Submission: Inquiry into Australia’s Mandatory Last Resort Home Warranty Insurance Schemes

Consumer Action welcomes the Senate Economics Committee Inquiry into Australia’s Mandatory Last Resort Home Building Warranty Insurance (HBWI) schemes. We have long been concerned that the mandatory HBWI schemes that operate in a number of Australian jurisdictions provide little or no protection for consumers, while coming at a significant cost. We note that this is consistent with a recent finding of the Productivity Commission in the Draft Report of its Inquiry into Australia’s Consumer Policy Framework.

We believe that problems with HBWI are interlinked with other aspects of the home building consumer protection regime, including licensing/registration requirements, access to alternative dispute resolution, and access to low-cost courts and tribunals.2 For that reason, HBWI cannot and should not be looked at in isolation, but rather from a holistic, consumer protection perspective.

Home building consumer protection is particularly important considering that a home will typically be the single largest purchase a consumer will ever make. Considering the significant expense of home building, and the dislocation and trauma that can occur when building defects occur and consumers have to relocate at their own expense, a comprehensive and effective consumer protection regime is essential in the area of home building. It is our view that adequate and effective HBWI is an essential part of that framework.

Attached to this submission is a case study detailing the experience of a client of Consumer Action. The case study highlights particular problems with both the alternative dispute resolution mechanisms relating to home building as well as the significant difficulties a consumer faces should they wish to claim upon HBWI.

The remainder of this submission is divided into the following:

  • Approaches to HBWI around Australia;
  • Consumer protection problems in the building sector; and
  • Potential reforms which may lead to better consumer protection.

Our final recommendation is that HBWI return to a government controlled warranty body, as previously operated in Victoria through the Housing Guarantee Fund (HGF) and as currently operates in Queensland through the Queensland Building Services Authority (QBSA).

To read our submission, click here:Inquiry into Australia’s Mandatory Last Resort Home Warranty Insurance Schemes.