Legislative Assembly for the ACT: 2003 Week 9 Hansard (26 August) . . Page.. 3146 ..
MS DUNDAS (continuing):
One of the positive things about the piece of legislation before us is how it excludes developers from statutory warranty cover and how they will be still able to obtain their own insurance, but removing them from the pool allows us to reduce the call on the insurance pool without impeding too much on consumers' rights. That is one thing to be commended. As I said, we will not be opposing this piece of legislation, but I will again put on the record our concerns about how the insurance crisis is being dealt with in the ACT and our continuing willingness to bend over for insurance companies without necessarily pushing them to see what they can do to reform themselves and make the situation better.
MR CORBELL (Minister for Health and Minister for Planning) (10.56), in reply: Mr Speaker, this bill is part of the government's response to the continuing crisis in the insurance industry. The proposed changes in warranty protection for home building were brought forward at the request of the insurance industry, as members have noted. The government agreed to these changes because it considered that the effect on residential building warranty protection for homebuyers would be limited and the likely alternative was that insurance would cease to be available. The judgment that the government has made is definitely in the public interest.
In 2001, residential building warranty was directly affected by the collapse of HIH, which was then the only insurance company associated with the Master Builders Association scheme. A year later, the new brokers for the MBA, Dexta, also withdrew from the market. As members would know, the government responded by introducing legislation for the establishment of a fidelity fund to provide building warranty protection alongside the HIA's existing insurer. The MBA has established a fund under this legislation and it provides an alternative to the insurance still available through HIA Insurance Services.
These successive changes were disruptive for the construction industry and its customers. There have never been more than two separate sources of cover in the ACT and, in the present condition of the insurance industry, the government considers it important to make reasonable adjustments to maintain that number. It was in this context that it considered a request from the remaining insurer operating in the ACT to bring key terms of the insurance in line with recent changes in New South Wales and Victoria.
Mr Speaker, the scope of the building work that residential building warranty must cover has been considerably wider in those states than in the ACT. In March last year the governments of Victoria and New South Wales agreed to reduce the scope of residential building warranty insurance. The ACT has been asked to bring the Building Act into line with these reforms. The only change that in itself reduces consumer protection in the ACT is the increase in the value of work that does not require protection from $5,000 to $12,000. The other reforms merely clarify the present position.
Mr Speaker, residential building warranty protection is only one of the ways in which building legislation considers the needs of homebuyers and in the ACT it has been a last resort. This legislation also sets reasonable standards for key aspects of buildings, requires builders to be qualified for the work that they undertake, and gives