Mr McBRIDE (The Entrance) [3.50]: I move:

That this House:

(1) Notes the existence of outstanding insurance grievances against the Building Services Corporation: and

(2) Congratulates the New South Wales Government for its decision to hold an inquiry into outstanding grievances.

After several years of inactivity of the previous Government I congratulate the present Government on its announcement that it is about to keep another election promise. The former Minister's procrastination prevented the Building Services Corporation from addressing grievances in an efficient and timely manner. The promise was made in this House on 14 September 1994 by the shadow minister for consumer affairs, the present Minister for Agriculture, the Hon. R. S. Amery, when he said:

The Commercial Tribunal should be given the opportunity to resolve these difficult disputes.

He was referring to the disputes associated with the Building Services Corporation. He said further:

The Labor Government will hold an inquiry - whether it be a parliamentary inquiry or one established under a well-known mediator - to address the outstanding disputes. The inquiry should assess each case separately.

Today Labor is honouring another election promise to the people of New South Wales. People have been waiting for settlement of grievances that date back a decade. The reason that nothing was done, at least in part, over the past seven years is that no-one was prepared to bite the bullet and address this difficult issue. That is not surprising given that the basic theory of the former Government was government by crisis. The previous Minister was waiting for the entire Building Services Corporation to seize up with complaints before she would act in any concerned way to address the grievances of consumers. Since Labor won government the Minister's office has been inundated with such grievances. It is well known that when there is a change of government, people with outstanding grievances approach the new Government seeking resolution.

Mr Hartcher: And they don't get it.

Mr McBRIDE: They will certainly get it from this Government. The honourable member for Gosford interjects. I would have thought after what occurred in the House yesterday that the honourable member for Gosford would show some humility in this Chamber, but it is obvious that he does not. I am speechless.

Mr SPEAKER: Order! The honourable member for The Entrance and the honourable member for Gosford will resist the temptation to converse across the Chamber. Members should address the Chair.

Mr McBRIDE: This inquiry will need to address the many grievances currently before the Building Services Corporation and should recognise the beginning of the review process promised by the Government prior to the election. This process illustrates the Government's commitment to ensuring the development of a quality service that the Building Services Corporation has been able to develop over the last 18 months, even while having to deal with a government that was incompetent, rudderless. It was a government without direction. The former Minister's directives could not be associated with, even on their best days, good administration or management.

I am sure there are many people in many electorates who will be delighted when they learn that the panel of inquiry will be set up. I have received a number of complaints in my electorate office about outstanding claims. One such complaint was received from a specialist builder, a craftsman, who built saunas. He informed me of a dispute in which he was involved that has lasted for years. He sought redress through the existing system but found it inequitable. He was not able to have the matter resolved fairly. As a result of my intervention the matter was dealt with. But that is not what should happen. Such matters should be resolved through processes set up by Government, as part of its responsibility. A local doctor in my electorate complained of a grievance that has remained unresolved for three years. Though there had been mediation and intervention in the matter - a whole range of activity - there had been no resolution.

I am sure every member of Parliament has received complaints from constituents about faulty building work and the fact that they had not received satisfaction through the Building Services Corporation or the processes offered by existing statutory bodies. It is clear to everyone concerned that during its last two years in office the previous Government was in hold mode waiting for the 1995 election. That rudderless Government procrastinated while the public waited the justice. It put the matter on the public record last year but nothing was done. Despite the present Government being hamstrung by the problems it inherited from the previous Government some cases have been dealt with. However, there are many complaints unresolved and they involve millions of dollars.

I shall inform honourable members of pieces of the history of the matter. The previous Minister is well aware that the corporation has some longstanding disputes with a number of consumers. The disputes relate principally to matters arising out of the non-payment or part-payment of insurance benefits to consumers. The complainants also are critical of the corporation and the board's handling of complaints lodged by them about defective or incomplete work. Labor, when in opposition, made the commitment to consumers which I related earlier to institute an inquiry into all outstanding grievances by consumers with the Building Services Corporation so that the issues raised by consumers are thoroughly examined by an independent and external inquiry to ensure that all outstanding matters are resolved.

