This article is from the Australian Property Journal archive
OPINION: THE Baillieu/Ryan Victorian coalition came to power on a wave of discontent. The previous Brumby government ignored constituents and treated them with contempt when it suited them and nothing is more obvious than the blatant disrespect they showed for the building industry and its consumer protection regime.
Builders Warranty Insurance (BWI) as it is known is an insidious scam that is an affront to democracy and decency and put together by so few who were able to take advantage of events being the HIH criminal collapse and the tragedy of 9/11 to benefit their own self interest and use consumer protection as the vehicle for that self interest.
The transcript of a press conference of the 29th September 2003 held by the Housing Industry Association, Royal Sun Alliance now Vero and the Victorian Government states these precise facts by the self admission of Dr Silberberg and John Gaffney of the HIA together with Nick Kirk of Vero and all confirmed by John lenders of the Brumby government.
The implementation of this scam on the 1st July 2002 has seen millions of industry dollars taken by vested interests under the illusion of consumer protection and maintained by the fear factor of what if a big builder failed then we would need this regime to protect the vulnerable consumer. After 8 years no big builder has failed in Victoria and only one in NSW where the same scheme exists but those failed contracts were sold to an alternate builder and the BWI regime was not called on.
In the meantime, the consumers who needed this protection has not been able to access it and has suffered in the extreme in trying to access the illusion through being put on the legal merry-go-round for years. Builders on the other hand go through hoops as the criteria to go work through this insidious mandatory scheme forces them to pledge their assets to an insurer to satisfy any future consumer claim as well as pay the overpriced premium.
The effect on the building industry is dramatic and compounding as not only does the cost being the premium followed by the accountancy and time costs for the builder add to housing affordability it impacts on the builders ability to operate at a profitable level and removes his democratic right as the insurer only allows him annual tenure and restricts his annual turnover and size of project he can undertake.
Consumer Affairs Victoria (CAV) state this regime is a builders barrier to entry to the compliant building industry and the warranty insurance removal would benefit the consumer in terms of protection as the statuary warranties within the building act would benefit the consumer as well as deal with recalcitrant builder who can ignore his responsibilities and this view is supported by the Small Business Commissioner (SBC) who adds his interest is the unfair market practices of the insurers.
The Builders Collective as long time advocates for the removal of the insurance scam shares the views of CAV and the SBC.
We believe the industry is held back through this scheme as builders don’t have confidence in employing apprentices as they only have annual tenure in their profession and cites the Tasmanian experience whereby the same regime was removed completely two and a half years ago to the benefit of the consumer and its industry and has seen a 17.5 % increase in building activity according to ABS data while the rest of the nation has remained static.
The national building industry wants appropriate consumer protection and industry management and is prepared to support it entirely but will no longer tolerate the abuse perpetrated by so few for selfish self interest and the major impediment for reform over past years has been the building industry peak bodies as both HIA and MBA still maintain support the current arrangements of Last Resort Warranty Insurance.
We further call on the government to implement a Royal Commission into this regime, who structured it in such a way that is an affront to all and detriment to so many.
The Coalition have made their position on BWI very clear many times over past years as Ted Baillieu publicly announced at a failed building site in Port Melbourne one of the first acts when they achieve Government will be to remove BWI and Matthew Guy the now Planning Minister who has responsibility for the building industry stated during the recent Upper House Inquiry it is gone for all money while the Nationals have continually supported its removal.
Besides the Coalition support Small Business, democracy, and fair play accordingly we can now look forward to the complete removal of the BWI scheme after eight long years, and thousands of consumers and builders being adversely impacted on when a consumer protection regime such as one put in place to protect a consumers biggest investment should support all players.
The Baillieu/Ryan undertakings will see the removal of the BWI at a time when the industry is in national decline and will assist to support it as builders will be able to undertake works they are licenced to commit to and employ staff and apprentices without the draconian restraints of builders warranty insurance that has done so much damage to the building industry its builders and consumers over the past eight years.
The removal of the BWI scheme/scam by the Baillieu/Ryan Government will become the most historical event in the history of the Victorian building industry as was heralded in the Tasmanian press when it was removed in July 2008.
By Phil Dwyer, National President of the Builders Collective of Australia.*
