Government asked to support engineering assessments
Budget time always shows where government priorities lie and thinking back a year, the good news were that the federal budget provided $11.6 billion for the growth of infrastructure and in particular, there was very specific support of the North Queensland insurance market which has been suffering from high premiums in the past few years due to natural disasters.
The budget directly provided $12.5 million over three years from 2014-15 to provide “grants to bodies corporate to undertake engineering assessments of strata-title properties in North Queensland”.
The plan incorporated to develop an insurance information and comparison website (or an insurance ‘aggregator’); promote resilience of strata title buildings by facilitating engineering assessments of strata title properties in North Queensland; and to expand North Queensland insurance markets by encouraging participation by foreign insurers.
What has been done with that line item a year later? As far as SCA is concerned – not too much, at least not publicly. Of course the budget reflected this committed funding over four years (including a capital component) which allows the Department of the Treasury to develop an insurance comparison website on strata-title and home building and contents insurance offerings in North Queensland. However, we would be most disappointed to see in another 12 months time that nothing has progressed.
We therefore took the opportunity to remind the new Queensland treasurer to provide funding to the North Queensland economy in this year’s budget to assist severely impacted strata schemes after natural disasters.
Many newer North Queensland strata schemes are now built to cyclone building standards to ensure the damage is minimal. However, there are still a considerable amount of properties that have been built before the cyclone damage to strata title property has been recognised as an issue and building standards were developed.
The Body Corporate and Community Management Act 1997 dictates that strata title property needs to be sufficiently insured. Recently, the Queensland government has acknowledged that North Queensland unit owners have been severely disadvantaged in regards to insurance premiums when they are the worst affected by natural disasters.
The Queensland treasurer, Curtis Pitt, acknowledged SCA (Qld)’s request to provide a minimum funding of $15 million in the upcoming 2015-16 budget to cyclone proof some of the worst affected strata schemes in North Queensland. Many schemes need to urgently assess their properties and better safeguard against future damage.
Our member’s clients experience hesitation to assess schemes simply due to the costs involved and such a funding support upon application would encourage bodies corporate to act which will, even if their application is not approved, help owners to be fully aware of the risks to their properties from natural disasters. This awareness would provide bodies corporate with an opportunity to take necessary action to mitigate those risks (regardless of government assisted funding) and reduce their risk assessment by insurers, ultimately reducing insurance premiums in some cases.
Funding of cyclone proofing works has the ability to help the North Queensland strata insurance market back on its feet after a handful of tough and disappointing negative experiences. Not to mention that since stamp duty was raised from 7.5 per cent to 9 percent in July 2013, the financial burden on the North Queensland property market has been very high and it is probably right to say that the raised revenue would enable Treasury to consider sending positive signals by providing this handout.
The treasurer acknowledged our concerns and assured us that the establishment of the Northern Australia Insurance Premiums Taskforce will explore options for reducing strata insurance premiums in that region.
The treasurer has invited us to attend the budget lockdown mid July and we are hopeful that the positive messages to North Queensland and the strata sector on the whole will continue. North Queensland may only be the first step though in asking for engineering assessments, whether funded or not. More and more concrete cancer cases arise at the Gold Coast and there are now considerations that mandatory inspections should be implemented. We’ll have to wait and see.
AccomNews is not affiliated with any government agency, body or political party. We are an independently owned, family-operated magazine.
