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- 7 June 2001
Home Building Legislation Amendment Bill
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Page: 14649
Second Reading
Debate resumed from 31 May.
Mr J. H. TURNER (Myall Lakes—Deputy Leader of the National Party) [10.00 a.m.]: I represent the shadow Minister for Fair Trading, who is in the other House. My comments on this bill will be somewhat truncated—he will make a more definitive contribution on the bill in the upper House—but I will put on record a few matters on the bill. I had carriage of the Home Building Act on behalf of the Opposition when it came before the House. Although I do not have my speech with me, it is clearly in my mind, and it has been referred to in representations to me by organisations such as the Master Builders Association. Although the Opposition supported in principle the Home Building Act, we had severe reservations about a number of matters. At the time I stated that the legislation would have to be revisited. Those comments were prophetic. At the time a number of evident deficiencies were not picked up by the then Minister for Fair Trading, mainly because of the lack of consultation and the inherent rush to have the bill passed.
This brings us to the HIH Insurance debacle. It was the Home Building Act that saw HIH come on board in the home building sector. In 1995 when the legislation was debated I enunciated reservations about private insurance sector involvement. We believed that it would create more problems than it would fix. On 30 April 1996, one day before the legislation was to come into effect, the Minister was still scratching around for sufficient private sector insurers to make up the numbers so that builders would have an option of whom to ensure with. Five days before, I had written to the Minister suggesting that she defer implementation of the Home Building Act because there was confusion in the market in relation to insurance, legal contracts and many other things. She ignored my plea, which reflected representations from the home builders and the public at large.
On 1 May 1996 I put out a press release to say that I had severe concerns about the entry of HIH. That also was prophetic. The building market has collapsed and there are many cases of hardship, with people in economic ruin and despair. I have to say that that could have been avoided had the Minister heeded the advice of the Opposition at the time, and hastened slowly and properly implemented the Home Building Act. The other problem associated with the HIH debacle is that the Home Building Act provides that the Minister—both the previous Minister and the current Minister—shall approve and accredit insurers under the Home Building Act and has the power to revoke that accreditation. What were the Ministers and the department doing from 1996 to date in relation to the accreditation or revocation of the approval of insurance companies? Surely there were some prudential requirements on the Minister and the department to ensure that the HIH debacle did not occur.
I am sorry to say that a great deal of responsibility for what has happened in the home building industry rests squarely on the shoulders of the former Minister for Fair Trading, the Hon. Faye Lo Po', and the current Minister, the Hon. John Watkins. Their lack of proper prudential oversight of companies such as HIH has led to this sorry mess. It is hollow for the Government to crow that it is doing something in relation to the home building industry following the collapse of HIH, because it was the Government's negligence that created the current problem. The public should remember that the Minister has the power to approve and accredit—and the Minister has the power to revoke that accreditation. It is a very sad industry at the moment.
The bill contains some reasonable provisions. By and large, we will not oppose it but we are concerned about a number of matters in addition to those I have just raised. Previous amendments to the Home Building Act may have changed section 92, but it provided that if a builder did not have insurance at the time that he undertook building work the contract for the work was void ab initio and, no matter what work was done, the owner of the land would not subsequently have to pay the builder. A constituent of mine signed a contract one day and received the insurance the next day, before any work had been done. After the building had been completed and disputes arose, some money was paid—not much. Under section 92 the owners were able to avoid the payment of any further money. Even a quantum meruit consideration could not be given.
Unfortunately, there is no retrospectivity in relation to that provision and the builder is out of pocket and facing bankruptcy. That is a typical example of what happened with the original bill. It was not thought through and looked at properly and a number of people were caught out. A number of concerns have been expressed by various organisations. The Master Builders Association has raised with the Hon. Michael Gallacher a number of matters, including renewal of contractor licences and the provision in relation to consumer information under new section 7AA. The association wrote:
This can be regarded as a potentially good thing or a wasted opportunity. In light of the Bill's present proposals for dispute resolution and a "cooling off period" the information brochure could well be a wasted opportunity. Amongst its functions will be to:
(i) explain the Act; and
(ii) explain the procedures for the resolution of disputes both those under the contract and relating to insurance.
To explain the Act will be a very complicated and difficult job—it certainly should involve a lot more people than just Departmental Officers.
The association goes on to state:
More importantly though the "brochure" will be compulsory and therefore a fantastic starting point for delegalising the dispute resolution process and promoting a style which attacks the issue by fixing up the problems with the building work or the payment of money which are the two central prominent elements affecting consumers and builders.
It refers to a cooling off period and has some concern for its members in this respect. It states:
What comfort will be in a cooling off period for builders who have spent many weeks, if not months, negotiating and talking to a client?
The association refers to bid shopping, added costs, the contract procedures and the resolution of building disputes. The observations are considered and in detail. I am sure the Leader of the Opposition in another place will go into more detail about those matters. One of the matters we are concerned about is that the bill will expand the level of information provided about the history of builders on the registration system, which can be inspected by consumers prior to entering a building contract. The registered details of builders provided is certainly more than one can obtain now, but we are aware of two shonky builders who recently had their licences suspended by the Director-General of the Department of Fair Trading but who would have had clean bills of health on the register. The industry may resist this, but we take the view that someone about to invest $100,000 or $200,000 on a building project deserves to know whether the builder has been ordered to rectify structurally defective work, not just whether he has refused to comply with an order from the tribunal. As I said, a number of other matters concern us but the shadow Minister in another place will fully enunciate those.
Mr GREENE (Georges River) [10.11 a.m.]: I support this legislation. I will start with discussion about two of my constituents, Mr Brian and Mrs Janice Griffin, who decided to do some extensions to what was going to be their retirement residence at Caves Beach. Unfortunately the builder—and I use that term under advice—in this construction, which included a second-storey addition and various renovations, was so incompetent that he could not manage to tie the second storey to the bottom storey of the premises. So, in high winds, as has been suggested by an engineering report, there is a strong possibility that the second storey may be blown off the residence. Also, the roof was so badly put on, the tiles would come off before the second storey. These poor people, the Griffins, have been through a long and arduous process that so far has cost more than $30,000, with various reports and barristers trying to get this work rectified.
Fortunately, the Minister for Fair Trading and the staff at the Fair Trading office have been extremely co-operative and of great assistance to the Griffins, and I congratulate them on that. Without going into the enormous detail and the litany of complaints these poor people have, I shall say it is extensive. This legislation looks to help consumers such as the Griffins. Innocent people who employ apparently competent builders to undertake important work—in this case work valued at in excess of $120,000—should not have to face rectification work costing up to $180,000. Mr Griffin had retired and was going to spend his retirement at a lovely residence at Caves Beach, but his dream, although not yet destroyed, has certainly turned out to be a huge nightmare.
This bill aims to protect consumers such as the Griffins. It does so in a number of ways: first, with the contractor licensing scheme and associated disciplinary process, the home warranty insurance scheme, the resolution of disputes process and the provision of consumer advice. The need for home building reform has arisen from a review of legislation as well as concerns raised by people such as the Griffins, homeowners, consumer advocates, industry associations, insurers, builders, members of Parliament, various representations on behalf of people such as the Griffins and other interested parties. The reforms set out in this legislation are intended to significantly improve the level of protection for consumers. The reforms tighten the licensing system, speed up the disciplinary process, increase penalties for non-compliance with the Act, make the insurance scheme fairer and more accountable, establish an early intervention dispute resolution system and raise consumer awareness of remedies available when things go wrong. In addition, members of the building industry will benefit from these reforms, especially those relating to dispute resolution and continuing education.
The review of licensing in the New South Wales home building industry recommended that a number of changes be made to the licensing system. Based on consultation with builders, consumers and industry associations, the Government believes the current licensing system should be enhanced to provide a greater level of protection for consumers and a simpler system for builders. A further review will be conducted three years after the commencement of these reforms. Without wishing to go through each and every one of these reforms, they include additional matters on the register of licences maintained by the Department of Fair Trading that can be accessed by consumers. This will include orders of the Fair Trading Tribunal that have not been complied with and other such matters that are to be finalised after consultation. The reforms also give responsibility for conducting disciplinary inquiries to the Director-General of the Department of Fair Trading rather than the Fair Trading Tribunal. This will significantly speed up the process and ensure builders who should not have a licence are removed as efficiently as possible.
The reforms will include the licensing of building consultants. The building consultancy industry has grown in recent years. A continuing professional education program will be developed with the assistance of the Home Building Advisory Council, and will specify additional requirements for owner-builder permits. Around 20,000 permits are issued each year, and complaints have been received from purchasers of owner-builder dwellings that contain defective work not covered by insurance. The reforms will rationalise the number of categories of building licences. Currently there are around 420 types of building licences in New South Wales.
The bill will enable the Director-General of the Department of Fair Trading to cancel a contractor's licence if, for example, the holder becomes bankrupt, or is convicted more than twice in 12 months of a breach of the insurance provisions, or fails to maintain home warranty insurance cover. The reforms will enable the director-general to suspend a contractor's licence held by a company that is placed into administration and will crossreference the electronic licensing records to disclose builders and contractors who are licensed as individuals as well as through a company. This will help to ensure that inappropriate persons do not circumvent the licensing system via incorporation. They will also develop a licensing renewal policy linked to the number of complaints and other criteria, and will introduce photo licences.
Under the home warranty insurance scheme introduced on 1 May 1997, the Home Building Act, subject to certain limited exceptions, provides that persons contracted to do residential building work costing more than $5,000 must arrange insurance cover for that work. Since 1 November 1999 all applicants for a new licence or existing licence holders seeking to renew their licence as builders, and certain other categories, have been required to provide proof that they have, or are eligible to obtain, insurance cover for future work. Consumer complaints about the system mainly relate to the claims-handling processes of insurers.
From the industry perspective, the main complaint is that insurers have unreasonably raised both the financial requirements and premiums. After nearly three years of operation it is clear that reform is needed. The proposals for this reform include, amongst many, a requirement that when a contractor is licensed both as an individual and through a company and there is a difference between the building contract and the insurance certificate, the consumer is still covered by the policy. This overcomes a legal shortcoming identified in several tribunal and court cases over the past 12 months.
The reforms also include: ensuring that where a certificate of insurance is provided by the builder, the consumer is still covered, even if the insurance policy commenced after the date of the contract; requiring a contractor to provide insurance cover for building work when the labour and material costs exceed $5,000, whether part of the work or material is provided by the other party to the contract—that means that the $5,000 threshold for insurance will be changed to reflect the value of the project, not just the cost of the contractor's work; increasing the period of appeal against an insurer's decision from 30 to 45 days, and allowing the Fair Trading Tribunal, with leave, to extend the period of appeal.
Further reforms include: clarifying when a consumer has reasonable grounds to refuse access to the contractor who did the work without prejudicing the consumer's insurance claim; and confirming that certificates of insurance issued by contractors on or before the HIH liquidation on 15 March 2001 are valid and that consumers who had HIH insurance in place before 15 March are covered by the Government's $600 million HIH rescue package. As a result of representations by consumers, and the department's ongoing monitoring of the insurance scheme and consultation with building and insurance groups and the Home Building Advisory Council, clearly there is a need to, first, better define when an insurance claim can be made and, second, establish a new dispute resolution process in the industry.
Amongst interest groups there is general consensus that an alternative dispute resolution process is required to deal with residential building disputes which is simple to follow, cheap to use, provides a quick resolution and is attached to the Fair Trading Tribunal. In addition, all interest groups recognise that an integral feature of any process is early intervention. Unless the parties are brought together at the initial stage of the dispute, the dispute can rapidly escalate and the chance of informally resolving the dispute decreases substantially.
Following consultation with representatives of the home building and insurance industries and the Home Building Advisory Council an alternative dispute resolution model has been developed which focuses on mediation. The bill gives significant clout to consumers and at the same time provides protection for builders and contractors. I compliment the Minister, his staff and the staff of the Department of Fair Trading. I attended a briefing at which Mr Peter Smith attended with whom I had had dealings with and found him to be exceptionally good at his job. No doubt an enormous amount of work has gone into this bill by the people I have mentioned and many others, to ensure that people from my electorate, such as the Griffins, are protected.
Undertaking building work on one's home is a large investment; it is not only a financial investment, but also an investment of heart and soul. We, as a Government, have a responsibility to protect people, because a great emotional cost goes into building programs, especially when problems arise. The Government should do all it can to protect those who are most vulnerable, the weakest in society and most susceptible to being done over by shonks. I congratulate Minister Watkins, who is in the House today, on this most appropriate bill, and thank him for his work. I commend the bill to the House.
Mr McBRIDE (The Entrance) [10.24 a.m.]: I support the Home Building Legislation Amendment Bill. Along with the honourable member for Georges River and other members, constituents have approached me for help in making a claim to resolve problems associated in building their homes. I have had real concerns about this issue for a long time. In my time as a member of this Parliament numerous complaints have come through my office regarding builders who, for one reason or another, had not complied with the original contract. More importantly, the resolution of disputes has often been ongoing, interminable, and leading to the destruction of the claimants.
