laid the road that these families so desperately needed.

Today our message to developers and to councils is simple: this can never happen again. Costs incurred by the state government to get these families into their new homes exceeded $4 million, a significant burden on the taxpayer and one that was wholly avoidable.

Now the City of Marion has acknowledged fault in this matter, doing so in writing to the Minister for Infrastructure and Transport. However, not only did it refuse to contribute towards the cost of the road but it would not even consider a rate rebate for the period that these residents were locked out of their homes. And when building indemnity insurance only stretches so far, home owners are paying rent to keep a roof over their heads plus mortgages on what were supposed to be forever homes. The absence of any rate relief was a swift kick in the guts.

There are important lessons learned from the Felmeri Homes saga, there is no doubting that, but the only players that seem to have taken a hit through this process are the O'Halloran Hill estate home owners and South Australian taxpayers. For a problem it had such a significant role in creating, the local council washed its hands and walked away with the rates of 20 families that it had failed. To me, that is unacceptable and thankfully my government colleagues agree. This bill affords the highways commissioner power to intervene should there be another Felmeri-type incident, giving them authority to complete prescribed works on residential developments with approval from the Minister for Infrastructure and Transport.

More importantly, though, it also allows the commissioner to recover the costs of these works from the relevant developer, council or any other person deemed responsible for the development, meaning taxpayers will not be left on the hook for the mistakes of developers or councils ever again. And if you think there is an opportunity to shirk these new responsibilities, then you would be wrong. The bill restricts local councils from passing any costs they incur along to ratepayers, be that through a rate, charge, levy, fee or any other mechanism. If a council makes a mistake the onus is on them to own that mistake and pay to remedy the situation.

Just like residents of the O'Halloran Hill estate, every South Australian deserves a roof over their head and that is exactly why we have introduced a suite of policies to deliver more houses for more people. The Malinauskas Labor government's A Better Housing Future initiative is well and truly off the ground, with stamp duty abolition for eligible first-home buyers, the single largest residential land release in the state's history and streamlined code amendment processes unlocking new homes right across South Australia. What is more, in the100 days since launching the Housing Roadmap, more than 1,000 new allotments have been approved for construction, all with guaranteed water and sewer services.

An investment is not limited to houses available on the private market, with 82 government-led public housing homes completed and construction on a further 177 homes underway. This is a serious policy for a city and a state that is quickly becoming the envy of jurisdictions across the country, and we are doing all that we can to accommodate the ever-increasing demand for housing. To do that, though, means more than throwing money at infrastructure and freeing up land for development. It means ensuring our state's policy settings are correct, but that is through new legislation or tweaking what has served us so well. It also means setting clear expectations for the private sector and each of those agencies that play a role in approving new developments, including local councils.

While some builders have encountered difficult trading conditions during and through the wake of COVID-19, we know poor strategic management and greed played a significant role in the Felmeri Homes dilemma, a dilemma that wrongly extended to families looking for a place to call home.

The Minister for Infrastructure and Transport rightly described the Felmeri disaster as 'a dark chapter in South Australia's building history', but instead of pointing fingers, we are learning from these mistakes, safeguarding consumers and taxpayers not just through the bill before the house today but also through changes adopted by the State Planning Commission last year. We are getting on with the task at hand and helping more South Australians into home ownership, but we are not going to let developers and councils take advantage of anyone looking to live out that dream along the way, be that through oversight, neglect or poor planning.

To Edward, Jordan, Jess and everyone else in the O'Halloran Hill estate who has advocated relentlessly to protect South Australians from enduring the hardships that they suffered, we thank you. I commend this bill to the house.

Mrs PEARCE (King) (17:25): It is my pleasure to speak and provide my support on this bill. As a state, it is absolutely crucial that we plan for future growth and that we do it well. It is why, as a government, we are committed to making home ownership and secure housing more available to those living in our beautiful state. As our economy booms and our population grows, it is vital that we address the challenges of housing affordability and the need for quality public spaces and supporting infrastructure.

