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Thursday, 29 October 2009
Page: 7587


Senator MILNE (10:48 AM) —I take it that the coalition is not even going to speak to this motion. It is very interesting that members of the coalition are not going to speak because it is they who run around saying they support small business. So let them explain to the builders, their suppliers and companies in November and December this year why they refused to bring this matter to a head in a time frame that would have allowed the federal government to take some action to save builders from being put in a position of building in a non-compliant way under the law or else going broke.

I want to address some of the issues that people have raised. I heard the Chair of the Standing Committee on Economics, Senator Hurley, saying that the matter has been referred to the standing committee of officials at COAG and that it is now on its strategic agenda. I am sure that the builders around Australia are enormously relieved to know it is on the strategic agenda! Things are on that strategic agenda for a decade and never get beyond the strategic agenda. COAG is the biggest black hole for inaction. If you want to make sure nothing happens, then you leave it to COAG, but if the Commonwealth decides to drive something at COAG it can do it.

It is a question of political will. If it is left to the states nothing will happen. The Commonwealth needs to drive it. Of course, it needs to be done through COAG and the ministerial council, because that is the mechanism through which the federal government relates to the states. But it should be driven by the Commonwealth and there should be the political will to do it. To say it is not possible for anything to be done before Christmas is saying that it is not possible to save 25 per cent to 30 per cent of Australia’s builders from being in dire circumstances before Christmas. This is the national parliament. This is what we are supposed to be doing. We are supposed to be looking out for the interests of people.

We have Tasmanian dairy farmers in complete chaos because of what National Foods has done. The Commonwealth has no direct power to do anything about that, yet everyone is quite rightly rushing around trying to do something. You would expect parliamentarians to support people who are in dire straits. So why isn’t the government prepared to put its shoulder to the wheel and help builders right now when it has the power to do something about it by driving it through COAG and the ministerial council? I have heard it said that the government is closely monitoring the situation with Lumley Insurance and CGU pulling out. What does ‘closely monitoring the situation’ mean? Who is closely monitoring the situation? To what end is it monitoring the situation? What is being done to assess the fact that the securities that have already been offered cannot be transferred? That is the issue for these builders, because when those two companies pull out there will be no more securities to provide because the ones that have already been provided to Vero, QBE and other companies are not transferable. What are they supposed to do?

What is the government doing? It says it is monitoring the situation. The minister did not tell me what that means. It is like in Oliver Twist: ‘I am monitoring the situation.’ Very good. I am glad they are monitoring the situation! But what is monitoring of the situation actually doing about the situation? This is the sort of thing that people in the community cannot stand: bureaucratic gobbledygook for monitoring a situation. I hope Senator Abetz can tell me what monitoring the situation means since he is not prepared to support the builders on this occasion. I would like him to tell us why he is so comfortable about the fact that the federal government is monitoring the situation. Very good. Let us see what the builders think the government’s close monitoring of the situation is doing.

The New South Wales government is about to engage in significant reform. Nobody could seriously believe that the New South Wales government is capable of engaging in significant reform, and I cannot believe the coalition would think the New South Wales government was capable of engaging in significant reform. It needs to significantly reform itself before it can significantly reform anything else in the New South Wales economy. Frankly, people have lost all confidence in the New South Wales government being able to administer things in a way that is not in many ways questionable. Whilst we have the New South Wales government reviewing the situation—no doubt, closely monitoring the situation, again; no doubt, looking into it, again, being yet another government of mirrors looking into things—we have the Commonwealth, the chair of the Senate estimates committee and of the Senate Standing Committee on Economics and the federal parliament saying that there is no benefit in an additional inquiry, that it would be a waste of time.

I hope every builder in Australia knows that as far as the Labor Party, the Liberal Party and the National Party are concerned it is a waste of time to consider the fact that 25 to 30 per cent of Australia’s builders are going to either be carrying on their businesses illegally by Christmas or be out of business by Christmas, and the fact that they have to raise money to go to court in order to try and get some judgment about whether these companies can force them to be their own reinsurers. This is a ludicrous situation and it just cannot be allowed to continue. I really am appalled that we have a situation where the federal parliament is prepared to abrogate its responsibilities in this regard to a group of people who are the backbone of the government’s stimulus package. All this money is being spent on building and construction around the country, supposedly to keep people in work, in the face of the global financial crisis and we have a ridiculous, last resort, mandatory home warranty insurance scheme putting people out of work. This is a classic case of the government failing to look at the consequences of its action: pouring money in and then letting builders build illegally. That is the situation we have at the moment. Worse still, it is forcing them to put up their own deeds of indemnity and their own bank guarantees to get insurance so that they continue to carry on their businesses.

I thank Senator Xenophon for his support for recognising what is clearly in the figures from the Essential Services Commission of Victoria and the insurance ombudsman, which pointed out that this is a very, very poor insurance product—45 per cent of claims rejected—and that what is going on with these insurance companies is price gouging. There is no-one who could justify the fact that the total value of the claims between 2002 and 2008 was $10.23 million yet at the same time the average premium income was $6.9 million a quarter since December 2005. How can you possibly justify that? So few claims have been paid out. In the course of the inquiry we discovered the reason for that. It is very difficult to prove that a builder has become insolvent and the insurance company just says, ‘No, they remain solvent.’ Then you have to take another legal route to try and prove anything to the contrary.

This is a disaster for Australian builders and for communities, and we desperately need a standardised system around Australia of consumer protection. Tasmania started the ball rolling. This should be a two-stage process. Instead of just monitoring the situation, the government should be moving now to call an emergency meeting to make sure we abandon the mandatory nature of this before Christmas, so that the builders can build legally and then, instead of putting it on the strategic agenda for some consideration years down the track, move rapidly to get it quickly onto the national radar so that we can roll out a system similar to the one in place in Queensland.

I want to express my thanks to Senator Xenophon and my disgust at the government and the coalition for their lack of care and responsibility for builders in Australia—


Senator Xenophon —Consumers.


Senator MILNE —Yes, builders and consumers. I congratulate the Builders Collective and the work they have been doing for years and years to bring to the attention of the parliament the reality of what is going on with this junk insurance. The community already knows it because consumers are suffering. Choice called it junk insurance, quite rightly. Tasmania responded and the rest of the country is lagging behind in response. I really urge the coalition to reconsider its position, because I can see chaos in the building industry ensuing by Christmas. I do not know when the Builders Collective court case will get into court. But why should a consumer advocacy group have to get to the situation of taking this matter of whether reinsurance is legal to court in order to continue their business?

For the life of me, I cannot understand why a parliament is so careless about such a significant group of people, a significant number of businesses and the whole consumer public when it comes to the issue of constructing your own home. For most families who get to the point of building their own home it is the major asset in their life. It is a failure of leadership by the Australian parliament to be so careless about this consideration in reassessing the validity of these schemes, the price gouging of companies like Vero and the failure of this insurance product.