Brumby inspires Mandatory Madness

OPINION: THIRD party, Workers-Comp, and Builders-Warranty form John Brumby’s mandatory social justice trio.

Builders Warranty Insurance was the only policy provided and managed by the private insurance industry while the other two policies are underwritten by Government but delivered and managed by the private insurers on a fee for service. That is until the private insurers withdrew from the builders market and the Brumby Government took over the underwriting in May this year we believe.

We never hear of the first two policies unalike Builders Warranty that has constantly been at the forefront of consumer, builder, and media criticism since inception 8 years ago, and has attracted some 38 public inquires into its continually questioned operation.

Consumers who build or renovate a home and undertake the greatest financial commitment of a lifetime are to be the intended recipients of this builders Warranty social policy to protect them for 7 years from a builders failure to complete or deliver a defect free home.

This appears on the surface to be a commendable and necessary social policy that building consumers can draw comfort from and proceed with confidence however when something goes wrong they find the warranty insurance is non existent unless the builder is dead, insolvent or disappeared. This is known as Last resort Insurance. An illogical and useless product to most.

Third-Party and Workers-Comp are accepted by the wider community who all pay the same rates for it and both deliver the intended purpose of their being unalike Builders Warranty that is continually accused by all of being a scam and propped up by questionable conduct and alleged probity issues while premiums are supposedly risk rated, arbitrary, and secretive.

So why has the Labor Government supported, embraced, and now taken over such a questionable scheme/product without undertaking a complete analysis of its performance to ensure it is meeting its stated objective.

Duty of care and due diligence are demanded of Governments in these circumstances surrounding a public policy but in this instance those responsibilities have been ignored as clearly determined and established by the current Upper House Inquiry.

The privatised Insurance industry has formally withdrawn from this market completely and they say its for good reason and you can take your pick, one because its not profitable but the preferred reason is because of the severe brand damage they have suffered through the questionable warranty product.

So the insurance industry don’t want it and neither do the Consumer or the Builder need or want the Last Resort product but both want and are prepared to fund an appropriate regime based on the principles of the long proven, transparent, and self funding Queensland model.

So if the privatised insurance providers don’t want Last Resort Insurance and the supposed beneficiaries don’t want it, who does, and why?

The Labor Government can see many much needed dollars (money for nothing) in this election year while hiding behind the necessity of providing consumer protection even though it is only illusionary

HIA the self proclaimed peak industry body love it for the dollar income and the sway it delivers them over the industry while they their excuse their role because it is a Government requirement to provide consumer protection.

MBAV love it for the commissions and move between support of it when they have the product to sell to rejection of it when they don’t have access to the product.

So it all comes down to money yet again, follow the money and you get to the problem and reason:

· Mr Brumby must account for taking over the failed Last Resort Warranty Insurance Regime that remains precisely the same and yet suggesting it will now provide certainty for builder’s and enhance the consumer protection

· Mr Brumby knows full well there is no change to the product and no enhancement for either party

· Mr Brumby must account for why he would take over a scheme that nobody wants and not undertake due diligence in regard to its performance on behalf of the Victorian people

· Mr Brumby rejected the Stateline invitation recently when asked to support his move to take over the Builders Warranty

· Builders and consumers see this move as a pure money grab under the guise of consumer protection

· Vic Builders are incensed the Vic building industry has bailed out the HIH collapse through a levy that has cost around $1 billion so far and counting whereas in NSW the insurance industry itself paid for its own failure through a tax that has cost $70 million a year and finalise in 2011

· HIA must account for their role of strident support of a failed system that builders clearly do not want

· HIA must produce verifiable date to prove their membership supports their policy of Last Resort Warranty Insurance

· HIA must account for the doubling of their annual income to $70 million from a static position in 2000-02

· HIA must account for the annual payment of license fees from HIAIS to HIA

· HIA must account for the HIAIS Directors fees being paid annually to HIA Directors

· HIA must account for all the HIA associated companies being in the private name of Ron Silberberg

· HIA must account for the intimidation against and non representation of their members wishes

· MBAV must account for their continual reversal of their policy on BWI over the past 8 years

· MBAV must provide verifiable data to prove their membership supports the policy of Last Resort Warranty insurance

· MBAV must publicly account for their warranty Insurance commission income

· Insurance commissions accounted for the majority of their income when transparency applied in 2000-2002

Housing affordability is a key issue and the failed warranty arrangements have cost Victoria some $2 billion in levy and premium fees since the criminal collapse of HIH without any verifiable benefit to the industry or their consumers/

However the Opposition also rejected the Stateline request to appear which many say is bewildering considering the Opposition would have consumers and builders believe they have their support but in the absence of a policy on the matter it appears talk is cheap and the dollar lure of last resort Warranty Insurance regime may be playing a role.

The Brumby Government has failed to achieve any acceptable level of consumer protection for the building industry and have continually endeavored to cover up and ridicule those who dare critisise the failure while collecting considerable fees from a scheme of ill repute.

They now intend to take the large slice of the Last Resort pie by taking the full premiums so we end up with the same stable but different horse.

But they also know this move to underwriting is unsustainable in the long term but immensely profitable in the short term when a November election is looming.

By Phil Dwyer, president of Builders Collective.*

Australian Property Journal