Senator CHERRY (2:31 PM) —My question is addressed to the Minister for Family and Community Services. It concerns not-for-profit community organisations, many of which are funded by her department. A recent survey by the Queensland Council of Social Services shows that, since the collapse of HIH Insurance, the cost of public liability insurance for community organisations has risen by 30 to 40 per cent—and in many cases by more than 100 per cent. Is the minister concerned by the lack of competition now apparent in the provision of public liability insurance for community organisations? Are insurance companies overpricing premiums in respect of risk? Will the minister be initiating research to ensure that insurance companies are not profiteering at the expense of community organisations? Will the minister consider supplementing grants to ensure that services are not scaled back as a result of the HIH collapse?

Senator VANSTONE (Minister for Family and Community Services and Minister Assisting the Prime Minister for the Status of Women) —I thank the senator for his question. It is a good question because, as members of the Senate may well know, we have over four million volunteers in Australia. On top of those volunteers we have people—who themselves are probably, although not necessarily, volunteering—who are organising them. They are in the community organisations that need the sort of insurance referred to. I am aware that there have been some reports of quite dramatic increases in insurance premiums that have been levied following the collapse of HIH. Incidentally, I welcome the Democrats' commitment to competition, producing lower price outcomes. I understand my colleague Senator Alston would also welcome a commitment from the Democrats in that respect—especially in relation to telecommunications services. But I am pleased to see that they do recognise that competition can serve to assist in bringing prices down.

Many people believe that HIH had undersold the true value of insurance costs and that that has meant the market has had to adjust in order to account for the real risks and costs involved. To put that another way: some people think that HIH got a larger share of the market by underpricing and that that may have contributed to its not having the sort of money it should have had in order to keep going. I do not assert that as a fact; I just indicate that a lot of people believe that is the case, that the company was not run properly and it did not price its services properly. Consequently it went broke. In the meantime, in offering lower costs, it forced prices down unrealistically, in a way that they otherwise might not have trended.

My federal colleague Joe Hockey, the Minister for Financial Services and Regulation, has referred the issue of across-the-board premium increases to the ACCC. No doubt I will hear from Minister Hockey when he has had a report back on that. In addition, advice from the insurance sector suggests that a marked increase in the number of public liability claims is also a big driving force behind the increase in insurance premiums. That is affecting virtually every sector that requires insurance, including the community sector. The Commonwealth, as I am sure you will understand, has little and probably no influence over the cost of insurance policies for volunteers—or, not to restrict it to those activities undertaken by volunteers, for community organisations in the other aspects of their work. The cost of volunteer insurance is driven largely by the commercial and legal environment that organisations operate in today. I have asked the department to closely monitor developments in conjunction with Treasury, the ACCC and Volunteering Australia.

I conclude by saying, firstly, that I do not have any advice, anecdotal or otherwise, that insurance companies have been seeking to profiteer at the expense of community groups. If I understood the words you used to mean that, it implies that you think some insurance companies might be particularly targeting community groups to ramp up premiums and get more money from just them rather than the rest of the sector. I would not like to think you meant that, but I give you the opportunity to address that point.

Secondly, Senator Cherry asked whether the Commonwealth will supplement grants to community organisations to assist them to maintain the same level of insurance. Costs go up every day, for different reasons, for a wide variety of groups. Not all community sector groups get grants from the government. I think, therefore, for the government to increase grants to those who are lucky enough already to get a government grant—an act that would be to the disadvantage of those who do not get one—would be unfair. In any event, it would be an acknowledgment yet again to some people—maybe such as you, Senator—who encourage the view that, if something is wrong, if the price goes up, they should go to the government—(Time expired)

Senator CHERRY —Madam President, I ask a supplementary question. Thank you, Minister, for that answer. I am pleased you are at least monitoring this area. Does the minister acknowledge at least that many not-for-profit organisations are doing the work previously done by government and by transferring that service from government through contracting out you are also transferring the risk? Does that not create the need for you to actually give more prominence to the concerns that the sector is raising about the rising cost of insurance? Will the minister be considering alternatives as part of ensuring that these costs are kept down, such as the American approach of narrowing liability to reckless or gross negligence or, indeed, capping liability for not-for-profit organisations, as being considered by some state governments?

Senator VANSTONE (Minister for Family and Community Services and Minister Assisting the Prime Minister for the Status of Women) —Senator, even in my former job as Minister for Justice and Customs in the Attorney-General's portfolio, I did not have responsibility for the question of product liability or capping liability on insurance premiums, et cetera. That area is not in my portfolio. Let me come to the point you ask about where the not-for-profit sector is doing work that might have been done in the past by the government because we have contracted it out. Those contracts frequently come up for renewal and that is the time for renegotiation for any price increases as a consequence of a whole range of matters that might have happened in the first contract period.