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"Junk" Builders' insurance to stay: Government report ignores evidence.



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Christine Milne

Australian Senate Australian Greens Deputy Leader, Senator for Tasmania

Contact: Tim Hollo on 0437 587 562

media release

Canberra, Thursday 13 November 2008

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

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/index.htm