The new Owners’ Corporation Bill in Parliament – the good, the bad and the ugly

True to form, and six months after the Expert Panel delivered its confidential bill to the Labor Government without so much of a peep from Consumer Affairs in relation to any feedback or further consultation …

The government then went into overdrive, by releasing a self-congratulatory press release, a formal “response” to the Expert Panel report, and introduced a draft Bill to the Lower House, which was then read a first and second time, all in the space of two days.

Now we know that the Expert Panel recommended 51 amendments to the current legislation.

The Labor Government decided to accept 17 recommendations in full, three recommendations in part, and 26 recommendations supported in principle.

The current Bill however, which is due to be introduced to the Upper House when Parliament next sits in late July, is primarily focused only on one aspect of the proposed reforms, which is about ensuring that lot owners enduring financial hardship are given some relief in terms of making payments on their fees and levies.

What we know from the draft Bill is that there will be a standard form which any lot owner can fill out and send to the owners’ corporation (OC) to request a payment plan for their quarterly fees and levies. Information about the standard form and about the process for implementing a payment plan must be published and provided to owners together with the fee notices each quarter.

The Bill seeks to set out certain prescribed and mandatory instances where an OC will not be permitted to refuse a lot owner’s proposed payment plan, where the lot owner is an owner-occupier.

What that means is that it is about to get very hard (almost impossible) for OCs to refuse a payment plan from an owner-occupier. Furthermore, no penalty interest or debt recovery proceedings can be imposed as long as the payment plan is on foot.

And lot owners will still be eligible to sit on committees and vote at General Meetings if the Bill goes through. All of which will further disincentivise lot owners (and some committee members) to pay their fees on time.

What perhaps the current Labor Government might not appreciate is that it is all well and good to grant cost of living relief to some lot owners, but someone has to pay the piper!

Money doesn’t grow on trees, and there has been inadequate analysis by the government as to who exactly is going to be paying the ongoing bills of an OC. For some buildings, the annual fees are over $1million per year. If perhaps one out 10 owners decide to defer paying their quarterly levies on time, then very quickly the OC is going to find itself with insufficient funds to pay its bills.

Almost every OC in a medium-large building will now have to impose annual fees 10 per cent in excess of the current budget, in order to ensure that sufficient cashflow protection is in place.

The upshot of this is that in a current cost of living crisis, the cost of living in an OC just went up by 10 per cent, thanks to a policy decision by the government that was supposed to deliver cost of living relief. Go figure! •