We have an incredible reputation. Adelaide is one of the world's most liveable cities, and we certainly want to do what we can to keep it that way. We also know it is getting harder for South Australians to get into the housing market, and we are pulling every lever to help address this. We have a Housing Roadmap. We are looking at where we can build the infrastructure that is required to make it happen, how to help those entering the housing market, and we are focused on skilling up our workforce to be able to ensure that we can build the homes as expeditiously as possible.

We also want to ensure that homebuyers are protected. This is the single biggest investment that you can make in your life. Now more so than ever, provided the climate that we are currently living in, we want to ensure that they are protected wherever possible. We do not want to see jobs half done. We want to support the need surrounding housing while also ensuring our state continues to be viewed as one of the best places to live. It is why we stepped in last August to provide an infrastructure solution to ensure builders could complete work on 20 unfinished homes in O'Halloran Hill after the builder, Felmeri Builders and Developers, entered into liquidation.

This highly unusual situation left 20 families who had bought home and land packages within the development facing an uncertain future with deteriorating financial positions while their homes were unfinished and uninhabitable. I honestly cannot imagine not only the financial pressures this would place on a household but the physical and mental pressures that places on a family to keep afloat during that time. They were absolutely left in a dire situation through no fault of their own. It is why we have worked hard to support consumers to be able to access building indemnity insurance. I certainly would like to thank all ministers who have been involved in this process, as well as the member for Davenport for making sure that the special circumstances of these 20 families at O'Halloran Hill were well understood within the government.

In the middle of a housing crisis we are not prepared to sit by and let people like these suffer, losing more money when their homes, in many instances, are nearly complete. To be honest, I am still surprised that the developer was actually given approval to be able to build on these blocks without completing the roadway or providing financial security to be able to do so. We made a promise to examine the options to make sure that this absolutely does not happen again, which is why we are now here today. We do not want to see this scenario happening again, and we would like to avoid situations where the government needs to step in to undertake works and construct common infrastructure at residential developments at the government's cost.

It is why I am so pleased to share that we now have this bill before us today, one that benefits landowners who are affected by a builder or a developer going into liquidation, ensuring they are not left with unfinished common infrastructure such as roadways which prevents their homes from being built. It is one that would also address future risks to the taxpayer of having to front the cost of unfinished common infrastructure in the event that the government was required to intervene. It is also one that encourages councils to ensure that they have appropriate security in line with the State Planning Commission Practice Direction 12 (Conditions) 2020, which places a condition that councils must confirm that either a common driveway has been constructed or that appropriate security for the construction of the common driveway is provided before a land division certificate is issued.

These amendments are necessary safeguarding provisions that will ensure that when a developer fails to complete common infrastructure on a community title development the state is not required to bear the costs or enter into a licence agreement to ensure the works are complete. I want to ensure that any development that happens in my local community is one that value-adds to those who are already so proud to call this beautiful piece of South Australia home. This means that I want to ensure that any works done are done right.

I do not want to see anyone in my community placed in the same situation as those who were caught up in the Felmeri incident. It was unfair, it hurts the individuals and it has flow-on impacts to the community on a greater scale as well. It is important that we absolutely learn from these experiences and that we exercise the powers that we have to reduce the risk of this happening again. This bill helps to achieve this, which is why I commend it to the house.

Mr TEAGUE (Heysen) (17:30): I rise to make a brief contribution at the second reading. As far as this side of the house is concerned, it has been well put by the member for Unley and the member for Flinders. There are good reasons why the opposition opposes the bill and perhaps there will be an opportunity for me to participate rather more fully in the committee stage. I flag that my concerns are partly about what is past, and Felmeri has been a disastrous set of circumstances. The member for Davenport has given what is a contemporaneous and close to home recitation of how disastrous that has been. There is no doubt about it.

The concern that we have is that that is a set of circumstances that has befallen everyone involved. There is a set of approvals that have been granted and the council has had a significant role to play in all of that. The builder has then gone under and we all have to deal with how that is best resolved. We hear that the council might not have been terribly reasonable in maintaining an insistence that rates be paid and all the rest of it, but that has all the ingredients of an individual negotiation.