In one case, the client, that is the person who engaged the builder, was definitely in the right. The claim was valid. However, the builder was clever with his documentation concerning the dispute. As one would expect, the builder was familiar with the building industry and all its associated nooks and crannies. Whenever there was a problem, the builder systematically went through a careful documentation process, recording in his diary discussions with other people, bringing in consultants—and I use that term advisedly—to confirm his position. When the client, the home owner, negotiated with the builder on the rights and wrongs of the contract it was clear that the client was completely outflanked.
The owner took the attitude that although she was right, and I believe she was right, she could not win the case. One of the problems with the home building industry is that inexperienced people take out a contract involving a large amount of money and sometimes deal with people who, unfortunately, do not behave in a professional manner. The concept behind this legislation is to overcome problems with contracting and to make sure that licensed contractors do the right thing. I have worked in the building industry and found it to be tough and cost competitive. Compared with America, England and many European countries, New South Wales has the most efficient building industry, and its residential construction is at the lowest cost. However, when individuals contract with certain builders problems often arise. I welcome the legislation because it will tighten up the industry, make contractors more responsible, define the responsibilities of contractors and, most importantly, speed up the dispute resolution process, which I consider to be an outstanding issue.
A reform regarding licensing is the inclusion of additional matters on the register of licences maintained by the DFT, which can be accessed by consumers. That is important, because if one is to buy a car and wants to find out whether the car is incumbent, one can telephone the register of encumbered vehicles to find out whether there are any liabilities on that vehicle. But when one builds a house, there is no way to check up on the contractor's performance during the period of his licence. That is an important reform, because clients have to make a decision without having sufficient information.
Earlier when constituents have come to my office and we investigated their cases, we found that contractors had very poor form. On a number of occasions contractors have been caught for disciplinary matters and have failed to meet their contractual obligations; notwithstanding that, the contractor still maintains a licence, but a person engaging in a contract with such a licensed contractor cannot find out the contractor's previous history. That is an important reform associated with this legislation. The bill provides that the Director-General of Fair Trading, rather than the Fair Trading Tribunal, will have responsibility for conducting disciplinary inquiries. My office has received numerous complaints that the process has been too slow. When people decide to have a house built they are on the edge in terms of their finances.
If a dispute arises the process slows down, people find their position is weakened, and they must enter negotiations to get an outcome; otherwise they do not have a home to sleep in. As a result of the collapse of HIH, people are living in garages, et cetera, because their homes cannot be completed. The length of time it takes to resolve a dispute is an ongoing problem. The bill provides for building consultants to be licensed. I have met building consultants on a number of occasions, and it has been interesting to find out what qualifications they have to undertake building consultancy work. Many people who are employed as building consultants have never been involved in constructing a building. In many cases they have not been at the interface with the builders and the contractors, the people working on the site, yet they claim they are building consultants.
I know of one building consultant whose only experience was working in a council office basically rubber-stamping building approvals. He knew a bit about what council required but he was not within cooee in his knowledge of building details—whether a building had been properly constructed, whether the bricks had been laid properly, whether the timber frames had been installed correctly and whether the concrete had been poured correctly and met all the relevant standards. Despite that, a real estate agent hired him to consult on building works. It is clear that the current licensing system provides insufficient regulation of building consultants. Generally speaking, when people take out a loan to purchase a house they are required to have the property evaluated by a building consultant. Obviously there are some glaring gaps in that aspect of the building industry.
The bill provides for the development of continuing education programs, which are undertaken in all other areas of construction. Education is important because new products and new techniques are continually coming onto the market, and builders need to be aware of the changes taking place. For example, until about five years ago residential plumbing was all copper pipes and soldered fittings; today it is all plastic pipes with pressure fittings. So there has been a total change in how work is carried out and in the equipment used to carry out that work. Education is an ongoing process. It is important that builders and contractors are aware of new products and equipment as they come onto the market.
The bill specifies additional requirements for owner-builder permits. At present, builder-owners are regulated only by a local government authority, which is not comprehensive. At present, builder-owners cannot sell a house within two years of construction. When the house is put on the market, if the construction is unsatisfactory there is insufficient insurance protection for the purchaser in terms of redress for faulty workmanship. The bill provides for the Director-General of Fair Trading to cancel a contractor's licence if the holder becomes bankrupt, is convicted more than twice in 12 months for a breach of insurance provisions, or fails to maintain home warranty insurance cover. That has been a big issue in my electorate. Builders continue to operate for long periods although they have a bad record, and no action appears to be taken against them.
The bill further provides that when a contractor's licence has been suspended or cancelled the director-general may make an order for completion of the work on hand by other builders and the insurer. As I said, the finances of people buying a house are usually limited; when work on the house comes to a halt the builder has the upper hand in any negotiations with the purchaser. That has happened on a number of occasions, and such cases have been brought to my attention as the local member.
Another reform in the bill is the development of criteria for renewal of a contractor's licence. That relates to the licensing procedure and monitoring the performance of those who hold a licence. It is proposed to introduce a photo licence, which seems to be in vogue. I do not think that will make much difference. The bill has several provisions relating to insurance reform. For example, it provides that even if the contractor is licensed both as an individual and through a company, consumers will have insurance cover if a dispute arises between the contractor and the insurer.
The bill requires that contractors provide insurance cover for building work when the labour and material costs exceed $5,000, whether or not part of the work and materials are provided by the other party to the contract. That means the insurance threshold of $5,000 will be amended to reflect the value of the project, rather than simply the cost of the contractor's work. In the past, some contractors broke down the contract price into allotments or $5,000 or less. That meant that they did not have to carry comprehensive insurance for a particular project; $5,000 was the limit. Interestingly, it does not matter how a contract is worded, because people will always find a way around it if it means they will save money along the line.
The bill further provides for the Fair Trading Tribunal to extend from 30 days to 45 days the period in which to appeal against an insurer's decision. The bill contains a number of other reforms relating to dispute resolution and other issues in the building industry. The Government intends to revisit the legislation in three years, and that is important. Appropriate legislation is introduced, but as times change, it needs to be reformed to resolve unintended consequences in terms of the way people find their way around it.
This bill is important for ordinary people in society because it improves the procedures for resolving construction disputes. Hopefully, it will reduce the trauma and angst suffered by people when something goes wrong. It provides for resolution, compensation and a reduction in lengthy processes. The dispute resolution process is lengthy at present, and in some cases purchasers lose all the money they have invested in their home and they become insolvent. Honourable members realise that purchasing a house is probably the largest purchase that people make in their life. It is fundamental to our whole existence, particularly in Australia, which has one of the highest rates of home ownership in the world. I commend the Minister for Fair Trading for introducing this bill and taking up these issues on behalf of ordinary people in society.
Ms MEAGHER (Cabramatta—Parliamentary Secretary) [10.39 a.m.]: The House may recall that in August last year I brought to its attention the disgraceful story of the Trang family from Bonnyrigg. The Trangs had been the victim of an unscrupulous builder who preyed upon them, took their money and left them with an appalling mess that is still to be cleared up. The Trang family, like so many of us, wanted to build their dream home. They engaged Westfield Concrete to turn that dream into a reality. Instead, Westfield Concrete, trading as Boulevard Homes, under the auspices of Romulo Tomassetti's building licence, has left that dream and their house lying in utter ruin. The Trangs lost $120,000 in building their home—and I use the term derisively because it never will be a home.
The house has since been cited to have 24 defects and it is earmarked for demolition as it is defective beyond repair. The Trangs struggled and worked hard to be able to build this house. Now they battle to meet mortgage repayments on a house they cannot live in. To rub salt into the wound, they also have to meet rent payments. Sadly, the Trangs are not the only people to suffer from the deceptive and predatory practices of some people calling themselves builders. I know of 22 cases in my electorate that have been before the Fair Trading Tribunal and I have personally spoken with 10 families in similar circumstances.
Today I congratulate the Carr Government on doing something about these deceitful and despicable practices. Regrettably, the old legislative regime meant that it took a long time to put disreputable builders out of business. That is because individual complainants had to make an application to the Fair Trading Tribunal and the matter then had to be considered by the tribunal. This bill will put an end to those excessive delays. It gives the director-general the right to suspend the licences of questionable builders. The bill not only ensures protection for families like the Trangs but also protects hardworking, responsible builders whose reputations are being tarnished by the actions of a few dishonest, untrustworthy vultures. Under this bill, building licensees must undergo a minimum amount of continuing professional education each year, and professional standards will be improved.
The various legal loopholes that in the past allowed some of these shonks to continue to trade have been well and truly closed by this legislation, particularly by its requiring more information about the past fair trading records of licensees, including any failure to comply with the Fair Trading Tribunal orders. The depth of the despicable business practices of Westfield Concrete cannot be overstated. Its victims were predominantly from non-English-speaking backgrounds, and they were all first home buyers. Westfield Concrete took advantage of their language difficulties and their lack of knowledge and experience of building procedures. Most people rely on the recommendation of family or friends when hiring tradesmen. We must ensure that people investigate the past history and work of a builder so that they are fully informed before they enter into contractual agreements and end up paying large sums of money to people who abuse their trust.
Under this new legislation the Director-General of Fair Trading has the power to immediately cancel and suspend licences, thereby freeing up the Fair Trading Tribunal to focus on dispute resolution. Prior to seeking my assistance the Trang family had been disputing the complaint against Westfield Concrete for two years. This is an unacceptable delay, and a remedy has now been put in place. Under this legislative regime, dispute resolution procedures will be fast-tracked. Where a dispute is notified to the Fair Trading Tribunal an expert will be appointed to visit the site to provide guidance and assistance. If an agreement is reached by both parties, it will be lodged with the tribunal. If this is not adhered to, either party can have the matter heard by the tribunal as a building claim.
The Home Building Legislation Amendment Bill also makes provisions for people who buy from a speculative builder to rescind a contract for sale of land if the required home warranty insurance is not taken out. It also extends from one year to three years the period within which action on offences may be instituted. Although nothing can console the Trangs and other families who have been preyed upon by these vultures, this bill goes a long way to ensuring that some justice will be done and that few families will ever have to endure the ordeal that the Trangs have experienced. I take this opportunity to congratulate the Minister for Fair Trading on oversighting the debate and ensuring appropriate protection for consumers who are setting out to build their homes. I commend the bill.
Mr BARTLETT (Port Stephens) [10.44 a.m.]: I speak on the Home Building Legislation Amendment Bill from a background of only two years in this Parliament. In that time I have contacted the Minister a number of times and as a result of representations from me, consumer groups and other Government members—but few representations from Opposition members, as, similarly, few will speak in this debate—a review of the Home Building Act and related legislation was ordered. Today 153,228 licensed tradespeople are working in the building industry and each month the Fair Trading Tribunal receives approximately 300 to 400 building claims.
When I was elected a member of Parliament in March 1999, among the first people to come to my office seeking help was a young couple who, unfortunately, have subsequently separated, largely because of the 2½ years of stress related to their building problems. Unfortunately, their builder was unlicensed and used the licence of another builder. He laid the foundation slab for the house below ground level so that every time it rained the house filled up with water. It took 2½ years to sort out the insurance and undertake investigations. At the end of the day the brickwork was pulled down, the frame was jacked up and the slab was relaid to prevent water coming into the house.
One might question what happens when council building inspectors check foundations, frames and the final product. I have discovered that council building inspectors provide hardly any security; they do not even ensure that the building is correctly on the block of land. They do not guarantee that the foundations are at the right height or that the frame meets requirements. On final inspection they do not even say whether the house is all right, so I wonder about the role of council building inspectors. This house was finally completed and after this considerable delay of almost three years, they were able to move in. During the intervening period they lived in a caravan on the site because their income went towards paying off the loan for the house.
As a member of Parliament I urge people buying a new house to be aware that this industry still has a number of disreputable people, although the bill is designed to tighten up relevant requirements. Constituents I have known for 20 years bought a new house in January 1997. This was the first time they had purchased a house, so they were inexperienced. They saw the house, liked what they saw and decided to buy it. The first time it rained they realised that the windows were not secure, water leaked in through the skylight, and as a result the house had a musty smell. There was insufficient downpiping and the water had pooled under the house, causing the piles to sink and the floors and walls to crack. The conditions in the building were unlivable because of the smell and the leaks. Despite the building being brand-new, it was found that there was absolutely no dampcourse.
The building was made of hebel bricks and because the render on the outside of the bricks was different in texture, the bricks and the render expanded and contracted at different rates and consequently whole slabs of the exterior of the building fell off. An inspection of the skylight revealed that there was building debris all over the roof although, presumably, the house had been subjected to a final building inspection by the local council. Because of the water pooling under the building and the piers having sunk owing to insufficient drainage, the owners had to get the builder to come back and fix the problems. Thus began a period marked by even more concerns.
