Don’t do a U-turn on consumer protection

LETTER TO THE EDITOR

 

Sir – The Master Builders Association is concerned at moves to roll back building reforms designed to protect consumers.

 

The Government is being lobbied to get rid of the Residential Building Cover package introduced at the beginning of the year and go back to the old Home Building Certification Fund scheme that provided only limited cover.

 

The Home Builders Certification Fund covered only structural failures and provided no protection against builders’ failure to complete homes. Over the years in the Territory we have seen a regular stream of builders going bust, leaving desperate families wondering how to finish their homes.

 

In the past four years, at least eight builders went belly up in the Territory, leaving dozens of families with unfinished homes. Now we are seeing a campaign, that seems to be based on a fair bit of misinformation, putting pressure on the Government to roll back its own reform.

 

The package of Residential Building Cover reforms includes a mediation process through the Department of Consumer Affairs if home builders are unable to resolve disputes with builders and the Master Builders Fidelity Fund that provides cover should builders die, be declared bankrupt or disappear.

 

The Master Builders Fidelity Fund is a not-for-profit scheme administered by a Board of Trustees, unlike many of the commercial insurance schemes that operate with mixed success interstate.

 

The Fidelity Fund ensures builders have the financial capacity and experience to do the work they are taking on, and issues a Fidelity Cover certificate that is paid for by the home owner.

 

The certificate provides up to $200,000 worth of cover if their builder dies, disappears or goes broke and covers structural defects for six years.

 

Other measures in the reform package include limits on deposits. Progress payments can be made only on the completion of work.

 

A number of builders are now lobbying government to roll back the reforms. The Minister, Peter Chandler, has responded by announcing a review, just five months into the new Fidelity Fund’s operations. We are more than happy to contribute in good faith to the review and discuss with our members any ideas for improving the scheme, but we believe the Fidelity Fund is working well. More than 400 homes are covered and 250 builders have applied for cover.

 

The Fidelity Fund has a focus on prevention. Many builders get into trouble because of cash flow problems. Their finances and experience are now checked to reduce the chances of their over-extending.

 

We have a compliance auditor who does random checks of construction sites to see that work has started as scheduled and that houses are being built in accordance with their Certificates.

 

For most people, building a home is a daunting experience. It is one of the least frequent but most costly purchases they will ever make. If we can build trust between consumers and builders, by giving them greater peace of mind that their home will be completed, we are also building confidence in the construction industry.

 

Graham Kemp

Executive Director of the Master Builders Association of the NT

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  1. Posted July 15, 2013 at 10:43 pm

    Following on from the builders meeting in Alice Springs the Builders Collective staged a builder information meeting in Darwin last Thursday the 11th of July at the Darwin Turf Club that was well attended by Darwin builders.
    We are currently producing a video of the event that we will provide to the Alice Springs News when available.
    The overwhelming outcome was that the building industry is happy to fund a consumer protection regime based on the regime being under the direct control of Government that will provide real protection to all consumers who are faced with a building failure.
    The fee, the levy, or the premium we pay would build a discretionary fund managed by Government and overseen by industry, Government, and consumer representation.
    The reinstatement of the existing Home Building Certification Fund (HBCF) would be an appropriate vehicle for such a regime with enhanced procedures delivering a compliant industry and genuine FIRST RESORT consumer protection (Insurance as we know it).
    The LAST RESORT Fidelity Fund put in place by Master Builders through the previous Labor Government was soundly rejected as it is a Last Resort scheme with such a narrow claim criteria it has been described by “Choice” our national consumer advocate as Junk Policies / certificates making a mockery of consumer protection.
    Many consumers have now come to the forefront as a result of all the publicity generated around the Darwin meeting and we have found the Building Advisory Service (BAS) has failed in providing assistance to them, and we only discovered the fact that the NT Ombudsman tabled this Report in Parliament in March this year: http://www.ombudsman.nt.gov.au/wp-content/uploads/2009/07/BAS-Investigation-final-March-2013.pdf
    The report confirms the outcomes they found as described in the report apply to the consumers we met last week and the Ombudsman recommended the Building Advisory Services to apologise in writing to the consumers mentioned in their report.
    Due to the complaints being received by the Ombudsman there is a distinct chance there may a further investigation into the Building Advisory Services and its roles in dealing with consumers and builder failures including the controversial Randall Carey failure.

    Phil Dwyer
    National President
    Builders Collective of Australia
    27 Advantage Road
    Highett Vic 3190
    Phone 0414 699 905
    http://www.builderscollective.org.au/

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