The Victorian Government has proposed stiffer laws that it says would clamp down on so-called “phoenix activity” – a term that refers to builders who declare bankruptcy to avoid sanctions for shoddy works before resurfacing as a new business.

Expanded powers will be given to the Victorian Building Authority (VBA) to investigate such actions under the Building and Environment Protection Legislation Amendment Bill introduced in parliament last week.

If the bill is passed, the VBA would be able to reject registration applications from builders who are suspected to have engaged in such acts over the previous two years. The same goes for renewal of registration.

“The bill strengthens the fit and proper person tests required for practitioner registration by incorporating financial probity requirements,” the Victorian Government says in a statement. “This will allow greater scrutiny of company directors, secretaries and influential persons as part of the registration process.”

The Insurance Council of Australia “supports reforms that offer greater protections to building and apartment owners,” spokesman Campbell Fuller told insuranceNEWS.com.au.

But Builders Collective President Phil Dwyer describes the announcement as “a bit of a smokescreen to make the Government look good”.

“[The VBA] has always had that power through the registration of builders because you can’t have a phoenix company without a registered builder,” he told insuranceNEWS.com.au.

“So there’s always been the registered builder there in all cases, and the VBA has the power to take any registered builder to task. It hasn’t been acted on in the past. If they say they haven’t had the power, what has been the point of registration?”

In a separate statement, the VBA has vowed to press on with efforts to hold a builder accountable for a residential complex that was damaged by fire in 2017. A faulty air-conditioning unit sparked the fire at Anstey Square in the Melbourne suburb of Brunswick, which was found to have non-compliant cladding.

Michael Argyrou, of Hickory Group, filed a motion in the Supreme Court of Victoria to stop the VBA proceeding with disciplinary action against him.

“It is extraordinary to have a building practitioner claiming that he cannot and should not be disciplined by the industry regulator,” VBA CEO Sue Eddy said.

“No one is above the law, and that includes Mr Argyrou.”