In mid-1997 the builder declared himself bankrupt. The unit I have described is one of three units on the site. The situation was that the windows and the skylight did not have any flashing, the water was pouring in and the builder declared himself bankrupt. The vendor cleared off overseas in 1998 and was never seen again. When the investigations began, it became evident that there was no formal contract for the building: construction had been based on a handshake between the builder and the vendor. When the investigator tried to work out through the insurance system and the fair trading legislation what exactly had happened in this instance, there was no documentation and there was no evidence. The unit owners spent $3,000 each and $3,000 came out of the aptly-named sinking fund to repair the exterior of the house where the slabs of render had fallen off. The drainage was also fixed and other repairs were undertaken.
Having been mightily emotionally scarred throughout the whole process of letters being written, contracts and everything else—the relationship of the previous couple I mentioned had actually broken up—the owner decided to sell. That is very interesting because the sale highlighted the role of building consultants and building inspectors. The building consultants who were engaged to try to rectify the problems despite the absence of a dampcourse said that the best way to repair the house was to drill holes through the hebel bricks and pump in some chemicals to form a seal to stop the damp from rising. The owners thought that that advice was fair enough, so they went ahead and paid for damp-proofing. I will deal with that in more detail at a later stage.
The provisions of the bill that relate to the circumstances I have outlined in the limited time available to me are the rationalising of licence categories and the introduction of licences for building consultants. A person who wishes to buy a house usually obtains an assessment that is carried out by a building consultant. Lo and behold, the building consultant chosen by the prospective purchaser was the very same building consultant who advised the vendor in respect of the repairs. The building consultant wrote to the prospective purchaser and basically stated that he would not advise purchase of the house because in lieu of a dampcourse the vendor had injected chemicals to control rising damp. He actually stated that purchase of the house would not be a course of action that he would advise, in spite of the fact that it was the very same building consultant who advised the owner to use chemicals to damp-proof the dwelling.
I am very pleased that the effect of this bill will be to introduce a system of licensing building consultants. Moreover, additional requirements will need to be met by owner-builders, including a course of education. The gentleman in the first example to which I have referred, who was an owner-builder, had signed a contract to engage someone who simply was not licensed to build. The bill will also introduce new licences and renewal requirements that take into account the number of complaints against an applicant for a licence and other criteria. At this stage, complaints are not taken into account and I think that that vital information is crucial to the reforms that are provided in the bill. The bill also contains provisions that introduce an early intervention dispute resolution scheme which focuses on alternative dispute resolution. In the first example I mentioned, dispute resolution may have been a player because there was no contract between the builder and the vendor—just a handshake—and the insurance company just washed its hands of the matter.
By virtue of this legislation, the Government is attempting to address a large number of issues concerning the building industry. There is insufficient time available during this debate for me to outline all the instances of which I have knowledge, but I warn young people who are buying their first home to be very, very careful. This bill will address a lot of problems in the building industry. I congratulate the Minister on trying to bring these reforms together to help people. Not a lot can be done retrospectively but it will be interesting to see what actually happens at the grassroots level when the improvements outlined in the bill are implemented. I thank the Minister for listening to the complaints I have outlined on behalf of my constituents. I wish the Minister well in implementation of this amending legislation. Taking into account the range of legislation that applies to the building industry, one wonders whether the Home Building Legislation Amendments Bill will clean up all the problems. I suspect that the legislation will require further amendment in the future relating to other matters.
Mr FRASER (Coffs Harbour) [10.56 a.m.]: In commenting on this legislation, I will probably be doing a bit of parish pumping because the concerns that I have knowledge of are similar to matters outlined by members opposite. Let me put this matter in perspective. The Minister for Fair Trading, who has carriage of this legislation, is amending the Act because the action that was taken in May 1997 did not solve the problems in the building industry. It is a pat on the back for the Minister to say that he is fixing up something the previous Minister failed to fix in 1997, as well as the additional problems created by the Minister who was previously responsible for homeowners. The Great Australian dream of owning a three-bedroom, brick veneer, double garage home on a quarter acre block is fast becoming a nightmare because of unscrupulous builders and because dispute resolution has not been undertaken properly. The legislation has no teeth and the Department of Fair Trading has insufficient resources with which to support people experiencing major problems with their own home.
Mr Debnam: A lazy Minister.
Mr FRASER: A lazy Minister indeed. I cite the copybook example of HIH Insurance Company being given the opportunity by the previous Minister, the Hon. Faye Lo Po', to carry all insurance on new homes in New South Wales.
Mr Debnam: By the Carr Government.
Mr FRASER: It was done by the Carr Government—by the previous Minister.
Mr Debnam: By Bob Carr.
Mr FRASER: As the honourable member for Vaucluse says, it was done by Bob Carr. The Government is now saying that the collapse of insurance companies is not its problem. In relation to most of the problems in the marketplace, this Government says, "They are not our problem. It is a problem for the Federal Government." It should be remembered that the responsibility came down to the Minister for Fair Trading at that time, the Hon. Faye Lo Po', to actually assure herself, this House and the people New South Wales that the insurance company she appointed had such a prudential standard that it would not fall into a big heap, as some have done recently.
Even under this legislation, the Minister has set down certain guidelines for two insurers, Dexter and HIA Insurance, but it absolutely amazes me that apart from monthly reports et cetera the Minister does not require at any time a full financial history of the insurer or a statement of any kind that the insurer is actually solvent and that it can meet the liabilities to which it is exposed. I challenge the Minister for Fair Trading to take up this matter by way of amendment. Is that not the problem that occurred with HIH? Yet, under the legislation that is presented by this Minister, the people of New South Wales are faced with exactly the same situation.
Mr Brown: We are not the regulator.
Mr FRASER: The Government is the regulator of the building industry and it licenses insurers by regulation. However, it is not asking for a full probity prudential check that will give the industry and homeowners confidence that their insurer, who is authorised by this Government, can meet their claims. That is hypocrisy. This is a nice thick bill; it looks good, but it does not address the basic issue that people must have confidence in the insurer that this Government has authorised. I have received a letter from Mr Graeme Everard, a builder, about a quite unusual case. The party concerned experienced some problems 14 months ago and had a claim authorised by HIH. So the money is available. Mr Everard now has the building contract. The letter states:
In the case of Maria Nichles where her original builder was ordered off the job due to an engineer's report for unsatisfactory workmanship and structural defective work as the attached fax explains. She was lucky in one way that she was paid out before HIH went down. Under the Government relief program paid out or not her original policy should stand but only if her original builder is to finish the job, but in this case where a new builder is engaged to rectify that builder has to apply for a new Home Warranty cover and 5 – 6 weeks and another 2 - 3 weeks for a cover note.
As she has been put out for over 14 months with her roof leaking and unsafe exposed floor joists crawling up and down ladders to get to bedrooms etc., was the way her building was left. I think she should qualify as a special hardship case. We are not asking for N.S.W. building laws to be changed but we are asking that hers and others in the same situation that their original policy should stand under an arrangement so that they can get their buildings completed. A new policy cover be obtained either during the rectification process or on completion and that the original cover taken out by the previous builder be temporarily transferred to the rectifying builder saving the time span of 2½ months in which will send us and others to the wall. Not only will this get jobs completed but get smaller builders like ourselves back to work. I think that these types of cases have been overlooked by the Govn. relief program.
On behalf of myself and many other small builders I think that something urgently must be done in cases such as this. Maria Nichles phones at least twice a day asking when we can start but our hands are tied.
People such as Maria Nichles cannot get cover because of past legislation. She is desperate; she is climbing ladders to reach rooms in her house and floor joists are exposed. The Government is no help: It is not saying, "Look, you have the cash and you are a reliable builder so we will go out of our way to assist you." Ms Nichles is in a parlous state and the builder cannot do anything. He has four people ready to work but he cannot get insurance cover because the Government will not assist him. It is all very well to say that it is a Federal Government problem. It is not. There is to be a royal commission, but should we simply wait for its results in 18 months or two years? We cannot do that. The building industry is the lifeblood of our society. New houses must be carpeted and furnished, and most service provision in our society revolves around the building industry.
This legislation does not provide any assistance. Government members claim that they have no responsibility in this area. That is lunacy when the regulations and conditions for building and contracting are set by this State Government. They cannot hide from that fact. The Government must do something. It should allocate some resources to the Department of Fair Trading and allow it to mediate on claims immediately—not in four, five or six months. Two and half years down the track, Ms Nichles is in dire straits. She has money in her pocket and a builder to do the job, but the work cannot begin. This legislation does not address that problem.
Mr Debnam: They are in denial.
Mr FRASER: That is true. It is a bit like the drug legislation that was passed by the House yesterday: It looks good in the media releases. However, people do not believe it. In case Government members have not noticed, the electorate is somewhat cynical these days. The Government must address existing concerns and issues. Labor loves to blame someone else, but it has been in government for a fair while. This Government has had the opportunity to do something about shonky builders in this State. We tend to get a lot of them on the North Coast because it is a nice place to live.
These builders work for low wages because they put only one nail or a stud in the joist and then sheet it over and no one knows the difference until there are problems later. I was somewhat amused by the comments of the honourable member for Port Stephens, who was a councillor. This legislation should return us to the old system of inspecting every post. That would keep the builders honest and ensure that companies with a building licence but no licensed builders earn some credibility among consumers and members of Parliament. The legislation picks up on a few points, but it does not cover the full ambit of the issue. It is a nice piece of paper—
Mr Brown: Move some amendments.
Mr FRASER: This bill was put out to public consultation. I have a letter dated 5 June 2001 from the Master Builders Association [MBA]—I am happy to table this correspondence because Government members should be aware of it—detailing its concerns. The Government has not addressed these issues.
Mr Ashton: The letter was written on 5 June and you expect the Minister to have read it and moved amendments straightaway.
Mr FRASER: There was public consultation on this issue. The honourable member for East Hills is not prepared to address the concerns of the Master Builders Association—the industry's peak body in this State.
Mr Ashton: The draft bill was published six months ago.
Mr FRASER: The Minister is trying to push through this legislation without addressing the concerns of the MBA.
Mr Ashton: The MBA had six months in which to write that letter.
Mr FRASER: It does not matter whether it had six months or two years, the Minister decided ultimately not to listen to the MBA.
Mr ACTING-SPEAKER (Mr Lynch): Order! The honourable member for East Hills will cease interjecting and the honourable member for Coffs Harbour will direct his comments through the Chair.
Mr FRASER: The fact is that the Minister has not listened to the Master Builders Association's concerns. I do not claim to support every one of those issues, but the Government has not listened to the MBA. The legislation is nice and thick but it does not address the MBA's concerns. It is all very well for Government members to flag wave and say "Aren't we wonderful?', but that will not make a great deal of difference at the end of a day. I do not believe this legislation will help Ms Nichles one iota in resolving her problem. I do not believe it will assist Mr Everard in putting his four employees to work. I do not believe this legislation addresses the concerns of the MBA. It is nice window dressing but the Government has not learned anything from the consultation process.
The Government should listen to people's concerns and deal with them. I challenge the Parliamentary Secretary to relay my comments to the Minister. The Minister should give an assurance that the guidelines for approving insurers will request a full financial history and a confirmation that insurers are capable of meeting their debts. If that does not happen the two insurers covering the State's construction industry might end up insolvent as well. The Parliament cannot risk that outcome. We have seen the devastation that the collapse of HH has wrought across the board—the building industry is just one group affected. It is now up to the Minister: He must obtain full, documented assurances from insurers that they are solvent and could meet claims and liabilities in the event of a collapse similar to that of HIH. I support the legislation, but with reservations.
Mr BROWN (Kiama) [11.09 a.m.]: It gives me great pleasure to support this legislation and to acknowledge the very hard work of the Minister for Fair Trading, and his staff and department. I am continually amazed at the unhelpful waffle from Opposition members in debates in this place.
Mr ACTING-SPEAKER (Mr Lynch): Order! I suggest that the honourable member for Coffs Harbour contain his amazement and allow the honourable member for Kiama to continue.
Mr BROWN: Time and again Opposition members say that they support a bill and then point out all the problems with it. They make it up on the spot and waffle on. We can see the cogs turning in their minds—click, click, click. Rather than Opposition members speaking for 15 minutes about how they support a bill and trying to invent problems as they go along, they should take the time to read the legislation. If they have concerns about it, they can move amendments to it. In that way, Parliament can entertain proper debate. The honourable member for Coffs Harbour said that this bill did not address the issue of the ability of insurers to meet their liabilities. The honourable member should look at the amendments to section 103A of schedule 6 of the Home Builders Act 1989. This legislation will insert new section 103A, which puts beyond doubt the matters that the honourable member has raised.
Mr Fraser: It does not. You do not seek a guarantee.
