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Legislative Assembly for the ACT: 2002 Week 6 Hansard (16 May) . . Page.. 1763 ..

MR HUMPHRIES (continuing):

That is perhaps not the ideal way to implement such an arrangement in the ACT. Until now these schemes have been operated by virtue of insurance companies entering the marketplace in the ACT. Those insurance companies have always had very substantial assets and have in turn been backed by re-insurers or underwriters, who as a rule have even greater assets. That substantial firepower-in insurance terms-protects the ACT consumer against failure.

It is true that sometimes even those behemoths fail, as we saw with the collapse of HIH a couple of years ago. But generally speaking, those companies have the resources to be able to guarantee that the small payments-small on a relative scale-expected in the ACT can be met. This fund will be responsible only to the ACT and will be fed only by ACT levies and ACT payments.

I simply do not know, on the basis of evidence or advice available to the opposition at this point in time, whether the amount of money which we provide to the fund in the early period or even in the long term will be enough to secure this fund for the benefit of consumers. I cannot be sure, and I suspect that the minister cannot be sure, that at some point in the future the fund will be sufficiently strong to meet the expectations of it in the event of a "catastrophic failure".

Having said that, I have been reassured by advice from the Master Builders Association, which is the sponsoring organisation for this scheme, that there will be an emphasis on aversion to risk and a prudential approach towards the assets of the fund and that the approach to each person or organisation that applies for coverage under the fund will not be that they are entitled as of right to that coverage, which means there will be the capacity to refuse bad risks.

In those circumstances, I have some hope at least that this arrangement proposed to be set up in the particular case of the ACT will be such as to ensure that the ACT building industry and its customers will be protected. But I have to confess that I cannot be sure of that, and that is the concern that I put on the record.

In large part, the opposition will be relying on the government's assessment of the circumstances of this matter: its obvious belief that there is a crisis in the building industry that cannot be resolved in any other appropriate and timely way; its obvious view that intervention by government in this form is the most appropriate means of providing quick access for members of the industry to insurance or equivalent protection; and, in particular, its view that the regulations it proposes to make under this bill will be appropriate to the operation of the scheme. I make that last point very strongly because the effect of the arrangement being adopted for this scheme and this legislation tonight is that the Assembly will have to take on trust the government in its approach to this matter, particularly with respect to the regulations.

We saw these regulations for the first time approximately 24 hours ago. It is true that in theory the Assembly has the power to disallow these regulations, but the practical effect of the proposed arrangement is that, if this scheme is to operate in an effective way to protect members of the industry, there will not be an opportunity for this Assembly to come back-in the June sittings or even the August sittings, which is theoretically possible-and materially change the scheme or, even further, to disallow these

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