Sunday, October 7, 2012

Silence on Strata

A report from the Australian Government Actuary on strata insurance in North Queensland was due to be provided to the Government by September 30. This week there was no sign of the report and enquiries to the Actuary and relevant Minister Bill Shorten brought no response. There was a response at least from the office of Senator Jan McLucas, although that was to tell me that they have had no response either on where it was at!

The Member for Leichhardt remains deluded and illogical in his proposals in my view. As previously posted this has gone in circles and Shorten appears to have buried issues around this and disaster insurance over the past year. This was the PR from Shorten at the time of the Treasury rejection of the committee recommendations:
In relation to the residential strata title insurance, the Government agrees with the Committee that the underlying causes of the affordability and availability problems in North Queensland need to be identified before a course of action is determined.
The Government has called on the Australian Government Actuary to undertake a rigorous quantitative investigation of the causes of the recent premium increases. The insurance industry has agreed to provide the Australian Government Actuary with the data that it needs to undertake the analysis. The final report will be provided to the Government by 30 September 2012.
We also support the Committee's recommendation that the Queensland Government introduce a 12-month moratorium on stamp duty charged on strata title insurance in North Queensland.
Well the moratorium on strata insurance was also ignored in the recent Queensland budget so a query was also forwarded to the Treasurer a few weeks ago via his website which at least had an automated response:

Hi Tim,

I was disappointed to find that doesn't appear to be any response in the budget to the recommendation by the Commonwealth Parliamentary Committee for a moratorium on strata insurance stamp duty north of Rockhampton? Can you respond with why you have chosen not to address this?

Submissions to the inquiry indicated an estimate of 70,000 units adversely affected. The largest regional proportion of those units are in Cairns - Port Douglas. With insurance premiums increasing by up to 400% in some cases in recent years it would appear that your Treasury has been on a 'nice little earner' from compulsory strata insurance stamp duty ripped out of Tropical North Queensland?

So why was it not reasonable to provide some budget relief, as was done for SEQ water consumers for example?? The impact on the strata property market and construction in TNQ has been profound which surely can't have been neglected by you in your budget process given your stated four pillar policy??

Without any direct relief can you advise how the windfall gains to your revenue from this market failure have been allocated for return to TNQ?

Thank you for your email to the Honourable Tim Nicholls MP, Treasurer and Minister for Trade.  We confirm receipt of your message.  Your correspondence will be actioned for reply if appropriate.  We appreciate the time you have taken to contact our office.Office of the Treasurer and Minister for Trade
I presume it wasn't deemed worthy of reply? The attitude of  Queensland appears to be that insurance regulation is a Federal responsibility. This ignores that strata insurance is compulsory under state legislation and also aspects of that legislation which relate to the insurance issue. I hope to at least get a Christmas card from Tim this year to thank me for the contribution to his fiscal crusade!

As recently noted at Loose Change  Cairns has two suburbs in the top 50 rental suburbs in Australia according to RP Data (Westcourt and North Cairns) as well as a high proportion of strata properties. The strata market remians dead despite a tightening rental market and reports of rising rents. The lates HTW Month in Review noted:
Apartment construction in particular is at a complete standstill with no new Council building approvals issued for units in the past 12 months.

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