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Many grievances relate to the insurance scheme by the Builders Licensing Board which was abolished in 1987. This scheme offered a low level of protection and a maximum benefit of only $40,000 for consumers. Appeals against decisions were also required to be dealt with by arbitration - which is presently not the case - and a number of persons with outstanding grievances are seeking payment beyond the statutory limit that applied at the time insurance cover was taken. This is one of the major problems that exists within the system at the moment. Limits were quite low in terms of the actual building construction cost. Simply put, if in 1985 work was carried out on one's home, or structure -

Mr Hartcher: This is so urgent!

Mr McBRIDE: The honourable member for Gosford has no sympathy for these people. This matter is urgent. The Government is committed to resolving a problem that has been around for years. Previous Ministers have acknowledged the situation but have done nothing about it. To return to my point: if defects in work completed in 1985 did not become apparent until 1990, the maximum insurance payable was limited to the maximum insurance that applied in 1985. In other words, if rectification is required in 1990 to defects that appear in work completed in 1985, costs may be awarded for that rectification but only to the limit that applied in 1985. That would not apply in any other situation.

This is a major issue for those with grievances. The upper limit is clearly not comparable to current building costs. At present the limit is $100,000. One could not build a decent house in New South Wales for $100,000. It is a modest amount of money. With regard to houses that cost in excess of $100,000 one is limited to $100,000 compensation. A number of claims are for amounts well over $100,000.

In total, 11 claims for compensation, amounting to $1.4 million, have been lodged against Adventure Industries Pty Limited. With regard to those claims it is alleged that the Building Services Corporation was negligent in the issue of builders' licences. Other claims have been lodged, including four claims for compensation sought by Phillips Fox, solicitors, against King, Morris, White and Thirrup for an amount of $2.6 million. There can be no doubt that the idea was a good one. However, the implications - [Time expired.]

Mr SCHIPP (Wagga Wagga) [4.00]: The Opposition does not object to the establishment of an inquiry. However, I advise the present Minister that when I became the Minister responsible for the Building Services Corporation in 1988 I inherited from my predecessor a mountain of cases I could not jump over. I suggest that the Minister inherited a similar number of cases and that she will leave a similar number to her successor. Many of these claims cannot be resolved. A system is in place that permits appeal from the decisions of independent arbitrators, upon whom this motion, I believe, reflects. They have always done their best to resolve complex disputes.

I remind the Government that a deal of evidence given to the Gyles royal commission into the building industry related to this very issue. I recall that the BSC held money - an amount of $180,000 from memory - for a particular lady who formed an action group. The money had accrued interest for up to nine years. Frank Walker, the Minister responsible, had dealings with the claim, as did the honourable member for Heffron when she was the Minister for Consumer Affairs. For six years Labor did nothing to resolve that outstanding claim. I recall that the lady involved refused to accept any offer of money. The extent of her claim was of the order of $1 million.

I am not au fait with the latest objectives of the scheme, but it is working and Labor got it for nothing. It would be impracticable with such a scheme to offer compensation in all cases. The scheme was regarded throughout the world as being at the leading edge of building industry insurance schemes. At one stage the private sector sought to involve itself but declined when it became aware of the generous provisions and the low premiums. When I was Minister I increased the amount that could be paid for compensation from $40,000 to $100,000. Larger amounts could be paid at the discretion of the Minister. The coalition was not about cutting people off at the knees and being hard nosed about claims. Consequently, many grey areas were resolved in favour of the consumer.

As I recall, there was triple jeopardy. If a consumer was unable to get a favourable ruling at one level, the consumer could go to the next level, and so on. In addition, builders were running about wasting everyone's time. The Commercial Tribunal was empowered to rehear these matters at a cost of $25 a hearing. The cases were heard by independent arbitrators who had little or no association with the building industry. They were engaged by the Department of Consumer Affairs, even though the Building Services Corporation was under my control.

