Final report for the

Building Services Authority 1 July – 30 November 2013

This report

This is the last report of the Queensland Building Services Authority (BSA).The functions of the BSA have been transferred to the Queensland Building and Construction Commission (QBCC). The action taken during the final reporting period of 1 July to 30 November, 2013 complies with Section 23 and Schedule of the Public Sector Ethics Act 1994. In accordance with the Public Records Act 2002, the BSA has used record-keeping best practices and has identified, captured and maintained complete and accurate records retained in an accessible and useable format that preserves the evidential integrity of those records for as long as they are required. This annual report is available on the QBCC website at www.qbcc.qld.gov.au The Queensland Government is committed to providing accessible services to Queenslanders from all culturally and linguistically diverse backgrounds. If you have difficulty understanding the annual report, you can contact us on 1300 272 272 and we will arrange an interpreter to effectively communicate the report to you. You are free to copy, communicate and adapt this annual report, as long as you attribute the work to the State of Queensland (Building Services Authority 2013). To view a copy of this licence, visit http:// creativecommons.org/licenses/by/3.0/ au/deed.en For further information: contact the Executive Manager, Customer Relations and Communication. Phone: 1300 272 272 Fax: 3225 2939 Email: info@qbcc.qld.gov.au © Queensland Building Services Authority 2013

Letter of compliance

Contents

17/03/2014 The Honourable Tim Mander MP Minister for Housing and Public Works Level 7, George Street Brisbane Qld 4000 I am pleased to present the final report and financial statements for Queensland Building Services Authority. I certify that this Annual Report complies with:

the prescribed requirements of the Financial Accountability Act 2009 and the Financial and Performance Management Standard 2009, and

the detailed requirements set out in the Annual report requirements for Queensland Government agencies.

Yours sincerely Ian White Deputy General Manager Queensland Building Services Authority

Contents Foreword................................................................................................................................................................................. 5

Corporate governance ............................................................................................................................................................ 6

Organisational structure ..................................................................................................................................................... 6

The board ............................................................................................................................................................................ 7

Risk management ............................................................................................................................................................... 7

Information systems ........................................................................................................................................................... 8

APRA’s 75 per cent probability requirement adopted ....................................................................................................... 8

BCIPA ................................................................................................................................................................................... 8

Right to information ........................................................................................................................................................... 8

Service Complaints Management System .......................................................................................................................... 9

Our service ............................................................................................................................................................................ 10

Communication and customer service ............................................................................................................................. 10

Consumer Education ......................................................................................................................................................... 10

Contractor Education ........................................................................................................................................................ 11

Licensing ........................................................................................................................................................................... 11

Certifiers ........................................................................................................................................................................... 11

Owner-builder numbers continue to decline ................................................................................................................... 12

Insurance .......................................................................................................................................................................... 12

Complaints ........................................................................................................................................................................ 13

Proactive compliance ........................................................................................................................................................ 13

Support offered to contractors in financial distress ......................................................................................................... 14

Regulating Financial Requirements for Licensing (FRL) .................................................................................................... 14

Judgment Debt policy ....................................................................................................................................................... 15

Unlicensed contracting and contractual regulation ......................................................................................................... 15

Licence audits ................................................................................................................................................................... 15

Contractor compliance with legislation investigated ....................................................................................................... 16

Demerit points issued to contractors for breaches of legislation .................................................................................... 16

QCAT affirms majority of BSA decisions ........................................................................................................................... 17

Debt recovery ................................................................................................................................................................... 17

Our people ............................................................................................................................................................................ 18

BSA’s workforce profile .................................................................................................................................................... 18

Code of Conduct ............................................................................................................................................................... 19

BSA follows Equal Employment Opportunity Management Plan ..................................................................................... 19

Importance placed on Workplace Health and Safety ....................................................................................................... 19

Queensland Carers (Recognition) Act 2008 ...................................................................................................................... 19

Staff encouraged work, life and family balance ............................................................................................................... 19

Moving forward ................................................................................................................................................................ 20

Finance .................................................................................................................................................................................. 21

Financial overview ............................................................................................................................................................ 21

Statements of Comprehensive Income ............................................................................................................................ 23

Statements of Financial Position ...................................................................................................................................... 24

Statements of Cash Flows ................................................................................................................................................. 25

Statements of Changes in Equity ...................................................................................................................................... 26

Notes forming part of the financial statements ............................................................................................................... 27

Certificate of the Queensland Building Services Authority .............................................................................................. 64

Independent Auditor’s Report .......................................................................................................................................... 65

Foreword This Annual Report, covering the period from 1 July-30 November 2013, is the final Annual Report that will be produced on behalf of the former Queensland building industry regulator, the Building Services Authority (BSA).

