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Thursday, 25 March 2004
Page: 27253


Mr ANTHONY SMITH (12:07 PM) —As previous speakers on this side of the House have indicated, the Trade Practices Amendment (Personal Injuries and Death) Bill (No. 2) 2004 forms part of a package of critical reforms to the Trade Practices Act to address the crisis in public liability insurance.

Listening to the previous speaker, the member for Cunningham, you would think that the federal government on its own had dreamt up these changes, that somehow we had decided without any consultation that these changes to the Trade Practices Act were necessary. In fact, nothing could be further from the truth. These changes come as a result of extensive consultation with all of the states. The states themselves—and I will come back to this through the body of my speech—after confronting the crisis in insurance have amended and changed their own state laws, which of course cover the bulk of the legislation in this area, and after extensive consultation have agreed to the changes that we are making. To have the federal and state governments agreeing is something that does not happen every day.

For the previous speaker to oppose this legislation for opposition's sake—to get some cheap publicity or to try to differentiate himself—is a sad commentary. Whilst he has extensively researched and adequately diagnosed the problem, at the end of the day, his solution is to do nothing. That is not what community groups throughout Australia want. That is not what the battling small businesses of Australia want. That is not what the Australian people want. They know that insurance premiums are too high and they instinctively know that some of the Tattslotto style payouts have been ridiculous, and they look to their levels of government to do something about it. That is why the state governments have acted and that is why we are acting to hold up our end of the bargain and to make change where we can.

As the member for Moncrieff and some others on this side of the House indicated earlier, the changes in this bill and, just as importantly—in many ways more importantly—in the previous bill in this same package seek to jointly implement the very reforms I just spoke of that have been developed by the federal government in close cooperation and conjunction with the state and territory governments right around Australia.

In recent years, the insurance story—the blow-out in premiums and some of the crazy results—have received extensive media coverage. We have all seen the headlines. The headlines really do tell the story: `Insurance no laugh for comedy festival'; `Grab for compo: Council coughs up for city spills'; `Fire refuges closed'—fire refuges closed in areas like my electorate, which covers the Dandenongs, the most fire-prone area in Australia, because of this insurance crisis; `Decking the town hall proves risky'—community groups that cannot even deck their town hall; and `Liability puts an end to swim classes'. The reasons for this justifiable media interest indicate the importance of public liability insurance in its various forms for our community.

Community groups and small and medium sized business right across Australia have borne the brunt of huge premium increases in recent years. Recently the Minister for Small Business and Tourism, Joe Hockey, cited a number of examples—two of them quite telling—that I will use just to remind the House. One was a premium increase for a small battling adventure tourism company in regional Western Australia. The premium went up from $940 in 2002 to $1,380—a rise of $440. That is a typical sort of rise where the company itself will have done nothing different in its year of operation than in previous years yet is hit with a massively escalating premium. Another example is that of a $5,200 premium increase for an engineering business. The premium went from $800 last year to $6,000 this year.

Even though the bulk of the relevant law is in the state and territory domain, as I indicated earlier, the federal government, through the active involvement of Senator Coonan, the Assistant Treasurer, has sought to work cooperatively to resolve this problem. The Australian Competition and Consumer Commission has been tasked to monitor premiums and insurance payouts. A recent report found that the average size of personal injury and death claims settled increased quite markedly. The statistics on this issue really do tell the story. There was an increase from just over $17,000 in 1997 to more than $35,000 in 2002—an increase of 102 per cent. The report noted that there was a marginal decrease in 2001 and a reduction to $30,000 in the first six months of 2003. Between 1999 and 2002 average public liability premiums increased greatly—10 per cent in 2000, 19 per cent in 2001 and 44 per cent in 2002. For the first six months of 2003, the average premium increased by four per cent. In dollar terms, premiums were stable at around $600 between 1997 and 1999. The ACCC found the average premium to be just over $1,100 in 2002 and about the same in 2003.

A Victorian Employers Chamber of Commerce and Industry, VECCI, survey in 2003 found that public liability insurance premiums had significantly affected all sectors of the Victorian economy. The survey found that the average premium increase on 2002 was 60 per cent. Eighty-nine per cent of respondents reported that they have experienced an increase between 2002 and 2004. The increase in premium amounts was sizeable—more than $4,500 for the average small business. That is a small business with between one and 20 employees. The survey concluded that 49 per cent of respondents considered the increases as being a `major concern' to the viability of their businesses and 11 per cent considered the issue `critical' to their continued survival.

