Ms GRIERSON (9:31 AM) —I rise to support the second reading amendment moved by the member for Perth and, in doing so, to support the Medical Indemnity Agreement (Financial Assistance—Binding Commonwealth Obligations) Bill 2002. The bill is a very necessary response to an unnecessary crisis. The legislation confirms the arrangements previously announced by the government to ensure the continuity of medical indemnity insurance coverage for medical practitioners who were insured with United Medical Protection Ltd, UMP, and for its wholly owned subsidiary, Australasian Medical Insurance Ltd, AMIL. The legislation provides for an appropriation out of consolidated revenue expressly for the purpose of payments in accordance with this bill, but it is also a reflection of the insurance and corporate governance crisis now facing this country.

For both providers and users of health services, this legislation serves as a reminder of the extreme difficulties, pressures and risks they now face because of the collapse of the medical insurance firms. This is a crisis for patients and health customers, who have now lost confidence in the protection of their rights; a crisis in confidence for medical practitioners, who fear they can no longer provide medical care with the assurance that within the parameters of safe and responsible practice they will be personally indemnified; and a crisis in confidence for the Australian public in our insurance industry and in the ability of this government to regulate and monitor such important areas of commercial and medical practice. Prior to its provisional liquidation, UMP-AMIL was the largest medical insurer in Australia, providing coverage to over 60 per cent of medical practitioners nationally. In fact, in my state of New South Wales and in Queensland, the coverage by those two companies extended to 90 per cent of medical practitioners. Being such a large player in the medical indemnity insurance field, the collapse of UMP-AMIL had a very dramatic and distressing effect.

The first major shock to the Australian insurance and reinsurance markets came when HIH Insurance filed for voluntary liquidation in March last year, but the shock waves caused by the HIH disaster are being felt today in the royal commission and in headlines detailing fraudulent activities and individual corruption. The causes of HIH's voluntary liquidation are currently being examined by the royal commission but, as well as the factors of unethical human behaviour, significant reasons did exist for their $800 million interim half-year loss. They have already been reported as overseas investment losses—something we now hear too much about—the high cost of the acquisition of FAI Insurance and the unprofitable premium rates. Whatever the reasons, the outcome was that in June 2001 UMP announced it had written off $30 million due to the collapse of HIH. It was caught up in that aftershock. The outcomes of the HIH Royal Commission may just create the shock this government needs to take on the responsibilities extended to it by the Australian public.

The legislation we are dealing with today was, sadly, inevitable. The Labor opposition support this bill, but we remain highly critical of the continuing failures of this government to address medical indemnity problems generally. Medical indemnity is not just a problem for doctors but one that directly affects the availability and affordability of medical services to all Australians. Therefore, the need for a national response led by the Commonwealth remains acutely and urgently essential. The current crisis in medical indemnity insurance that this legislation responds to was publicly brought to a head by the financial difficulties experienced by UMP and the appointment of a provisional liquidator earlier this year.

Problems with medical indemnity insurance have a much longer history in Australia. The warning signs were well and truly there for the Howard government to read from as far back as 1996. Instead, they have chosen to consistently ignore this problem until now, when it has reached crisis proportions. For example, in 1996, the Tito report—commissioned by the Keating government in 1991— provided a detailed review of the professional indemnity arrangements for health care professionals and made a number of key recommendations, none of which was acted on by the then new Howard government. After seven years in government, we still see no sense of urgency. The reverse is true. This government has consistently refused to be proactive on this issue, choosing instead to wait for a crisis to descend and threaten the availability and affordability of medical services to all Australians.

On this side of the House, we have recognised the need for action in the area of medical indemnity insurance and identified areas needing urgent reform. In July 2001, we proposed a reform package for medical indemnity insurance. We have repeatedly called on the government to assume a leadership role in the coordination of reforms necessary across states and territory laws and we have highlighted the desirability of achieving uniformity in tort law reforms. Labor have also called on the government to act in those areas for which it has responsibility, including dealing with issues of quality and safety of medical care, the establishment of a scheme for the care of catastrophically injured Australians, and a heightened role for the ACCC in ensuring that patients do not unreasonably bear the increased costs of medical indemnity insurance.

Labor welcome the general thrust of the two recent reports: the Ipp report issued in August this year, and the report commissioned by the Australian Health Ministers Advisory Council called Responding to the medical indemnity crisis: anintegrated reform package, which was released in September this year. We encourage the government to respond to the very comprehensive recommendations made in those reports.

