The biggest purchase a consumer makes in their lifetime is that of their home.
State Governments believe such a purchase should be protected and have in most cases mandated a Builder’s Warranty Insurance (BWI) regime on building industries to protect building consumers and their homes.
All consumer agencies and fair-minded people in the nation agree with this policy and commend Governments for their stance.
What not everyone agrees with is the manner in which the Governments have gone about delivering their consumer protection policy on behalf of the building industry as they have abrogated this policy to private enterprise and allowed the building industry to be captured.
Back in 1996, we left behind a functional first resort government-run regime and mandatory trade association membership in favour of a privately run consumer protection regime that saw the mandatory membership removed, and trade associations able to sell the warranty insurance product provided by private insurers instead.
The HIH collapse and the events of 9/11 gave the perfect platform to an insurer and a trade association who together concocted and devised a regime known as Last Resort BWI that was to be an enhanced consumer protection regime and better for the builders and industry. That was introduced in July of 2002.
The capture of the building industry was complete in the face of anger and adversity from the nations builders, who were disregarded as rebels who were opposed to the regime and not prepared to protect their consumers, and it was presented as necessary consumer protection so Governments ignored our concerns.
It was Royal Sun Alliance (now Vero) who jointly with the Housing Industry Association (HIA) developed this regime under the banner/illusion of consumer protection, but its role ran much deeper as it took over the complete management of the building industry.
The roles of both entities are described in their own words in this Rehame transcript of a press conference they held in Armadale (Vic) in 2003.
Builders before they could build had to adapt to the BWI being more powerful than a licence, as it is the insurance eligibility from an insurer that activates a builders licence with stringent conditions that limit their annual turnover and the size of a project they can build all based on personal assets as determined by the insurer and also sign a deed of indemnity over those assets. They were left with no real choice: accept and sign or don’t work!
It was also found in evidence given to the Victorian Upper House inquiry that if a builder questioned the insurers decision, veiled threats of restrictions and or withdrawal of insurance were made by the HIA and this aspect has suppressed all industry concerns over the years.
We don’t believe there is a builder in the nation who thinks this regime is good for our businesses, our industry or our consumers.
This regime also established the role of the tribunals, as this is now the one and only means that consumers have to seek justice if a dispute arises as the regime directs the play and puts both parties before a tribunal.
It was initially intended that the tribunals would be a cost effective outcome for consumers where they could self represent themselves in a timely manner. As is often the case with the best of intentions, however, they often do not turn out that way. The legal profession has become embedded in the role and self representation and justice appear lost to the consumers who now spend in excess of $100,000.00 endeavoring to seek justice.
Secondly, the process now has to be supported by expert witnesses and we have created various professions to support the tribunal processes such as building consultants, and building experts that add to the overall costs.
Be mindful that the builder has a similar dollar cost and this one and only resolution method may have a time span of four to five years and the tolls on both parties in terms of stress, financially, the family unit, and the well being of all has seen devastating outcomes for thousands of Australians who at the outset of the dispute believed their actions were correct under this regime.
The past 12 years has delivered a total of 53 inquires into BWI as Governments struggle to deal with the failed BWI that trade associations continue to present as a necessary safety net for consumers.
The Victorian Government have accepted the fact the regime has failed and presented some 500 pages of reform to the Parliament in 2014 that would see the demise of BWI and a new scheme implemented devoid of private interests that is supported by the consumer advocates but not the trade associations.
It was suggested by the associations the new regime that would be run by the Victorian Building Authority and incorporate a fund under their management would be a moral hazard as the VBA may be influenced to deny claims to support their fund.
Only a trade association could suggest such a circumstance, as the regime they have supported for years is a moral hazard as many thousands of building consumers and builders has suffered under their draconian Last Resort BWI regime and many will never recover.
While the trade associations have been successful in stalling the coalition’s attempts to reform the building industry the legislation still sits before the Parliament and will be enacted if the coalition is successful in being returned on November 29.
Public Policy on this level must be devoid of private interests if it is to succeed, and it must deliver its intended purpose.
The building industry and eventually the building consumers fund all consumer protection in the building industry and have a role to play in what is considered appropriate consumer protection whereas the trade associations who have had years to deliver their views have failed dismally and have no right to have any further input into consumer protection.
Enough is enough!