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Thursday, 21 June 2001
Page: 28273


Dr MARTIN (10:29 AM) —It is with some degree of sadness that I enter the debate on the Appropriation (HIH Assistance) Bill 2001 today, sadness because of the difficulties that have been inflicted on the lives of my constituents, like those of so many others in this place, because of the collapse of HIH, sadness because it has meant that the government has had to come to the rescue belatedly—having been dragged there kicking and screaming, when originally Minister Joe Hockey, the Minister for Financial Services and Regulation, seemed to indicate to the public at large, and certainly in this place, that the Commonwealth government had no responsibility— and sadness because there are some people who, whilst talking about risk, caveat emptor and so on, might indeed be suggesting that people in government should not have a responsibility, particularly when you establish what the Treasurer described as `world's best practice supervisors' through APRA and suddenly we find a major corporate collapse like HIH leaving so many of my constituents devastated.

It is indeed sad for those reasons that we are debating the provision of $640 million from the Commonwealth government to match those moneys that have already been pledged and certainly allocated through recent budgets by our state colleagues. It was state premiers like Peter Beattie and Bob Carr that immediately saw the problems that were being caused to their state constituents, our national constituents, because of the collapse of HIH. They came in immediately and made announcements about what they saw as their responsibilities and, as I say, belatedly it was this Commonwealth government that came to the party with the pledge of the money that we are debating today.

It concerns me that the breadth to which this collapse has affected the lives of ordinary Australians is still not fully realised. I do not think people understand the way in which people's lives have been impacted upon because of some of the difficulties occasioned now by the collapse. Let me give you some illustrations from my own electorate as to why this might be the case. A close mate of mine who is a physiotherapist and runs a physiotherapy and sports injuries clinic wrote to me and said a claim had been made against him, the only claim made against him in 24 years of practice. He said that the claim was approaching its final stages and that if the claim went against him in court the maximum amount able to be claimed by the plaintiff was $140,000 plus legal costs of approximately $80,000, which is going to send him bankrupt. He has got a mortgage, he has got a family to raise, but he was covered by HIH. On his behalf we wrote to the government, and we got the standard response back from the Treasury. Under `HIH insurance concern' it runs through `I acknowledge receipt of the Hon. Member's letter' and says:

The letter has been passed to HIH Claims Support Pty Ltd (HCSL), a company established by the Insurance Council of Australia to process the Commonwealth Government's $640 million relief package for policyholders suffering financial hardship as a result of the HIH collapse.

Enclosed is a copy of the Minister's press release of 21 May 2001, outlining the criteria for HIH hardship relief.

That was a blessed relief for my constituent, to get a copy of the minister's press release! It says that HCSL has established a toll-free telephone hotline number and the number is listed, and the web site is there and the address is given for that. It continues:

I expect that HCSL will be in touch with—

my constituent—

... shortly to obtain details of his arrangements with HIH and to assess this claim for assistance.

That is well and good, and that is the standard response that comes to all of the representations I am making, but it does not go to alleviating the problems for organisations like the Illawarra Migrant Resource Centre. The Illawarra Migrant Resource Centre has operated in Wollongong for a long time. It has taken on more responsibility simply because this government, the Howard government, chose to shut down the immigration office in Wollongong and, as a consequence, it acts as a de facto immigration office in my constituency—just as, I might say, my electorate office does from time to time.

The Illawarra Migrant Resource Centre indicated—and as I wrote to the Minister for Financial Services and Regulation, who has just come in, on this issue back on 22 May— that it is funded almost entirely by government, it has no spare funds to cover a possible damages payout and it has been advised by the Department of Immigration and Multicultural Affairs that it cannot seek further financial assistance from the department to cover the costs associated with indemnity insurance. In fact, DIMA actually suggested that the Illawarra Migrant Resource Centre put pressure on the new insurance company to cover any possible payout or to approach the Department of Fair Trading for assistance in their action. The Department of Fair Trading advised that neither the centre nor Fair Trading could compel the new insurer to take on this responsibility. The only funds that the centre has set aside are tied to employee entitlements, and legal advice is that these cannot be accessed to cover a possible damages claim.

So in this circular fashion, where we have got something like a migrant resources centre operating in Wollongong affected by the HIH collapse on personal liability insurance, they have been told by their funding organisation—another government department, at the national level—that they should go somewhere else and seek assistance, and they have been told that that is just not available. The Migrant Resource Centre are fortunately getting some pro bono legal advice, which is great, to fight the claim against them, but should they lose that case and be unable to obtain financial assistance from either DIMA or the government through this assistance package then there is going to be certain closure of the Migrant Resource Centre in Wollongong.


