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Monday, 15 September 2003
Page: 20003

Dr WASHER (2:06 PM) —My question is addressed to the Prime Minister. Would the Prime Minister advise the House on the steps taken by the government to respond to problems with the medical indemnity insurance industry and make medical indemnity insurance more affordable?

Mr HOWARD (Prime Minister) —I thank the member for Moore for his question. It allows me the opportunity, against the background of some criticism made by members of the medical professional over the weekend about the government's responses on this issue, to put the matter into some better perspective. I start by saying that I recognise the great contribution of the medical profession to our country, I recognise the disabilities under which many specialities are operating at the present time because of increased insurance premiums, and I recognise the particular challenges faced by many general practitioners within the Australian community. Over the last 18 months, the government has implemented a comprehensive package to make medical indemnity insurance more affordable, to put the industry on a more secure footing and to keep doctors in the work force.

The government had nothing to do with creating the recent medical indemnity insurance problem. The problem is a product of two things. It is a product of an unsustainable tort law regime, which is almost exclusively the responsibility of the states and territories in this country, and it is also a product of the bad management of the largest insurer, UMP. Notwithstanding the fact that it is a product of those two forces—neither of which the federal government were in any way responsible for—we have provided a very significant and generous taxpayer funded support package. It includes a financial commitment of more than $350 million over five years in the form of subsidies for specialists with relatively high medical premiums; a high-cost claims scheme for settlements over $2 million; the IBNR indemnity scheme—a scheme to meet 100 per cent of damages above $20 million; enhanced prudential supervision of medical defence organisations; and increased monitoring of premiums through the ACCC. We also continue to work with the states and territories to bring the laws of negligence back into balance with both public expectations and opinion.

In August we announced the details of the IBNR indemnity scheme to apply to UMP members only. I take this opportunity to say that it is misleading and inaccurate for any member of the medical profession to call this a tax. It is designed to shore up a situation caused in no way by decisions of the government and in no way by neglect of the government but by the operation of a tort law regime that is increasingly out of whack and also by the bad management of UMP. Without the IBNR indemnity scheme, UMP would probably have been placed into full liquidation, leaving doctors personally liable to meet claims.

In response to the concerns of doctors, we have exempted retired doctors aged over 65 and earning less than $5,000 in medical income per year. That is at a cost of $120 million over 10 years. Four out of five doctors paying the levy will pay less than $1,500 per annum, and this amount on top will be tax deductible. This package is designed to ensure that key private medical services are maintained throughout Australia and to improve the safety and affordability of insurance for doctors. By any measure, far-reaching reforms have been implemented and very generous taxpayer funded assistance provided.

I understand the challenges faced by the medical profession, but I ask them not to misunderstand and misrepresent to the Australian public the circumstances that led to the collapse of UMP. It was not the fault of the Commonwealth government; it was an accumulation of factors—the major ones being the mismanagement of the fund and also the faltering and increasingly out-of-date negligence laws. It is the responsibility of the Commonwealth to give leadership to the states and territories, which we have done through the Assistant Treasurer, to reform the tort law. By any measure, far-reaching reforms have been implemented and very generous taxpayer funded assistance provided. I look forward to working closely with the medical profession to implement the elements of this package.