Introduced after the HIH collapse in 2002 by vested interest, builders didn’t want it and many refused to participate but it was forced on them under duress by the very trade association they trusted and who was supposed to represent their views and interests to the government of the day but instead they abused that trust and turned around and used it directly for their own direct financial gain.

The Housing Industry Association (HIA) together with the insurer Royal Sun Alliance (RSA) (that later became Vero Insurance) had put together this appalling scheme that benefited them handsomely but also gave them sway and control over the builders of the nation and they used that power to suppress any vocal builders who did not agree with them.

Government Ministers of NSW and Victoria being advised by their bureaucrats went along with the scheme as it suited them because industry could work again, and the government coffers were being lined with stamp duty, levies, and fees and it was all sold under the illusion of consumer protection.

The big builders Hi-Rise and Estate Builders bluntly refused to have any part of this scheme as was the case with all the domestic builders and the whole industry saw the scheme as draconian, grossly unfair, and immoral and besides it would not benefit the wider building industry or the building consumers of the future that were being used as the vehicle for its very being.

The smaller builders of the nation make up more than 90% of the states and territories registered builders and the other 10% odd are those hi-rise and estate builders that have power in their dealings with Governments of the day so it was a relief for all the smaller builders when they refused to participate but that relief was short lived as a deal was quickly done and under point 4 of the 10 point plan all the Hi-Rise builders such as Australand, Meriton, Hickory Group, LU Simon and so on were all excluded from providing any form of consumer protection.

The big Estate builders such as Metricon, Simmonds, Henly and so on were given assurances of unlimited warranty without restrictions and when was the last time you saw one of these large builders challenged by a regulator.


This left all the small builders without any form of a voice and the scheme took over their lives and businesses in a similar manner to a dictatorship as those who spoke out soon lost the ability to work through the criteria imposed.

Some took their lives as without income they could only fail from a business perspective. Why has our industry failed to such an extent and what did BWI have to do with it!

Last Resort Builders Warranty Insurance (BWI) was born on 1st July 2002 and has slowly but surely been the very structure that has seen the industry fail together with other measures bought in on the basis of stimulating and benefiting the industry.

Privatisation has played a role as it was seen as a benefit to consider the certification process and in the early nineties, we privatised the role of building surveyors without sufficient thought to the process. Then in 1997 we threw out a perfectly good consumer protection regime being the Housing Guarantee Fund Ltd (HGFL) in favour of privatising the regime and it being delivered by the private sector via HIH insurance with trade associations being the broker for delivery to builders. Privatised HIH Insurance, consumer protection in the building industry.

In 1999 the Building Commission released a report titled Privatisation and Performance Based Building Regulations are they cost-effective? While deemed to satisfy had been around for some time this document heightened the use of the procedures related to the process.

HIH Insurance collapsed on the 15th March 2001 being the biggest financial failure in Australia’s history and they provided virtually all the BWI in Australia on a First Resort basis (insurance as we know it)

On the 1st July 2002 HIA and RSA insurance introduced the LAST RESORT Builders Warranty Insurance that allowed the eventual downfall of an industry.

While the events introduced in the nineties played a role it was not until the BWI was introduced that those events started to play a pivotal role to the future conduct as the BWI was last resort and only available to a consumer if the builder was dead, insolvent or disappeared as builders now know but most consumers to this day still don’t know they are not protected if one of the three triggers are not existing. BWI is an illusion!

The role of the privatised insurer was/is to vet the financial ability of the builders to be an acceptable risk under the regime and if so, provide a letter of eligibility which the builder provides to the registrar to allow activation of their building licence.

The private insurers suddenly took over the roles of regulator and enforcer through the schemes criteria and the State and Territory agencies sat back and dropped their roles which effectively removed the policeman from the block.

It took very little time for some builders to realise there was no policeman looking over their shoulders and more and more risks were being taken while registered training organisations (RTO’s) and trade associations started the short course systems that put people in the industry lacking the skillsets for the category of licence they obtained.

Builders below 3 levels were suppressed so many skirted any form of compliance and worked in the shadows, and still do today while an element just ignored all and worked around the questionable system to their financial advantage and ignored the rights of the consumers.

The large estate builders took advantage of the upheaval in the industry and where their realm has always been the outer fringes and newly opened tracts of land, they started to move into the suburbs that had always been the domain of the small and often family builders. The large builders are now firmly entrenched in the suburbs with special divisions and display homes set up.

The Hi-Rise/Tower builders had a field day as they were excluded from any formal consumer protection under this10 point Plan at point 4 Their handiwork is obvious today in terms of cladding, Mascot, and Opal towers not to mention the myriad of defects and failures they are responsible for throughout Australia.

Introduced in tandem with the 10 point plan was the full detail of the players and in their own words they described their roles in this Rehame Transcript of a press conference they held to quieten the dissent from builders in 2003.

In summary:

The vast majority in the building industry have had their voice removed and unable to be heard through the criteria of the BWI regime and while many had forecast the outcome, we see today including this author we have not had the ability to effect any change.

This has left a powerful lobby of trade associations and vested interests to make changes to the industry and in most cases to the financial advantage of a few in power but in all cases has been to the detriment of the industry.

The Federal Government has and still plays a significant role in our industry and their position of blaming States and Territory’s for the industry failures is just a cop out and unacceptable as Joe Hockey was instrumental in the introduction of the Last Resort BWI.

We are unaware of any changes made since the early nineties that may have benefited or have been of value to the industry.

Both Trade Associations have significant political influence in the corridors of power in Canberra and see building legislation as their dominant income stream which is a circumstance that must and will cease.

While the focus has been on the failure of Hi Rise apartments due to cladding fires and the sheer size and volume of those failures we would ask you to spare a thought for the failed buildings on the ground as the volume of faulty and defective failures far exceed the Hi Rise debacle.

There is very good reason why the Builders Collective of Australia has called for a Royal Commission as fiddling at the edges of the once proud industry as has been the case over past years has achieved a zero result.

Prime Minister Morrison must step up to the plate and instigate a fully independent Royal Commission.