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Thursday, 25 March 2004
Page: 27258

Mr ANDREN (12:28 PM) —I want to make some brief comments on the Trade Practices Amendment (Personal Injuries and Death) Bill (No. 2) 2004, which flows from recommendations in the report of the Ipp committee, of which the outgoing Mayor of Bathurst, Ian Macintosh, was a distinguished member. The task of that committee, in the wake of the HIH debacle and the collapse of affordable insurance, was a very difficult one and, by and large, I support the recommendations that they made and the amendments included in this legislation, but I have some reservations that I will detail.

The earlier bill, which was introduced last year—the 2003 bill—was designed to address recommendations 19 and 20 of the Ipp report. That bill proposed that the Trade Practices Act should be changed to prevent a person from recovering damage for personal injury or death where part V division 1 of the act has been contravened. The aim of that bill is that such damages be pursued only within the parameters of state tort law reform, and it certainly made clear that the Trade Practices Act is to be an area of law quite separate from ordinary laws of negligence.

The opposition did not divide on that bill in this place, from memory, yet both the Labor Party and the Democrats now contend that the earlier bill denies the right of a person to recover damages for personal injury and death where part V division 1 of the Trade Practices Act has been breached. As I understand it, both parties are arguing for a cap to be placed on damages recovered under part V division 1 of the Trade Practices Act, but a court may still issue an injunction or make punitive or non-punitive orders where the provisions of the act have been breached and this leads to personal injury or death. The ACCC may still represent individuals to recover damages for economic loss. For those reasons I supported the earlier bill but, as I said then and maintain now, my strong reservation is that an adversarial faults system, the bounty it provides for lawyers and the wastage that is inherent in a lump sum payout still stand out as massive weaknesses in the path we are treading.

While I am prepared to accept the thrust of the Ipp report and the amendments reflecting these recommendations in this bill in the interests of reining in exorbitant claims and payouts and making insurance affordable, I continue to have problems with assertions in the Ipp report and in commentary from the government and industry that obscene rises in insurance premiums can be fixed through changes in federal and state laws—especially changes of the sort that we have been debating in this place in recent months and today. While the reforms in this bill are supposedly aimed at containing the cost of litigation while maintaining a just access to damages, we do run the risk of protecting major corporations from justifiable damages claims, as the member for Cunningham alluded to in his speech. But there has to be a balance between just outcomes and unjust claims.

The government refuses to countenance a no-fault scheme similar to New Zealand's, and until we do embrace such a scheme we are attacking this problem from the wrong direction. For instance, we are placing a cap on damages for non-economic loss at $250,000, which begs the question of how such a figure is fair under all circumstances. On the other hand, the cap on loss of earning capacity to twice average full-time adult ordinary time earnings seems quite reasonable, although no doubt there are some who would argue their earning capacity was seriously reduced by far more than that ceiling. But one also has to consider contributory negligence. Again, the New Zealand scheme appears to offer formulas that account for all such contingencies far better than these provisions and this approach do.

I see, again, references in this debate to the circumstances of the young man who dived off the fence of a property into the Coolangatta waters and the young man who, with a belly full of grog, dived into the surf at Bondi and sustained terrible injuries. It is no good blaming the victim in all circumstances, because someone has to care for that person no matter what the circumstances of the injury. It seems to me that we need a process in place that takes account of the care, perhaps long term, and living circumstances of the victim. But the massive lump sum payments we have seen based on actuarial assessments of the person's loss of earning capacity and potential life expectancy seem to pluck figures out of the air that really bear little resemblance to the cost of the person's longterm care. I will point out an example of that in a moment. The provisions in this bill surrounding personal injury and gratuitous care services therefore do seem reasonable, given the deficiencies of this approach to solving the problem, as do the limitation periods.

In reluctantly supporting the bill—it is a case of being grateful for small mercies—I draw the House's attention to a motion I placed on the Notice Paper in June 2002. It has long since lapsed, but it is interesting to restate it. It said:

That this House:

(1) recognises that there is no Constitutional impediment to Commonwealth regulation of insurance claims procedures and the magnitude of insurance claims;

(2) recognises that the Commonwealth has the power to prescribe conditions upon which any person may carry out insurance business of any kind and establish any mechanisms for the supervision of such person and corporations and to regulate their affairs, under section 51(xiv) of the Constitution;

(3) recognises that the Commonwealth uses this power to regulate the Insurance Act 1973; the Life Insurance Act 1995 and the Insurance Contracts Act 1984;

(4) calls on the Commonwealth to order an inquiry by the Australian Law Reform Commission into the feasibility of a Commonwealth legislative scheme for the insurance industry ...