With skill and application by all interested parties, you can get to an outcome where there are contributions, including by the various public authorities, to make sure that the worst of those oppressive outcomes are not visited upon these poor home owners, would-be residents. It is really important that an outcome is reached so that those homes can be built and people can be in their homes, but that has all the ingredients of an individual negotiation.

Going forward, there are a few alarm bells that start ringing when you hear constantly from the government in the process of it legislating, 'Don't worry, this is not going to come up very often,' or, 'Don't worry, these are nightmare scenarios that have been raised. They're never really going to occur.' If so, why are we legislating? The very set of circumstances prospectively that this is contemplating seems to me to include just about everything in terms of residential development, potentially, and circumstances where the costs of works that have been deemed desirable can be sheeted home to either the council or to the developer.

It seems to me that as a result of this legislation the state can get a rush of blood to the head any time you like and say, 'Right, it's high time that the developer bore the cost of what we now think is an important priority to get on with.' I just flag that I might have a few questions to ask about one example of a bit of a tug of war that has been going on for some years in Mount Barker, which is the way in which to ultimately get everybody to play their part in the completion of Heysen Boulevard. That is just one example.

There are plenty of means by which I can see this legislation being used to just come along and impose itself on councils primarily—it might be said, the decision-makers in terms of grants of development approval in many cases—but also developers in ways that are superimposed on the arrangements that had been made.

Another general chilling effect that this kind of legislation, in fact this legislation as it is presented to the house, risks is that you will have a super risk-averse response from the councils responsible for giving development approval and a sort of banking effect in terms of councils having to provision, conceivably—and these might be questions for the committee, as well—for the possibility that this kind of thing might be imposed upon them out of the blue and they have to make some sort of risk provision for that. That might have capital consequences that flow on to rates.

Whether or not councils are prohibited from passing on the costs of capital provisioning to account for a risk that this sort of legislation imposes will be, I think, a question that is likely to come up in the committee as well. It might be seen as necessary and prudent on the one hand but prohibited on the other. With just that brief contribution, I look forward to the committee stage.

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (17:36): I would like to thank first and foremost everyone who has contributed to the debate and especially the member for Davenport, who I think gave a heartfelt description of what those residents with Felmeri at O'Halloran Hill went through.

It is hard to understand, unless you have been through it, the stress and anxiety of the idea that the actions of other people removed from you can have such an impact on your family, the idea that your mortgage repayments are not stopping, your dream home is not being built, there is no-one with a sympathetic ear other than your local MP and council are saying, 'Bad luck. Up to you. You deal with this. It is your problem. It is private land; we cannot spend taxpayers' money on private land.'

I do hear that the shadow treasurer said that there is some sympathy for the circumstances that occurred here; he is just not happy with the solution the government has come up with. I accept that, but let us explore what happened. Council approved the selling of lots before the common infrastructure was built. That is unacceptable behaviour. In my opinion, that is maladministration or misconduct at the very minimum. How a developer was able to get any council to agree to that is ridiculous.

Under those circumstances, with the opposition's opposition to this bill, if they are successful, those councils can get away with it again, and then the taxpayer—who the shadow treasurer is meant to be more interested in than anyone else—would have to come up and front up and pay up to look after people like the people at O'Halloran Hill who did not have the ability to pay. I have to say, after hearing the last remarks from the shadow attorney, both men were elected on a platform of rate capping.

All of a sudden, when a government says, 'Hang on a second. If a council maladministrates or conducts misconduct or does something wrong and does not follow the basic planning codes set out by the state planning authority about how developments should be approved, they should pay,' somehow it is in breach of their independence, but rate capping is okay. But I suppose there has been a change of heart about council rates since they chose the new candidate in the seat of Black, who proposed the second largest rate increase in the state of 7.1 per cent, which of course is going to be each and every year over the next three years.

So I understand that the shadow treasurer and the shadow attorney do not like the idea of interfering in council matters when it suits them, but it suited them at the last election, the election before 2018. They went to the election with a policy of actually telling councils what they could and could not rate and how they could increase their rates, taking away their independence. So I think the hypocrisy here is a bit thick.