The BSA was replaced on 1 December 2013 by the Queensland Building and Construction Commission (QBCC), following an enquiry into the operation of the BSA by the Queensland Government’s Transport, Housing and Local Government Committee.

Among the Committee’s recommendations to Parliament on 30 November, 2012 was the replacement of the BSA with a new regulator and a new regulatory model.

This Annual Report covers the BSA’s activities in the period since the previous BSA Annual Report (for the 2012-2013 financial year) was tabled in late 2013.

During the current reporting period, the BSA processed 36,804 policies under the Queensland Home Warranty Scheme, with gross premium receipts totalling $35.124 million.

Six hundred and fifteen claims were made by consumers against the Scheme and 1,326 claim approvals were processed for a value of $17.56 million.

BSA Customer Contact Centre staff answered 79,355 calls, with 82.64 per cent of calls answered within 60 seconds, exceeding the key performance measure of 70 per cent.

The Contact Centre also received 2540 customer emails and responded to 98.54 per cent of these within four days, significantly exceeding the key performance measure of 90 per cent of emails responded to within 10 days.

The BSA continued hosting its consumer education seminars and material presented covered the entire building process from design and budgeting to obtaining quotes, the construction phase, and dispute resolution.

The free licence search facility on the BSA website continued to prove popular with consumers keen to check on contractors’ histories before engaging them for building work. In the period covered by this report, 190,664 licence searches were undertaken.

During the reporting period, 1,714 complaints were received about building work and 321 directions were issued to contractors to rectify defects.

The BSA’s Debt Recovery team recovered $1.349 million from 1 July to 30 November 2014. Of this amount, $1.299 million was recovered for the Queensland Home Warranty Scheme, about 2.5 per cent more than in the same period in the previous financial year.

The number of claims received for recovery decreased by 6.5 per cent compared to the same period in the previous financial year, and the value of claims paid decreased by 6.2 per cent.

There was a 40 per cent increase in the recovery of Queensland Civil Administrative Tribunal penalties, with $32,633.32 recovered from July to November.

Magistrates Court penalties decreased by 37 per cent during this period.

The 2013-2014 Annual Report for the new Queensland building industry regulator, the QBCC, is due for tabling later this year.

Ian White Former Deputy General Manager Queensland Building Services Authority

Corporate governance The Building Services Authority was a statutory authority established under the Queensland Building Services Authority Act 1991 (the QBSA Act) to manage the regulatory framework needed to support the building industry in Queensland.

Regulatory functions of the BSA included licensing of contractors, providing education programs for consumers and contractors, handling disputes, protecting consumers with statutory insurance, implementing and enforcing legislative reforms and where necessary, prosecuting noncompliant individuals or entities.

Organisational structure The General Manager of the BSA had overriding executive powers and was responsible for the global administration of the business, providing leadership to the organisation and promoting strong service standards. Advice was also provided to the Minister for Housing and Public Works on key issues facing the industry.

While independent of the Queensland Building Services Board, the General Manager reported to the board on the administration of legislation, the BSA’s performance and the board’s policies. Diagram 1 – Organisational structure

Table 1 – Executive Management

Name Position Ian Jennings General Manager vacant Deputy General Manager, Policy, Strategy and Communication Ian White Deputy General Manager, Operations and Service Delivery Shane Wilson A/Executive Manager, Business and Insurance Services Lewis Hayes Executive Manager, Compliance and Industry Services Mick Davis A/Executive Manager, Customer Relations and Communication Chris Boyle Executive Manager, Resolution and Regulatory Services Michael Chesterman Executive Manager, Contractual Development and Adjudication Registrar Graham Ives A/Executive Manager, Area Offices

The board The Queensland Building Services Board was a non-executive board generating and reviewing policies governing the administration of the QBSA Act, working in conjunction with the General Manager to manage the strategic direction of the BSA.

Comprised of eight members representing stakeholder interests and providing a balance of skills and experience, the board established a number of committees to assist their functions: the Finance, Audit and Risk Committee; the Policy Committee; the Licensing Committee; the Insurance Committee and the Fire Occupational Licensing Committee. A number of the committees did not meet, as reforms were being addressed by the Parliamentary Review into the performance and operations of the BSA.