Against these developments, as I indicated at the outset of this speech, it is incumbent on all levels of government to act—and that is precisely what this bill and the other bills in this package seek to do. Our community, as I indicated, has a right to expect that government should act: it should expect and demand no less. This bill, together with the earlier bills, seeks to complement the state and territory reforms to the law of negligence and seeks to make liability insurance more affordable and available. With the states and territories, the Commonwealth has sought to address these concerns and ensure that there is a degree of balance to the laws that compensate people for death and injury.

A panel of experts chaired by Justice David Ipp brought down a series of recommendations, and this bill implements some of them. The Ipp review concluded that the federal Trade Practices Act needed to be included in any proposed changes to state and territory laws—and that makes sense. The Ipp review determined that reforms must apply equally around Australia—that is, in each of the states and territories as well as at the federal level. The bill seeks to introduce the sorts of changes that have already been legislated, in the main, by many of our state jurisdictions.

Australia's new negligence laws would be undermined if lawyers and their clients were allowed to forum shop between state jurisdictions or between state and federal jurisdictions. This potential loophole would only introduce new difficulties and prevent the problem from being solved. For that reason, the government is acting to fix the loophole in this bill and, to an equal or perhaps larger extent, in the earlier bill that has passed through this House. Of course, the Trade Practices Act allows a person to claim damages for loss, including personal injury or death, following from unconscionable conduct or contravention of the act's product safety provisions or for the supply, by a manufacturer or importer, of unsatisfactory or defective consumer goods.

Once this amending legislation is passed, the Trade Practices Act will include, in specified sections, limitations on time periods for actions arising from personal injury and death and limitations on the quantum of damages that may be awarded. Such claims will have to be made within three years of the date of discoverability and no more than 12 years after the event. As Australians would rightly expect, special concessions will apply where children or adults are incapacitated or involved. The court will also have discretion to extend limitation periods in inappropriate cases. The maximum amount of damages for non-economic loss will be set at $250,000 and will be indexed to the CPI. For less serious injuries, proportional damage limits will apply.

These and other amendments will harmonise Australia's negligence laws, as I have said. A nationally consistent approach will reduce the number and cost of smaller claims and reduce the uncertainty associated with the outcome of actions. It is important to note that these new rules do not reduce the deterrence against undesirable conduct. Protection under the TPA remains—only the rules relating to the limitation of actions and the quantum of damages are being changed. Australians would see that as a sensible, pragmatic and appropriate response to try to fix this problem that has arisen. The Ipp review included an actuarial assessment of the economic impact of the national reforms—that is, the benefits that can be derived, to the best that they can be calculated, from moving down this path in cooperation with the states. It was determined that the initial reduction in public liability insurance premiums could be in the order of 13.5 per cent with, of course, more savings flowing in the future years as the laws settle in and the new regime takes place.

I hope that Labor members and senators are able to support these amendments and this bill. They should do so, as their counterparts in the states and territories have done. The business and community groups across all of our electorates—including mine in the outer east of Melbourne and the Yarra Valley—expect the parliament as a whole to pass these laws so that there can be some relief and some light at the end of the tunnel. The amendments in this bill, like other related changes to the Trade Practices Act, are needed and they are needed now. Up until now, that has been recognised everywhere, except by some people on the other side. The Financial Review, in a very good editorial on 10 March—and a good editorial does not happen every day in the Financial Review—exhorted federal Labor to take a responsible stance. It highlighted the comments of the Labor Treasurer in New South Wales, Michael Egan, urging Labor senators to back the insurance reforms in the previous bill and in this bill. It said that unprincipled obstruction would cost the business community. The editorial said:

But the rest of the country couldn't care less about the politics; it just wants a solution and Labor is holding it up.

Whilst, unfortunately, that is sometimes an opposition's natural instinct on so many matters, on this matter of community concern, where the community is crying out for sensible, pragmatic solutions to a very real problem that affects business, community groups and everyone in their daily lives, I urge those opposite, for the good of the country, to overcome that natural instinct and support this bill and the other bills that form part of this package of changes to the Trade Practices Act. I commend the bill to the House.