Mr BROWN: The honourable member for Coffs Harbour says that the legislation has not addressed the issue. Clearly it has in new section 103A, which puts it beyond doubt that a corporation authorised under the Federal Insurance Act 1973 is able to carry on insurance business. It is the Federal Government's role to regulate the insurance industry through its regulator, the Australian Prudential Regulatory Authority [APRA]. The honourable member for Coffs Harbour, having been told of those facts, has put his tail between his legs and scurried out of the Chamber. I was going to inform him that simply because an organisation writes a letter saying it does not agree with a number of aspects of legislation does not mean that it has not been consulted. We are an open and accountable government. We are about reforms that will move the community forward and we want to take all sections of the community with us. One has only to look at the polling and the support for the Carr Labor Government to attest to that fact.
The Master Builders Association has met with the Minister for Fair Trading and his department on at least 10 occasions. Its suggestions and comments have been taken seriously by the department and by the Minister. When the honourable member for Coffs Harbour says that no-one has been consulted, simply because he has received a letter dated two days ago, he is getting very close to misleading the House. Consultation took place over six months with various facets of the community to try to improve home building in this State. The reforms that the Government is introducing in this legislation massively overhaul New South Wales home building laws.
The package, which includes more than 50 new reforms, will make New South Wales the leader in home building consumer protection in Australia. That is another area in which this Government is leading the nation. The consumer protection and dispute resolution reforms include: giving consumers more information about licencees' past fair trading record, including any failure to comply with Fair Trading Tribunal orders, thus assisting consumers in their choice of tradespeople; giving the Fair Trading Director-General, instead of the Fair Trading Tribunal, power to cancel and suspend licences, thus reducing harm to consumers by acting more quickly; and requiring building licensees to undertake a minimum amount of continuing professional education each year. They are just a few of the reforms.
Like other members in this House, a number of constituents have spoken to me about problems they have had in the construction of their homes. Many members of our community face a massive financial and emotional commitment when they build a new family home. Unfortunately, a number of shonks operate in the industry. When things go wrong, it seems to be the start of a whole host of issues that impact on family life. The Minister has acted on every issue that I have brought to him about home building, including my concerns about the shonky builder Mahmud Ali, who operated in the Illawarra. I spoke to this House last year about Mahmud Ali. No sooner had I raised the matter with the Minister, he spoke with his departmental officers, and the television program Today Tonight came to the Illawarra and did a story on this matter.
Mr Debnam: Was the media good?
Mr BROWN: The honourable member for Vaucluse is suggesting that we went to the media simply to get publicity. Yes, we wanted major media because we wanted to warn all consumers that this shonky builder, Mahmud Ali, is a danger to their families, their homes and their financial situation. Perhaps the honourable member for Vaucluse would like me to stand on top of the Kiama blowhole and yell out the dangers of Mahmud Ali. It is more sensible that we go through the electronic and print media to warn consumers and get the message out.
The Minister, in his second reading speech, made it clear that the object of this bill was to protect consumers. That is the object of bills fundamentally. Unfortunately, some builders and insurers will regard these new consumer regulations as tough legislation. The new regulations match the Carr Government's tough laws in other areas which try to protect our citizens. These are tough consumer laws, but we want to work with the builders and the insurers to ensure that their businesses are profitable. We want to make sure that the decent builders in the industry are able to do their job and that the shonks are found out. The bill affords better protection to consumers by providing that more information about licensees be given to consumers when they are deciding on engaging a tradesperson.
When a consumer looks up a licensee on the Register of Licences, details of a contractor's non-compliance with orders of the tribunal will be given. The register will also include details of any disciplinary action, results of any prosecutions, the number of penalty notices issued, the number of insurance claims paid, formal cautions issued to the licensee and details of any public warnings and cancellation or suspension imposed under the Home Building Act or any other Act. That sort of information empowers consumers. The register also cross-references records electronically to make sure that individuals cannot hide behind companies or trading names. In the case of the building shonk in the Illawarra, Mahmud Ali, every time he did a shonky job he would register a new trading name. He would then organise his contracts under that new name so as to hide from the power of the register. This legislation will address that problem and some of the other sneaky devices that builders such as Mahmud Ali use.
When the department revoked Mahmud Ali's licence he then worked under a consultant. My office rang and asked why the consultant was not supervising Mahmud Ali. The consultant said, "We have never heard of him. Don't know who he is. I live in Queensland. That's where I do my work. I do not know how I have a registered building number in New South Wales. I've never built there." Constituents bring these problems to their local members, mostly on this side of the House, who present them to the Minister. The Minister distributes a draft bill for consultation, people look at it, and the result is the excellent legislation we are currently debating.
Mr Fraser: Why is the Master Builders Association still upset about it?
Mr BROWN: The reforms set out in the legislation will improve significantly the level of protection for consumers, tighten the licensing system, speed up the disciplinary process, double penalties for non-compliance, make the insurance scheme fairer and more accountable, establish an early intervention dispute resolution system, and raise consumer awareness of remedies available when things go wrong. Members of the Opposition continually interject about insurance. They are the last people who should speak about it. Their Federal colleagues through the Australian Prudential and Regulatory Authority , after being notified last year by the New South Wales Carr Labor Government that HIH was in financial difficulties, decided to do nothing. Families are suffering as a result of the HIH collapse. That suffering is due predominantly to the weakness and inadequacy of APRA. The arrogant Coalition and conservatives both here and in Canberra have not listened to the concerns of the working people. I support the bill. If the Opposition has complaints about it I would like to see them move some amendments so that we can have a proper debate, rather than their continual harping and snide remarks that are not at all constructive.
Ms HODGKINSON (Burrinjuck) [11.21 a.m.]: Thank goodness that is over! The honourable member for Kiama took many liberties, particularly when he said that there was full consultation on the bill. If that were so why would the MBA, the peak building organisation in this State, continue to write to us? The MBA will be somewhat miffed that it was so trivialised by the honourable member for Kiama in his contribution to the debate. Building a family home in this State used to be a family dream, but it has become a nightmare. It is important to put on the public record, as both the honourable member for Coffs Harbour and the honourable member for Myall Lakes did so eloquently, the fact that the former Minister should have ensured that the prudential standards of the company she appointed, HIH, were up to scratch, and that it would not fall in a heap.
I note that the honourable member for Myall Lakes, in his capacity as shadow Minister, questioned the appointment of HIH way back when that appointment was made. Five days before HIH was appointed he questioned the whole process, and said that it should not have occurred. When HIH was appointed he pointed out that he had not heard of the company, nor had many other people, which could bode ill for the future. What vision the honourable member for Myall Lakes has! What vision the Coalition has! It is extraordinary that the Carr Government is trying to heap accolades on itself when it should have been conducting probity checks on HIH. How could so much go so wrong? The answer, of course, is Labor. People in my electorate no longer have confidence in their insurers: once bitten twice shy. Why should they have confidence in insurers when so many people have lost so much money?
This morning the honourable member for Cabramatta told us that she has received something like 22 representations, which is probably a fairly average figure for members of this Chamber. So many people have been bitten by the HIH scandal that, as a local member, it is sometimes difficult to feel that one is doing enough for them. I will read excerpts from a letter I received from Ganter Constructions Pty Ltd, quality building contractors who work in Goulburn. They use local staff and local tradespeople from the area. They wrote to express their anger, concern and disgust about the announcement that HIH had gone into provisional liquidation. Their concern is home warranty insurance, which they are obliged to take out by law for their business to operate. The letter states:
The Department of Fair Trading will not renew your builder's licence unless you provide them with a letter of eligibility stating that you have insurance cover or can obtain insurance cover. Also local council will not approve any building application unless you supply them with a copy of a current certificate of insurance. Our business cannot operate properly without this insurance cover.
We cannot seem to get any answers as to what exactly is to happen with our current policy that now seems to be totally useless. All we seem to know for sure is that unless we are prepared to fill out more forms or part with more money, then we probably won't be able to get on with our work.
On 27 February 2001 we renewed our blanket cover policy—called Mastercover—through a firm called Jardine Lloyd Thompson in Sydney. (HIH Insurance is the underwriter for this home warranty insurance.)
In order for our policy to be renewed we were required to fill out lengthy application forms as well as supplying our current financial document for the year ended. Our accountant also had to sign a declaration verifying that these documents were true and accurate.
Why is it that the public are required to provide a financial guarantee yet the company itself can do what it likes without being monitored or held to answer? …
Our renewal was issued only after they received our premium of $2637.58. This made our policy valid from 13/3/01 until 13/3/02.
How in all conscience could they take our money so close to them announcing their liquidation? Isn't this a fraudulent premeditated act? …
Weren't the Department of Fair Trading aware of the problem? What is the government going to do about this? …
We know that we are only one of thousands of people that have been affected by this collapse. The government should have monitored the situation more closely to prevent this situation from occurring!
That is one example. Another example is Gunning District Community and Health Centre, a community organisation that has medical negligence insurance through an insurance broker. The broker did a flit with the premium and the centre lost $1,300. The centre had to reinsure. It reinsured with HIH and forwarded a premium of $1,258 on 6 March. HIH then folded. The Gunning District Community and Health Centre is now—
Mr ACTING-SPEAKER (Mr Lynch): Order! Members on the Government benches will come to order.
Ms HODGKINSON: Many thanks, Mr Acting-Speaker. Dunning District Community and Health Centre is now seeking further reassurance. It has lost $2,600 in premiums in the past three months.
Mr ACTING-SPEAKER: Order! The honourable member for East Hills and the honourable member for Keira will restrain themselves.
Ms HODGKINSON: The Government had a chance of monitoring what was going on. It should have checked the full financial history. We cannot, as a Parliament, accept this kind of thing happening again. Insurers must be able to meet their claims and liabilities.
Mr ASHTON (East Hills) [11.27 a.m.]: Mr Acting-Speaker—
Mr Rozzoli: Now we will hear some great wisdom.
Mr ASHTON: You will hear some, and you will enjoy it. You might not like it, but you are going to hear it. Nothing is more important for most Australians than building their own home. In financial terms it is certainly the greatest contribution they will ever make. I represent people in Labor electorates who have to build homes around the $200,000, $300,000 and $400,000 mark. They are not building or buying homes in the electorate of Vaucluse that they will then sell off for $8 million, $10 million or $12 million. I note that the only contribution to this debate by the honourable member for Vaucluse has been by way of interjection. He has sat in this Chamber for the one and half hours I have been here and has interjected on eight or nine occasions. He has offered no indication that he wants to stand up and say something. He is not here to speak; he is here to interject. I can understand why the besieged Leader of the Opposition, Mrs Kerry Chikarovski, sacked him last year for his outrageous disloyalty when he had the hide to point out some of the Opposition's problems. So far his contribution has been nothing but interjections.
Mr Fraser: Tell us about the MBA.
Mr ASHTON: I am going to tell you about the MBA.
Mr Fraser: Tell us what you said off the record a minute ago.
Mr ASHTON: It does not matter about off the record. I am happy to repeat it. The honourable member should listen to it. The MBA has had six months to be involved in this process. On 30 November last year the package of draft reforms was released. Even those opposite can work out that from November to June is a period of six or seven months to look at it. But the MBA is so busy that it has done nothing in that time. A draft exposure bill was released three months ago! I know the Master Builders Association [MBA] is very busy, with HIH tripping over, the One.Tel problems and the New South Wales financial sector collapsing, but it could not prepare a letter until 5 June.
The honourable member for Coffs Harbour referred to the letter dated 5 June from the MBA in which the association indicated it was not happy about the proposed reforms. They have had three months, possibly six months. The Home Building Legislation Amendment bill was introduced by the Minister on 31 May. It would have been preferable if the honourable member for Coffs Harbour had bothered to read what the Minister said in his second reading speech on that day. If he did not attend a government school I could understand it, but if he did attend a government school he should be better able to read. The Minister said:
I make it clear at the outset that the introduction of this bill is not in my mind the end of the consultation and improvement process. I am more than willing to adopt any sensible suggestions that further improve the bill as it passes through this Parliament.
There it is. The Minister has told me, as honourable members will note from his second reading speech, that he will be happy to consider further amendments. The MBA might have some. Today is 7 June and the Opposition referred to a letter dated 5 June. Fair go! A Minister cannot respond to a letter like that by saying, "I will run down to the Chamber now and scribble out a few notes." I know that the Minister met representatives of the MBA on 4 June. That was Monday! He met them on Monday and they wrote a letter on Tuesday! I just love the way the honourable member for Coffs Harbour skedaddles when I get stuck into him. It is just amazing.
Mr ACTING-SPEAKER (Mr Lynch): Order! The honourable member for East Hills will return to his speech.
Mr ASHTON: I will.
Mr Debnam: There is a speech?
Mr ASHTON: There is a speech and it will be a good one. A State Labor government, the Carr Government, has introduced legislation that encompasses more than 50 reforms that will make New South Wales the leader in building consumer protection in Australia. The bill will improve protection for consumers in the building industry, but it will also improve the reputation of the builders in the building industry. That is a vital component that members opposite have no interest in. As I said before, the honourable member for Vaucluse represents more than half of the people involved in the biggest financial collapse in this nation's history. That has come to attention in the past few weeks. He can be proud that they live in his electorate. I am sure they are proud of the quality of their representative.