Table 1 – Board committee meetings

Full board Insurance Committee

Licensing Committee

Finance, Audit and Risk

Committee

Fire Occupational Licensing Committee 5 0 0 2 0

John Gaskin 5 4 2 n/a 2

Jim Russell 4 n/a n/a 2 n/a

Wally Trohear 4 n/a 2 n/a 2

Christopher Taylor 5 4 2 2 n/a

Jean Althoff 2 n/a n/a 0 0

Karen Dare 4 1 n/a n/a n/a

Keith Eaton 3 n/a n/a n/a n/a

Remuneration rates paid to board members, as determined by the Governor in Council, totalled $6,864 in the period of 1 July to 30 November 2013.

The allowances exclude travel and associated expenses incurred in the course of their duties.

Risk management The BSA’s risk management strategy, compliant with Australian/New Zealand Risk Management Standard (AS/NZS150 31000: 2009), assessed the adequacy of the risk management framework and risk policies that dealt with all facets of operations.

Risks, categorised as strategic, operational, people or financial have had identified controls and treatments managed through the internal audit program or specific projects and initiatives.

An internal auditor was appointed through a tender process conducted by the Finance, Audit and Risk Committee every three years.

During the final operations of the BSA (July 1 – November 30, 2013), key risks related to the transfer of operations to incoming entity, the Queensland Building and Construction Commission (QBCC) and subsequent change management issues.

Information systems

Management of information systems for the BSA were coordinated through the development and review of the Information and Communications Technology Strategic Plan, maintained in accordance with the business planning cycle.

Implementation of the plan was overseen by the Information Steering Committee, comprising the General Manager, BSA’s Deputy General Managers, Executive Manager Business Services, the Chief Information Officer and an external advisor.

The plan has ensured information and communication technology resources were appropriately allocated, supported and aligned with organisational and whole-of-government outcomes.

Strategic, practical enhancement of BSA information management was achieved through the following initiatives:

practical progress was made towards replacing the BSA Contractor Management System, with the Licensing module on schedule for release in May 2014

continued enhancement of the organisation’s resilience to technology disruptions

delivery of key components of the BSA Digital Services strategy

development of key technology-related strategy documents. The BSA participated in a number of reviews of its information technology and records management practices both internally and externally to ensure its continued systemic compliance with mandatory standards and alignment with industry best practice.

APRA’s 75 per cent probability requirement adopted To ensure a solid financial framework for its insurance operations the BSA has continued to comply with various Australian Prudential Regulatory Authority (APRA) standards that apply to general insurers, including a prudential margin loading in relation to projected future claims to achieve the APRA requirement of a 75 per cent confidence level that the outstanding claims provision will be adequate.

BCIPA The Building and Construction Industry Payments Agency, funded by the Building Services Authority, was introduced to improve contractual and payment outcomes in the building and construction industry and provide administrative support for the Building and Construction Industry Payments Act 2004 (BCIPA).

Contractors and trade contractors are the most frequent users of the adjudication processes under BCIPA but awareness of the BCIPA continues to grow among suppliers and consultants.

Seven hundred and twenty-one adjudication applications were lodged under the Act in 2012-13, for payment claims totaling, $874,700,640. In 2011-12, 731 applications were lodged, for claims totaling, $394,741,017.

In 2012-13, 531 adjudication decisions were released for a total value of $311,362,457. (2011-12: 553 decisions, $242,676,619).

Right to information BSA was committed to following the objects of the Right to Information Act 2009 and the Information Privacy Act 2009, with applications (including administrative access requests finalised by November 30, 2013) totalling over 30,500 folios processed, approximately 84 per cent released in full.

The BSA actively supplied information under various administrative schemes in addition to the documents released administratively by the RTI unit according to the intentions of the legislature.

Neither of the external reviews that were in progress during the period of 1 July to 30 November 2013 were finalised in this time.

The BSA’s commitment to information privacy and transparency will continue on with the QBCC, including BSA initiatives intended to enhance public accessibility of information such as a publication scheme and disclosure log.

RTI applications will be progressively published as they meet the criteria for publication.

