Mr HAYES (11:21 AM) —For some time community groups, individuals and businesses have all expressed concern about the rising cost of public liability insurance. No doubt many members on both sides of the House have been lobbied at various times about the cost of such insurance to various community based groups that have sought to obtain public liability insurance or, more appropriately, as the member for Hunter pointed out, that have found that it is just not available to them. The problem of public liability insurance premiums is one of the principal reasons that the government has brought the Trade Practices Amendment (Personal Injuries and Death) Bill 2004 before the parliament, but it is also a reason that I find somewhat lacking. The government has brought this bill before us on the basis of arguments that, after some closer analysis, are particularly unconvincing.

The Trade Practices Act has undergone many amendments but remains an important piece of legislation, outlining a number of key consumer protections and governing the activities of companies and some individuals. The provisions of the act allow for: the prohibition of unfair, unconscionable, misleading and deceptive conduct; the right of consumers to purchase goods of acceptable or merchantable quality; consumers injured by defective goods to seek compensation for their injuries; the Commonwealth minister to set product safety and information standards; and the Commonwealth minister to ban supply of unsafe products or to order their recall.

These are significant and important provisions that should not be discarded lightly. The provisions of this bill seek to remove an important provision from the Trade Practices Act. As the Minister for Revenue and Assistant Treasurer correctly noted in his second reading speech, part V division 1 of the Trade Practices Act prohibits, under civil law, unfair practices, including misleading and deceptive conduct, from trade and commerce. Penalties for such actions are provided under part VC division 2 of the act. As the minister noted:

Obviously such a significant reform to the act poses the question: ‘Why?’ The minister went on to explain:

I have no doubt that those groups and individuals who have faced considerable increases in public liability insurance premiums and those who have been unable to obtain public liability insurance at all would welcome any action to reduce the upward pressure on premiums. However, like everything that seeks to sweepingly remove important provisions in legislation, the consequences—perhaps not the immediate ones but certainly the ones in the not too distant future—also need to be taken into account.

It is far too simple to say that the problem will disappear or that a solution will present itself when we simply remove sections from legislation. Often when we try to apply a quick political fix to a situation some unintended consequences are missed. Before we take action to throw the baby out with the bathwater, I think it is time for a closer examination of the issues. There is no doubt that the premiums associated with public liability insurance have been the source of much concern over recent years. We all remember the headlines about the community groups, about the local scouts and about the school fetes that could not go ahead because of high public insurance premiums—or because such insurance to underwrite an event in the first place could not be secured.

As the minister has noted, the driver for this legislation is to reduce public liability claim costs and reduce pressure on insurance premiums, in order to assist in delivering affordable public liability insurance. I find it interesting that this remains the driver for this legislation, given the trend in public liability premiums. For example, the New South Wales Chamber of Commerce conducted a survey which indicated that there was a 43 per cent reduction in the number of businesses having difficulty obtaining public liability insurance over the 12 months to July 2003. Another example is that a leading commercial insurer, CGU Insurance Ltd, has cut its commercial liability insurance rates by 10 per cent in New South Wales—and, I assume, in other states. In addition to this, the Australian Competition and Consumer Commission commenced monitoring premium prices in July 2002 to assess whether the insurance industry is reducing public liability and professional indemnity insurance premiums. In January 2005, the ACCC reported that the average public liability insurance premiums had decreased by 15 per cent between 31 December 2003 and 30 June 2004—a reversal in the pattern of premium increases that was certainly obvious during the period around 2000.

Of course, this evidence is probably not enough for the government, but the government did commission two Commonwealth reports which found that public liability premiums were down by between four and five per cent in the year to December 2004. When the minister released these reports, he said that the results came about because of the tough action of federal, state and territory governments. Needless to say, the results that the minister took the opportunity to praise make you wonder why the government continues to pursue these amendments. It makes you wonder why, with these amendments, the government is pursuing removing the rights of consumers.

I was looking through the bill and thinking that there must be something else to keep this alive—that maybe there was an industrial relations implication. But, after going through the bill, I find there is not. It seems that this is just another example of the government’s pursuit of bottom standards on so many fronts. That is the likely driver for the continued existence of this bill.

If the evidence of the insurance premiums is not enough for the minister and not enough for the government, maybe they should have a look at the dissenting report of Labor senators of the Senate Economics Legislation Committee. It noted that the justification for the bill—the fact that the Trade Practices Act has the potential to undermine state and territory reforms—was regarded as less than convincing. The Law Council presented evidence to the committee that only nine examples of cases could be found in which people had tried to recover personal injury damages based on part V, division 1. These nine cases were not in the last six months—they were not even in the last 12 months; they were between the years 1989 and 2002. That is, nine cases were found over 13 years. And, of those nine cases, there were a number through which no damages were recovered.