Had I been forewarned of this motion, I would have provided to the House the recommendations of the Gyles royal commission. Though the Government may have a mandate to conduct such an inquiry, I am sure the consumers will feel that they have been outfoxed. As an analogy, in relation to the inquiry into the petrol industry no-one has been brave enough to suggest that the New South Wales Government is prepared to set the retail price of petrol. The Federal Government sets the maximum wholesale price of petrol. Will there be a dual system? We have not been told.

There are many traps to be avoided. The Minister will pass to her successor a long list of unresolved, complex cases. Many people have expressed to me frustration and dissatisfaction with the system. In one case, though the woman concerned continues to discover faulty workmanship, the inspectors claim that there has been no breach of contract. I recall initiating an education campaign concerning the operation of the Building Services
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Corporation. I recall other Ministers jumping on the bandwagon and attempting to claim credit for that initiative. They thought it was the best thing since sliced bread.

Many people do not enter into fixed-term contracts, yet they complain about contract overrun. Many do not have the required specifications, yet they complain that their buildings are unfinished. Even with the best will in the world, complaints will arise. The honourable member for The Entrance suggested that the person who will conduct the inquiry is a well-known independent arbitrator. I await with interest the announcement of that person's name. I hope that, whomever it is, he or she will bring about a fair result for everyone involved. That will be one of the tests. We must remember that when we are dealing with people there are the inevitable breakdowns in relationships. There are those who seek to cut corners, to get an el-cheapo price. Faulty construction is often the result of corner cutting by one or other, or both, of the parties. As I have said, many of the issues are complex, and many cannot be resolved, but the Building Services Corporation has always given of its best to try to resolve disputes. The spotlight always focuses on any hostility that arises between parties. I refer honourable members to the BARG action group - a group that received a fair go from the system but a group that could not accept the umpire's decision. The Opposition awaits with interest the appointment of the independent arbitrator who will oversee this review. I remind the present Minister that two former Labor Ministers were not able to find the answer to this problem. I am sure that she too will realise that she cannot satisfy all parties. Having said that, however, I wish the inquiry well. I hope that the result is fairness for all concerned.

Mr IEMMA (Hurstville) [4.10]: I do not have a problem with the comments just made by the honourable member for Wagga Wagga. In fact, much of what he said could be used to support the Government's proposal to establish an inquiry into the Building Services Corporation. As the honourable member for Wagga Wagga said, the complexities and difficulties that have been highlighted by these cases are arguments for having an inquiry and bringing these matters to a head. As the honourable member said, these cases have been dragging on for about 10 years. Given the difficulties that he has outlined with respect to the current situation, it is time that these matters were brought to a head. An inquiry is the best way to do that. We can finally determine whether the claimants - there are probably about 50 claimants - have a case, and whether they can get compensation. If they cannot, at least the people involved will have had the benefit of an inquiry; it will be the final determinant in this issue.

I certainly acknowledge that the honourable member for Wagga Wagga tried to do something about this when he was the responsible Minister. He at least gave the people concerned a hearing; he tried to do something. That is a lot more than the Ministers who followed him did, particularly when the Building Services Corporation was again placed under the auspices of the Department of Consumer Affairs. In 1988 the then Premier removed the BSC from the jurisdiction of the Department of Consumer Affairs and placed it under the jurisdiction of the Department of Housing.

The honourable member for Wagga Wagga, the former Minister, at least gave the claimants a hearing and tried to do something. He recognised the complexities and difficulties of trying to get something done. However, that was not the case with respect to former Minister Chikarovski, the honourable member for Lane Cove; or former Minister Machin, the honourable member for Port Macquarie. Those Ministers did not want to receive complaints from the people we are talking about. As a result, the Building Services Corporation found itself in a position where it could not properly address the claims and arguments of these people in relation to the difficulties they had faced.