What the government is attempting to do—

Mr Telfer: You voted against rate capping, though.

The Hon. A. KOUTSANTONIS: Sorry?

Mr Telfer: You voted against rate capping.

The Hon. A. KOUTSANTONIS: That's right.

Mr Telfer: Now you are bringing it in.

The Hon. A. KOUTSANTONIS: That is right. I did vote against rate capping and voted against it for very good reasons, because I believe councils should be able to raise the appropriate rates that they have for their infrastructure. That does not mean that they should be able to charge their taxpayers some mistakes that they made, which is what the opposition is saying. The opposition is saying if council makes mistakes, one, they should not have to pay, and, two, how dare you force them to pay. That is what you are saying.

Mr Telfer interjecting:

The Hon. A. KOUTSANTONIS: But again, if I was a former mayor, I would not want this type of legislation either, because who knows what it might uncover.

Mr Telfer interjecting:

The Hon. A. KOUTSANTONIS: Well, but that former mayor supports this legislation. There is a difference.

But let's get to the point here. The point is I think what the opposition's concerns are, I do not want to put words into their mouths, but what they are paraphrasing here is: what is deemed to be misconduct or an error by a council, and does that mean that the Commissioner of Highways or the minister just all of a sudden will start getting councils to pay for other people's infrastructure?

I think what you are basically implying, and I mean the shadow minister, is that a developer cannot afford to build an intersection to get into their land, they can use this legislation to buddy up with a minister and the minister can say, 'Yeah, no worries. I will make the council pay for it. I will build it and charge them.' That is not what this bill does; it simply does not. Quite frankly, to presume that I think misinterprets the bill.

However, I have undertaken to meet with the Local Government Association to try to iron out what is a way of codifying what that type of behaviour is, and I am happy to look at that, absolutely. So I suppose my request of the opposition today is: I do not think you should oppose this bill, I think you should allow the government to pass this bill and allow the—

Members interjecting:

The Hon. A. KOUTSANTONIS: I had not noticed the numbers.

Mr Telfer interjecting:

The Hon. A. KOUTSANTONIS: Well, the previous government could not pass legislation and they were the government and it is in the name.

I think there is a point I want to make here about how we will deem this and I think it is an important point to make to the parliament because the Felmeri situation can happen again, and I will tell you why. It could be undertaken again because councils in my opinion have a perverse incentive: the more development, the more rates. The one thing that is not growing are their boundaries, so their rates are limited to their size and dwellings and the values, and of course the budgets that they set, and obviously good common sense and what the public will accept.

But a very easy way of increasing revenue is allowing more development, especially development like this where the council almost have no infrastructure at all to put in place—like none. It is a private road, electricity and gas have been put in by the developer, driveways have been put in by the households, the council just receives the rates. They do not put their hands in their pockets at all but they receive the revenue. So the perverse incentive here is the council approve the selling of these allotments and the issuing of titles on the basis that they would get more revenue before they allowed the very clear, concise steps that are set out to make sure that the state planning code is met.

There are steps that can be taken to ensure that the appropriate developments are followed, and I think it is important to know that if a developer has not followed the prescribed steps set out through good management and good development, that could be a trigger. If council has allowed no security to be taken, or has allowed the issuing of lots and building approval on the basis of common infrastructure not being built yet, that could trigger it.

Let's say, for example, that council is not at fault and a developer is, council and government have no recourse over that developer other than through the courts. I would say to the shadow treasurer: would it not be a useful tool for our constituents, councils and government alike to have the ability to pursue developers who were liquid, who do have assets, to make them liable, to make sure that their constituents, our constituents, got the services that they were promised and through no fault of the council and no fault of the state government those constituents got the infrastructure that they were promised and paid for?

Currently, we have no recourse, and in the undertaking here in Felmeri what we found was that stormwater retention basins were not put in properly, electricity and gas were not rolled out properly, the road was substandard and the access road into the development from the Commissioner of Highways road should have been completed first. It was not done, yet council still allowed construction to proceed.

