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Governments refuse to act to save builders as 'junk' insurance schemes collapse

Media Release
Christine Milne 23 Jun 2010

Many builders across Australia will be forced to operate illegally or close their doors after June 30 if governments fail to remove the mandatory requirement for Last Resort Home Builders' Warranty Insurance.

Today in the Senate, the Rudd government refused to even acknowledge the problem.

Most state governments still require builders to have the insurance in order to operate, even though it has been described as 'junk' insurance and has been the subject of numerous inquiries, including a Senate Inquiry established by Australian Greens Deputy Leader, Senator Christine Milne, last year.

"With one of the last remaining companies offering this 'junk' insurance withdrawing on June 30, many builders will be unable to get cover and others will likely be subject to price gouging from the virtual monopoly that will be left," said Senator Milne.

"It's not good enough for the government to say this is a State issue while hundreds of jobs are on the line. The Commonwealth can and must step in to save jobs and small businesses.

"These people are the backbone of the Rudd government's economic stimulus, but they won't lift a finger to make the changes builders need to keep operating legally."

The government and opposition voted against a motion from Senator Milne noting the problem and calling on the government to step in.

"It's well past time the Rudd government took some responsibility and worked with the states to ensure they implement reasonable and effective home builders warranty schemes, along the lines of the Queensland model.

"In the meantime, the Rudd government must urgently work with state governments to remove the mandatory requirement for this 'junk' insurance before builders are forced to close their doors or operate illegally as soon as next week."

The Senate notes that:
1. A crisis is looming in the building industry with Vero exiting the Last Resort Builders Home Warranty Insurance market in NSW by September 30th and in all other states by June 30th leaving only two providers in the market, QBE insurance and Calliden;
2. This insurance product is mandatory by law in all states except Tasmania and Queensland;
3. Thousands of Australian builders will be left without this insurance product on June 30th requiring them to build illegally or to stop building immediately unless QBE provides insurance or there is government intervention within the next eight days;
4. Small building firms will be disproportionately affected as they will not be as attractive to a virtual monopoly provider as large building firms; and

Calls on the Federal government to act immediately with their state government counterparts to remove the mandatory requirement for this product before this impending crisis in the building industry occurs.


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