Highways (Works for Residential Developments) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 17 October 2024.)

The Hon. B.R. HOOD (11:27): I rise as the lead speaker for the opposition on the Highways (Works for Residential Developments) Amendment Bill 2024, and to outline our concerns and our opposition in regard to this amendment bill. While the government's intent to address incomplete residential developments is acknowledged, the bill itself raises several serious issues, so we cannot support it in its current form, as we have expressed in the other place as well.

The powers granted to the Commissioner of Highways and the Minister for Infrastructure and Transport in this bill go far beyond what is reasonable, in our opinion. The bill seeks to give sweeping authority to state bodies, while disregarding the fundamental role that local councils play in managing development within their communities, and that is certainly the feedback we have heard from a number of councils around the state.

The most glaring issue within this bill is the way that it bypasses local councils. Under this legislation the Commissioner of Highways is given the power to step in and complete infrastructure works if and when a developer fails. On the surface this might seem like a positive move, most especially given the issues around Felmeri that we saw a year or so ago. Of course, we would not want unfinished roads and essential services not completed.

However, the problem ultimately lies in how this will be done. The commissioner can bypass the usual planning processes under the Planning, Development and Infrastructure Act 2016. Local councils, which are responsible for approving and overseeing development, are sidelined. The commissioner can intervene without the council's agreement or even without their full understanding of what is ultimately happening on the ground in their patch.

As a former deputy mayor and local councillor, I know that local councils know their communities. They are best placed to manage the needs of their residents and the specific requirements and developments within their regions. By allowing the state government to come in and override these local decision-makers, this bill does undermine local governance and erodes the ability of councils to represent their constituents. I guess the question is: how are local communities supposed to feel confident about their needs being met when the state government can push ahead without considering local input?

Another key issue of the bill is the lack of proper safeguards and oversight. The commissioner is granted significant powers to carry out roadworks and other prescribed infrastructure works in designated residential areas, but I guess the question remains: where are the checks and balances? As far as we can see, there is no clear mechanism to ensure the commissioner's actions are aligned with local government goals or the broader community interests.

The bill grants the commissioner power to recover costs from councils or developers, but there is no clear clarity around how disputes over the cost will be managed. What happens if a council disagrees with the commissioner's decision to step in or objects to the costs being imposed on them? This bill provides no clear process for remediation or appeal with regard to the council. It puts councils at a financial and administrative disadvantage, particularly smaller regional councils that may not have the resources to challenge the state's decisions. Without proper oversight, these powers could be open to abuse, and there is little in the bill that provides the necessary safeguards to protect against this.

On the financial burdens of councils, the financial implications of this bill for local councils, especially regional ones, cannot be overstated. The bill makes it clear that councils cannot pass the costs on for the works to ratepayers through additional rates, levies or fees. While we agree that ratepayers should never bear the financial burden of incomplete developments, this restriction does leave councils with no real clear way to recover costs. What happens when a small regional council is forced to pay for roadworks or essential services in a development where the developer has failed and they cannot recoup the costs? This could lead to councils having to divert funds from other important local services, which ultimately affects the entire community.

In some cases, councils may be more risk-averse in approving developments altogether, which of course would be a very perverse outcome, most especially as we suffer through a housing crisis. If the fear is for the council that they will be left holding a bill for incomplete works they may impose stricter conditions on developers or delay approvals, which ultimately will negatively impact housing growth and development growth, particularly in regional areas where development is essential for economic and community development, and the capital costs to develop in the regions are obviously higher.

By granting the minister the power to designate areas for prescribed works, this bill does open the door for political interference. The minister can decide, at their discretion, to designate a residential development area for intervention, but what guarantees are there that these decisions will be made on a genuine need rather than political convenience?

Local planning authorities are already equipped to handle these decisions. By allowing the state to override their authority, we are creating confusion over who is ultimately responsible for the development outcomes. It is not just a question of good governance; it is ultimately about maintaining the integrity of the planning system and ensuring that local councils can retain the powers they need to serve their communities effectively.

Finally, the process behind this bill has raised concerns with regard to the level of consultation with key stakeholders. Consultation with local councils, developers and community groups: have they been adequately consulted? We know the former Minister for Infrastructure and Transport in the other place, during the second reading and committee stages, started off pretty bolshy on this bill but ultimately was saying that there might be some room for us to move. It does not seem like that has happened, and the concerns still exist there with the LGA and others in the drafting of this bill. From what we do understand, there has been little engagement with those who are ultimately affected by these changes, which only adds to our concerns that the bill will create more problems than it can actually solve.

To conclude, the Liberal Party recognises that the need to address the issue of incomplete residential developments is an important one, even though we have not necessarily seen it a lot, apart from when we speak to the $3.5 million that was put into sorting out the Felmeri issue, as I stated earlier in the second reading. We should address the issue of incomplete residential developments, but we cannot support a bill that tries to do that by undermining local councils, which lacks proper oversight, places financial burdens on communities and can open the door to political interference.

