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Thursday, 25 March 2004
Page: 27237


Mr CIOBO (11:01 AM) —I am very pleased to speak to the Trade Practices Amendment (Personal Injuries and Death) Bill (No. 2) 2004. This is an important debate that is taking place in this chamber, because it deals with an issue of great concern across the community at large. That is the issue of insurance premiums, in particular insofar as it is having a detrimental impact on all of those volunteer organisations and community groups that play such an important role in ensuring that the social fabric in our communities remains strong. All those volunteer and community groups play an important role in ensuring that the services that many have come to expect are there. For example, such a group is the surf lifesaving movement, which I know many people in my electorate on the Gold Coast have come to expect to be there when they go to the beach with their families.

In the same way, this is an important debate because it deals with the very serious issue of the way in which not only federal government but all tiers of government are dealing with the exponential growth in premiums that seems to be occurring as a result of Australia's society becoming more litigious. I heard the member for Wentworth earlier reflecting on the fact that Australian society does seem to have become more litigious, and I wonder whether it is because of some high-profile incidents in which significant people in Australia's history have sought legal action. I am reminded of the member for Watson. The member for Watson, in a very high profile case, brought action against the Commonwealth government after he fell off his bike. I cannot help but wonder whether the member for Watson is one of the reasons why we see this growth in personal injury lawsuits taking place with respect to not only negligence but also the various courses of action open to people to pursue under, for example, the Trade Practices Act if they engage in forum shopping.

The reality is that over the past two years the Commonwealth government has been leading the initiative with respect to ensuring that the states and territories are on a program of reform to make liability insurance more available and affordable. There was clearly a perception in the community that the way the courts were deciding on negligence cases was unclear and unpredictable. I turn my mind to two high-profile cases of the recent past which have led to grave concerns being held in the community. One was an instance on the Gold Coast. A young man who was at a party and had had several drinks dived off a back fence into the canal behind the home, which was on one of the extensive canal properties available on the Gold Coast, and in the process injured himself. He then successfully brought a lawsuit against the owners of that property, arguing that the owners of that property had a duty of care—and that, if they were having a party at their place and someone had had too much to drink and, in an inebriated state, decided to climb onto the back fence and dive into the canal and injure themselves, that was reasonably foreseeable to a certain extent and the owners of the property should have taken measures to ensure that that did not occur. I find that farcical, and I know most of the community finds it farcical. That example operated perhaps as an ancillary to another ridiculous decision by the courts with respect to an individual who dived into the ocean at Bondi Beach and hit his head on a sandbar that had arisen under the surf. In that particular instance the courts ruled that, when that individual who was swimming between the flags dived into the ocean and hit his head on the sand underneath the waves, that was in some way reasonably foreseeable and the local council—and of course, through the council, all ratepayers—had a duty of care to that particular individual and were in some way liable for the fact that this was not foreseen.

They are two shocking examples of the way in which negligence law in Australia seems to have completely run off the rails. I am very pleased that the Howard government has been leading the program to ensure that we move away from this increased sense of litigiousness that is taking place in Australian society—that we move away from people's first reaction if they get injured being: `Who can I sue?'—towards a society that no longer looks to blame someone but recognises that some accidents do occur and if you are walking down the footpath and you slip or if you are elderly and you catch your foot on a broken footpath and you trip, you cannot always automatically seek to sue someone in relation to that event occurring. Until society in Australia at large recognises that we are all adversely affected by this increased sense of litigation taking place in the community and that we all bear the cost of this increased litigiousness, we will all continue to pay the price associated with that.

I had a discussion recently with a good friend of mine, Dr Darryl Gregor. Dr Gregor is a well-known ophthalmologist on the Gold Coast and runs a very successful clinic there. He described to me the great sense of unease that exists among the medical fraternity, not only on the Gold Coast but Australia-wide, as a consequence of people's first reaction if there is a problem being: `Who can I sue?' The reality again is that, in large part, this is brought about by changes and escalating premiums with respect to liability insurance. In that regard it is very important that we undertake reforms to ensure that not only, for example, the medical fraternity has its costs brought under control but also community groups—and again I would highlight the surf lifesaving movement—are not stung by the burden of exponentially growing premiums for their insurance.

The reality is that it had become too easy for plaintiffs in personal injury cases to establish negligence, and the payouts were seemingly too high. The whole system was rapidly falling out of balance. Again I would cite the case of the medical insurance industry to highlight the social costs associated with what took place there and in particular the fact that Australian taxpayers had to bail out UMP to the value of $400 million or so. Again, that was a social cost borne by all Australians as a consequence of the general affliction in the Australian community of automatically thinking, `Who can I sue?' if something goes wrong.

As I have mentioned, the federal government has been leading the charge to ensure that there is a national uniform set of reforms to tort law. All ministers across the country have agreed that tort law reform is the area in which governments can have the greatest impact on the insurance crisis. As a consequence of these discussions, the Ipp review was appointed in May 2002. It handed down its report in September 2002, which included a number of recommendations about how to deal with the escalation in insurance premiums.

The bill before the chamber today is the second tranche of Commonwealth reform, the first being the Trade Practices Amendment (Personal Injuries and Death) Bill 2003, which was passed and which I also spoke on. That bill dealt with forum shopping and in particular the use of part 5 of the Trade Practices Act to sue in cases of personal injury and death. Once both tranches have been passed by the parliament, the Australian government will have met its commitment to implement the recommendations flowing from the Ipp review.