The building industry drives the Australian economy and it is vital that it be successful, but it is equally vital that consumers have protection. The consumer protection and dispute resolution reforms contained in the bill mean that information will be given about a licensed tradesperson's Fair Trading background, including failure to comply with decisions of the Fair Trading Tribunal. It will also give power to the Director-General of the Department of Fair Trading to cancel or suspend licences and act more quickly to help consumers. He already has that power, but he will be able to act much more quickly. Each licensed tradesperson will have to undertake a minimum amount of continuing professional education each year.
In the same way as high school teachers, doctors, chiropractors and others have to undertake extra training, some of these people that the honourable member for Vaucluse and the honourable member for Coffs Harbour want to help will have to learn a little more about the technology in the building industry. The honourable member for Coffs Harbour is probably very experienced in building—"We want a fence post there. Get some of the slaves over here, boys, dig that hole. We will put a post in here. I will claim that bit of land." It is a bit more involved down here in the city, where huge buildings are constructed. We need to protect people. Giving powers to the Director-General of Fair Trading to cancel or suspend licences and requiring each licensed tradesperson to undertake extra study during the course of the year will provide that protection.
Dispute resolution procedures will be fast tracked. Any dispute referred to the Fair Trading Tribunal will first go to a mediator and $3 million has been set aside for that program. Each month an average of 300 to 400 building claims are received. With a mediation process it may well be that most of those can be satisfactorily resolved in advance of a referral to the Fair Trading Tribunal, which could involve a lengthy process. More than 150,000 licensed tradespeople work in New South Wales. As with licensed doctors, solicitors, teachers and barristers—who pay no tax—there will be a few shonky operators, a few cowboys.
Mr Debnam: Lawyers.
Mr ASHTON: You were a lawyer, weren't you? The legislation before the House is the result of 18 months of examination—not 18 days or 18 hours, but 18 months. Honourable members might say it could have been done in a hurry. One cannot get things right if they are done in a hurry. Look at the Baker bill that the Opposition tried to introduce a couple of months ago. If something is put up in a hurry it will be shot down in flames. Being in government means you have to do it right; being in Opposition means you can sit there and waste everyone's time. I am sure there is not a member of this House who has not had to deal with distressed home builders. They have told us horror stories about their experience with some builders. I exclude the honourable member for Vaucluse, because people do not build homes in Vaucluse; they just keep buying everyone else's and racking up the prices.
We all know about the cowboys in the industry who take on too many jobs, cut corners by using poor materials, and engage poor tradesmen and subcontractors who then employ unreliable labourers. So it goes on. The result is a badly built or half-built house that often ends up as a horror story on one of the various current affairs programs. Of course, the recent collapse of HIH Insurance highlights the number of people caught in that trap. It has been a ridiculous effort by the Opposition in this House today. One speaker after another has attempted to claim that the collapse of HIH Insurance, Australia's biggest financial collapse, is somehow the fault of the Carr Labor Government. The Australian Prudential Regulatory Authority [APRA], the organisation in Canberra that has responsibility to oversight insurance companies, was sound asleep at the wheel and that has caused road kill throughout the entire insurance industry in Australia.
The Liberal Party's mates involved in One.Tel—Jodee, Bradley and Rodney; the way those names end is a worry—are all punters from the Vaucluse electorate. They are good mates of the honourable member for Vaucluse who have made donations to the Liberal Party. That is why the honourable member is continually interjecting: so that the Government will be unable to get through its important legislation. He is ashamed to know them. The Premier pointed out yesterday that when he dealt with those people they said, "We don't really need to talk to you, Bob Carr, we will be talking to the next Premier, Kerry Chikarovski, in a couple of weeks." Famous last words! If that shows their business acumen they should not have been allowed to own a telephone, let alone run a telephone company. Gee, you are a bad lot! Honourable members opposite have more fun when I make a speech than they do at 2.15 p.m., when the troops come into the Chamber and fill up all the Government benches. The Opposition is fairly quiet then, because interjecting—
Mr ACTING-SPEAKER: Order! I suggest that the member returns to the leave of the bill. If he does not we will still be here at 2.15 p.m.
Mr ASHTON: I am merely responding to interjections, but I take your point, Mr Acting-Speaker. The former member for East Hills, Pat Rogan, and I tried to assist a woman whose new house in Revesby was built by a respected, well-known home building company. When building the home they put down a slab. The building inspector came out and allegations have been made about his inspection routine. There are photographs that show that the slab was not laid on compacted soil, or on proper footings. It was simply plonked down in the backyard on some soft dirt. Needless to say, later on there were cracks in the walls and brickwork and it was impossible to open or close the doors.
The building company, which is a big and powerful company—not the one referred to by the honourable member for Kiama, but a famous company that advertises on television—decided to use its size and power to completely ignore requests to fix the problems. That went on for a couple of years, with Pat Rogan and I making representations. Finally, a resolution was achieved. As the honourable member for Port Stephens said about a case in his electorate, the family was emotionally destroyed after all that. Even though they finally won the case after three or four years of prevarication and obfuscation by the building company, I understand the family was emotionally destroyed. I hope their emotional state has now improved.
The new reforms will speed up the dispute resolution process. More importantly, they will go a long way towards ensuring that those types of shonky houses are not built at all. The Register of Licences will now include details of a contractor's non-compliance with orders of the Fair Trading Tribunal. Many consumers have placed great faith in the gold licence certificate of tradesmen, but this addition to the register will add extra protection. I am sure that in the past many tradesmen subject to proceedings and adverse findings of the Fair Trading Tribunal did not remove their "Licensed Builder" sign. It is still on the back of the panel van as they drive around and attempt to suck other unfortunate people into their deceitful web.
The list on the register will be specific. It will include public warnings, and a record of any cancellations, suspensions, fines or requests to show cause. The director-general will no longer have to provide 48 hours notice to those contractors. That merely provided them with an opportunity to quickly transfer any assets into the names of their respective wives or husbands, or enabled them to obtain passports and travel to Majorca—where most Liberal voters can be found. The bill also guarantees a lesser risk for the public.
The honourable member for Port Stephens mentioned the provisions relating to building consultants. People set themselves up and call themselves building consultants. They come around and say, "Oh yeah, not a bad house, it would be a pretty good idea to go ahead." They have probably been given a backhander by the real estate agent to say that it is a good-looking house. There is no guarantee that the person is not just a mate looking after somebody. The bill will ensure that consultants are fully certified. They will have to have a proper licence and professional indemnity insurance, hopefully taken out with a responsible insurance company. But how would we know after what has happened with HIH, given that APRA was taking no interest? A royal commission has been announced, but there are no terms of reference and no commissioner has been appointed yet.
Mr Campbell: "A few weeks".
Mr ASHTON: "It is in the pipeline." It is going to happen when John Howard finally gets around to giving a bit of thought to it. It was six or eight weeks before John Howard thought that HIH was going to be a problem. He said that it was an insurance company and that under the private enterprise system people perhaps should have looked more carefully at what company they insured with. That is what he said: it is on the record. A couple of weeks later when it became too hot, with publicity on the Alan Jones show and a few others and the Daily Telegraph having a picture of John Howard's mate Ray Williams on page 1 saying "Give back the money" John Howard decided to react. He is very reactive—in more ways than one, and reactionary.
Another good aspect of the bill is that it provides that builders will have to have photo licences, which will provide further protection. It has been suggested that not every photo licence is 100 per cent, but it is a little better to have a photo licence system for respected builders. There will be ways of guaranteeing that the photo licences are accurate. The Home Building Legislation Amendment Bill will improve consumer protection in the home building industry through reforms to the home warranty insurance scheme, the contractor licence system, better initial mediation processes, alterations to the jurisdiction of the Fair Trading Tribunal, and increases in the range of penalties for non-compliance. As I said at the start of my speech, in Sydney, where the cost of building a home is so prohibitive, this bill will go a long way towards guaranteeing consumer rights and further improving the building industry's reputation.
I congratulate the Minister, his staff and those interested groups, including the MBA, that have helped frame the bill. In the Minister's second reading speech he said that he was open to further amendments. As I have already said, the Minister spoke to the MBA on Monday. The MBA will probably come back asking the Minister to look at different aspects of the bill, and the Minister has said that he will do that. The Opposition has been pumping air into the issue to try to keep it going but the gas just leaks back out. Paul Keating, when referring to Andrew Peacock, said that a soufflé rises only once. This Opposition is yet to rise—but I do not think it will be a threat to anybody when it does. I look forward to the valuable contribution that will soon be made by the honourable member for Vaucluse, and I will wait here until he makes his contribution.
Mr ROZZOLI (Hawkesbury) [11.42 a.m.]: It is a pleasure to follow my good friend the honourable member for East Hills. One can never doubt that his heart is in the right place; it is not certain whether his mouth and head are connected to it in the right manner. I find amusing the ignorance of most Government speakers in this debate about the history of building protection for consumers. It is a sad and sorry saga extending over many years. As long as I have been in this House the same problem has existed. Governments of both persuasions, unfortunately, have consistently failed to deliver to consumers in the home building industry access to proper redress, equity and justice.
The honourable member for Keira referred extensively to the licensing of building consultants. There was almost a suggestion that this was a newly emerging problem and that it was wonderful that the Government had got onto it quickly. I can tell members on both sides of the House that this bill will fail to reach its consumer protection target, as have all others put through this House on this matter. I did not intend to speak on the bill because I am so despairing about the capacity of governments to address the problem properly but I was inspired by the comments from the other side of the House to say a few words. Many years ago I fought for many years a building consultancy firm called, amongst many other things, Carstairs Building Advisory Service.
Mr Campbell: They probably changed their name every second day.
Mr ROZZOLI: That is exactly right. The gentleman who ran it not only changed the name of the firm many times in the course of his history; he also changed his own name. He had many aliases. During the difficulties I had on behalf of a number of builders in my electorate—there seemed to be a whole heap of people who looked to me as the only person who was giving them any support—the Government was of no assistance. My great friend and colleague the then consumer affairs Minister Syd Einfeld, for whom I had the greatest of respect, failed to do anything about this, as did his department. In the end, the only people who made inroads into the problem were members of the fraud squad, to whom I give great credit. These shonks develop a very complicated manner of working which makes it very difficult, without a lot of time and effort and money, to go through the evidentiary trail to pin down the wrongdoing. One of the reasons is that we never seem to get the legislation right to pin these people down in a simple, quick and efficient fashion.
Ultimately the gentleman who ran Carstairs Building Advisory Service served a period of time as a guest of Her Majesty in one of our local institutions. That was good. Since that time I have not heard of his going back into the business. That case is from the late 1970s and early 1980s, but we are still talking about the same problem today. We are talking about licensing building consultants. But when I look at the bill I despair at its framework and the complexity with which it has been put together. All the apparatus that we put in place will serve only to grind down the honest builder more and more while the shonks seemed to keep thriving under the system. A person in my area—anyone in the department dealing with these issues will recognise the person I am referring to without my having to say the name—has been involved in a dispute. The original difference of opinion between the builder and the home owner was about $1,800. Subsequently, the matter has turned into a farce which has cost at the very least $1 million and possibly $2 million. It is very difficult to calculate the exact figure.
The way in which the department has handled the matter is a monumental disaster. The builder concerned is a man of great honesty and integrity who continually wins awards for the excellence of his building standards. Yet the original complaint that founded the litany of disaster that has followed involved a difference of opinion over less than $2,000. Any system that allows such a situation to get so far out of hand is absolutely bereft of commonsense or ability to address the problem. That is why, amongst other things, this bill will fail to achieve what it seeks to achieve, because the culture for dealing with these problems is wrong from the bottom up.
I am not going so far as to say that the people who administer the system are themselves corrupt, but the lowest I can put it is that they are incompetent. In many cases they are badly motivated. Under that system people make mistakes and later those mistakes have to be dealt with under the existing legislative framework. Rather than having a mechanism that cuts back to the original source of the problem, it get worse and the case ends up in court with long and complex legal proceedings—at least it did in the case I am referring to. That system further raises the cost to the taxpayers, the builder and the industry.
In relation to the HIH Insurance disaster, one must remember that HIH is an international conglomerate that is also in trouble in other parts of the world. I would be the first to say, as I said earlier this week in debate on the urgent motion involving One.Tel, that I have absolutely no sympathy for directors who do the wrong thing. So far as I am concerned they should finish up in gaol if they visit disasters such as the collapses of HIH and One.Tel on ordinary people. I refuse to be associated with those sorts of people. Leaving that aside, the New South Wales Government set up legislation which quite rightly required that builders take out compulsory insurance so that a pool of money would be available from which home owners could seek redress if something went wrong.