What we do need is a legislative framework that empowers local councils, provides them with the tools to manage development correctly and efficiently, and ensures that the state only intervenes when absolutely necessary and always with the proper safeguards in place. This bill, as it stands, does not meet those requirements. We urge the government to rethink its approach and we will be opposing the bill.

The Hon. R.A. SIMMS (11:34): I rise to indicate my opposition to this bill. I consider it to be poorly thought through and something that poses significant risks to councils. The bill responds to a community title development at 1700 South Road, O'Halloran Hill, in the electorate of Davenport. Felmeri Homes went into liquidation in July 2023 before finishing the homes and the common infrastructure, including the common driveway and stormwater works.

The bill gives the highway commissioner the power to step in and undertake prescribed works on residential developments on approval from the Minister for Infrastructure and Transport. It further allows the commissioner to recover the costs of these works from the relevant developer or any other person who is, in the opinion of the minister, responsible for undertaking the development, which can include any related body corporate.

However—this is the area that is of concern to the Greens, and I note the comments raised by the Hon. Ben Hood—costs can also be recovered by council if it is the relevant authority for the development under the Planning, Development and Infrastructure Act 2016 or the Development Act 1993 and provided the development on the land is for residential purposes. Higher rates will then be incurred for late payments.

The bill also restricts the relevant council from passing on these costs to ratepayers by restricting recovery through a rate charge, levy, fee or other mechanism. It will therefore inevitably result in service cuts at a local council level, as they are required to carry the can for these developments that go wrong. City of Marion Mayor Kris Hanna said in a statement that the problem does not lie with the council planning approval but rather with the builder:

It is a driveway on private land which is uncompleted, not a public road. Council can't spend ratepayers' money to improve private property.

I must say I am inclined to agree with Mayor Hanna. Enacting a broad-ranging ability of the state government to impose financial impositions on councils sounds to me like cost shifting rather than consumer protection from the Malinauskas government.

The Greens, some time ago now, when we saw a series of builders collapsing in South Australia, advocated for the establishment of a public builder. This public builder could build public housing at the scale that is required, because we know there is a significant backlog in that regard, but it could also step in and complete construction of properties in circumstances where a developer goes bust.

I must say, I have a huge amount of sympathy for people in those positions. It must be an absolute nightmare to lose your life savings and to be in a situation where you have an unfinished home, it is not something that you can take possession of, and there is no end in sight in terms of getting it completed. The Greens' proposal meant that the public builder could step in and do that work and then the state would have equity in that home that could be paid down over time.

This is a model that has worked well during the financial crisis in places like the United Kingdom. It has also worked in countries like Singapore. That would be a sensible approach to getting this crisis under control and providing certainty to those home owners who are left high and dry when a developer goes belly up. Instead, what we have seen from the Malinauskas government is a poorly thought through populist brain fart that does not actually do anything to address the fundamental issues at work.

I understand this was the thought bubble of the previous minister. We have a new minister now, and I congratulate her on her elevation. I hope that our new transport minister, bringing the wisdom that she does, will look at this with fresh eyes and conclude that this is not an appropriate solution to this problem, because we know that it has been poorly thought through and it seems more about trying to get highway headlines rather than trying to address the fundamental problems that are endemic in our construction system. So I encourage the new minister to think again.

I recognise that the government has already announced changes to ensure that people building a home are better protected. I note the former Treasurer and the Minister for Consumer and Business Affairs completed a joint review into building indemnity insurance to enhance protection for consumers and to support the building industry.

In July 2025, changes were announced that increased maximum insurance payouts to $25,000 if a builder fails to deliver a finished home. Under the reforms that came into effect on 1 October, the policy limit for all QBE policies—which represent the majority of the SA market—will increase from $150,000 to $250,000. The 66 per cent increase will see home builders receive up to $100,000 more in the event that their home is not completed. I recognise that this is an important step in the right direction. It is worth noting, however, that the average premium for a new build or renovation valued between $500,000 to $750,000 will increase from $2,251 to $2,814—a difference of $563 or 0.1 per cent of the value of the build.

The state government has also said it intends to update the regulations and will make it mandatory for all insurance to provide the increased cover to better protect all people building or renovating their home. That is all progress in the right direction, but if we are serious about dealing with the issue of incomplete homes, if we are serious about providing certainty to those who have invested in a new home but who are caught high and dry when a private developer goes under, then we do need to have a public builder.

Part of the reason we have this housing crisis is that the private sector has not been able to deliver the housing we need at scale. The Malinauskas government has brought back the Housing Trust—would a rose by any other name smell so sweet? It has been a change in name only: they have not restored the mission of the Housing Trust. That is why the Greens have been urging them to do so, to bring back the Housing Trust not just in name but in mission.

Re-establish it as a public builder that can build the housing we need at scale, and that can provide certainty to people who have invested in new houses but who find themselves in the invidious position of the private sector failing them. This highways bill is really not the answer, and I think all members of this place should think very, very carefully about this proposal and the implications it has for local councils.