Table 2 – Right to Information and Information Privacy applications 1 July – 30 November 2013

Applications type Application no. % Folios

finalised No. %

Administrative C:1

R:21 F: 22

30 Full Access 25897 84.8

Information Privacy C: 2 R: 17 F: 17

24.3 Partial Access 3730 12.2

Right to Information C: 7 R: 30 F: 28

42.8 Full Exemption 929 3

Notice to Provide pursuant to legislation

R: 2 F: 1

2.9

Total 70 100 Total 30556

Withdrawn or transferred 3 -

Internal reviews RTI & IP 2 3.5

External Review RTI &IP 2 3.5

C – carried forward from last year R – received F – decision finalised

Service Complaints Management System

Implemented in July 2010, the BSA Service Complaints Management System has provided the public with a means to lodge complaints, compliments, enquires and suggestions directly to the BSA by mail, telephone or through the “Contact Us” tab on the BSA’s website.

Of the 113 matters entered into the system over the 5 month reporting period (1 July – 30 November 2013), there were 47 enquiries, 45 complaints, 15 compliments and 6 suggestions.

Prompt action was taken in relation to all contacts received. All service complaints were investigated and appropriate steps taken to improve communications and address complainants’ concerns in accordance with the BSA’s published Service Complaints Policy.

Our service Communication and customer service

79,355 calls were answered by the centre from 1 July to 30 November 2103, with 82.64 per cent of calls answered within 60 seconds, exceeding the key performance measure of 70 per cent. A summary of the types of calls is provided in the table below.

Table 3 – Contact Centre telephone statistics 1 July – 30 November 2013

Call type Number % of total calls received

General enquiries – defective work 10,554 13.3 %

General enquiries – licensing and owner builders 18,407 23.2 %

General enquiries – other 17,914 22.6 %

Insurance payments 14,013 17.6%

Licence renewals 16,951 21.4 %

Online Services 1,516 1.9%

Special events (e.g. seminars) 0 0%

Total 79,355 100%

Additionally, the Contact Centre received 2540 customer emails during this period and responded to 98.54 per cent of these within four days, which significantly exceeded the key performance measure of 90 per cent of emails responded to within 10 days.

To measure the quality of advice provided through the Contact Centre, surveys are undertaken of customers who have accessed Contact Centre services by telephone or through face to face contact. Of those who responded to the survey, 95.7% per cent said they were either satisfied or very satisfied with the overall level of service they received and 97.1% per cent said they were either satisfied or very satisfied with the ease of access to BSA services.

Consumer Education

Four consumer education seminars were presented in Brisbane from 1 July to 30 November 2013 that attracted 58 attendees. These seminars covered the entire building process from design and budgeting onto obtaining quotes through to the construction phase, and dispute resolution.

These sessions were also available on the BSA’s YouTube Channel. The two most popular sessions were ‘On Completion’ and ‘After Moving In and Certifiers, Plans and Building Inspections’.

Consumer fact sheets and publications, available on the BSA website and at state-wide Home Show events have complemented this education program.

The BSA continued to support good building outcomes in Queensland with the promotion of BSA ‘online licence search’, educating the public about the importance of engaging appropriately licensed contractors. The free licence search facility was used to conduct 190,664 licence searches during the period of 1 July to 30 November. The majority of users remain consumers who, based on BSA education initiatives, are checking contractors’ histories before engaging them to perform building work.

Contractor Education

The BSA’s 2012-2017 Strategic Plan gave a commitment to “Strengthen contractor skills, capabilities and industry standards”. As part of this strategy, the BSA presented 36 contractor information sessions in 35 locations across the State. Over 4000 people attended these sessions between 1 July and 30 November 2103. The contractor information sessions were free and topics included ‘Fire Separating Walls in Class 1A Buildings’, ‘Common Defects in Plasterboard and Painting’ and ‘Common Defects in Internal Waterproofing and Tiling’. These sessions were presented with the assistance of industry experts from the Master Tilers Association, the Association of Wall and Ceiling Industries and Catchpole Building Services. More than 90 per cent of attendees who responded to the feedback survey said they would recommend these sessions to others. The BSA YouTube Channel featured contractor education videos on such topics as ‘Timber Durability’, ‘The Timber Framing Code’, ‘External Waterproofing’, ‘Roof Drainage’ and ‘Building on Challenging Sites’.

Licensing In the five months from 1 July to 30 November 2013, the BSA received 3088 licence applications (2012-13: 7,027), with an average processing time of 23 days. The average processing time in 2012-13 was 27 days.

The BSA also processes “mutual recognition” applications from practitioners who hold an interstate licence and wish to obtain a BSA licence to work in Queensland.

This period the BSA processed 191 mutual recognition applications compared to 461 in 2012-13.

The overall demand for licences has fallen slightly during the period.

