Government answers delivered to the Parliamentary Inquiry into Building Standards have revealed a disastrous $201 million deficit in the NSW Government’s home insurance scheme in the 2019 financial year.
This result has now pushed the scheme into an accumulated deficit of $637 million.
The Home Building Compensation Fund scheme works as a last resort insurance product for owners in NSW faced with incomplete and defective building work. Because of the collapse in building standards the insurance fund is facing extraordinarily high claims to rectify a surge of building defects.
Greens MP David Shoebridge, who chairs the inquiry, said:
“The collapse in building standards isn’t just hurting individual homeowners, it is costing taxpayers hundreds of millions of dollars a year in insurance losses.
“This scheme is a basket case having now run up accumulated deficits of $637 million. This is public money being used to pick up the tab for shoddy buildings.
“Because there is no guarantee of building standards in this state, no private insurer is willing to write a policy to address building defects.
“This has left the NSW Government’s insurer Icare as the only provider of Home Building insurance in the state, and it is selling the policies below cost as a direct subsidy to the property industry.
“The cost to taxpayers just keeps rising, increasing from $135 million in the 2018FY to $201 million in the 2019FY.
“The government has been aware of these issues for years and instead of moving to fix building standards they legislated in 2017 to reduce insurance coverage under the scheme.
“It is now patently clear that the 2017 changes have failed and once again developers have taken the benefit and long suffering taxpayers are paying the price.
“There is only one long term answer to this, which is to step in and fix the collapse in building standards before they spiral into yet more multi million dollar insurance claims,” Mr Shoebridge said.
The relevant answers can be found here.
Media: 9230 3030 / 0408 113 952