Government members conveniently ignore the fact that irrespective of what happened with HIH, the Government has a fiduciary duty to continually check the prudential security and viability of the insurers that it forced builders to go to to take out insurance. The concept of setting up regulation insurance should go through all the processes that a builder goes through to take out insurance. It is incumbent on the Government as a fundamental fiduciary duty to ensure, as best as it can through its prudential examination, the security of insurance companies to which it inevitably directs builders. That is where the Government failed demonstrably and it will, I trust, be the subject of the close subsequent investigation into the collapse of HIH Insurance.
The Government failed to meet its fiduciary duty to builders who were forced to take out insurance under this type of legislation. This legislation is analogous to shuffling the deck chairs on the Titanic. The legislation appears to be great, logical and it ought to work. However, I ask honourable members to reflect on the fact that this is the latest episode in the long-running saga—it is a little like "Blue Hills" or Days of Our Lives—of attempts to address the problem. The bill will not address the problem any better than earlier legislation, because the necessary analysis to come up with an effective and simple solution is not happening. I cannot say why that is not happening.
The people who are generally involved in addressing that problem are intelligent, but they have got themselves into a bureaucratic bind in which they cannot see the wood for the trees. They cannot come to terms with the fact that the system has demonstrably failed all the home owners of this State forever and a day. They need to realise that the system is continually failing and that we need to go back to square one and start again rather than graft onto what we have already: a structure which, if subjected to home building inspection, would be condemned. Instead of building on the shaky structure we should go back to square one and rethink the process. I say that based on an examination of history. It is easy for honourable members who do not have that knowledge of history to read the legislation, to think at first glance that it looks good, and to support it.
Given the experience of history, this legislation is no more likely to work or give the protection sought by home owners than any previous legislation. Irrespective of the new measures undertaken in an endeavour to bring the building industry into line, the shonks, the wheeler-dealers, and the less-than-honest people involved in the building industry will still find ways of getting around this type of legislation. Sadly, it is often the gullible, naïve, trusting person who is caught. Often those building their first dream home have little experience of those sorts of things.
As a member of Parliament I continually receive complaints and hear sad and sorry stories about these matters that are upsetting and distressing to the people involved. It is of great concern to me that after all this time I have an intuitive feeling that we are no closer to the solution now than we have ever been. I call on honourable members—and I do not care which side of the House they are on—to have a long, hard think about the history of this type of legislation and to question whether this bill is the way we should approach this matter. Should we go back to the beginning as if no legislation were in place and find a better and more effective way to approach this matter? Many people have never received redress under the legislative packages that have been brought in during the years. As legislators we stand indicted for our failure to do our job in that regard.
Mr CAMPBELL (Keira) [11.57 p.m.]: Initially I thought that the contribution of the honourable member for Hawkesbury strongly supported the legislation. For the first half of it he had me very much on side, but then he strayed a little. For whatever reason, he finished by saying that many families get into strife as a result of people doing the wrong thing. Clearly we have to keep building on what we have. However, it is interesting to note that with the exception of the honourable member for Hawkesbury, not one member of the Liberal Party has contributed to this debate. All contributions from the other side of the House have been from the National Party. The city Liberals, as opposed to the country Liberals, have shown no interest in this debate. They have not come into the House to talk about it.
Mrs Skinner: We haven't finished yet.
Mr CAMPBELL: I am making the point that members of Country Labor are here and I am pleased that we have been able to shame members of the Liberal Party other than the honourable member for Hawkesbury into taking part in the debate.
Mr Debnam: We will discuss Wollongong City Council next.
Mr CAMPBELL: That would be fine; we can discuss any local government authority that you like. The honourable member for Burrinjuck asked about the Government's vision on this matter. The Opposition's vision is a rear vision: it keeps looking backwards; it keeps going back to the past instead of admitting that problems in the home building industry continue. As the honourable member for Hawkesbury said, none of us can deny that, we all have heard stories and I have one that I may mention shortly. We all have heard stories from our electorates that tell us that we have to keep moving forward.
After six months of consultation and discussion this bill takes a forward step rather than follow the rear-vision debate of the past. Importantly, the Minister for Fair Trading has gone to considerable trouble to ensure that the community generally, and interest groups associated with the building industry, have had an opportunity to look at the bill and comment on it. The Master Builders Association certainly has had an opportunity to do that. Although it may not be totally satisfied with the end result, consultation does not necessarily mean that the Government absolutely agrees with every proposal put up during the process. I acknowledge and thank the Minister for consulting.
The main purpose of the proposal is to improve consumer protection in the home building industry through reforms to the Home Warranty Insurance Scheme and the contractor licensing system to establish a better process for the resolution of building disputes and to alter the jurisdiction of the Fair Trading Tribunal. The bill contains a package of reforms for the home building industry related to licensing, insurance, dispute resolution, contracts and the Fair Trading Tribunal. That fits very well with the best traditions of Labor governments, which seek to ensure the protection of consumers in this State. Consumer protection in the home building industry is the responsibility of the Department of Fair Trading under the Home Building Act. The Act aims to protect consumers through the contractor licensing scheme and the associated disciplinary process, the Home Warranty Insurance Scheme, and through the resolution of dispute and the provision of consumer advice.
The need for home building reform has arisen from a review of the legislation—and rightly so because it is appropriate for government to review existing legislation—as well as from concerns raised by home owners, consumer advocates, industry associations, insurers, builders, members of Parliament and other interested parties. The reforms set out in the bill are intended to significantly improve the level of protection for consumers by tightening the licensing system, speeding up the disciplinary process, increasing penalties for non-compliance with the Act, making the insurance scheme fairer and more accountable, establishing an early intervention dispute resolution system, and raising community awareness of remedies that are available when things go wrong.
In addition, members of the building industry will benefit through these reforms, especially those relating to dispute resolution and continuing education. With regard to licensing reform, the review of licensing in the New South Wales home building industry recommended that a number of changes be made to the licensing system. A major recommendation to change from a contractor licensing system to a business licensing system is not supported at this time. Instead, based on consultation with builders, consumers and industry associations, the Government believes that the current licensing system should be enhanced to provide a greater level of protection for consumers and a simpler system for builders. A further review will be conducted.
With regard to insurance reform, under the Home Warranty Insurance Scheme introduced in 1997 the Home Building Act, subject to certain limited exceptions, provides that persons contracted to do residential building work costing more than $5,000 must arrange insurance cover for the work. Since November 1999 all applicants for a new licence or existing licence holders seeking to renew a licence as builders, and certain other categories, will be required to provide proof that they have, or are eligible to obtain, insurance cover for future work. Consumer complaints about the system mainly relate to the claims handling processes of the insurers. From the industry perspective, the main complaint is that insurers have unreasonably raised both the financial requirements and premiums. After almost three years of operation it is clear that further reform is needed.
Small businesses in my area have told me they have difficulty in obtaining insurance because of the bureaucratic structures and detailed requirements of insurers. As business operators they believe those requirements are particularly onerous and make it difficult for them to obtain insurance. The dispute resolution process also forms part of this bill and without doubt most honourable members have war stories to tell about this process. As a result of representations by consumers, the department's ongoing monitoring of the insurance scheme, and consultation with building groups, insurance groups and the Home Building Advisory Council, there is a clear need to better define where an insurance claim can be made and to establish a new dispute resolution process for the industry.
There is general consensus amongst interest groups that an alternative dispute resolution process is required to deal with residential building disputes that is simple to follow, cheap to use, provides a quick resolution, and is attached to the Fair Trading Tribunal. In addition, all interest groups recognise that an integral feature of any process is early intervention. Unless the parties are brought together at the initial stage of the dispute, the dispute can rapidly escalate and the chance of informally resolving the dispute decreases substantially.
In this regard I wish to tell a war story about a constituent of mine who entered into a contract with a builder to do repairs to her roof for $5,900. Over a period of four years the tribunal sent this builder back four times to repair the original botched job. Each time he made it worse, to the extent that an award was made against the builder in the sum of $25,000. My constituent made a claim in the Local Court in an endeavour to extract that sum from the builder, and a further claim has been made by her against the builder in the sum of $20,000 for costs incurred in employing consultants and the like to recover the $25,000. The project started out with a contract price of approximately $6,000 and has resulted in an award of $25,000 and a further claim of $20,000. Who knows how much has been spent by both parties, the tribunal and the Government along the way? It is that type of war story that the dispute resolution and reform might address, and that is appropriate.
When things go wrong, and at the end of the day when the shonky builder is held to account, the penalties are important. The bill provides that the existing penalties be doubled, and I support that. The penalties should be substantial for those who create so much misery for families along the way. They should be as tough as possible. This process looks forward; it seeks to build on what we have learned from past difficulties, rather than take the rear-vision approach of the Opposition—although I understand that the Opposition will vote for the legislation, in any case. I commend the bill and look forward to consumers and families receiving the protections it provides.
Mr DEBNAM (Vaucluse) [12.08 p.m.]: I take issue with a number of comments made by the honourable member for Keira. One is clearly the attitude of the Coalition. The honourable member for Keira needs to remember that the bill should be seen in the context of history, and the Labor Party must learn from history. It was elected in April 1995 and more problems have arisen in this area of regulation since then. A number of changes have been made to regulations and a number of regulations have not been enforced because the Labor Party does not do its homework. When it came to office in April 1995 it had not done its homework. It had run a cynical election campaign promising the earth—it was a scorched earth policy across New South Wales. Bob Carr basically promised anyone anything.
Labor found itself in government in April 1995 and it did not know what to do. It was saved by the bureaucracy and the public sector. Some of the Minister's comments in his second reading speech inspire me to think that some professionalism remains in the New South Wales public sector. The speech highlights a number of problems; it is not in denial because it was written by the public service. However, this Government is in denial, as are Labor members who have spoken in this debate. The honourable member for Hawkesbury pointed out that home building problems are a sad and sorry saga that has continued over successive governments. This is an area of major concern to millions of people in New South Wales, and Parliament has still not got it right. This bill is another band-aid measure from the Carr Government. It should go back and do its homework and see what other improvements it can make.
This bill can be described overall as an admission of the failure of regulation in New South Wales. I will refer later to some of the particular failures of this Minister and his predecessors. The Minister's second reading speech points out time and time again that previous legislation enacted by the Carr Government did not work. It did not work in some very obvious areas, simply because the Government did not do its homework. It remained in a state of denial for as long as possible, despite continual representations and advice from the department highlighting concerns. When the Government finally realised it had better do something about this issue, it introduced this band-aid bill and blamed everyone else. In his second reading speech the Minister stated:
The current system of consumer protection for the home building industry was established in May 1997.
The Carr Government came to office in April 1995, and things have gone downhill for the State ever since. The Government did not do its homework when it introduced that legislation. The Minister continued by saying that it had become "patently clear" that there were major problems and that:
… consumers and builders alike have expressed dissatisfaction with aspects of the current legislative regime.
The Government has taken four years to try to sort out some improvements and include them in this band-aid bill. The Minister went on to say that one of his major concerns is:
… the apparent ability of shonks to continue to operate in the industry.
We are pleased to hear that the Minister is worried about that. The Minister for Local Government, Minister for Regional Development, and Minister for Rural Affairs is at the table. One of his colleagues clearly applied that general comment to Labor councils in New South Wales and the obviously incestuous arrangements between those councils and the building industry that prevail in many areas. The Minister should address that issue. He should do his job on behalf of the people of New South Wales. He should give away one of the cars that he has garaged across the State, stay in his office, and do his job. I urge him to investigate some of these concerns and get to the heart of the matter. The Minister has not done that to date even though the Minister for Fair Trading referred in his speech to:
… the apparent ability of shonks to continue to operate in the industry.
That is partly the problem of the Minister for Local Government, and he should do something about it. The Minister said further in his second reading speech:
In recent years there has been an increase in the use of building consultants by consumers in the home building industry.
There is one reason for that: the planning legislation in New South Wales is so complex that I defy those who are not experts in the field to find their way through it. It is no wonder that there has been an explosion in the number of planning and approval consultants in New South Wales since April 1995. That has not happened in other States that have simpler systems. I thank the Minister for making that point in his speech. The Minister for Local Government should go to his colleague the Minister for Urban Affairs and Planning and do something to simplify the system in New South Wales. The Government has made various attempts to change the planning system in the past couple of years, but it has still not got it right. The system remains extremely complex and the man in the street cannot make progress with it. The Labor Party has generated an industry in building consultants, and I am pleased the Minister for Fair Trading acknowledged that in his second reading speech. The Minister went on to comment on various problems, and said:
I hasten to add that these issues arose prior to the HIH Insurance collapse, which was in no way linked to the company's provision of home warranty insurance in New South Wales.
The Minister is a very cynical operator. He is at least partly, if not mostly, responsible for some of the problems experienced by HIH in New South Wales, but he has denied it. I will return to that point. The Minister should have done his job instead of seeking all possible cheap publicity regarding his portfolio. While he was out seeking cheap television and press publicity, he was not doing his job in the office. The department obviously warned him, but the Minister was not interested. A little later in his second reading speech the Minister said:
This bill also contains various provisions to improve the monitoring of the Home Warranty Insurance Scheme.