Certifiers As at 30 November 2013, the BSA (now QBCC), had 401 licensed building certifiers. There were 11 new registrations and 12 de-registrations throughout this period. As at 1 July 2013, QBSA had 155 complaints open. During the period 1st July 2013 – 30th November 2013 the QBSA received an additional 47 complaints, then finalised 117. The QBSA currently has 153 open complaints. Of the 117 complaints finalised, investigations found 62 certifiers at fault, 43 complaints were either withdrawn or closed due to insufficient evidence, and in 47 cases the certifier conduct was found to be satisfactory.

Table 4 – Certification statistics 1 July – 30 November 2013

Action Number of certifiers

Reprimand 57 Direction – enforcement action and ensure certification 12

Licence condition imposed 1

Total 70

Note: While 62 certifiers were found to be at fault, the above number 70 indicates that a complaint can result in more than one action.

Owner-builder numbers continue to decline

Owner Builder permit numbers have been steadily decreasing over the past three to four years due to the economic climate and owners electing to engage a contractor to build their homes. The BSA approved 736 permits in the period of 1 July to 30 November 2013, compared to 1,623 in 2012-13.

Owners of land are required to obtain an Owner Builder permit where the value of the building work they wish to construct exceeds $11,000.

Insurance For the period 1 July to 30 November 2013 QBCC processed 36,804 policies under the Queensland Home Warranty Scheme. Gross premium receipts for 1 July 2013 to 30 November 2013 totalled $35,124,617.

The breakdown of residential construction work carried out in Queensland was 67 per cent alterations and additions and 33 per cent new home construction.

Table 5 – Policies written and gross premiums received

Year Policies written Gross premiums received

2010-2011 73,603 $63,400,000

2011-2012 73,256 $67,000,000

2012-2013 74,826 $70,270,603

1/07-30/11/2013 36,804 $35,124,167

615 claims were made by consumers against the Home Warranty Scheme and 1,326 claim approvals were processed for a total value of $17.56 million.

Table 6– Claims by approval type

Year Non-completion Defects Subsidence

Approval numbers $M

Approval numbers $M

Approval numbers $M

1/07-30/11/13 200 5.5 745 8.36 381 3.69

2012-13 339 7.16 1783 27.06 890 10.56

2011-12 421 11.15 1509 17.4 894 9.07

2010-11 521 13.8 1500 14.6 894 10.8

Complaints The BSA mediated 26.25 per cent of complaints without the need for a site inspection.

Table 7 – Complaints received and policies written

Table 8 – Complaints received and number of Directions to Rectify issued

Year Complaints received Directions issued

01/07 – 30/11/2013 1,714 321

2012-13 4,843 865

2011-12 4,726 896

2010-11 5,625 852

Proactive compliance The BSA’s Compliance team employs a comprehensive approach to regulation, with three sub -divisions:

Contractor Support Unit Financial Regulation Unit Investigations Unit.

These units undertake a range of activities to help ensure compliance occurs within the building industry.

2012-13 2011-12 2010-11 2009-10

Policies written 74,826 73,603 73,603 87,582

Complaints received 4,843 4,726 5,625 6,113

Support offered to contractors in financial distress The BSA’s Contractor Support Unit monitors licensees who are or may be in financial distress and in appropriate situations will afford the licensee a reasonable opportunity to save their business and demonstrate that they meet the financial requirements to hold a BSA licence.

The Contractor Support Unit conducted 194 financial audits of licensees in the 2013-2014 financial year to November 2013 (2012-2013: 529).

Regulating Financial Requirements for Licensing (FRL) The Financial Regulation Unit manages breaches of FRL by individuals or companies, including breaches of allowable annual turnover.

The unit conducted 441 audits of licensees suspected of exceeding their financial capacity (2012-13: 834) to ensure their financial viability.

Table 9 – Complaints received and number of Directions to Rectify issued

* Figure was not available at the time of printing

In the 2013-2014 financial year to November 2013, 97 individuals and 52 companies were excluded from holding a BSA contractor or nominee-supervisor licence for five years due to their involvement in a financial failure (2012-2013: 283 individuals and 139 companies).

Permanent exclusion from holding a BSA-contractor or nominee-supervisor licence was imposed on 44 individuals for their involvement in a second financial failure (2012-13: 123).

