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Construction costs for apartments and commercial buildings could soar in Victoria if the federal government refuses to help fund the removal of dangerous, flammable cladding.

It comes after Victorian Labor Premier Daniel Andrews’ plan for a $600 million program to make safe 500 high-risk buildings covered in the product.

The state wants the Commonwealth to pitch in half the money, but federal Treasurer Josh Frydenberg said it’s not Canberra’s problem.

“We’re not picking up the bill for what is a state responsibility,” he said.

“So, I say to the states, look in your own backyard, make sure it’s fixed.”

If the federal government won’t help Victoria, the state plans to make up the shortfall by increasing the building permit levy for high-rise developments worth more than $800,000, a move that’s raised concern by industry experts.

The government should not burden future home owners with the costs by introducing a levy, Housing Industry Association Victoria’s chief executive Fiona Nield said.

“The initial contribution from government to kick start the works is welcomed, the buildings requiring rectification have been constructed over many years and it may be more equitable if government was to fund all remediation works rather than place these costs on future new home owners,” she said.

Calculations show the changes would add about $2200 to the cost of a $610,000 apartment currently under construction, but low-rise developments, such as townhouses, would be exempt from the levy.

Melbourne resident Jenny Opie, whose home is considered dangerous due to flammable cladding, said the planning minister called her directly to convey the news.

“After 18 months of really going through a nightmare, that’s what it’s been like, we have at long last received good news. So we are very, very happy,” she told the Nine Network on Wednesday.

She said knowing her home was a potential trap had been “really scary”.

“We have some people in our buildings with young children. They have been very, very nervous every night when their children are put to bed, wondering what’s going to happen, if they’re going to be safe in the morning. It has been a really, really stressful time for us,” she said.

“But look, it’s not only our building. There is (sic) thousands of other people out there in a similar situation.”