There are solutions to this crisis and the solutions we are putting forward are consistent with our commitment to improvements to the quality and safety of medical care. We propose that the government should consider national legislation for open disclosure so that causes and prevention are the focus rather than blame—we see that with our transport and safety investigations; the real aim is to find out what went wrong and what happened, without the blame, so those things do not happen again—while at the same time respecting patients' rights and sensitivities. Mandatory reporting of negligence claims and maintaining a database of incidents would be a helpful solution. Other measures proposed by Labor include: developing with the profession national best clinical practice guidelines with ongoing review and monitoring processes that are enforced; better informed consent processes so that patients do know from their doctor what lies ahead; better information and management systems in health care institutions through the health care arrangements; and improving clinical experience in training. I draw to the attention of the House the Newcastle University model which is a clinical practice, particularly for general practice, for young trainee doctors. It is very much a clinical model with young students out in the workplace actually experiencing first-hand the job that they will be taking on. I will speak on that further.

We also suggest that there need to be improved codes of practice, particularly in regard to informing patients of the risks and benefits of different treatment options. Also, identifying those practitioners who show poor performance and assisting with implementation of improvement programs—we actually see that in almost all professions but this has perhaps been overlooked. Thorough consideration should be given to a national scheme for those who are catastrophically injured and who require long-term intensive care and rehabilitation and it should be developed and agreed to with the Commonwealth and state governments and the medical profession and put in place. Sadly, those catastrophically injured Australians will now include some of our survivors of the Bali tragedy, which is so much on all of our minds here today. We also propose to ensure that medical defence and advocacy organisations are able to be inclusive but regulated through APRA with increased resourcing to APRA. We propose that such medical organisations fully disclose incidents and claims so that risk is better understood, better costed and therefore better managed. We support differential levels of cover dependent on outcomes, rewarding good practice that reflects quality and safe health care. We also propose the prevention of price exploitation, through the ACCC monitoring any flow-on cost to patients because of the increase in indemnity insurance.

In stark contrast to Labor's position, the Howard government have been very reluctant to play a role addressing medical indemnity insurance problems and only took their first tentative steps following the federal election in November 2001. But now when the government have no choice but to act, some confusion and uncertainty still abound for the 32,000 medical practitioners and specialists insured by UMP and for the community at large. Whilst the government have finally agreed in this legislation to extend their guarantee until 31 December 2002, the long-term viability of UMP remains unknown at this time. The extent of the payments that will actually be required by the Commonwealth to meet these financial commitments also remains unknown. Yet the government continue to claim that they are financially responsible managers.

Every member of this House will be aware of the human cost and social impact of the failure to avert this crisis—they will be seeing that in their electorates. In the Newcastle electorate that I represent there have been far too many local stories of the impact of this failure. I will take the opportunity to share those here to highlight the direct effect this problem has had on the availability and affordability of medical services for people of Newcastle and the Hunter region. The first example occurred in May of this year when the Family Planning Association health clinic in Newcastle was forced to temporarily close because it was unable to obtain professional indemnity insurance. This clinic provides more than 9,000 clinical consultations to women, men and young people in the Newcastle and Hunter regions each year. It works with primary and secondary schools, non-government schools, TAFEs and universities, youth refuges, Indigenous and ethnic services and parent groups. Throughout the Hunter, the FPA provides professional education for doctors, nurses, midwives, medical students, social workers, teachers and allied health workers. It provides a vital service in our community but it was forced to close—fortunately temporarily—in a bid to secure the necessary medical indemnity insurance. There is overwhelming community support for FPA Health in Newcastle as an essential community service. FPA was very fortunate to have eventually found new insurers and has reopened its health clinics.

The breast clinic in Waratah is operating under the current federal government guarantee, extended now to 31 December 2002, but the breast clinic remains uncertain what will happen after that. Patients are contacting my office worried that their clinic, which treats some 100 clients, including men, at the centre each week, may not be there next year. They are worried that the staff who have supported them and with whom they share a bond of trust and empathy will no longer be there to continue their treatment and care. The current insurance paid by the breast clinic of $100,000 a year looks set to jump to $130,000 a year if the clinic leaves the crippled insurer UMP.

The medical, nursing and radiography students at Newcastle University were excluded by insurers last year, forcing the university to self-insure its students so that they could continue their mode of operation which sees them working in the community. But it can only provide short-term cover, and we are absolutely desperately concerned should there ever be a claim against the university because we know that it would have great difficulty in paying a claim. This short-term cover will also expire on 31 December this year. The students need that insurance cover to be able to gain important practical experience in caring for sick and injured people. If they cannot get that experience the community will suffer, finding its young doctors and nurses with only a limited range of skills. Our university prides itself on the quality of our medical and nursing graduates. The practical skills of graduates are considered to be of a particularly high standard in the profession and they are certainly an integral part of the training at the university.

