Senator Christine Milne in support of the Australian domestic building industry put forward this motion to be debated in the Senate on the next sitting day

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
JOURNALS OF THE SENATE
THURSDAY, 25 FEBRUARY 2010

 Notice of motion: Senator Milne: To move on the next day of sitting—That the Senate—

      (a) notes:

 (i) the Federal Government’s aim to implement through the Council of Australian Governments a seamless economy,

 (ii) that the Australian building industry is facing a crisis because of the impending withdrawal of four insurers from the home builders warranty insurance market and the requirement by all state governments, except Tasmania, that this insurance be mandatory,

 (iii) that the remaining insurers are unlikely to be able to meet the market demand post the end of the 2009-10 financial year with the result that many builders will be forced out of business or forced to work illegally,

 iv) the failure of the New South Wales, Victorian, South Australian, and Western Australian state governments to address the ongoing performance problems with this insurance product in spite of 56 inquiries and failed interventions, and

 (v) the need for nationally consistent laws that protect consumers and builders alike; and

       (b) calls on the Government to:

               (i) immediately intervene with the states to remove the mandatory requirement for this insurance product as a short-term measure,
                   and
               (ii) facilitate the development of a national regime that gives genuine protection to consumers and the building industry.

Property Review

NSW dumps junk insurance

Monday November 9th, 2009

GOING, going... well almost gone. Possibly the biggest fraud served upon the Australian public... home warranty insurance is all but on the way out. The door has been opened.. and its shuffling sinisterly out the door.

The New South Wales Government is finally taking steps to fix the plight builders warranty insurance, which has defrauded builders and consumers in the state. The move follows immense pressure from builders and consumers who have suffered under the scheme.

State governments, in particular the NSW and Victoria governments, the HIA and MBAV have all been major supporters and beneficiaries of the schemes through kickbacks from the warranties, which have been described as “worthless’ by Choice Magazine.

Even the Productivity Commission has called on governments to take early action to provide better and uniform protection with guaranteed access to alternative dispute and resolution whilst providing a greater scope to de-resister builders who do not meet appropriate performance standards, and revamp the scheme to ensure it delivers genuine value to building consumers and that they understand what it may deliver to them.

Only Queensland and Tasmania have scrapped the last resort scheme which only covers consumers if the builder dies, disappears or becomes insolvent – the latter process taking years through the Court system.

Yesterday, Minister for Fair Trading Virginia Judge announced the NSW Government will underwrite all home owner warranty policies from July 01 2010.

The Builders Collective of Australia president Phil Dwyer, who has led the fight to get rid of the scheme, yesterday welcomed the move.

“The BCA welcomes the announcement by the NSW Government to take carriage of the Builders Warranty Scheme as it demonstrates that our long held position has been vindicated and we also welcome and embrace the opportunity to work with the Government to achieve and ensure industry management and consumer protection measures are appropriate and work for the primary stakeholders being the consumers and builders who are the parties to all building contracts.

“We are all aware the devil is in the detail and that detail is unknown at this time however the NSW Government has recognised that private insurers who are accountable to shareholders do not have the capacity to provide adequate consumer protection to the purchasers of new homes or renovations under the banner of Last Resort,” he added.

The HIA’s NSW executive director Graham Wolfe said it is critical for example that the new scheme maintains the current distribution arrangements.

“It is also important that the new scheme does not unintentionally penalise good builders who operate sound and well capitalised businesses.

“We must not lose sight of the purpose of the scheme. Consumer protection is not enhanced by exposing consumers to unsustainable businesses,” Wolfe said. “The next 12 – 18 months will be a critical time for residential building. It’s extremely difficult for small and medium building and contracting businesses to keep pace with the constant flow of legislative change. The next 18 months will be very testing.”

Dwyer said the recent release of Victorian Essential Services Commission showed only some 2.5% of claims (273) were accepted over the past six years compared to Queensland’s First Resort insurance regime that provided comfort to 9,552 consumers over the same period and represented 98.5% acceptance of all claims.

“This is the first official comparative data that showed the Last Resort warranty schemes as a scam.

“Private vested interest including private insurers and or brokers such as trade associations have no place in the consumer protection regime or the industry management and the Builders Collective will continue working to rid our industry of that vested interest the same as the Queensland regime where it does not exist.

“We look forward to achieving our long held goals and the Tasmanian decision of last July to dump privatised warranty has seen that State go forward in leaps and bounds as no warranty insurance has seen greater benefits for both builders and consumers and the NSW announcement today leads the way for the nation to follow,” Dwyer concluded.

PropertyReview.com.au