Legislative Assembly for the ACT: 2002 Week 6 Hansard (16 May) . . Page.. 1770 ..
MR CORBELL (Minister for Education, Youth and Family Services, Minister for Planning and Minister for Industrial Relations) (6.25), in reply: I thank members for their support of this legislation. The government is the first to admit that this regulation is being put to the Assembly in extremely unusual circumstances, but they are the circumstances we face.
What we face is a classic example of market failure: the withdrawal of 50 per cent of insurance providers in the ACT that provide home warranty insurance. The circumstances are highly unusual and the timing of the presentation of this legislation and the associated regulations to the Assembly is undesirable. That said, it is necessary that this Assembly take action because a majority of the territory's builders are currently unable to complete work or sell houses and significant extensions to home owners or home buyers because they are unable to get a certificate of occupancy because they are unable to get the necessary insurance cover.
There has been detailed discussion and correspondence between government and industry, both at ministerial level-between me and industry representatives-and at officer level. The government has closely considered the most appropriate response to the circumstances that the ACT building industry faces and has chosen to proceed with this fidelity fund model. We believe that this approach is the most appropriate in the circumstances, first and foremost because it does not expose the territory to any significant risk. We are not underwriting the arrangements, we are not financially investing in the arrangements and, therefore, the territory taxpayer and territory funds are protected. This is in contrast to the approach adopted by the New South Wales and Victorian governments. They have chosen to become underwriters for Dexta, exposing New South Wales and Victorian taxpayers to potential significant liability.
We do not believe that is an appropriate course to take in the ACT, partly because of our size and our capacity to underwrite those arrangements, and partly because, as a matter of principle, we did not believe it was a level of risk the government and territory should be prepared to accept. This approach protects the territory taxpayer and addresses the issue of risk in the most appropriate way.
We do that, also, in the context of the claims history in the ACT. The data provided by insurance providers to the ACT government as part of their normal reporting requirement highlights the fact that the claims history in the ACT is historically low-low for the ACT and low compared with other jurisdictions. So, whilst our confidence cannot be absolute about that continuing, the government believes that we can have a reasonable degree of confidence that our claims history will continue to be at the level we have seen it at to date.
Members have raised a range of issues in relation to the regulations, which I accept are an integral part of this legislation. Before I address some of those, I would like to address some issues raised by Ms Dundas. Ms Dundas suggests that the proposal the government is putting forward will provide for a monopoly operation. I have to inform members that that is simply not the case.
The legislation is enabling legislation. It is not organisation specific; it does not provide solely for the MBA to operate a fidelity fund. Any organisation can operate a fidelity fund if this legislation is passed tonight and if it meets the requirements set out in the