The crisis in confidence among the medical profession is very real for GPs in Newcastle. Two Newcastle GPs have raised concerns about their inability to find insurance cover for the tail—that is, for previous but yet unknown or reported claims—despite having paid medical indemnity insurance premiums for decades. These GPs who are currently in the midst of legal proceedings have alerted me to the fact that their respective solicitors, formerly engaged by UMP on their behalf, have advised them that, notwithstanding the government's guarantee in this legislation, they may be personally liable for any settlement or judgment awarded in their respective cases. The amount being claimed in both cases is more than the total of the GP's personal assets. Both GPs are therefore under considerable stress. Both have indicated that they are seriously considering stopping practising because of this concern.

GPs do work in stressful situations at the best of times. They do not need the added uncertainty and worry of inadequate medical indemnity insurance. One of these affected GPs stated that doctors need affordable medical indemnity and affordable cover for the insurance tail as well as some assurance of the financial security of alternative indemnity providers. No other insurers currently in the market will cover the tail. It appears that the only option is for the Commonwealth government to come to some arrangement regarding this. Patients do need affordable, accessible medical care provided by practitioners whose main concern is patient care rather than the fear of litigation. I must agree.

A leading Newcastle neurosurgeon has publicly warned that Australia's medical indemnity crisis threatens to destroy the neurosurgery specialty and therefore jeopardises the care of people with serious brain injuries and spinal problems. This surgeon has practised in Newcastle for 27 years but will retire early because of an annual insurance premium with UMP of $110,000, which is clearly prohibitive. Obstetricians faced with spiralling insurance premiums are also passing the costs on to patients. A local obstetrician in Newcastle has stated that his premiums have spiralled from $45,000 to $94,000 per year and that he will have no choice but to pass on that cost to his patients, taking the average cost for care during pregnancy and delivery to around $1,000.

Doctors in Newcastle, like those around the country, are absorbing more costs of practice. Many of them claim that they can no longer afford to provide bulk-billing or gap payment facilities. In Newcastle 76 per cent of GP services are now bulk-billed, which is a decrease from 79 per cent two years ago. Our ratio is actually better than many other areas in the country, and I congratulate our local GPs on their responsible approach and their willingness to respond to the needs of their local community. Those needs are quite considerable in Newcastle when you consider that in my electorate alone there are 40,000 constituents with health care cards. Newcastle also has the second highest disability pension take-up rate in the country. So any loss to bulk-billing hurts the families that I represent.

More and more people cannot find GPs who will bulk-bill so more and more turn to the public health system. Public hospitals around Australia have seen an increase in the number of patients with less serious illnesses because people are finding it more difficult to obtain bulk-billing. Constituents are also telling me that they are now being asked to make up-front payments to specialists before surgical procedures are carried out. They say that the specialists are quite open about asking for an up-front payment in light of their increased medical indemnity insurance costs—$300 was one example.

To add insult to injury, patients are being advised that they cannot claim this extra cost against their private health insurance. As one woman put it to me, she is paying for the demise of UMP every way she turns—as a patient, as a taxpayer and now as someone with private health insurance who is unable to claim for this additional expense. This activity will result in increased numbers of people who simply cannot afford to pay for the surgery they need. Individual patients in our community are suffering through reduced availability of medical services, loss of doctors from practices and higher prices for those who do stay in practice.

The crisis is real and this legislation is necessary. But to resolve the medical indemnity situation properly and responsibly, action is required by both federal and state governments and changes are also required of our medical defence organisations, our doctors and our lawyers. Only a comprehensive approach to the medical indemnity issue, like that proposed by the opposition, will ensure the availability and affordability of high quality medical services to all Australians.

Finally in supporting this legislation, I again remind the federal government that this is a time for governments who are prepared to govern, to protect what has made Australia the great nation it is. With the tragic events in Bali, we are all very grateful and very proud that we have a public health system that can respond so well to the immense need—and the need for medical care and attention at the moment is extreme. We are grateful that we do live in a civilised country where our health system, built on the back of public service and commitment, can perform so well in a crisis. We must do all we can to protect and preserve the social infrastructure that makes our country strong, and solving the medical indemnity crisis would be a good start. I support the legislation and the amendment.