Make no mistake, if this bill goes into effect and we see the collapse of private builders, we will see councils being stung with huge bills, and that will result in the slash and burn of public services. That is what this will do. It is very poor policy.

The Hon. J.S. LEE (11:42): I rise to speak on the Highways (Works for Residential Developments) Amendment Bill 2024. This bill introduces amendments to the Highways Act 1926 designed to clarify and strengthen the state's ability to respond to infrastructure shortfalls in residential developments.

It reflects lessons learned from recent events, most notably the collapse of Felmeri Builders and Developers Pty Ltd, which left shared infrastructure such as stormwater, services and roadworks incomplete at a residential development at O'Halloran Hill, with the owners of 20 unfinished homes left in limbo. In that case, the government stepped in to intervene and complete essential infrastructure works to enable owners to finish building and move into their homes.

From my understanding, the Marion council had allowed work to progress before the appropriate infrastructure works had been completed. The bill provides the Commissioner of Highways with the authority to undertake prescribed works—such as roadworks, water, telecommunications, stormwater, sewerage and other essential services—on residential developments subject to ministerial approval and after notifying the relevant council and landowners. This ensures that critical infrastructure can be delivered in a timely and coordinated manner when private developers are unable or unwilling to fulfil their obligations.

Importantly, the bill was introduced as a cost-recovery framework. The commissioner may recover costs from the responsible developer, including related corporate entities or from relevant councils if it was the authority for the development. However, the legislation explicitly prevents councils from passing this cost on to ratepayers through rates, levies or other charges. This provision protects the broader community from bearing the financial burden of private sector failures.

The bill also removes the requirement for a licence agreement from community corporations before works can proceed. The government has stated that these amendments are not intended to shift responsibility away from developers or councils, but rather to prevent future infrastructure failures like the one that occurred in O'Halloran Hill.

The minister has argued that the Commissioner of Highways will only step in to complete prescribed works if there is a failed builder, developer or an administrative failure by local councils. However, I also note that concerns have been raised during debate in the other place that the bill before us does not specify that there must be wrongdoing or failure before such powers can be enacted. This was brought up again during debate in this place by the Hon. Ben Hood and the Hon. Robert Simms.

The bill provides broad powers to intervene in developments and recover costs from developers or local councils, but does not appear to provide for any mechanism to resolve disputes between councils and the commissioner about cost recovery. I acknowledge that concerns have also been raised about the financial impact that such situations may place on councils, particularly smaller councils in regional areas.

While I am broadly supportive of the intent of the bill and the desire to avoid any potential future situations where home owners and residents could be left in limbo by incomplete residential developments, I do have some serious concerns regarding the broad powers, the lack of oversight or dispute resolution mechanisms, and the financial impact on local councils.

I congratulate the new minister who has been elevated to the position, but I do want the new minister to address the concerns that I and others have raised about the bill, and I will give careful consideration to the arguments put forward by all those concerned during the committee stage.

The Hon. R.P. WORTLEY (11:47): The Highways (Works for Residential Developments) Amendment Bill 2024 amends the Highways Act 1926. The introduction of the bill aims to avoid situations where the government needs to step in, undertake works and construct for common infrastructure at residential developments at a cost.

The introduction of this bill supports the announcement by the Premier, the Hon. Mr Peter Malinauskas MP, in August 2023, for this government 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 Pty Ltd, formerly known as Felmeri Homes, entered into liquidation. We all saw pictures on TV of people who had spent a lot of money and were trying to move into their houses, and there was obviously a problem with this developer. I think it is important that we have a responsibility to look after people who have dedicated a large part of their finances building a home, to ensure that the works are finished on time.

The bill provides the Commissioner of Highways (the commissioner) with the power to undertake prescribed works on residential developments on approval from the Minister for Infrastructure and Transport, after notice has been provided to the relevant council and the landowners. Prescribed works include roadworks; the supply of water, gas, telecommunications, the provision of stormwater, wastewater, sewage management or other facilities and services prescribed by the regulations. The bill allows the commissioner to recover the cost of these works from either the:

relevant developer, being the person granted development authorisation under the Planning, Development and Infrastructure Act 2016, or the Development Act 1993, or any other person who is, in the opinion of the Minister for Infrastructure and Transport, responsible for undertaking the development and can include any related body corporate; or

relevant council, provided the council was the relevant authority for the development under the Planning, Development and Infrastructure Act 2016, or the Development Act 1993, and the development on the land is for residential purposes.

The bill also restricts the council from passing on the cost to ratepayers by restricting recovery through a rate charge, levy fee or other mechanism. The bill also provides the commissioner with the authority to undertake these works without the need for a licence agreement from the community corporation, which occurred in O'Halloran Hill. I understand there has been some feedback raised by the LGA in relation to portions of the bill and the state government, as always, will continue to consult with the LGA on potential amendments to the bill.

Debate adjourned on motion of Hon. F. Pangallo.