[Greens-Media] "Junk" Builders' Insurance to stay: Government report ignores evidence

[Hollo, Tim (Sen C. Milne)]

"Junk" Builders' Insurance to stay: Government report ignores evidence

Canberra, Thursday 13 November 2008

Mandatory Home Builders' Warranty Insurance is junk insurance and should
be replaced by a national system based on the Queensland model, the
Australian Greens said today.

A Senate Inquiry established by Senator Milne into this insurance scheme
published its findings today, with the Government and Opposition
inexplicably supporting continuation of the existing scheme. Senator
Milne tabled a dissenting report recommending significant changes.

"The mandatory Builders' Warranty Insurance system is fundamentally
flawed and must be completely overhauled to provide real protection for
both builders and consumers," said Australian Greens Deputy Leader,
Senator Christine Milne.

"I simply cannot explain why the Government and Opposition decided to
ignore the overwhelming evidence and recommend only cosmetic changes to
the system.

"The vast majority of submissions complained about the system.
Throughout the hearings, nobody said they would take out the insurance
if it wasn't mandatory. Even the HIA admitted that it would support the
product becoming voluntary."

Senator Milne recommended that:
1. Australia should adopt a national approach (through COAG by January
2010) based on the Queensland model, which has superior dispute
resolution, better defect repair provisions, and appropriate
registration of builders;
2. Between today and January 2010, the insurance should be made
voluntary;
3. Any form of Home Warranty Insurance in the future should be included
in the National Claims and Policies Database; and
4. Any loopholes that remain in Commonwealth regulation, such as
exempting the insurance from oversight by APRA, ACCC and ASIC, should be
immediately closed.

Senator Milne said "Home Builders' Warranty Insurance is junk insurance
and making it mandatory gives incredible power to the insurance industry
and its brokers - particularly the HIA - allowing them to determine who
can and can't build in Australia. The harsh and onerous compliance, with
deeds of indemnity and financial security, means that many skilled
builders are either not working or not complying.

"Builders' licensing should be based on skills and performance, not on
the influence of a powerful industry body, especially one such as the
HIA which does not have a representative structure.

"In the global situation we currently face, we need as many skilled
builders as possible to help build the new, green economy!"

The report can be downloaded from:
http://www.aph.gov.au/senate/committee/economics_ctte/home_warranty_08/i
ndex.htm

Tim Hollo 
Media and Communications Adviser 
Senator Christine Milne 
Australian Greens Deputy Leader
ph: (02) 6277 3588 
mob: 0437 587 562
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