AN INQUIRY on home building warranty insurance has found the main problem lies not in its severely limited cover but in its name, which misleads consumers.
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The inquiry of the six-month Senate report has angered consumer groups, builders' activist groups and the Greens, which tabled a scathing dissenting report in Parliament yesterday.
There were more than 100 submissions alleging the injustice and failure of the compulsory scheme, under which consumers in all states but Queensland and Tasmania are forced to buy into when they embark on construction work worth more than $12,000.
But the inquiry found there was insufficient evidence to recommend state governments remove the insurance's mandatory status.
"Home warranty insurance is not an effective title for the insurance and implies a misleading level of coverage for consumers," the report concluded.
"The committee recommends changing the name of the insurance."
Annette Hurley, the senator who chaired the Labor-dominated inquiry, said she believed the removal of the word warranty would dispel widespread consumer misapprehension that the mandatory insurance provided a warranty on the building work.
Senator Hurley also conceded that had the inquiry recommended the scheme become voluntary, very few consumers would bother taking it out, as the last-resort scheme only covers home owners if their builder dies, absconds or becomes insolvent.
"[A voluntary scheme] would unnecessarily expose consumers left with unfinished houses and they would look to the government [to bail them out]," she said.
The inquiry was the latest in 30 previous state and federal inquiries, select committees and statutory reviews. Yesterday afternoon, at the behest of the Victorian Opposition, inquiry number 32 was announced. The Herald was told the timing was coincidental.
After tabling her dissenting report, the Australian Greens deputy leader Christine Milne said the conclusions drawn by the inquiry were inexplicable.
"I simply cannot explain why the Government and Opposition decided to ignore the overwhelming evidence and recommend only cosmetic changes to the system," she said. "The vast majority of submissions complained about the system … Nobody said they would take out the insurance if it wasn't mandatory. Even the Housing Industry Association admitted it would support the product becoming voluntary."
Senator Milne supported a national scheme rejected by the inquiry that was based on the government-run Queensland system of first resort, which also insures consumers unconditionally against no-fault subsidence, fraudulent misrepresentation by builders and non-completion.
The builder who campaigned for the inquiry, Phil Dwyer, said none of the views and experiences of the public and building community were reflected in the final report, making the insurance providers and the main broker, the Housing Industry Association, the only winners.
"The inquiry has made a mockery of consumer protection," he said.
An investigation into the relationship between Suncorp Metway, owner of the largest insurance provider Vero, and the Labor Government, which holds $28 million worth of shares in the bank, needed to be conducted urgently, he said.
Last week Vero appeared to be one step ahead of the inquiry's report, announcing that Vero Warranty would henceforth be offered under the umbrella of Vero Construction and Engineering.