That is obvious because we must do a lot more to improve that monitoring. I will return to that point later. The Minister has been remiss in this whole area. Talking about a requirement in the 1997 legislation, he said:
This requirement had an unintended result … the improvements in dispute resolution the 1997 Act was meant to bring have not eventuated.
Those improvements have not eventuated because the Minister did not do his homework. Labor tripped into Government in April 1995. It did not know what it was doing and it had to figure out its course of action. In 1997 the Government eventually introduced legislation, which has caused massive problems. The Government did not get it right because it did not do its homework—and it has taken four years to attempt to address the situation. Various honourable members have mentioned continuing problems and, as the honourable member for Keira said, there is no shortage of war stories that highlight the real problems with regulating building in New South Wales.
I turn to the attack that the honourable member for East Hills launched against the Master Builders Association [MBA]. This is the way the Labor Party runs government in New South Wales. The strategy was picked up from Paul Keating and it has been entrenched in Ministers' philosophy: If there is any disagreement whatsoever on the part of any industry body, launch a personal attack. The honourable member for East Hills, who is obviously a cricket fan, said that the MBA "can't read, can't write". When the Government attacks the people it is trying to work with, it creates dissent throughout the industry. That will not help it get this legislation right.
This bill is not yet right, and Labor will have to work on it in its remaining 21 months on the Treasury benches. The Government will have to work with organisations such as the MBA, and I suggest that the vicious comments by the honourable member for East Hills will not help the Government to resolve many of these issues. There can be no doubt about it: HIH is a Carr crash. HIH crashed because the Carr Government failed in its responsibility to New South Wales.
Mr Woods: What about APRA?
Mr DEBNAM: Who failed? The Minister for Community Services was the first Minister to fail with HIH. The Minister for Fair Trading, and the Minister for Industrial Relations, the Hon. John Della Bosca, also failed. They are three failed Ministers for a start. For whom do they work? They work for Bob Carr. That is why HIH is a Carr crash. The Government is responsible; it should stop blaming someone else. Why is this Government in a continual state of denial? Why does it not take it on the chin and do something about the problem? Those Ministers should be held personally responsible for the current situation. Referring to the HIH saga, the Leader of the Opposition said:
When the Home Building Act came into force in May 1997, the Carr Government in a desperate attempt to accredit approved insurance underwriters for the scheme, signed up HIH Casualty and General Insurance who were not even listed in the phone book.
The then Minister for Fair Trading, Fay Lo Po', signed up HIH just 24 hours before the Act came into force, refusing to heed Opposition warnings to impose a moratorium on the start of the regulation until the necessary infrastructure was in place.
The Leader of the Opposition highlights the various responsibilities of the Minister. I will come back to that. The approach of the Labor Party to any problem is to play cynical, shallow politics. That is a problem for New South Wales. This Government has been on the Treasury benches for a little over six years, and since then New South Wales has had increasing problems in every area of regulation. One could almost summarise the Carr Government as "a failure of regulation". I will not go into the Government's approach to corporatisation, which it has totally messed up. I will leave that to a later date and stick with its failure with regulation.
What did the Coalition do in the upper House in relation to HIH Insurance? We called for an inquiry? What did that the Government do? The Government fought tooth and nail in the upper House to avoid an inquiry. What a bunch of cynical HIH hypocrites! That is not a stutter. HIH is a Carr crash. The Carr Government is responsible for it. In his second reading speech the Minister discussed all these issues at length. At page 22 of the first of two volumes of the 1999-2000 Annual Report of the Department of Fair Trading there is a paragraph headed "Home warranty insurance monitored". Generally, we do not take notice of the headings of various paragraphs in most publications, but the word "monitored " is used. The report states:
Amendments to the Home Building Act made in 1997 established a Home Warranty Insurance Scheme that replaced the government operated schemes. The following five companies or their agents were approved by the Minister for
Fair Trading to offer Home warranty insurance.
The first company listed is HIH Casualty and General. In case honourable members missed it, the words prior to that were, "The following five companies or their agents were approved by the Minister for Fair Trading". That was a Minister of the Carr Government. Who was it? At that time it was Faye Lo Po'. The Minister for Fair Trading approved HIH. As I outlined previously, and the Leader of the Opposition has outlined in great detail, the Minister for Fair Trading approved HIH in a great rush. One has to ask why. I might come back to that a little later. Two paragraphs later the report states:
The intention of the private insurance scheme is to provide consumers with direct access to the insurer for claims processing and to enable insurers to take recovery action against the contractor. The Department monitors—
I repeat—
The Department monitors approved insurers' claims-handling procedures and provides information to consumers on avenues for dispute resolution.
The present Minister, Mr Watkins, received a series of representations on HIH. He, and the department, knew that there were problems. What did the Minister do? He ignored them. The people of New South Wales had to suffer for years with this company, as it did everything possible to delay settlement disputes, and the present Minister for Fair Trading was responsible. It is no wonder that he scurried out of the Chamber just before I spoke.
Mr LYNCH (Liverpool) [12.23 p.m.]: Unlike the previous speaker, I will try to restrict my comments to the bill. This bill is a matter of considerable interest to me for two primary reasons. One is that the Liverpool local government area has been claimed to be the largest growing area in New South Wales for a number of years. A whole series of new estates are being developed in south-west Sydney in my electorate, which includes Hinchinbrook, Green Valley and Cecil Hills and a range of neighbouring suburbs, such as a Wattle Grove, Prestons, Carnes Hill and Hoxton Park. With developing suburbs, new houses are built. Inevitably, even at a statistical level, that means a significant number of complaints about the nature of the buildings and the conduct of the builders involved. People in my electorate who have had concerns about the building industry will welcome this legislation, if it tightens the current legislative regime, as it is proposed to do.
My other interest in this legislation relates to the extraordinary emotional commitment that people make to building a house. It is one of the most substantial investments people will make in their lives. If it goes wrong, it is an absolute catastrophe for them. Several members have spoken today of how a dream home has turned into a nightmare—words that unfortunately many of us have used over the last few years. Whilst it is a cliche, it is an accurate presentation of the difficulties many people have with builders. This legislation, which proposes to regulate building work and builders, is a positive step. A tightening of the renewal process and an early intervention scheme to resolve disputes are a welcome addition to the current legislative scheme.
I have dealt with a number of complaints about difficulties with builders in my electorate. Perhaps the most notorious was a firm called Reef Pools, whose principal was Ken Burke. He probably rates as one of the most despicable people ever to engage in building practices in this State. The number of complaints received about him were legion. He, and the corporate entities he was responsible for, had an appalling standard of work and were regularly guilty of unforgivable delays. Some time ago Faye Phillips, who had a house at Hinchinbrook, came to my office. She had the horrific complaint of sewage collecting in her swimming pool, which had been constructed by Reef Pools. Approximately 20 other couples attended my office with her.
When I made inquiries of the Department of Fair Trading, I was told that about 70 more complaints had been lodged against Reef Pools. This matter occurred some time ago, but the problems are ongoing. Mr and Mrs Williams, who have corresponded with me, contracted in 1998 to have a pool built by Reef Pools. Three years later their problems are ongoing. They received a letter from Liverpool council dated 6 December 2000 which refers to an "unauthorised raised wall section to the eastern (curved wall) elevation" on their property. That letter included a rather frightening paragraph which states:
Council is not permitted to give retrospective approval for works after they have been undertaken. Therefore you are to within thirty (30) days submit a structural engineer's details and report certifying the variations to the structural variations of the swimming pool wall. In respect to the matter of safety and loss of opportunity for safe access to the pool, this entire issue is not one for Council as the works undertaken are illegal. Council may proceed, if not satisfied with requested certification, to issue a demolition order on the unauthorised works.
Such catastrophes remind us of the significance of these incidents. The complaints against Reef Pools read like a horror story, and people are still suffering the consequences three years later. Reef Pools is not the only builder I have had difficulties with in my electorate. Many people have come to talk to me about difficulties in housing construction in the new release areas. People such as Ben Ward, Bruce Etherington, Sharon Giannine and Peter Young have come to me in the past 12 months to complain about builders, delays in construction and thoroughly inadequate construction standards. If a tightening of the legislative regime is implemented by this legislation, every member of the House will support it. Given the time frame for this debate, I will leave my comments there.
Mrs GRUSOVIN (Heffron) [12.28 p.m.]: I support the Home Building Legislation Amendment Bill and hope it will provide effective protection for consumers. I have listened intently to this debate, and have noted in some of the contributions a degree of cynicism as to whether the legislation will be effective. I believe that the Minister has made great strides in addressing very defective consumer legislation that failed to protect consumers. If we were frank we would admit that the legislative amendments put in place in 1997 were gravely flawed. Since then, consumer protection has been going backwards, particularly with home building. As a member whose electorate was devastated by the Sydney hailstorm just two years ago, I have had a very wide exposure to the building problems that many of my constituents experienced.
I feel very much for the very good, very efficient, very credible builders who, because of the present circumstances and the collapse of HIH, are in grave difficulties. Many of those builders have provided good building practices for their clients and have caused no problems. But the climate in this State has allowed shonky builders to operate without any control. I understand the dilemma for the Department of Fair Trading; I understand that officers of the department have been frustrated by the limitations of the legislation under which they have had to operate. I am very pleased that the Minister assured the House in his second reading speech that the bill will improve the delicate balance between better regulation and a better deal for consumers, as well as a fair go for builders. I am also pleased that he has given a commitment to further consultation and an improved process.
I hope that will occur not only during the course of this debate and in the other place but through the Minister taking a proactive rather than reactive approach to problems that will inevitably arise because, unfortunately, no legislation can deliver absolute perfection. I have worked very closely with a number of constituents who have experienced the very worst of problems in these last years. Among the victims of this one builder—Prince Construction—are two family members. I cannot begin to express my angst and frustration in witnessing what has occurred to innocent victims of builders who have been able to use every technical malpractice in the book to allow them to continue to ravage innocent people. I am very pleased to be able to inform the House that Prince Construction is now in liquidation, and its licence has been surrendered.
However, the company is in liquidation only because in the early part of this year the builder sought to have his company put into liquidation. Had that not occurred my constituents would have continued to be in limbo. Unfortunately, they will not be helped by the legislation we are currently debating. I am hopeful that consumers will be afforded the protections currently denied my constituents. I am very pleased to note that in the month of May Peter Yassa, who operated as the Director of Prince Construction, had his licence suspended. If one were to look at the liquidation proceedings and circumstances of Prince Construction, one would note that the total outstanding debts of $644,057—roughly $250,000 of which is owed to the directors, that is Peter Yassa and his wife, Sharon Yassa—includes substantial debts to very large and well-known companies in the building industry. I am aware that, in the course of the last couple of years, a number of those companies have become involved in expensive court proceedings in an attempt to secure the money owed to them.
One of the largest debts in the wind-up proceedings, $93,000, is to Doyles Construction Lawyers. Peter Yassa was so litigious that if anyone attempted to deal with him, whether that person was the consumer or the supplier, he went straight into court. My constituents were aware of his inadequate, irresponsible building work and terminated his contract. Unbeknown to them, on the basis that they were refusing to pay him further money he filed a cross-action in the District Court six days before they terminated his contract. That precluded my constituents from having the matter dealt with by the Fair Trading Tribunal. As with other litigants, he continued to delay the matter through the District Court. If the company had not gone into liquidation, my constituents would continue to be in a very precarious situation. They have incurred substantial legal debts in an attempt to try to save their homes.
Building a home today is a substantial commitment. Usually people have only one opportunity to secure their home and their future. If anything goes wrong, as it did in this case, they become totally exposed and face the loss of everything, and an inability to ever put another roof over their heads. I have lived with it first-hand and I know the despair, the anger and the sheer frustration of so many people who have had such a rotten deal and who, unfortunately, will not be helped by this legislation. However, I am reassured by the undertakings given by the Minister. The proposed amendments will provide for close monitoring of the insurance scheme. Prior to 1997 a totally self-funded building insurance scheme was available to consumers. The system has become very adversarial. It seems that, if at all possible, insurers are determined to pay out nothing to victims of shonky builders. We will have to monitor closely how these matters are handled by the insurer. I welcome the legislation, which will deliver more effective consumer protection in this State.
Mr COLLIER (Miranda) [12.37 p.m.]: I welcome the bill. I note that the Minister for Fair Trading undertook extensive consultation with major stakeholders over 18 months. The bill will tighten up the home building legislation, improve the monitoring of the home and building insurance scheme, and provide protection for those who buy off the plan. Mrs Pont, one of my constituents who lives at Loftus, wanted to buy into a unit development in Miranda, but she discovered a potential gap in liability insurance. The developer started off with a builder who went bankrupt. The developer then decided that he would take over, which he did for a while. He then employed another builder. The development was effectively built by three different builders.
