Legislative Assembly for the ACT: 2004 Week 10 Hansard (24 August) . . Page.. 4021..
MRS DUNNE (continuing):
But what happens-and this is reality and does not relate to anyone's ill motive-is that from time to time builders will purchase a block of land for the purpose of building a residence on it. They might buy two or three at an auction or at a sub-auction. The developer has acquired the land, put in the sewerage, the drainage, the utilities, the curbing and guttering and the roads-all of those things-and in that process the person who is actually going to put the house on the block, as opposed to the person who does the servicing, buys a parcel of land; he might buy two or three blocks. There could be a whole variety of reasons why he may not be able to build on all those blocks.
At the moment, one of the pressing issues that affect the building industry is the availability of building indemnity insurance. No builder in this town with a building licence can undertake building works without building indemnity insurance, and there could be a whole of lot of reasons why he may not be able to get such insurance, for example, someone is relatively new in the industry and is trying to work things out.
I know, for instance, that the Master Builders Association fidelity fund takes a very close look at what people are doing. They might say, "We will give you indemnity insurance for three projects this year," but he might have four blocks of land. He may have purchased four blocks of land but then be able to acquire indemnity insurance for only three of those projects. He is left with a block of land. If he does not do something with it, he will be in breach of his lease and development conditions.
This amendment provides for him a mechanism of handing that on to someone who may have building indemnity insurance sufficient to allow another project. It is very stringent, because it can be done only within the first year. What we are trying to do is ensure that the lease conditions are met and that building work begins within the 12 months, but there are a number of circumstances-and that is one of them-where a builder who, in good faith, purchased a block of land cannot build on it.
The other option would be to extend the lease conditions. There is general agreement that it is better that the lease conditions be met and that the building in a particular suburb happens basically together, so there are not vacant blocks left behind where people might think, "Oh, that might become a park one day," or things like that. This is a mechanism that just gives the building industry a little more leeway and does not punish them financially.
One of the points that I should have made in the in-principle speech is that one of the failings of the current system is that it is all too easy to obtain an extension on your lease conditions. Somebody owns a block of land and has lease conditions that say you must commence building within 12 months. It is very easy to obtain an extension of those lease conditions. That is an administrative process that encourages people not to build on blocks and may lead to the process of speculation.
This is a very specific mechanism that provides an honourable out for a builder or developer who is in a position where he cannot, for very good, valid reasons, fulfil his lease requirements. Rather than paying the penalty of surrendering the block, you should be able to on-sell it. I commend the amendment to the Assembly.