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Residential Building (Home Warranty Insurance Amendments) Bill 2023

Vica Bayley MP

Vica Bayley MP  -  Thursday, 17 August 2023

Tags: Housing, Legislation

Mr BAYLEY (Clark) - Madam Deputy Speaker, the Greens will support the bill. The need for this legislation is clear. In the past few years we have seen significant media reporting regarding consumers who have lost significant amounts of money laid out for home construction works that have not been completed due to insolvency. We can only imagine the impact this has had on people's lives.

Before I get into the bill, I want to briefly outline some relevant history that the Attorney-General has touched on in the second reading speech. The Housing Indemnity Act 1992 introduced a compulsory first resort housing indemnity insurance scheme. This act was amended in 2003 to change the scheme to a last resort scheme, similar to the one before the House today, following the collapse of the insurer, HIH. Such was the extent of the failures and impacts of HIH that a royal commission was established to investigate its failures and a support scheme for policy holders was established. Jumping forward to 2008, Tasmania abolished the housing indemnity insurance scheme altogether.

I note the media release from the Attorney-General on 21 June this year where she makes the comment:

This bill corrects the damage done by Labor who abolished the requirement for home warranty insurance when they were in government, leaving Tasmanians with limited protection or recourse if their builder became insolvent.

With respect, Attorney-General, it is important and appropriate to acknowledge that the Housing Indemnity Amendment Bill 2008 which abolished the schemes was supported by both the Liberals and the Greens at the time. During his second reading speech contribution, the former member for Bass and premier, Peter Gutwein, indicated that the bill was a reflection of the Liberals' election policy. The reality is that the repeal of the scheme in 2008 had support across the parliament, obviously reflected here today with its introduction as well.

Being new to the parliament, it is difficult for me to judge whether the 2008 decision was the best path forward at the time, however, it is clear that times have changed, necessitating the introduction of such a scheme.

As the Attorney-General helpfully outlined in her contribution, since July 2021, eight building companies operating in Tasmania have gone into administration, affecting more than 90 consumers. From Ms Butler we have heard that there have been additional instances. Nationally, 1709 construction companies entered administration between July 2022 and April 2023, up from 1284 in the same period 12 months earlier. This is clearly a nationwide and growing issue. The industry nationally has been described as being in an insolvency crisis.

It is the nature of insurance that the costs, risks and benefits of a scheme need to be weighed up. With the increase in consumers negatively impacted by insolvency, it is clear that this equation is different compared to 2008. It also appears to me that the proposed scheme has some differences to that of the scheme in operation from 2003 to 2008. Correct me if I am mistaken, Attorney-General, but it appears to me that this scheme covers defective works whereas the previous scheme was limited to non-completion - is that correct?

Ms Archer – Ours is more extensive.

Mr BAYLEY - I am also hoping you may be able to outline in your summation a summary of the differences between the proposed scheme and the scheme repealed in 2008. Given the historical context of the scheme and the broad opinion at the time that the last resort scheme was a failure, I believe it would be helpful for members here and in the other place to understand any matters that are different in relation to the legislation before the House today.

I also have some questions in relation to the bill, particularly the proposed new clause 77B . As flagged by Ms Butler, our read of the scheme is that it does not apply to residential construction carried out by or on behalf of the state, Homes Tasmania or any other prescribed persons unless that construction work also involves another proponent. Does this mean that if the state or Homes Tasmania contracts building work, that building work is not covered by the scheme? If this is the case could the Attorney-General please outline the rationale for this exemption?

We do not understand why taxpayer-funded works for public housing would not be desirable to be insured. We can understand that if the state was carrying out the construction works insolvency is unlikely and the insurance would simply pose unnecessary additional costs. Surely this risk is present if those works are contracted out to a third party.

Labor has also distributed an amendment that it will be moving in the Committee process to introduce review provisions. We had extensive discussion in the last committee about the Greens' support for reviews and we will be supporting this amendment. Given the history of such schemes in our state, it seems prudent for a statutory review to take place. As a last resort scheme it is somewhat limited in nature and a review may identify opportunities where it would be desirable to extend the scheme. Four years seems to be a reasonable time frame for this review to take place.