HOME BUILDING - WHAT WE WANT

Building regulation is the province of the states, and as such, the extent of consumer protection varies.   We want to see a more nationally consistent approach that provides for:

1. A 'One Stop Shop' approach to regulation (encompassing licensing of builders and contractors, dispute resolution, compliance and enforcement activities and education and advice services);

2. ‘Long tail’ insurance (coverage for death, insolvency or disappearance of the licensee as well as poor workmanship or non-completion);

3. A national consumer advocacy body and consumer representation on other decision and advisory bodies;

4. Fair contracts: There should be a standard, fair contract in use across Australia.

 
BACKGROUND

1. A 'One Stop Shop' approach to regulation

Building regulation is the province of the states, and as such, the extent of consumer protection varies. For example, the Northern Territory does not licence builders at all. New South Wales and Victoria privatised the home warranty market in the late 90s - the collapses of HIH and the financial woes of Dexter meant that many builders could not obtain insurance. Consumers were also left high and dry. Premiums in both these states have increased dramatically since privatisation.

In contrast, Queensland has a broad regulatory framework covering dispute resolution, government provided insurance (80% underwritten by private insurers) advice and builders' licensing.

2. 'Long tail' insurance

A review of home building warranty insurance, completed by Percy Allen for the Ministerial Council on Consumer Affairs in mid-2002 made a number of positive suggestions about the industry as a whole. Of great concern however is the position of the review that home warranty insurance should be 'last resort' only.This would mean that insurance would only help a consumer if the builder was dead, insolvent or had disappeared. Disputes about the quality of workmanship would not be covered.Consumers would need to litigate through the courts.CFA does not agree with this position.

CFA is working toward the following outcomes in the building industry: One Stop Shop Approach to Regulation Effective regulation requites government provision of the following services: A comprehensive builders and subcontractors licensing system that is based on licensees demonstrating:

Competency to undertake the class of work for which they are licensed; and,Adequate financial position; and Managerial competencies; and,Fitness and proprietary (for example, not bankrupt) b. Compliance and enforcement in the industry, for example, through building inspectors; c. Dispute resolution; and d. Consumer and licensee education. insurance that covers consumers in the case of: Death, insolvency or the disappearance of the licenseePoor workmanship resulting in defects by the licensee;Non-completion (that is, where the licensee is not dead, insolvent or disappeared but refuses to complete work as per progress payment schedules).

CFA does not have a position on whether insurance should be provided by the government or the private sector, but notes that the private sector has not demonstrated any interest in providing this kind of home warranty.

3. National consumer advocacy body and consumer representation on other decision and advisory bodies
 
The consumer interest in this area is enormous, but the consumer voice is rarely heard.  A national building advocacy body is needed.
 
4. Fair contracts
 
There should be a standard, fair contract in use across Australia.