But enough about why this legislation is not needed because of the movement of insurance premiums or the number of actions brought about through the Trade Practices Act. Let us consider exactly what we will be losing under the provisions of this bill. Once the Trade Practices Act is amended it will remove the capacity for individuals, or the ACCC acting on behalf of individuals, to bring civil action under part V of division 1. Granted, while the option to pursue civil action may be removed, government members have been quick to point out that the ability to pursue damages under common law will remain.

We have all seen the difficulty of the individual to pursue things under common law, and that will be particularly so once the government rams through its industrial relations agenda. Those of us on this side of the House know that having an action at common law for most of us is the equivalent of not having a means of appeal at all. An appeal based on the common law for damages for most people is near on impossible. People cannot afford to take long legal actions against major companies through the courts. Even if an individual has a legitimate case, the company they are up against can in most cases economically starve them out of an action through protracted litigation. Oftentimes it is a David and Goliath battle in which David, in this instance, would not stand a fighting chance. To naively rely on the common law to solve problems is an economically inefficient approach. The costs associated with bringing an action would, from a societal perspective, no doubt outweigh any benefit.

The Trade Practices Act has had an important influence on the psyche of Australian business. The provisions of the Trade Practices Act, particularly in part V, division 1, have created what is often referred to as a ‘culture of care’ within the Australian business community. As the Law Council noted in evidence to the Senate Economics Legislation Committee:

This is an important piece of evidence that the government and the minister have clearly ignored. Product safety is important to consumers. Consumers have rightly developed through time an expectation that they will be able to purchase products that are safe and, after taking into account the marketing hype, will, to a greater or lesser degree, do what they are supposed to do.

It is also interesting that both the minister and the government have managed to ignore other evidence to the Senate committee. They have ignored the fact that, even though a number of groups expressed opposition to the bill, they expressed some support for alternative arrangements. The government has managed to ignore the fact that the proposals had a common theme in that the parties thought that the Trade Practices Act could be amended so that damages for breaching part V, division 1 could be bought into line with state and territory laws. That being achievable, the justification for this bill would be very weak.

I find it difficult to believe that nine cases over 13 years—a number of which were, as I indicated earlier, unsuccessful—have driven up insurance premiums and will cause people to jurisdiction shop. I have no doubt that rational individuals, if they think they have a better chance or have a chance at achieving greater damages, will exploit the rules in any situation, be it through the Trade Practices Act or any other means. If nine cases in 13 years is the most that the Law Council could find in terms of the use of these provisions of the Trade Practices Act, it is probably a measure of the success of the act.

As I noted earlier, the fact that these provisions exist and that actions can be taken against companies for misleading or deceptive conduct that results in injury or death has created a culture of care amongst manufacturers and suppliers. The fact that legislation exists in which a means is created for consumers to seek redress and that legislation exists that creates a potential liability, be it implied or otherwise, has certainly held producers to a higher standard. The numbers tell the story. Nine cases over 13 years is a measure of the success of these provisions, not a justification for their removal. The number of cases and the amount of damages should be judged, quite frankly, as the effectiveness of this piece of Commonwealth law. A small number of successful cases being actioned under the provisions of the Trade Practices Act are a measure of the strength of the law, a measure of its success, not the justification for its dilution. They are a measure of the seriousness with which producers take the act and a measure of the discipline that is imposed throughout the corporate world.

In this case, Labor’s proposals should be adopted. Under the proposals of the opposition, the important protections that have existed for some time would remain, the protections described by the Law Council as having ‘significantly improved the standards of behaviour that we have seen across the whole corporate world’ would remain, the protections about which the Law Council also noted that they would be ‘loath to go down a path of in a wholesale way taking out whole areas of action’ would remain, the ability for David to take on Goliath in something that looks like a fair fight would remain.

The opposition’s amendments are simple. They will retain the longstanding consumer protections under part V, division 1. They retain the essence of the rigour that is imposed on companies, implied or otherwise, under the Trade Practices Act. The culture of care that has emerged as a result of these provisions will remain. The discipline that companies have imposed on themselves because of the consequences of having the Trade Practice Act in existence will also steadfastly remain, because there is no escape clause. However, as we pointed out, the bill could be constructively amended to minimise jurisdiction shopping by aligning the damages for breaches of the act where that would be consistent with those within the state or territory jurisdictions.

But there is no way of dismissing the genuine concerns of people in relation to death or serious injury by saying that the only recourse they have is by applying the rigours of the common law. This government may be in a race for bottom standards when it comes to the conditions of working Australians, particularly in relation to the industrial relations agenda. It may be willing to throw everything away in an effort to outbid everyone else in a quest for the cheapest, but there are some protections that should remain and the provisions of the Trade Practices Act, quite frankly, are one of them. I cannot support the removal from this act of the capacity of individuals, and the ACCC in representing individuals, to obtain redress through civil claims. I do not believe the evidence supports it, and I do not believe that the public wants it.