Apparently, some of the defects appeared to be attributable to the second period when the developer had taken over. The problem was that there was no identifiable insurance attached to that period. People who wanted to buy into the unit development could not be assured that they had continuous coverage under the home warranty assurance legislation. When this matter was first brought to my attention I raised it with the developer, who assured me, "Oh yeah, it's all there, mate. We're right. We're all covered." But he could not produce documents to prove it.
The Ponts wanted to complete the contract but the developer was attempting to weasel out of it. He offered to agree to rescind the contract because Mrs Pont was making too many waves. She said that she wanted to go ahead with the contract. She informed the builder that she wanted to live in the unit, but that she wanted reassurance that her property was protected by insurance. What next occurred was that the developer decided to issue the Ponts with a notice to complete. The builder effectively demanded that they buy the property, even though he could not guarantee that the home-building warranty insurance would cover the gap.
I am grateful to the Minister for Fair Trading for his intervention in this matter. The Department of Fair Trading had to drag the builder, kicking and screaming, to the Supreme Court in order to obtain an injunction to restrain him from proceeding with the notice to complete. They were expensive proceedings and they continued for the better part of six months. I have in front of me a letter dated 12 May which indicates that the Department of Fair Trading was successful in having the developer withdraw the notice to complete, and also successful in forcing the developer to take out insurance coverage for the gap in the insurance period between the builder going bankrupt and the third builder coming on board—the period when the developer decided to do a bit of building work himself.
The Ponts are covered, but their case demonstrates the importance of this bill. Instead of having to make application to the Supreme Court and spending thousands of dollars on injunctive proceedings, the Department of Fair Trading will have additional powers. It will be the port of first call, the place where proceedings can commence and matters can be dealt with expeditiously. The bill will make it an offence for a contractor to knowingly mislead the Director-General of the Department of Fair Trading—in the way that I believe the developer attempted to mislead me by saying that he had insurance cover and that there was not a problem. It was only because Mrs Pont wanted the unit and insisted on her rights, and because she would not be fobbed off by the developer, that the Department of Fair Trading was intervened and spent a lot of taxpayers' money to get what truly belonged to her. As a result, not only Mrs Pont but also the 60 others who bought units in the development are protected.
I congratulate the Minister for Fair Trading and officers of his department, with whom I worked closely, on taking this developer to court to obtain for Mrs Pont and others like her what is rightfully theirs. I also congratulate the Minister on having introduced this bill, which will provide better protection for these consumers. It will also give those who wish to buy off the plan a five-day cooling-off period. It will provide them with a way out and with faster access to the Fair Trading Tribunal. I support the bill.
Mr PICCOLI (Murrumbidgee) [12.43 p.m.]: A number of members of the Opposition have addressed the bill in detail. I support their comments and will not oppose it. The bill addresses a number of matters, but I believe that there are a number of other very pressing issues relating to the building industry. As late as this morning I was contacted by Quiprite Pty Ltd, a company in Griffith in my electorate, which is facing some very difficult times in its business because of problems arising from the collapse of HIH Insurance. Quiprite sent me a copy of a letter that the company forwarded to the District Manager, Australian Business Ltd, seeking assistance. For the benefit of the House I will read part of that letter:
Our company Total Leisure Pty Ltd install swimming pools. In the past we would purchase insurance from HIH via the local Council. With the demise of HIH we have had to apply for insurance from the remaining two insurance companies Dexta and HIA. Applications were forwarded to them via courier express on 18th April 2001.
Since then we have received a letter from HIA on the 20th April 2001 requesting further information.
On 1st May we sent the requested details along with an assessment fee of $110.00.
We ring daily to HIA. Reception answer the call and transfer us to a message bank where we get absolutely no response. Dexta do not even answer the phone.
Today this is the problem we face:
1. We derive 66% of our income from the sale and installation of swimming pools.
2. We have not been able to undertake work since 1st May, which equates to approximately $125,000 income.
3. We have laid two staff off and a third has been reduced to 1 day per week.
4. A fourth person will be laid off next week.
5. We are currently negotiating an overdraft extension in order to remain viable.
6. It has been reported to me that Dexta usually handle 2000 applications per year. They have received 7000 applications in 6 weeks.
7. It has been stated that both insurance companies may not have the underwriting capacity to handle all the applications.
8. It has been suggested to get owners to take out homeowners applications with councils in order to get the plans approved. This is fine but the Department of Fair Trading states that any licensed person who undertakes work (including goods supplied) over $5,000 must issue a homeowners insurance certificate. It has been rumoured that the Department of Fair Trading is checking and fining any builder in this situation.
9. It has been indicated that it may take 3 to 6 months or maybe longer for the insurance certificates to be issued.
10. This business cannot possibly sustain its viability over this period of time.
This same situation will be affecting any builder who is applying to Council for processing of building plans for homeowners.
This problem is not an insurance problem it is a Government Legislation problem. The Government needs to recognise their legislation in regards to homeowner building applications is stopping companies like ours from operating.
My suggestion, which I have already passed to my local State Member of Parliament Adrian Piccoli, is that Councils hold a payment in trust until insurance certificates can be issued. The only problem with this is if the insurance companies ultimately will not accept the client then the government must underwrite those particular building applications issued by Councils where the money is held.
The collapse of HIH Insurance has caused a number of problems for many people throughout New South Wales and Australia. Quiprite in Griffith is one business that has been seriously affected by the collapse of HIH Insurance. Whilst the bill deals with a number of anomalies within the building industry, issues such as those raised by Quiprite in its letter to Australian Business Ltd are important and it is equally important that they should be dealt with quickly. Perhaps the Government did not have time to include in the bill measures that would have assisted that company, because the HIH Insurance issue is current. I hope that the Minister in his reply will address some of the issues raised by Quiprite because it is a successful business in Griffith that employees a number of people. As stated in its letter, that company will have difficulty continuing in business unless something can be done to assist it. Such assistance would only need to be in place for a relatively short period, until the insurance industry is sorted out following the collapse of HIH Insurance. In the meantime any assistance will help businesses such as Quiprite to survive.
Mr NEWELL (Tweed) [12.48 p.m.]: The aim of the bill is to improve consumer protection in the home building industry through various reforms. The bill contains packages of reforms for that industry relating to licensing, insurance, dispute resolution, contracts and fair trading. The reforms are the result of a review of the legislation undertaken in the past 18 months. The review addressed a range of issues, as contained in the bill. My remarks on the bill relate to problems similar to those encountered by other members in relation to building disputes. Some of the first representations members would have made on behalf of constituents would have concerned people having difficulty with some aspects of the building industry. I have made such representations to the Minister.
The bill will remove the need for the director-general of the department to give 48 hours notice of the issuing of a public warning if there is an immediate risk to the public. It will be an offence for a contractor to knowingly mislead the director-general as to whether an order of the Fair Trading Tribunal has been complied with. The purchaser of a dwelling from a spec builder will be able to rescind the contract of sale if the required home warranty insurance is not taken out. Concerns of my constituents have covered the gamut of various aspects of building, from earthworks, plumbing and drainage to general building. People in the industry have had a mindset that they have a right to operate in the industry.
In putting forward this bill the Government is attempting to change that mindset, to instil in people that they do not have a right to work in the industry but must work with the rules and provide a service to the consumer. The bill is about protecting the consumer from some of the problems that have arisen. Many of the problems in my electorate may have been avoided if inspection of particular aspects of building work had been undertaken as required. Had some of the people licensed through the local government system to tick off work been more stringent, the problems could have been addressed. I do not know whether there is a mateship system in operation, but one tends to be cynical and to come to that conclusion.
I estimate that a quarter to a third of complaints could have been nipped in the bud had action been taken early. Some of my representations to the Minister for Fair Trading have dealt with aspects of the licensing system. Those issues are addressed in the bill. Licensed builders have gone broke or, after having an order made against them by the tribunal, have disappeared into the ether and reappeared within a month or so working under a licence held by a subcontractor or a family member. Those builders have considered it fair that they should be able to continue working in the industry in the way they had in the past. I look forward to putting some of those people out of work. Licensed builders from Queensland come across the State border to work in my electorate. Many carry dual licences, but not all of them. Local tradespeople would like more policing of licences, particularly in the border region of the Tweed. I look forward to the situation being tightened considerably.
I welcome the new insurance provisions. Certificates issued before 15 March will be validated by the bill to ensure that consumers rights are protected in relation to the HIH Insurance collapse. I commend the Government for working so quickly and effectively to give consumers this further protection. I commend the bill and look forward to seeing how it functions in practice. Some Opposition members were critical of consumer protection in the building industry in the past. This is an ongoing problem. Legislation may be amended but people try to get around the provisions and it is sometimes necessary for amendments to be made later. I look forward to the bill giving consumers of services provided by the building industry, particularly in my electorate, the protection which they so rightly deserve.
Mr GAUDRY (Newcastle—Parliamentary Secretary) [12.57 p.m.]: I join my colleague the honourable member for Tweed in congratulating the Minister on bringing forward the bill. It is the result of 18 months of consultation with all people with an interest in the building industry, including consumers. It is part of an ongoing series of reforms relating to the building industry to increase consumer protection, to act against shonky builders, and to deal with the turgid processes that have occurred within the Fair Trading Tribunal. Insurance companies have also approached the Government on the matter. The purchase or major renovation of a house is the principal decision in the life of a family. If people are in conflict with the builder or do not understand a contract, resolving the problems can result in years of emotional stress and difficulty.
The collapse of HIH Insurance has emphasised the need for action. Many examples have been given in the debate of consumers caught by shonky builders. The collapse has also comprehensively demonstrated the absolutely deficient oversight of the insurance industry by the Australian Prudential Regulatory Authority and the almost beyond belief contemptuous behaviour of the principals of insurance companies in leaving thousands of people in the lurch and awarding themselves massive amounts. I commend the Minister on the consultation process.
The second reading speech shows that consultation was right across the building industry—the Housing Industry Association, the Master Builders Association, the Master Painters Australia Association, the Master Plumbers and Mechanical Contractors Association, the National Electrical and Communications Association, the Swimming Pool and Spa Association, the Landscape Contractors Association and the Building Industry Skills Centre. Since the draft bill was released 47 submissions have been dealt with. That consultation has continued up until this week. In the context of the HIH collapse, Robert Fuller from the Master Builders Association at Newcastle made it clear in discussions with me that he appreciated the opportunity to have input into the preparation of the bill during the consultation period.
As late as last Friday the Minister met with Robert Fuller and other representatives of the association, HIH Insurance, the insurers, the pool and spa group and landscapers to work out guidelines of communication in relation to the problems faced by the building industry in seeking reinsurance through Dexta or the Housing Industry Association. Last Monday the Minister held discussions with the Master Builders Association about issues facing builders in Newcastle, where a great number of builders were insured through the HIH home warranty insurance scheme. I understand that following those discussions a clinic will be run in Newcastle in the next week involving the insurers, the industry associations and the Department of Fair Trading. The clinic will focus on assisting builders to return to work. The bill demonstrates the Government's quick and full response to problems facing the building industry. The honourable member for Murrumbidgee may not have read the part of the Minister's second reading speech which stated:
I turn now to additional provisions included as a result of the devastating HIH collapse. The bill contains a savings and transitional provision which places beyond doubt that certificates of insurance issued by contractors on or before the provisional liquidation of HIH on 15 March 2001 are valid. This should address the widespread confusion which has arisen on the part of builders, developers and consumers as to whether they could continue to rely on these certificates and whether they were in breach of the Act.
In the case of consumers who had HIH home warranty insurance in place as at 15 March 2001 they will be covered by the New South Wales Government's rescue package.
That is a clear indication of the Government's commitment and rapid response through this legislation. I will cite one example which indicates clearly how people have been caught by the HIH collapse. My constituents Mr and Mrs Fishpool of 101 Ridge Street, Merewether, signed a contract with a licensed builder, W. J. Harris Constructions Pty Ltd, who held home warranty insurance with HIH. However, Mr and Mrs Fishpool did not realise that the builder was in deep trouble before he started the job. People started phoning them and going to their house looking for the builder to get money owed to them for previous work. The builder's men continued to work on the job and made out that nothing was wrong. My constituents were harassed by the builder for money and when it came to drawing money for payment he said that he was still waiting for more equipment to arrive.
The builder put blue board over the places where windows should have been and asked to be paid. When my constituents refused to pay until materials arrived the builder walked off the job. He abandoned the job, having been paid $66,000 towards a $107,000 job, leaving my constituents with $40,000 to pay to finish the job. Mr and Mrs Fishpool were forced to live in a house that had been absolutely destroyed by the builder. Rain has penetrated the roof, half the extension has no roof, the ceiling has been destroyed. The legislation will address those sorts of problems created by shonky builders. I congratulate the Minister and the Government on their continuing action on behalf of consumers and on improving the building industry.
[Debate interrupted.]
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