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Tuesday, 7 October 2003
Page: 20623


Ms GILLARD (2:31 PM) —I fear that I am going to disappoint because my question is to the Treasurer as minister responsible for medical indemnity and assisted by Senator Coonan. I refer him to Senator Coonan's media release of 1 October 2003 entitled `Paying for doctors' past mistakes?'in which she, on his behalf, defended the government's medical indemnity package, stating:

While today's announcement that five doctors will leave Western Sydney Hospitals is disappointing, half-truths and scare tactics about the medical indemnity situation are counterproductive—

... ... ...

... taxpayers cannot be expected to foot all the bills for claims against UMP for negligence of doctors. That is why the levy scheme is in place, after full consultation with the medical profession. It was a condition of the rescue operation.

Given that just two days later, the incoming Minister for Health and Ageing overturned the Treasurer's policy, does the Treasurer stand by the statement that his assistant minister made just last week or was he rolled by the new minister for health?



The SPEAKER —Member for Rankin!



The SPEAKER —The member for McMillan is warned!


Mr COSTELLO (Treasurer) —I thank the honourable member for her question; no doubt she has spent many days setting out that tricky little formulation. But we do get up early in the morning and we can see these tricky little questions when they are coming. We do like stepping down the crease every now and then and actually hitting them gently out towards the boundary, so I thank her. I will say in answer that Senator Coonan is a minister in her own right.

Opposition members interjecting


Mr COSTELLO ——Surprisingly enough, she is a minister in her own right and is perfectly capable of handling the indemnity issue and has very well indeed—not on my behalf but because she happens to be a very talented person in her own right. The point that Senator Coonan made was simply this: in relation to the doctors' mutual, because there had been underpricing in relation to tort law and there had been large verdicts, the mutual was not able to deal with all claims which had been incurred but not reported. As a consequence of that, the government stepped in with financial accommodation of the order of $400 million or $450 million. It gave the financial accommodation to the doctors to handle those claims, and under Senator Coonan's guidance has gone back to all of the states and argued for tort law reform to put this on a proper basis.

That tort law reform, incidentally, was opposed by some of the states, in particular the Victorian Labor Party, under pressure from trade union lawyers, some of whom the honourable member may well be familiar with—over the years they have made quite a deal of money out of this particular area. In return, what the government said was that the liability, which the taxpayer had picked up, would be recovered over time on an orderly work-out through a levy for incurred but not reported claims. For those who had retired there would be an exemption in relation to those claims. For those that would have had abnormal expenses there would be financial accommodation and an equalisation.

What the new minister for health announced the other day was that the incurred but not reported levy would be paid up to $1,000 but there would then be an actuarial investigation in relation to the recovery of the balance after allowance had been made for the tort law reform with the hope that it would reduce liabilities. That is what he announced. Nobody could argue with the proposition that you would do an actuarial analysis to actually see the amount that was involved. But there is one point where we would disagree with the AMA and it is this: the AMA has regularly called the IBNR levy a tax. It is no such thing. The IBNR levy is the recovery of a premium for a legal liability. Doctors are not the only profession that has professional insurance. Accountants, auditors, engineers and lawyers all have professional indemnity insurance. They all pay premiums. None of them actually call it a tax because it is a premium for an insurance—that is, a product which you get by way of indemnity.

In addition to that, can I also point out that those levies are in fact tax deductible—that is, they are a necessary expenditure incurred in the course of carrying on a business and earning income. So it is a tax deduction in the hands of the doctors for an orderly work-out for a taxpayer to pick up in relation to a problem which emerged which will be addressed with tort law reform. It has been handled brilliantly by Senator Coonan, with the addition and the expertise of the latest but greatest, in the last couple of days, new minister for health.