1 /07/13 - 30/11/13

12/13 11/12 10/11

Financial audits 194 529 451 512

Suspensions for non-compliance with audit 17 61 44 44

Suspensions for not meeting FRL resulting from financial audit 21 11 10 48

Cancellations for non-compliance with audit 5 53 31 30

Cancellations for not meeting FRL resulting from financial audit 22 16 40 50

Immediate suspension due to insolvent trading or other serious risk. * 8 10 11

Audits for suspected breach of turnover limit 441 834 963 898

Company licences cancelled due to exclusion 52 139 99 88

Individual licences cancelled due to exclusion 97 283 311 264

Permanent exclusions 44 123 138 101

The BSA believes the numbers of exclusions is indicative of insufficient business capital and a lack of planning and business management skills by contractors who have been unprepared for the sustained contraction in the building and construction marketplace.

Judgment debt policy Licensed contractors who do not pay judgment debts risk having their licence suspended or cancelled for failure to meet the FRL. This potential penalty is a strong incentive to licensees to pay debts.

Table 10 – Judgment debt outcomes

1 July 2013 - 30 Nov 2013

12/13

Judgment debts investigated 255 190

Suspensions for not meeting FRL resulting from an unsatisfied judgment debt 14 8

Cancellations for not meeting FRL resulting from an unsatisfied judgment debt

6 4

Judgment debts paid in full 32 20

Repayment arrangements entered into 3 3

Unlicensed contracting and contractual regulation

The Investigations Unit supports a fair playing field for licensees in Queensland by identifying and penalising unlawful operators.

The BSA investigates complaints made by consumers and BSA-licensed contractors. In the 2013-14 financial year to November, 222 investigations were undertaken into allegations of unlicensed contracting, compared to 522 in the 2012-13 financial year.

Licence audits During the 2013-14 financial year to November the BSA conducted the first of two licensing audits carried out each year at randomly selected sites. During this audit inspectors targeted their efforts towards remote areas and as a result detected a higher rate of unlicensed activity.

Table 11 – Unlicensed contractors

1 July 2013 - 30 Nov 2013

12/13 11/12 10/11

Site interviews conducted 3452 6972 2229 7222

Suspected unlicensed contractors detected 47 62 57 64

Unlicensed rate in the industry 1.36% 0.9% 2.56% 0.9%

Disaster recovery assessments - 628 20,686 -

In the 2013-14, financial year to November, 3452 contractors were interviewed at 1668 building sites. Forty-seven suspected unlicensed contractors were detected (2012-13: 62 ULCs and 6972 site interviews).

Contractor compliance with legislation investigated The Investigations Unit examines suspected breaches, and when required, takes appropriate action in the circumstances, including issuing infringement notices.

Where the BSA has reasonable grounds for concern that a licensee has not been complying with the requirements of the QBSA Act or DBCA, it may conduct an audit requiring the licensee to produce all contracts for review by the BSA.

Demerit points issued to contractors for breaches of legislation In the 2013-14 financial year to November, 182 contractors had demerit points listed against their licence for breaches of the QBSA Act or DBCA (2012-13: 372).

Table 12 – Demerit points issued

Activity 1 July 2013 - 30 Nov 2013

12-13 11/12 10-11

Demerit points issued for unsatisfied judgment debts 270 730 710 450

Demerit points issued for contractual offences 152 452 464 364

Demerit points issued for failure to rectify 216 430 504 648

Demerit points issued for failing to pay Queensland Home Warranty Scheme premium

74 206 154 116

Demerit points issued for carrying out work without a nominee 2 4 2 0

Contractors issued demerit points 182 372 399 335

Total demerit points issued 712 1822 1834 1,578

Table 13 – Contractual investigations

Activity

01/07/13 - 30 /11/13

12-13 11-12 10-11

DBCA QBSA Part 4A

DBCA QBSA Part 4A

DBCA QBSA Part 4A

DBCA QBSA Part 4A

Audits 2 0 5 0 2 0 1 2

Investigations 120 9 310 38 312 22 325 48

Contractors issued with a warning notice as a result of an audit or investigation

11 0 25 0 23 0 25 0

Number of contractors issued with infringement notices for breaches

57 1 163 21 170 14 137 14

Number of infringement notices issued

95 1 297 25 401 18 304 15

QCAT affirms majority of BSA decisions

Of the decisions of the Authority referred to the Tribunal for review in 2012-2013, 83.42 per cent were determined in the BSA’s favour. The BSA also undertook prosecutions and disciplinary proceedings for breaches of legislation; BSA was successful in 100% of these proceedings, resulting in the awarding of a total of $196 200 in penalties and fines payable to the BSA.

Debt recovery The BSA’s Debt Recovery team recovered $1.349 million from 1 July to 30 November 2013. $1.299 million was recovered for the Queensland Home Warranty Scheme, about 2.5 per cent more than in the same period in the previous financial year.

