Senator WEBBER (12:33 PM) —We are told that the Medical Indemnity (Prudential Supervision and Product Standards) Bill 2003 and the Medical Indemnity (Prudential Supervision and Product Standards) (Consequential Amendments) Bill 2002 give effect to the balance of the Prime Minister's announcements of May and October last year. We have already dealt with four related pieces of legislation last year, the main one being the Medical Indemnity Bill 2002, which gave effect to the High Cost Claims Scheme, subsidies to certain specialities and the provision of an indemnity to UMP to allow claims to be paid in full.

A cursory glance, therefore, at the legislative program would suggest that the government is working hard at resolving the problems with medical indemnity. As I said in this place during the debate on the Medical Indemnity Bill 2002, that is what the government would want us to believe. But the reality is quite different. As I have said previously, this government essentially allowed this problem to reach crisis point before it came up with a solution. Not only that but, instead of taking the opportunity to reform the system, all we have had so far is a band-aid approach that has left the real work to the states. The states got the bulk of the real work by having to undertake tort law reform. The federal government got to make all the good news announcements and left the real work up to the states.

We can see the effects of all the government's hard work in what it has achieved to date. Every announcement and every piece of legislation on medical indemnity is enhanced or rectified—take your pick—within three or so months of the original legislation being announced. Here today we get yet another go. We are told that this prudential regulation will ensure the long-term financial sustainability of the market. We are told that this regulation provides the highest level of certainty that promises made to customers will be met. I am sure that, with the recent experience of HIH, most Australian customers will agree with that concept, but the reality is quite different. The reason for this regulation is that most medical indemnity providers operate as insurance companies, but with a caveat: in the past they have not been regulated in this way, because they were medical defence organisations, not insurance companies. This is because medical defence organisations provide a discretionary cover—that is, they are not contractually obliged to meet the claims of members and, as such, their activities fall outside the definition of insurance business in the Insurance Act 1973 and, therefore, are not subject to the prudential supervision of APRA.

The government is going to impose a level of regulation and make changes to ensure that contracts of insurance exist in the medical indemnity business. As I mentioned in my earlier contribution, the issue here is that the government pretends that MDOs are the same as other insurers when the reality is quite different. Generally, all members of a medical indemnity fund pay the same premiums, regardless of their claims history. There is no recognition in premiums of risk management procedures. In short, they are still defence funds, and not insurers in the strict sense of the term. This increased regulation is designed by the government to paper over the cracks. It is not designed to fix the system, just to make sure that another UMP problem does not surface.

Even though coverage will be provided from 1 July this year under a contract of insurance, without fundamental reform of the system this will not go far enough. In fact, these changes are so badly thought through that even the AMA, as recently as 27 February this year, is reported in the Financial Review as describing the changes as:

The AMA went on to say that the changes actually increase the costs for doctors and their patients. In that article, Dr Phelps, the President of the AMA, was quoted as saying:

The solution to the medical indemnity crisis is out for comment, and it would seem the stakeholders do not like it. The government has done what it has done consistently for month after month in relation to this crisis: it waited for a reasonable period to get the issue off the front page and then threw some more money at the industry to buy it off. On 20 March, the Prime Minister announced that the package was being extended to increase the amount of subsidies for country obstetricians. You would think that the government could have avoided all of this by taking a more consultative approach. How much time and effort would have been saved if the government had worked this out prior to the release of the legislation? Of course, that would not be this government's way.

There were other problems raised by the AMA in February. It raised concerns about how doctors would be covered for claims over $15 million and in the event that they retire. In March, the Prime Minister said he would look at the issue of retirement but he was silent on the matter of claims above $15 million. In the Financial Review of 20 March, Peter Marer, executive officer of Queensland Doctors Mutual, said the government's approach was `tinkering at the edges'. And that is exactly what the government has done during this whole crisis. It has tinkered at the edges and made change after change. Normally, once the AMA has kicked up a fuss about its proposed solution, it is then galvanised into action. It tinkers away, and then the AMA has another kick. Tinker; get a kick. Tinker; get another kick. This approach, which can only be likened to death by a thousand cuts, is no substitute for fixing the crisis in the first place. It is a national disgrace that this issue has lurched along for as long as it has. Indeed, it has been an issue confronting this government ever since I joined this place.

Perhaps if the minister had actually got her act together this would not have turned into a melodrama that shows no sign of ending. During my last speech in this debate, I suggested that, if the system is as broken as it so obviously is, the government should engage in a wholesale reform of medical indemnity. Instead, the minister has taken the approach of doing as little as possible to keep it struggling on. And now the legislation has come before the Senate with more changes—changes introduced at the last moment to prevent referral of this current round of legislation to a Senate Economics Committee inquiry.

There are pressures from the industry to resolve the legislative framework this week because of the change to contracts of insurance and the need for insurance certainty beyond 1 July this year. We are told that the changes must take effect before we rise this week. This is not a problem of the making of the Labor Party nor, indeed, the other minor parties and Independents in the Senate. This is a problem of the government's making. This is the result of months and months of inaction. Now, at the last possible moment, the government is seeking to make more changes and is tinkering yet again so that it can avoid a full, proper Senate Economics Committee inquiry with witnesses from the relevant stakeholders.

Given that this issue has been going for years, it is ridiculous that the government has suddenly found itself short of time. Suddenly, it has run into yet another deadline in order to avoid yet another collapse in the medical indemnity system. We cannot afford any delay now because it would put at risk medical indemnity from 1 July. We would not have found ourselves in this situation if the government had been on the job from the moment that this issue first appeared. If the government had been working, from the first, on a total solution that covered all health professionals, that properly addressed the needs of medical defence organisations and that provided holistic cover throughout Australia, we would not have had this result. There have been four or five pieces of legislation. Perhaps we are going to see yet another package of bills after we get beyond the current 1 July deadline. Then we will just lurch into another crisis.

I remain to be convinced that we actually have the entire system covered. The industry does not accept this approach. It is concerned about this papering over of the cracks. The doctors do not support it and, what is more, the other allied health professionals certainly do not support it. Put simply, the minister and the government should have fixed it the first time. It is not a lot to ask that, rather than cobble together a whole series of legislation, amended at the last possible moment, we actually take the time to ensure that we come up with a rigorous, longstanding solution to guarantee the provision of medical services throughout this nation, particularly in regional areas.

As Senator Eggleston has said, in Western Australia we have our own unique set of difficulties due to the vast distances that people have to travel to access medical services. We have difficulties attracting medical professionals into some of those regional areas. This is made all the more onerous and difficult by the fact that there is not a robust, longstanding solution to the medical indemnity crisis. As I have said before, the industry does not accept this approach. Doctors and other health professionals do not support the approach of this government. The minister and the government should have fixed this the first time.

Debate interrupted.