Mr PROSSER (11:37 AM) —I rise to support the amendments proposed in the Trade Practices Amendment (Personal Injuries and Death) Bill (No. 2) 2004. This bill amends the Trade Practices Act 1974 to ensure a nationally consistent approach in relation to the Trade Practices Act limitation periods and constraints on damages arising from personal injury or death and also ensures that the Trade Practices Act cannot be used to undermine state and territory civil liability reforms for personal injuries and death.

As the overall objective of the Trade Practices Act is to enhance the welfare of all Australians through the promotion of competition and fair trading provisions for consumer protection, reforms were undertaken by the state and territory governments to help contain the cost of liability claims in an effort to make liability insurance more available and affordable. Commonwealth, state and territory ministers agreed on a package of reforms implementing key recommendations of the review of the law of negligence at the November 2002 ministerial meeting on public liability insurance. The review of the law of negligence was established to assist governments to address the issue of increasing premiums for and reduced availability of public liability insurance. Ministers agreed that the key review recommendations that go to establish liability should be complemented on a nationally consistent basis and each jurisdiction agreed to introduce the necessary legislation as a matter of priority.

The review terms of reference noted that the award of damages for personal injuries had become unaffordable and unsustainable as the principal source of compensation for those injured through the fault of another. It was desirable to examine a method for the reform of the common law with the objective of limiting liability and quantum of damages arising from personal injury and death. The review was requested to consider a number of areas—in particular, the interaction of the Trade Practices Act with the law of negligence. The review was asked to develop and evaluate options for amendments to the act that would prevent individuals from commencing actions in reliance on the Trade Practices Act in order to recover compensation for personal injuries and death.

This bill is the second tranche of the amendments forming the Commonwealth's response to the review's recommendations in relation to reform of the act. The purpose of the bill is to ensure that a nationally consistent approach is taken so that limitation periods and constraints on damages arising from personal injury or death apply consistently across the country.

The first tranche of legislation amends the Trade Practices Act to prevent individuals, and the ACCC in a representative capacity, from bringing actions for damages for personal injuries and death resulting from contraventions of division 1 of part V, which prohibits unfair practices by corporations in trade and commerce, including misleading and deceptive conduct. This bill, in concert with the first tranche when it is passed by this parliament, will complement the Commonwealth reforms to the Trade Practices Act as recommended by the review of the law of negligence.

I am most concerned that over recent times insurance premiums have skyrocketed, which has severely disadvantaged small business and charitable groups. Unfortunately, Australia has become more litigious than ever before, with compensation and public liability claims that have contributed to the exponential rise in insurance premiums. I fully support the government's policy objectives of addressing the issue of ever-increasing premiums for, and reduced availability of, personal liability insurance. I am happy to note that commonsense has prevailed during this time, with innovative approaches to insurance cover for events, such as festivals in my electorate of late, with organisers contracting with exhibitors and performers that they exhibit or perform at their own risk, with no litigation or compensation being sought.

However, against the background of diverse state and territory responses to the implementation of review recommendations, it has been difficult to formulate an optimal approach that will achieve the full potential of the reduction in the cost for business at the same time as providing a nationally consistent response to the review recommendations. The Commonwealth has considered two possible approaches for the implementation of the review's recommendations. Option 1 is the introduction of caps and limitation periods whereby the Commonwealth could amend parts of the Trade Practices Act to introduce constraints on damages and limitation periods consistent with the review's recommendations on these matters.

Option 2 is to link state and territory civil liability laws by the Commonwealth amending parts of the Trade Practices Act to provide that the rules relating to the quantum of damages and limitation of actions for personal injury or death be determined in accordance with relevant state and territory civil liability laws. This would involve characterising claims for personal injuries and death under the relevant provisions as actions in negligence for choice of law purposes; disapplying the existing relevant provisions setting time limits to the extent an action to which they apply seeks damages for personal injury and death; and making it clear that the law of the relevant state or territory governs matters such as quantum of damages and limitation of actions under the relevant parts of the Trade Practices Act.

This approach would ensure that these parts of the Trade Practices Act are linked to relevant state and territory civil liability reforms. Any contravention of these parts of the act that does not involve a claim for personal injuries would not be affected by these reforms. All other remedies for conduct in contravention of these parts of the act would remain. The benefits for business with this option are that it would provide clarity in the text of these parts of the Trade Practices Act in relation to quantum of damages and limitation periods by setting a benchmark at the Commonwealth level. In addition, by encouraging nationally consistent reforms, this option may result in compliance cost savings for business by reducing the divergence between various legislative regimes.

As potential exposures under these parts of the act will be certain, this option may make it easier for insurers to set premiums. However, full benefits are contingent upon states and territories enacting nationally consistent reforms. This option would constrain the ability of plaintiffs to undermine state and territory liability reforms in relation to quantum of damages and limited actions, though to a lesser extent than option 2. By constraining the ability of state and territory reforms to be undermined, this option may reduce the potential for businesses to withdraw from the provision of goods and services due to inadequate insurance cover. The benefits for the community under the second option are that it may reduce pressure on insurers to increase insurance premiums and thereby ensure that adequate insurance protection is available for consumers. This option may allow the community to take maximum advantage of state and territory civil liability reforms.

This option should remove the need for plaintiffs to assess differences in the rules relating to quantum of damages and limitations of action in different jurisdictions and should lead to a reduction of plaintiffs' legal fees. The recommendation under option 2 would provide a clear statement that matters relating to the rules for the quantum of damages and limitation of actions are matters of state and territory law. This may in some cases make it easier for insurers to set premiums.

Option 1 would provide greater certainty for insurers as to exposures under the Trade Practices Act and this may encourage insurers back into the marketplace, thereby placing downward pressure on insurance premiums. However, unlike option 2, option 1 has the additional benefit of putting pressure on the states and territories to enact nationally consistent reforms. Option 1 provides a national benchmark on these matters. Given that not all states and territories have enacted reforms, this benefit is considered to be significant. On this basis, it is considered that the potential overall benefits of option 1 exceed the benefits of option 2. Accordingly, it is recommended that the Commonwealth follow option 1 in relation to the proposed reforms in this bill.

It is therefore recommended that the Trade Practices Act 1974 be amended so that—to the extent that damages arising from personal injuries or death are sought in an action under the act relating to a contravention of the unconscionable conduct provisions, part IVA; a contravention of the product safety and information provisions, division 1A, part V: a supply by a manufacturer or importer of unsatisfactory consumer goods, division 2A, part V; or a supply by a manufacturer or importer of defective goods, Part VA—action is subject to a nationally consistent approach so that limitation periods and constraints on damages arising from personal injury or death apply consistently across the country.

At the May 2002 ministerial meeting on public liability insurance, the Commonwealth announced that the ACCC would monitor the impact of these reforms. In July 2002, the Parliamentary Secretary to the Treasurer requested the ACCC to monitor costs and premiums in the public liability and professional indemnity sectors of the insurance market on a six-monthly basis over the next two years. In particular, the ACCC was asked to give consideration to the impact on insurance premiums resulting from measures taken by governments to reduce and contain legal costs and to improve the data available for insurers to evaluate and price risk. To the extent possible, the ACCC's monitoring will inform the assessment of the impact of the changes introduced by these reforms.

I support the amendments proposed in this bill to ensure the establishment of liability on a nationally consistent basis so that the Trade Practices Act cannot be used to undermine any state and territory laws in relation to claims for damages for personal injuries or death. I champion the steps that have been taken at the state and territory level to improve the affordability and availability of insurance to all concerned. I commend the bill to the house.