The number of claims received for recovery decreased by 6.5 per cent in the period 1 July to 30 November 2013, from the same period in the previous financial year. The value of claims paid also decreased by 6.2 per cent in this time.

There was a 40 per cent increase in the recovery of QCAT penalties, with $32,633.32 recovered from July to November.

Magistrates Court penalties decreased by 37 per cent during the above period. There were 14 debtors outsourced to the BSA’s Debt Recovery Legal Panel during this period as well.

Recovery of Magistrates Court fines is the responsibility of the State Penalties Enforcement Registry (SPER).

Our people BSA’s workforce profile The BSA employed 332 active FTE (full-time equivalent) staff at November 30, 2013 (30 June 2013: 325) in a variety of professional, technical and administrative roles. This increase in active FTE is a result of increasing the number of front line positions.

The BSA’s staff separation rate was 5.82 per cent (30 June 2013 9.39 per cent) and no redundancy payments were made from 30 June 2013 to 30 November 2013. Table 14 – Workforce profile as at 30 November 2013

EEO Nov-13 2012-13 2011-12 2010-11

Women 205 174 194 208

Aboriginal and Torres Strait Islander 5 6 7 7

People with a disability 25 27 32 30

Non English Speaking background 46 40 56 70

Table 15 – Workforce diversity as at 30 November 2013 (based on substantive position)

Level Male Female Total EEO Target groups

Administrative A01-A03 31 88 119 32

Administrative A04-A05 70 86 156 33

Middle Management A06-A08 53 31 84 11

Executive Management S0-SES 5 0 5 0

% of total staff 44% 56% 100% 21%

Code of Conduct A Code of Conduct has always been implemented in accordance with the ethics principles outlined in the Public Sector Ethics Act 1994, supporting the BSA’s pursuit for consistent standards and approaches in interactions with stakeholders.

The code is communicated as part of the corporate induction program and through periodic staff training which applied to all BSA staff, including board members. Code of Conduct training was assimilated via mandatory online programs, ensuring consistency and complete participation.

Providing the ethical framework for behaviour, actions and decisions within the BSA the code played an integral role in supporting the BSA values of innovation and continual improvement, consultation and collaboration, accountability, respect and trust and energy and fun

BSA follows Equal Employment Opportunity Management Plan The Equal Employment Opportunity Management Plan outlines the BSA’s approach to ensuring all BSA employees work in an environment committed to principles of Equal Employment Opportunity (EEO), anti-harassment and anti-discrimination.

All staff, including new employees completed the initial EEO and workplace harassment online training. A refresher is undertaken every two years.

Importance placed on Workplace Health and Safety The BSA’s continued commitment to Workplace Health and Safety has included preventative measures and the promotion of safe and healthy work practices. The BSA maintains an active Workplace Health and Safety Committee which meets quarterly and has 4 Workplace Health and Safety Representatives that were nominated by the staff.

This year the Corporate Health Strategy included promoting PPC services and fact sheets. Information was also developed and distributed on implementation of the Work Health and Safety Act 2011 and risk management. A compulsory Fire Evacuation online training course was completed by all staff.

Queensland Carers (Recognition) Act 2008

The BSA always fully supported the principles and aims of the Queensland Carers (Recognition) Act 2008 and providing flexible working arrangements to assist carers to meet their commitments, including flexible hours and part-time work arrangements.

The organisation was committed to ensuring that all staff induction programs included training on the principles of the Carers Charter and that carers and their representative bodies, where appropriate, were consulted on any planning or policy decision that affected them.

Staff encouraged work, life and family balance The BSA encouraged staff to achieve a balance between work and family responsibilities. The BSA had a range of options available to help staff achieve a good work-life balance, such as variable working hours and part-time opportunities, employing 46 part-time staff.

Many incentives were employed to retain staff, including access to variable working hours, a fun and energetic culture and financial support for further study and professional development opportunities.

Moving forward

The BSA continued to support an ongoing, progressive learning and development program to benefit staff and enhance their ability to service the community.

To prepare managers and team leaders to address changes from the transition to from BSA to QBCC, Change Management training was delivered. Topics included “Understanding and managing my own responses to change” and “Understanding and leading others through Change”.

PROSCI Change Management accreditation was attended by six staff providing capacity across the organisation to manage the transition of projects.

All staff were included in operational planning workshops to identify areas for organisational improvement and participated in the development of the operational plans.