When the government went to Marion council and said, 'Look, this is a very difficult situation. The government is prepared to meet half the cost of this and half the cost for the council, and we will limit the costs of council to half a million and the government will deliver this,' council's response was no—no.

I got a letter of apology from the mayor, who later admitted that the council did err by allowing development to begin before the common infrastructure had been put in place. He just had not been aware. This is the frustration that governments face. When I say government, it can be any government. That is what we cannot allow to continue. We cannot allow developers to take payment and begin selling allotments without putting in the shared infrastructure first.

There is a good order to this, and the order should be followed. If the order is not followed, and the taxpayer—it is not coming out of my pocket or the shadow treasurer's pocket; it is coming out of His Majesty's Treasury and the way we raise that money is through debt and taxes. We have a responsibility to make sure that that money is spent appropriately.

Why is the taxpayer liable for what happened at Felmeri, and why is the opposition okay about it? Why is the opposition okay about it happening again? What is the alternative? I have pledged to work with the opposition between the houses if they support the bill, because I think supporting the bill shows a level of good faith. I am open for amendments, and I do not think we are going to draft amendments on the floor as we go through the legislation.

We are coming up to the end on Thursday and then another break. I undertake to meet with the opposition and come up with an alternative that allows us to appropriately codify, so that we do not have a situation where an infrastructure minister can simply start saying to councils, 'I want you to build this. If you don't build it, I will build it and then send you the bill.' Sure, but I am not going to allow developers and councils to be negligent and get away with it again. It cannot happen again.

Marion council is responsible for this legislation, and the LGA and other councils should know that the reason this legislation is here is because of the actions of Kris Hanna and his council. He is the reason we are doing this. That council is the reason this occurred. That council could have avoided everything that occurred at Felmeri if they had simply followed good practice, but they did not. There is no consequence at all for any officer in that council. The only people who have borne any consequence are taxpayers and the people at the top of the tree, the residents of that Felmeri development.

I have never had that type of stress in my life. I have been very, very lucky. I have been blessed. I can only imagine what a young family was going through, wondering what was going to happen. The member for Davenport was talking about people couch surfing after they had paid for a house. Council were asked—okay, you cannot contribute, but you could at the very least not charge these people rates. Do you know what council said? No. Well, that forces the government's hand.

If we had a cooperative council and if the LGA were able to have some sort of internal process that would allow this never to occur again, the government might have a different point of view. But in the absence of an alternative, the government is forced to act. If the opposition have found what they think are errors in the legislation, or gaps—and, of course, there are always gaps in legislation; no piece of legislation is perfect—I am happy to look at it between the houses. That is no problem whatsoever.

My point remains: in the absence of this, what? What? Just let Marion council get away with it again? Let the council just do as they please, when they please, as often as they please? No. There need to be consequences and there needs to be the ability to remedy the taxpayers' loss. Taxpayers are the ones who pay. I could do another scenario: how many taxpayers who have built in these types of allotments and who have paid for their private infrastructure are looking at this and thinking, 'Gee, the government didn't build my driveway. They didn't build my access road.' It is not fair. So what we are trying to do is apply a fairness here to make sure that this never occurs again.

You might ask, 'Why not just go after the City of Marion? Why not have special-purpose legislation that just recovers the cost from the City of Marion? Because, as far as I am concerned, they are the ones who are liable here.' Well, I suspect if I had done that, that would be a very different conversation I would be having with the opposition and the LGA about targeting individual councils. What I am trying to do here is build a prophylactic measure where we avoid this ever happening again and no-one has to pay.

My door is open. I am open for negotiation between the houses. I hope the opposition sees sense and supports this legislation and takes me on my word. But if they oppose this legislation, why would I negotiate with them? I am open for a bilateral discussion with the opposition about something that can work, and include the LGA and have a successful outcome. If the opposition opposes this, well, I suppose that is off the table. I commend the bill to the house.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

Progress reported; committee to sit again.