This article is from the Australian Property Journal archive
OPINION: AFTER more than 30 State based reviews and inquiries without result into the vexed issue Builders Warranty Insurance, the Australian Senate with all party support is finally listening to the builders and consumers of the national building industry.
The Economics Committee of the Senate is inquiring into “Australia’s Mandatory Last Resort Home Warranty Insurance Scheme” and at their first public hearing in Canberra on the 10th of April 2008 they heard from the Builders Collective of Australia (BCA), The Queensland Building Services Authority (BSA) and the Victorian Consumer Action Law Centre (CALC).
The BCA submitted extremely powerful evidence condemning the current arrangements and the purveyors of the warranty product for the detriment it inflicted on both the builders and their clients being the consumers of the building industry. They also presented an alternative regime based on the Queensland model that they say will provide the appropriate consumer protection and industry management required without impost to the taxpayer.
The CALC supported their views as they also condemned the current arrangements as just not working as they were unaware of a successful claim under Last Resort and for a consumer to pursue a warranty claim the legal costs would in fact outweigh any potential benefit received by at least double, therefore making the process commercially unviable, but many consumers only find this circumstance exists after embarking on this fruitless quest.
The Consumer Action Law Centre advocate also expressed the view a model based on the Qld scheme would provide appropriate consumer protection and industry management for the National Industry.
The BSA then presented the virtues of their holistic regime that incorporated all 5 facets of the industry management which include warranty insurance on a First Resort basis and the comments from the committee Senators on this regime were expressed as possibly to good to be true.
Examining the 61 submissions received by the Senate Committee to date it would be reasonable to suggest that Last Resort Insurance is a complete failure.
The only one submission in favour was the Housing Industry Association (HIA) whose views are in direct conflict with the builders of the industry that you would expect to be their members as they strongly support the current arrangements as providing an acceptable benefit to consumers and appropriate Industry management.
Consumer submissions are specifically critical of the role of the trade associations directly accusing them of a conflict of interest, as they, together with Vero-Suncorp are the dominant beneficiaries of the estimated $2 billion in Last Resort Warranty Insurance premiums since its inception.
Clearly, the Senate is gravely concerned with the initial submissions and evidence received, and on face value appear to have adopted a preliminary position that the scheme is far from satisfactory in terms of consumer protection and equally are encouraged with the virtues of the Queensland scheme as an alternative scheme.
Victorian Senator, Gavin Marshall: “There is a strong augment being put forward for a national approach.”
As the number of prominent politicians views become more aligned with the position of the Builders Collective calls for the establishment of a Royal Commission have become louder and the more likely we are to see such a Commission established which will find why the intended benefactors of Builders Warranty have been misplaced with alternate beneficiaries and was that concept by design at the outset.
Australian Property Journal