Training for building inspectors has been a focus for the BSA with a Building Inspector Training Conference held on in October 2013. Inspector training will continue to be of importance into the future following the transition to the new entity QBCC. A comprehensive internally delivered training program has been initiated which is aligned to nationally recognised qualifications (Certificate IV in Government (Investigations)) and includes partnering with a Registered Training Organisation (RTO) for assessment purposes.

Another important future-planning strategy was the training and development framework produced for BUILD, an integral computer system within the BSA that manages the core functions of contractor licensing, resolutions management, home warranty, compliance and all other operational processes. This has included systematic updates, workshops, workspace modeling and feedback.

Finance Financial overview The BSA returned a surplus of $12.139 million and a balance sheet equity position of $66.340 million.

The Statement of Comprehensive Income relative to Budget shows an outcome which has yielded an unanticipated five month result in three main areas of BSA’s operations relative to budget.

These are:

Insurance Premiums Insurance Claims Investment Revenue Insurance premiums

The relationship BSA has with the re-insurance aspects of its insurance business affects the net financial outcomes in relation to both Premium Revenue and Claims Approved.

Insurance premiums received are dispersed according to an arrangement BSA has with re-insurance providers (currently 70% Reinsurer 30% BSA after Administration Fees are deducted.)

Therefore: Actual Budget Variance Variance %

$m $m $m %

Premium Revenue 27.109 24.761 2.348 9.48%

Administration Fees Retained 6.217 4.757 1.460 30.69%

Subtotal 33.326 29.518 3.808 12.90%

Less outward reinsurance premium 19.878 18.235 1.643 9.01%

Net Result for Premiums collected 13.448 11.283 2.165 19.19%

Whilst most of the result can be attributed to annual premium increases and increases in cost of housing construction generally which determines premium levels, it is pleasing to note that a the remainder indicates a greater than anticipated revival in the domestic building construction industry in Queensland.

Insurance claims

Similarly, the reinsurance arrangement extends to insurance claims approved.

Actual Budget Variance Variance %

$m $m $m %

Claims approved and Charged 17.164 26.590 (9.426) (35.45%)

Less Reinsurance and other recoveries 11.219 17.891 (6.672) (37.29%)

Net Result for Insurance Claims 5.945 8.699 (2.754) (31.66%)

Is should be noted that each of the elements are considerably under budget due to the negative cost this year of providing for future claims as determined by BSA’s appointed actuary. A reduction of $406,071 in this provision against a budget of $9.5 million increase has reduced the net cost of future claims provision from a budget of $3.8 million to a negative $499,085.

Investment revenue

Has also exceeded expectations due to a recovery in the investment market segment where BSA retains the majority of its invested funds to meet the longer term requirements of future insurance claims. Queensland Investment Corporation’s Growth Fund returned 8.96% for the five months year to date which if annualised equates to 19.56% .The expected annual rate of return used for budget purposes was 9.4% which equates to a year to date return of 3.92%. The compounding effect of the higher returns added to the investment balance on a monthly basis has also assisted to produce a higher revenue.

Financial progress

At the segmented level (Note 25) the General Fund returned a surplus of $2.049 million increasing net assets to $27.881million. The Insurance Fund recorded a surplus of $10.090 million increasing net assets to $38.459 million.

Licensing revenue (Note 2) was $155,000 over budget for the 5 months of operation.

Net premium revenue (Note 3.1) i.e. Premiums received and adjusted by recognition premium revenue from previous years less premium revenue to be recognised in future years exceeded budget by $2.348 million (9.48%) as shown and explained above

Investment revenue (Note 4) was $4.663 million over budget. This result has been discussed in the budget outcomes above. It is mentioned BSA does spread investment risk by retaining funds in cash based investments which returned lower yields due to downward pressure on interest rates generally.

Other revenue (note 5) exceeded budget by $100,000 and comprises various fines, penalties, and other charges.

BSA’s balance sheet reflects the Authority’s sound financial position. All current and future liabilities are fully funded via invested funds. No going concern issues due to financial considerations were identified during the audit of BSA’s Annual Financial Statements based on current operations.

All of the Assets and Liabilities have passed to the Queensland Building and Construction Commission and will represent the opening balances of the Commission as at 1 December 2013.

Statements of Comprehensive Income

Statements of Financial Position

Statements of Cash Flows

Statements of Changes in Equity

Notes forming part of the financial statements

Certificate of the Queensland Building Services Authority

Independent Auditor’s Report