Melbourne to Increase Penalties for Construction Violations

The City of Melbourne has voted on 28 March 2023 to amend two local laws and increase penalties for construction law breaches. The changes will bring the definition of penalty units in the Activities Local Law 2019 and the Environment Local Laws 2019 in line with the Local Government Act 2020, allowing for a higher penalty rate.

The Future Melbourne Committee, at a meeting on 21 July 2020, has recognized that the current maximum limit of 20 penalty units for any building works-related breaches of local laws is “too low to be a meaningful deterrent for larger projects”. The cost of breaching the local law is “is increasingly being built into the cost of doing business”, and the council aims to stop this practice.

City of Melbourne councillor Rohan Leppert elaborated further at the 28 March meeting, “The council has in the past identified a class of offenses, usually against a company, where the penalties are so low now as to not be sending any meaningful financial deterrent against bad behavior. The classic example here and the one that we focused on in 2020 is construction activity outside the local law hours. For some of the bigger construction sites around town it is an open secret that it is cheaper to build into the cost of building, the cost of doing development, to be starting before the local law hours allow you to and cop the penalty than it is to not do that.”

Both laws currently reference the Local Government Act 1989 which sets the value of a penalty unit at $100 for any offence. The 2020 act, however, refers back to the Sentencing Act of 1991 which in turn references the Monetary Units Act of 2004 which allows the set rate for a penalty unit to be varied by the treasurer and raised along with inflation. It is currently set at $184.92 with a maximum number of penalty units for any offence set at 20. The council’s changes will mean that while other penalties will undergo a slight decrease or see no change, there will be changes to penalties for construction offences.

Leppert said that the scope of the local law review was only to bring the penalties into line and asserted that only a handful of companies acting in bad faith, “This is all about making sure that we’re not just allowing that flat rate of penalty in the age of quite significant inflation. Companies just building the cost of non compliance with local laws into the cost of doing business needs to stop.”

The council voted unanimously to direct its staff to create proposals to write Activities Local Law 2023 and the Environment Local Laws 2023 and for a process to include community engagement, bring the local laws in line with the relevant acts and to and update any out-of-date references. The motion also included a directive to have the local laws come into effect during the 2023-24 financial year.

Source: The Urban Developer