The Building Services Corporation is charged with the function of promoting and protecting the interests of owners and purchasers of dwellings. It is also has a mandate to set, assess and maintain standards of work. The current system does not allow the BSC to give adequate protection to people; it does not allow for these sorts of claims to be heard. One of the reasons for that is that the claims are outside the limits currently in existence. It is of no credit to former Minister Machin and former Minister Chikarovski that they did nothing about changing the limits so that these people could get some justice. At the end of the day, that is what this is all about. People may have a claim that work they engaged builders to do was not carried out in a professional manner and that they have suffered damage as a result.

The system which is in place - the system which is supposed to compensate these people - has not worked. The Building Services Corporation is now saying, "Let us have some other mechanism in place which will at least allow us to determine once and for all whether these people can get justice." We owe it to the 50 claimants to put in place some form of assistance so that they can at least have these matters determined. The Minister for Consumer Affairs, and Minister for Women will outline the nature of the inquiry and who will head it up. That is the very least that we can do for these claimants at this time. I urge honourable members to support the urgency motion.

Mr HUMPHERSON (Davidson) [4.14]: I am pleased to follow the honourable member for Wagga Wagga, the former Minister, in speaking to this urgency motion from this side of the House. All members would be well aware, from their contacts with their constituents, of the grievances that occur in relation to the building industry. I support the reservations expressed by the honourable member for Wagga Wagga with respect to establishing an inquiry into the Building Services Corporation and having great expectations come of it. It is certainly too early
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to offer any congratulations to the Government purely for implementing an election promise, as was claimed. I believe that taking an ad hoc quote, which is nothing more than a motherhood statement, out of Hansard and claiming that it is an election promise fulfilled is an extreme claim. I have great reservations about the second part of the urgency motion.

It is important that honourable members acknowledge that there are longstanding grievances in the building industry. Great heartache is involved in many of these cases. It is not always the consumer who has the grievance. I am aware of cases where the consumer has become vexatious and pressed a claim. By and large, one has to look only at some of the evidence. Many of the complaints and grievances are the result of poor workmanship. Consumers have been taken advantage of because of their lack of knowledge and understanding.

I will not condone in any way - I am sure that no member of this House would - members of the building industry taking advantage of consumers. Clearly, consumers lack knowledge in this regard. The former Minister for Consumer Affairs was very active in that regard, particularly with respect to some of the initiatives she took with the Building Services Corporation, in establishing one-stop shops which placed a significant focus on consumer service, provided ease of access, and gave advice and education to prospective builders so that they knew their rights and entitlements prior to entering into contracts.

All honourable members have seen current affairs programs with builders being chased over fences. If grievances exist against such characters, I would be only too happy to see them brought to justice. The honourable member for Wagga Wagga indicated that resolving some outstanding grievances may be difficult. I join the honourable member in cautioning against raising public expectations. These cases can be very involved. As the honourable member for The Entrance indicated, a number of cases go back a number of years. The fact that they have not been resolved in that time indicates their complexity. I had planned on referring to a number of individual cases, but I think it is more important to speak in general terms when addressing these grievances. It is pre-emptive to congratulate the Government in this regard. I move an amendment to the motion:

That the motion be amended by leaving out paragraph (2) and inserting instead:

(2) Notes the efforts of the New South Wales Building Industry and the labour movement in providing good quality, affordable housing for the people of New South Wales.

This amendment recognises that the building industry in New South Wales and the labour movement work together to a large extent to provide quality and affordable housing. Only on the minority of occasions is there a lack of quality and affordability. We should acknowledge that in the vast majority of cases there are not significant problems and the grievances of the nature referred to in this debate do not arise.

Mrs Lo Po': On a point of order: the amendment changes the urgency motion substantially, and it is not acceptable to the Government.

Mr HUMPHERSON: On the point of order: the Minister has argued that the amendment has substantially changed the motion. It certainly does change the motion but the primary objective of the motion is that which was referred to in the debate by the two previous Government speakers. It relates to the insurance grievances against the Building Services Corporation. That part of the motion has not been changed. The primary thrust of the motion is unaltered by the amendment. The amendment seeks to change the nature of part 2 of the motion and I believe that is entirely in order.

