Home Building Amendment Bill

18-October-2011

Mr CRAIG BAUMANN (Port Stephens—Parliamentary Secretary) [6.40 p.m.]: I make a very brief contribution to the Home Building Amendment Bill 2011. After graduation in civil and structural engineering I joined the building industry, and 30 years later I am still involved, being the sole shareholder and director of two residential building companies operating in the Hunter from a base in Maitland. My member's returns have details of that involvement. The building and construction sector is the canary in a cage for the Australian economy. The economy rises and falls on the strength of the building and construction sector and in New South Wales the sector, after 16 years of abuse, is experiencing a decline. The Australian Bureau of Statistics reports that building activity in New South Wales decreased over the last three quarters. Within the building and construction sector home building activity is contracting more rapidly than other building work. However, while home building activity falls, the demand for housing in New South Wales continues to rise.

The National Housing Supply Council predicts that present levels of dwelling construction are not high enough to meet Australia's emerging housing needs. The council expects that an additional 3.2 million dwellings will be needed to meet population growth projections. Of these dwellings, 16 per cent are expected to be in and around Sydney. This prediction is supported by Access Economics, which estimates that 390,000 new dwellings will be needed in New South Wales by 2020. In line with this, the New South Wales Government has made a commitment to release 10,000 housing blocks within four years in order to make Sydney housing more affordable and help families buy a home. It is clear that the home building industry needs to be robust and healthy to address predicted housing shortfalls. However, as the current home building legislation stands, stakeholders are concerned about the ability of the sector to meet future expectations and needs.

The amendments contained in the bill will go some way to revitalising the building and construction industry and stimulating investment. They will remove unnecessary red tape while at the same time ensure an adequate and appropriate level of consumer protection. The amendments will result in a more vibrant and competitive sector which, in turn, will benefit the future home owners of New South Wales. A significant amendment raises the threshold for home warranty insurance from $12,000 to $20,000. Since 2004 home warranty insurance must be in place where the value of building work exceeds $12,000. Industry stakeholders have repeatedly expressed concern that this figure does not represent the increases in building and labour costs that have occurred since 2004.

This requirement has had a negative effect on small-to-medium builders and tradespeople. In order to be eligible for home warranty insurance, builders and tradespeople must meet stringent prudential requirements. Builders and tradespeople also raise concerns about the cost, time and effort required to obtain home warranty insurance for small-scale building works. Small-to-medium builders and tradespeople are the backbone of the home building industry. However, the level of regulation imposed on small building jobs is preventing these people from being able to get on and do the jobs they want to do. I have much more to say but I will leave it to another day.