That call remains valid despite the Ipp inquiry and any legislative changes made to date at either a state or a Commonwealth level. Indeed, I contend that the impasse over bill No. 1—the 2003 bill of this federal process—only underlines the need for another approach. I said at the time of the HIH disaster and the associated crisis that has affected so many community groups in my electorate, and indeed in all electorates, that the Commonwealth needed to take a lead, not leave it to the states, and that a no-fault scheme similar to New Zealand's needed to be introduced, where everyone pays a premium through a variety of processes and lifelong stage payments, and costs of care and rehabilitation are provided.

I have mentioned several times in this place the case of a young lady in my electorate who was totally disabled after a car accident. The case is still the subject of debate and argument, even though the young victim quite tragically passed away a few weeks ago. The result of that accident was a $16 million payout, with Evans Shire Council still waiting for the state and federal governments to cough up their share of the agreed payments to local government caught out by the HIH coverage default. I was pleased to hear yesterday from the office of the Assistant Treasurer that the federal government has finally signed off on the agreement between the state and federal governments on the payout that will go to Evans council and, I think, a council in the electorate of my colleague the member for New England, which was not under the HIH umbrella but which was still left high and dry in terms of coverage after a significant payout. After much politics which I believe had more to do with the amalgamation agenda of the state government than it had to do with any reasonable, fair and timely payout to the affected council, it seems at last as though this memorandum of understanding is on the desk of the Treasurer of New South Wales, Mr Egan. I urge him to facilitate that payment to Evans council, notwithstanding the agenda of the state government to wipe Evans Shire Council off the face of the earth with a forced amalgamation with Bathurst City Council. But that is another matter.

As with so many monumental payouts, in this case the victim is now deceased and that money will no longer be available for the purpose for which it was intended: the lifelong care of the victim. How much more sensible would it be for staged monthly payments to be made for the term of the victim's life—based on a fair formula taking into account the cost of care; the loss of earnings; a no-fault scheme covering accidents of all kinds, including medical; and allowing always for criminal negligence to be pursued where the evidence is overwhelming. A no-fault scheme similar to New Zealand's has much support in the general community, especially from medical practitioners that I have spoken with; but it obviously does not enjoy support from the legal and insurance fraternities, whose interest this government seems so much more eager to represent.

If the government argues that the New Zealand scheme has a significant unfunded liability—which, by the way, is now far less than it was while it was briefly tendered out to the marketplace and out of government control—one might ask what the unfunded liability of Medicare is and why ordinary policyholders should pay premiums that reflect the massive payouts that are made, such as were made in the case I have documented, with most of the money being wasted and never used for the purposes for which it was intended. Perhaps a process of insurance industry premiums could be legislated for—if, indeed, that is necessary—to contribute to the rehabilitation and respite care processes that are so desperately needed in this community as an ancillary and complementary factor in the costs of injury and disability. Injury and disability impacts not only on the victim but also on the family and on the very community, largely because of the facilities that have to be made available, often by local government and charity groups and by dint of voluntary contribution, for the welfare of that person.

How much more sensible would it be if we were to treat insurance as an area that should be under the legislative control of our national government to ensure the maximum application of the insurance dollar, the premium dollar and the payout dollar for the benefit of the victim and the community—the small community in many cases—that surrounds that victim to offer support? That is where we should achieve maximum outcomes, not in the pockets of the legal profession or the insurance profession. As I think the previous speaker, the member for Bruce, pointed out, there is a lack of correlation between the premiums charged and the increase in the payouts. Having said that and having urged the government and this parliament to revisit the whole issue of the insurance industry—the market, the most affordable premiums and the way in which we achieve the sorts of outcomes that I have detailed—I will take great pleasure in seconding the motion of my colleague the member for Cunningham, who I understand will be detailing that motion after we have dealt with the second reading vote.