Mrs Lo Po': Further to the point of order: the part of the motion that has been deleted relates to the decision to hold an inquiry into the outstanding grievances, which is the very thrust of the motion. The honourable member's amendment does not include that and the Government will not accept the amendment.

Mr DEPUTY-SPEAKER: Order! The amendment is in order. However, if the Minister chooses to amend it or debate the matter, she may do so.

Mr HUMPHERSON: On a point of order: I seek clarification. In moving an amendment, is that done within the Minister's time limit of five minutes or is it done separately? I submit it should be within that five minutes of speaking time.

Mr DEPUTY-SPEAKER: Order! The Minister is free to speak to the substantive question and to the amendment. The Minister's time for speaking has not commenced. It will commence when I advise the Minister that she may proceed. The Minister may debate the substantive motion or the amendment, or both.

Mrs LO PO' (Penrith - Minister for Consumer Affairs, and Minister for Women) [4.22]: I intend to speak to the substantive motion because I wish to place on record at this point the inquiry that the Government proposes to conduct. I compliment the honourable member for Wagga Wagga on having a retentive memory. He got most things correct. As the honourable member knows, the Building Services Corporation was established in 1987. It replaced the Builders Licensing Board which was created in 1972 to license home builders and trade contractors.

Since 1973 the existence of insurance has protected consumers from defective or incomplete building work. This insurance, it should be acknowledged, has assisted thousands of home owners to complete their homes or to have defective work rectified. However, no-one would deny that the Building Services Corporation has failed to adequately help a number of home owners, and the honourable member for Wagga Wagga alluded to that in his contribution.

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The problems of such people and with the system set up to protect home building consumers were dealt with at length in a report into the BSC by Dr Peter Dodd. The Dodd review came about largely because of the problems drawn to the attention of the Royal Commission into Productivity in the Building Industry in New South Wales by a group of consumers. This group, which I am sure all honourable members have heard about, is the Building Action Review Group, BARG, which has consistently campaigned for a better deal for consumers in this market.

Since I became Minister, two things have happened. I have been plagued by people who have told me that the previous administration treated them with ignore - I am not talking about the Building Services Corporation, I am talking about the former Minister treating them with ignore. I have listened to them and I believe they have a case. To its great credit, the Building Services Corporation has been very progressive since the Dodd report was presented in February 1993. I am pleased to say that there has been worthwhile progress in establishing an improved program of protection for consumers.

The better education that was alluded to is very much on the agenda as is the advice for consumers through the establishment of a network of home building advisory centres. But there still remains on the books an indeterminate number of cases which cannot be resolved by the present approach. These people deserve a final answer and matters cannot continue for another decade. I am pleased to announce this afternoon that this promise will be honoured immediately. The inquiry will be split into two completely independent phases. The first phase will involve scheduling of outstanding cases to determine which warrant consideration by the inquiry panel in the second phase. This will be undertaken by a team of qualified lawyers and technical experts appointed from outside the ranks of the BSC.

The panel will be chaired by Dr Peter Crawford. He is a former Director of the South Australian Premier's Department. In New South Wales he would be remembered as the former Managing Director of AWA, the former Managing Director of the Water Board, the former chief executive of the New South Wales Pollution Control Commission, and the former head of the chemicals program at the Organisation for Economic Co-operation and Development, Paris, France. He has an impressive curriculum vitae. He is currently an honorary professorial fellow at Macquarie University.

