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Thursday, 29 October 2009
Page: 7584

Senator HURLEY (10:35 AM) —The government is aware of concerns about builders home warranty insurance and sympathises with the frustration that has caused some consumers and builders to make representations. The Senate Standing Committee on Economics recently held an inquiry into builders home warranty insurance, and that inquiry did hear all of the concerns that Senator Milne has raised this morning. We understand that the government is considering its response to the Senate inquiry into the mandatory last resort home warranty insurance scheme and will table its response soon.

The Senate inquiry reported on 13 November last year. Its main recommendation was that COAG and the Ministerial Council on Consumer Affairs pursue a nationally harmonised scheme of consumer protection in domestic building. That recommendation is already in place as a result of the inquiry last year.

In the meantime the government gained the agreement of the states and territories at the Ministerial Council on Consumer Affairs meeting in May this year to review consumer protection measures in the building industry, following the Commonwealth placing it on the meeting agenda. That ministerial council noted the findings of the Senate inquiry’s report, and it has already agreed to refer this matter to the Standing Committee of Officials of Consumer Affairs to consider as part of the review of the harmonisation of conduct provisions for the national licensing system. Establishment of a national trade licensing system is identified as a priority within the national partnership agreement to deliver a seamless national economy between the Commonwealth and the states and territories. This agreement forms part of the broader Council of Australian Governments reform agenda. Additionally, the ministerial council has agreed to place builders home warranty insurance on its strategic agenda.

State and territory governments are responsible for regulating builders home warranty insurance. Senator Milne asked for the Economics References Committee to do a one-day hearing and then, as she said, get rid off it in the short term; but that is not a possibility. The Commonwealth does not have responsibility. The economics committee certainly does not have responsibility for those laws and regulations, and it is unable to put such a thing in place before Christmas. Having the Senate committee revisit its inquiry in which all of these issues were raised will not produce Senator Milne’s desired action before Christmas.

Action has already been undertaken by the government to have this reviewed by the state governments, who are, after all, responsible for laws and regulations in this area. Therefore, the ministerial council is the most appropriate body to pursue the issues further, as it includes representatives of state and territory governments. This process will enable insurance arrangements to be considered in conjunction with broader aspects of the building industry, including licensing requirements and dispute resolution mechanisms. The Senate inquiry included those two issues specifically as something that had to be considered in conjunction with insurance. The government considers it is essential that insurance be considered in this broader context as well.

The government is also closely monitoring developments following the recent decisions of both Lumley General and CGU Insurance Ltd to withdraw from the home warranty insurance market. In its role of monitoring the implementation of the General Insurance Code of Practice, the Financial Ombudsman Service published statistics provided by insurers about insurance claims, including builders warranty claims. As part of the process of responding to the Senate inquiry, the government is considering options to address issues associated with the lack of access for homeowners to effective dispute resolution schemes, as well as a lack of homeowner understanding about the product. So the government has put in place motions.

Senator Milne raised questions about the Labor Party’s role in Suncorp. I have no knowledge of Labor Party involvement in Suncorp. But I would point out that it was a Tasmanian Labor government that abolished mandatory home warranty insurance. The Queensland government—and, as I understand it, Suncorp is based in Queensland—runs its own very good government insurance warranty. We had no complaints from either South Australia or Western Australia. This is principally an issue for Victoria and New South Wales governments. Our Senate inquiry found that the New South Wales government is undertaking significant reform in this area. As chair of the economics committee during the inquiry, I did not see that there was any basis to suspect that there was any Labor government involvement in Suncorp.

So, as chair of the economics committee, I see no benefit in doing an additional inquiry, whether it is one day or 10 days. The frustrations were in evidence. We understood the frustrations. We understood the issues. We made strong recommendations, which the government has commenced dealing with. I think that there would be no benefit—beyond what the government is doing—in pursuing another inquiry. I think it would be basically a waste of time.