Mr Hockey —I can't see why—


Dr MARTIN —Minister, genuinely, this is an organisation that does a sensational job— not for profit—but it is saying that if it does not get that it will have to shut down.



Dr MARTIN —I am encouraged by the minister saying these things to me—and, Mr Deputy Speaker, I appreciate the leniency you are giving us in this, because it is an important issue. Joe, these people do a terrific job in Wollongong, as you would know. As most migrant resource centres do, they provide non-English-speaking recently arrived migrants and so on with tremendous opportunities. So I hope that the new organisation, the new insurance arrangement, is going to benefit them.

Others, however, may not be so lucky, particularly those who have been affected by indemnity for builders licensing and so on. I have got two cases there. One of my constituents who lives in Mangerton—I will not use the names of these people, because I do not think it is appropriate now—said that in February 2000 he engaged Leisure Coast Steel homes to construct a new home for him at Cordeaux Heights. It was not long into the construction when concerns were raised about the quality of the workmanship. A building engineer looked at it and found defects. Unfortunately, the builder went into administration in November 2000 and liquidation in January 2001. HIH Insurance, which carried the home owners warranty insurance cover, advised that the cost to rectify the defects and so on would be over $180,000. My constituent did not recover one cent from the liquidation process that was associated with Leisure Coast Steel homes and, as a consequence, he is now faced with this dreadful situation as to whether or not he will receive any recompense out of the new system that has been established for this federal rescue package occasioned by the collapse of HIH.

What is suggested in a letter to me, which I have forwarded to the ministers concerned, is that my constituent would like to see the federal government provide the completion funds required in the short term and recover what is available from the liquidator at the appropriate time. He would like to see a waiver for the GST on those homes that should have been completed pre-GST, as this has added substantially to their problems. That is a genuine concern. We all accept that there was a time, a start-up date, when the GST would apply to the construction of new homes—that was 1 July last year—and that after then the GST would apply. The construction of this individual's home started before that date and it collapsed because of faulty workmanship subsequent to the company that was building it also going into liquidation and being wound up. He is left with nowhere to go. Finally, he is asking that the government, via its regulator or the appropriate body, contact the liquidator and immediately quantify the insurance arrangements and reinsurance arrangements that are applicable. I think these are important points that a constituent has raised with me.

Two more of my constituents, who live in Figtree, wrote to me about the HIH insurance group and the home owners warranty scheme. They are in a situation where their house is virtually worth nothing because of a problem with another company in Wollongong which went into liquidation and left them with a huge debt. As a consequence, they wrote a letter to me. I think these are valid concerns. Minister, you have heard comments being made certainly by people on this side and by other people about APRA. The following are not my words but those of two constituents that have been affected by this whole fiasco:

The Federal Government watch-dog, A.P.R.A., is a huge organization with a huge responsibility to all policy holders Australia wide. We are the victims of the regulators apparent failing to regulate a failing obligitory Insurance scheme.

The fact that H.I.H. took 5 months to process our claim has put a very suspicious cloud over A.P.R.A.

... ... ...

Why do we the ordinary battlers have to bear the brunt of beaurocratic bunglers who can't run a multi-million dollar industry if their mortgages depended on it!

This is a cry from the heart of two of my constituents, who live in Figtree, that got the same response back from the government when I wrote to the government about their particular concerns. Again, the words that I have just quoted were not mine; these are the words of ordinary Australians living in Wollongong who have seen the dreams associated with the construction of their new home go down the toilet because of the collapse here. They are rightly saying, `This is a government that has said that it has created a world's best practice supervisory regime, and look what happens!'

I am disappointed that there is a time limit on this debate, because there is a lot more I want to say about this on behalf of my constituents—just like we all did. I know that the honourable member opposite, the member for McEwen, is waiting to get her turn, and I am sure that she is going to talk about people in her electorate that have been affected as well. Something like this should not be allowed to happen. Governments take responsibilities for putting in place supervisory regimes that are supposed to protect ordinary Australians from collapses like this, and too much of it is happening. When they pick up a newspaper like today's, those ordinary Australians that have been affected see where the major investors seem to have been given advice over a period of time as to how long things were going crook—


Mr Hockey —That's One.Tel.


Dr MARTIN —As the minister said, they are talking about One.Tel, but I use this example in a more generic sense. Those investors and those people out there see a major corporation—whether it be HIH, One.Tel or whatever—where people have been given advice for a long period of time about things going wrong, but when they say, `If there is this supervisory regime in place, why can't something be done by a government to protect them?' they are left shaking their heads, just as we are. I commend to the House the amendment that will be moved by the opposition. I only hope that those people, like my constituents, are going to get some justice from the way in which the government has responded with this $640 million rescue package.