Senator JOYCE—Thank you very much. Your presentation sounds like there is a big misunderstanding. To clarify that, can you, as members of the board or with your involvement in the board, describe to me what you believe are the issues that are held as points of concern with regard to the public’s view of the home warranty insurance scheme? Even if you believe they are misplaced, what do you believe are their concerns?

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Mr McCarthy—I think some of the concerns are around the level of premium and profitability of the insurers. There are some concerns around issues such as commissions that the insurers pay to brokers and the like; the board is discussing their appropriateness at the moment. Other concerns are the time that it might take to have a claim considered and some of the aspects that consumers might have to go through in order to have a claim. Many of the issues that we had with builders have been addressed, such as the access to insurance. I think there are still some concerns by builders around deeds of indemnity. We are investigating that aspect at the moment to find out where they apply, particularly within the current scheme. I have to say that the board at the moment is only responsible for the current scheme; when we get issues that relate to prior schemes we pass those through to Fair Trading to deal with.

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Senator JOYCE—I might add a couple to those, just from what I have heard today. One is that they believe they are covered when they are not. That is probably the big one. People believe the insurance that they pay for covers certain issues and there is obviously a different view by the insurer, who believes they are not covered. When people employ the builder, they know the builder is covered by insurance and possibly the reason they come to this conclusion is because no document is actually ever handed to the owner of the house or the owner of the building. Maybe under law they do not have to be handed the document, but they believe that a clear, concise document clearly outlying what their position is and what their obligations are and what they have to pay for is not there. I see you have just grabbed a document. Are you about to tell me there is such a document, Mr Griffin?

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Mr Griffin—Yes, it is. In actual fact it is a legal requirement for builders who enter into a contract with a consumer to give the consumer the Consumer building guide.

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Senator JOYCE—The consumer in this case being the owner of the building; not the builder, but the owner of the building?

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Mr Griffin—Being the owner, the builder. If you are talking about third party, it is the person who they are contracting with.

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Senator JOYCE—Therefore that insurance agreement refers to the actual owner of the building—is that what you are saying?

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Mr Griffin—There are a couple of things. In relation to section 7A of the legislation—and I do not want to go into sections of the Home Building Act of New South Wales—there is a requirement first of all for a builder who is entering into a contract to give the other party, the consumer, the owner of the property, the Consumer building guide, and I will tender that for you.

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Senator JOYCE—That would suggest to me that he is acting as an agent in referring that insurance contract on.

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Mr Griffin—I will get to the second part in a minute. There is a checklist in the Consumer building guide for the consumer to concern themselves with and inform themselves prior to entering into the contract.

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Senator JOYCE—All I need to know is: the builder refers the details of the insurance contract in a document to the owner of the building, therefore he is referring the insurance contract on to the party, being the consumer, who he says is the owner of the building. Now, that would start to suggest that it is covered by APRA and ASIC.

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Mr Griffin—That is given as part of the contractual arrangements. At the same time the contract is signed, the builder receives the five per cent deposit under the contract and is required to give the consumer a certificate of insurance from the insurer.

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Senator JOYCE—You ask them to do that?

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Mr Griffin—It is the law.

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Senator JOYCE—That is interesting because then it becomes an arguable position as to whether he is acting as an agent.

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Mr Griffin—That is the requirement of section 92 of the Home Building Act in New South Wales.

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Senator JOYCE—Do you check to make sure they are actually doing that?

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Mr Griffin—We do. We conduct compliance programs to make sure that they do that.

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Senator JOYCE—You have oversight over that. I want to refer you to a media release that was put out by Richard Amery, state member for Mount Druitt, in 1995, because it talks about the sentiment of your organisation. Mr Amery said that Labor’s reforms for the building industry will ensure—and this is about the body, you remember—that at least 50 per cent of the members of the home building advisory council represent consumers. Can you please tell me who on the board represents consumers’ interests?

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Mr McCarthy—You were talking about the advisory council not the board. The advisory council does actually contain representatives from consumers. It is a separate body.

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Senator JOYCE—Just tell me who represents consumers on your board.

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Mr McCarthy—The board was not designed to represent consumers; it was designed to set up an insurance board. There is an advisory council that works independently of the board to advise the minister on matters related.

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Senator JOYCE—Who represents consumers on that advisory board?

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Mr Griffin—In terms of the names, we will have to take that on notice.

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Senator JOYCE—Is there anybody on the board or the advisory committee who represents builders’ interests?

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Mr Griffin—Yes, there is.

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Senator JOYCE—Who are they?

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Mr Griffin—Again, I would have to give you the names of the builders involved on notice. I am able to give you a complete list of those people and their placement on the board and I will take that on notice.

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Senator JOYCE—You have said that people get the bare minimum but if they want more with regard to insurance cover, they can get it. How do they know what the bare minimum is and what it represents? How are they made aware of that? Do they go through a needs analysis with the consumer? Do they sit down and say, ‘This is what you’re buying but this is what you probably will need’?

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Mr Griffin—I have tendered the document. The Consumer building guide contains information about what the policy covers so the consumer is aware upfront what the insurance policy provides.

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Senator JOYCE—Roughly, what is the cost of the insurance policy? What do you see as a ballpark figure for that product? Does it cost hundreds or thousands of dollars?

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Mr McCarthy—From our data, the average premium, including charges, per project certificate for builders is $7