Governments refuse to act to save builders as ‘junk’ insurance schemes collapse

Governments refuse to act to save builders as ‘junk’ insurance schemes

Canberra, Wednesday 23 June 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

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.

Tim Hollo
Media Adviser
Senator Christine Milne | Australian Greens Deputy Leader and Climate
Change Spokesperson
Suite SG-112 Parliament House, Canberra ACT | P: 02 6277 3588 | M: 0437
587 562|

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