The Ipp review itself concluded that, for many cases, a damages action under the Trade Practices Act is a real alternative to a damages action in negligence. Therefore, it can be plainly seen that any reform by the states and territories of common law negligence which are aimed and directed towards slowing the rise of public liability and professional indemnity premiums, and making such insurance more readily available, would fail unless it was done in cooperation with the Commonwealth making complementary changes to the Trade Practices Act. In fact, studies have been conducted and commissioned regarding the economic benefits that would flow as a consequence of complementary reform, both of the states and territories and the Commonwealth. PricewaterhouseCoopers conducted an actuarial assessment of the economic impact of national reforms to negligence law on both the affordability and availability of public liability insurance. The assessment noted that, if key quantifiable elements of the review were implemented, an initial reduction in public liability premiums of 13.5 per cent could be expected. The assessment also made the suggestion that, over the longer term, the behavioural effects of adopting the suite of recommendations not only on the definition of negligence but also dealing with duty of care as well as the other Ipp review recommendations on liability reform should result in significantly larger cost savings.

So right here I would highlight to my constituents in Moncrieff and my local community groups the savings that will arise as a consequence of this second tranche of legislation being passed. Only two days ago I had an email from the Main Beach Progress Association, a very important and very committed local community organisation in my electorate. The organisers and executive members of the Main Beach Progress Association raised with me their concern that there had been significant increases in their public liability premium. Likewise, there is a litany of examples of community groups in my electorate that have suffered as a consequence of this escalation in premiums. I would highlight to each and every one of them that there are benefits of as a consequence of this law being passed. Whilst I am pleased that the opposition is broadly supportive of the principle of tort law reform, the reality is that its arguments about why it is opposed to this piece of legislation simply do not stack up.

There is a clear distinction between the operation of, for example, section 52 of the Trade Practices Act and the provisions that this bill is aimed and directed towards. There is a clear distinction between whether or not section 52 originally was intended to have application with respect to courses of action for personal injuries and death over misleading and deceptive conduct versus the courses of action available and that this bill here is directed towards—for example, bringing an action against a supplier of a product—somewhere that it was originally envisaged there would be a course of action arising should there be personal injury or death. That is the reason why the government is committed to these reforms.

The opposition might be unclear and say, `Well, we'd like one blanket uniform rule to apply both to part 4A and part 5.' But this government's position is quite distinct from that, and it is a recognition that originally it was envisaged that there be some application under the provisions that this bill deals with versus the use of, for example, section 52—which, quite frankly, was not intended to be used in the way that it has become increasingly common for it to be used. It has become increasingly common because people are engaging in forum shopping. They think that if they can be successful with a section 52 claim they would like to pursue that. That is the reason why there is a very clear distinction—and a need for there to be a clear distinction—between the first bill that this government passed and this second bill dealing with those other provisions not contained within part 5.

So, what are the new caps and limitations for personal injuries and death actions under the act? Under the new rules, claims for damages for personal injuries and death actions under the relevant sections of the act must be made within three years of the date of discoverability and no more than 12 years—the long-stop period—after the event on which the claim is based. Special concessions to these rules apply, for example, in the case of minors or incapacitated persons. There will also be discretion available to the courts to extend limitation periods in appropriate cases, having regard to the justice of the case.

The amendments also establish a tariff, cap and threshold for the award of general damages. The maximum amount of damages for non-economic loss will be set at $250,000 and will be indexed to the CPI. This amount will only be awarded if the injury represents a most extreme case. In cases where the extent of the injury is between 15 and 100 per cent of the most extreme case, a pro rata scale has been built in that works off that cap of $250,000. Damages for non-economic loss will not be awarded if the extent of the injury is less than 15 per cent of a most extreme case.

The amendments also establish maximum amounts for the award of damages for loss of earning capacity. These damages are capped at twice average weekly earnings. The amendments also apply a threshold and a cap to damages for gratuitous attendant care services as well as for the loss of a plaintiff's capacity to provide gratuitous attendant care services. Damages will only apply if the gratuitous attendant care services are provided for at least six hours per week over a period of at least six months. These damages cannot exceed average hourly earnings for each hour the services are provided or average weekly earnings per week. Other changes incorporated into this bill limit damages for loss of superannuation entitlements and interest on damages, give courts the power to approve personal injury damages in the form of a structured settlement, and abolish exemplary or aggravated damages for certain proceedings.

Some organisations may put forward the argument—incorrectly, in my view—that reducing these payouts will create hardship. I would say to those organisations—for example, the Plaintiff Lawyers Association—that the restrictions on limitation periods and quantum introduced by the bill reflect the recommendations of the Ipp report, which have been endorsed and followed by state and territory governments. The Commonwealth, state and territory ministers agreed at the ministerial meetings on insurance issues on 4 April and 6 August 2003 that further opportunities to harmonise tort law reforms should be pursued, and this bill does just that. The Commonwealth government is of the view that the amendments introduced in this bill provide a nationally consistent position on limitation periods and the quantum of damages for the states and territories to move forward. The reality is that the Ipp review took a principled approach to the quantum of damages.

If this bill passes, I would simply highlight to the people of the Gold Coast and right across the nation that the community groups that they love—those community groups that they volunteer their time to—will be beneficiaries of the tort law reform that has taken place in the states and territories as well as the law reform that the Commonwealth government is introducing as a way to offset some of the burden that is being realised as a consequence of the forum shopping taking place. Those that engage in the patrolling of our beaches, the surf lifesaving movement and those that might be involved in the conservation of an area, such as the Southport Spit, through the Main Beach Progress Association, will all benefit as a consequence of a reduction, we would hope, over the longer term in the cost of premiums associated with personal and professional liability laws. I commend the bill to the House.