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Legislative Assembly for the ACT: 2002 Week 6 Hansard (16 May) . . Page.. 1768 ..

MS DUNDAS (continuing):

and a monopoly on the fidelity fund to be held by MBA. It is true that others may enter the insurance market and others may enter the fidelity fund market. But the minister has not yet made any statement or reported on any expressions of interest in doing either of these things.

It is interesting to note that the Master Builders Association of Victoria, when met with the same potential crisis, recommended that members actually seek insurance from Royal & Sun whilst it worked with the government to ensure the return of Dexta. It is quite possible that if our minister went down a similar path, we could see a strong competitive insurance market made up of Dexta, Reward and Royal & SunAlliance. But this is not the case. Instead we are presented with two monopolies selling two different products. I would rather see a market containing three competitors selling the same product than the situation that this bill is seeking to produce.

Minister Corbell said in his presentation speech that a key feature of this scheme would be that the approval of any fidelity fund would be a disallowable instrument. The minister has perhaps made an error, as it is clear from the bill and EM that the Assembly is not to be involved in this approval process. This confusion has not helped.

During the detail stage, I will seek to move two minor amendments that are about involving and informing the Assembly of the process of setting up what is a new and very different scheme to the system that we currently have. But, as I have said, an even playing field with three competitors would ultimately be a much better system than the two-tiered monopoly system that will be set up if this bill is passed.

MS TUCKER (6.20): This bill represents the government's response to the current situation in the ACT residential building industry caused by the withdrawal of the insurance broker Dexta from providing building warranty insurance for members of the Master Builders Association. I share the sentiments expressed by Mr Humphries and Ms Dundas in that this bill is something the Greens are supporting with some hesitance because it has been rushed and because supporting it requires quite a strong element of trust that the government actually knows what it is doing. I do not think that is a comfortable feeling for any of us in the Assembly.

The insurance broker Dexta accounts for some 40 per cent of the home building market and, while building projects that already have insurance can proceed, there is a problem that new houses cannot be commenced until the builder secures appropriate insurance cover. I note that the government has allowed speculative builders to continue building houses on a temporary basis without insurance, but the houses cannot be sold until the warranty insurance is in place.

There is obviously a need to have a sustainable system of building warranty protection in the ACT to return stability to the housing market and to provide consumer protection to home buyers. This bill provides an alternative form of warranty protection through allowing the establishment of fidelity funds operated on a not-for-profit basis by a board of trustees, and these fidelity funds will provide the same level of warranty protection as insurance companies are required to provide under the existing provisions of the Building Act.

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