Dr Crawford will work with a barrister, Moira Rayner, who would be well known to some honourable members as the former Commissioner for Equal Opportunity in Victoria and former Law Reform commissioner, and building industry expert, Warwick Neilley. Mr Neilley is currently an industrial relations consultant and is chair of the National Advisory Committee, Housing Industry Youth Employment Skills Australia. The panel will consider each of the scheduled cases on its merits and make recommendations to the Minister on appropriate action. I would like to read to the House the terms of reference of the inquiry, which are important. They are as follows:

1. To examine the outstanding grievances of the consumers listed in the following schedule . . . arising from:

•the investigation of complaints by the consumers received by the Building Services Corporation . . . and its predecessor the former Builders' Licensing Board . . . ; and

•the payment, part payment or non payment of insurance benefits as a result of determinations made by the Corporation or the Board;

pursuant to the Building Services Corporation Act 1989 and the Builders Licensing Act 1971 . . .

2. To examine, without limiting the generality of the foregoing:

•whether the consumers received their full entitlement under the legislation;

•whether the Corporation and the Board properly discharged their statutory duties to the consumers; and

•whether the consumers have suffered loss or damage as a direct result of the failure of the Corporation or the Board to properly discharge their duties to the consumers under the legislation.

. . .

4. The report of the inquiry be delivered to the Minister on or before 31 December 1995.

Given that there seems to be some consensus about the outstanding grievances, I am surprised that the honourable member for Davidson has tried to distort and divert this process by moving the amendment, which does not recognise the inquiry. [Time expired.]

Mr McBRIDE (The Entrance) [4.27], in reply: I acknowledge the contributions to the debate by the honourable member for Wagga Wagga, the honourable member for Hurstville, the honourable member for Davidson and, in particular, the Minister for Consumer Affairs, and Minister for Women. I was pleased at the attitude taken by the honourable member for Wagga Wagga to the motion. It was clear from his comments - and I have to give him credit for this - that, as Minister, he behaved in a responsible and caring way towards those people who were unable to receive proper compensation from the Building Services Corporation.

It should also be noted, however, that subsequent Ministers did not show the same care and consideration for the portfolio. I made the point that most members of this Parliament have received representations from constituents concerning disputes before the Building Services Corporation. It was interesting to listen to the contribution from the honourable member for Davidson who confirmed my view by saying he had received a number of representations.

The honourable member for Davidson made the point clearly that many cases have come before him. He then tried to subvert the second paragraph of the motion, which contains the substance of the motion. The honourable member for Davidson questioned the claim that the holding of an inquiry was an election
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promise made by the Government. It was clearly an election promise. The former Minister is nodding in agreement. Members of the Opposition should show the same knowledge of issues that the former Minister displayed in this debate. The moving of the amendment must have been an embarrassment for the honourable member for Davidson.

As I said earlier, the former shadow minister for consumer affairs pointed specifically to this issue in Parliament on 14 September 1994 when he spoke in the debate on the Building Services Corporation (Amendment) Bill. When in Opposition the Labor Party did not criticise the former Minister for Housing, the honourable member for Wagga Wagga, about his stewardship of the corporation. The attitude of subsequent Ministers has not been the same. They have not shown the same care, consideration and concern for those people with outstanding grievances against the corporation.

Mr Schipp: It is my Labor upbringing.

Mr McBRIDE: The former Minister is to be congratulated for that. I wish more members of Parliament had the same care and concern for their constituents. Nothing could be more devastating than to invest one's life savings in a home, and to have it go wrong. When it goes wrong, one suffers both financial and personal destruction. When HomeFund borrowers come to my office, they say, "Look, it is not only the house that we have lost, we have lost our family". That is the sort of thing that happens. One of my constituents, a professional person, approached me with a grievance about the Building Services Corporation. He had been married for many years. He and his wife had retired, built a home, invested all of their funds in the home and, as a result of that going bad, they had split up. That is the sort of thing the Government wants to address. It is not a matter of trying to settle some financial dispute. Nothing is more vital or strikes closer to the soul than one's home being placed in jeopardy.

Mr Schipp: You can only do so much.

Mr McBRIDE: I acknowledge that. The Government gives the former Minister credit for his actions. Subsequent Ministers have not shown the same care. [Time expired.]

Amendment negatived.

Motion agreed to.