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Wednesday, 14 March 2012
Page: 2998


Mr CIOBO (Moncrieff) (17:23): I am pleased to rise to speak on the Insurance Contracts Amendment Bill 2011. This is a bill that I had some involvement with in my capacity as deputy chair of the House of Representatives Standing Committee on Economics when the committee undertook a short inquiry into the operation of the bill. The issue is, as we have all heard from many contributors to this debate, a country that is fraught with extremes. Extremes in nature occur on a regular basis. In this past two months alone in my city of the Gold Coast we have seen very significant falls. Flooding occurred only a week ago through large tracts of the Australian countryside. People's lives have been put on hold; people's livelihoods have been put on hold. People's homes have been directly affected and impacted upon by flooding. The issue is what can government do to assist. Following the tragic floods that took place in the summer of 2011, when we saw devastation across so many parts of Australia, in particular in Brisbane, Ipswich, and in parts of Victoria, we know there were many people who thought that they were adequately protected and covered by flood insurance only to, horrifyingly, discover subsequently that they did not have flood cover, or at least not be covered for the incident that occurred to them.

When this bill came before the House of Representatives Standing Committee on Economics, it was a chance to explore in more detail the way the bill would operate to alleviate the concerns that people had and to provide surety and certainty that their insurance would provide them with the benefit of that cover should their home or otherwise be flooded. What quickly came to pass though was that this bill is effectively nothing more than what is known as colloquially referred to as a coathanger bill. It is a bill that pushes through principle only, and it is a bill that does not contain the actual important information—and in fact that will be deferred to being passed in the regulation. So we have a bill that is, for all intents and purposes, next to useless when it comes to providing certainty for people who are wondering whether or not they have got adequate flood cover, and what exactly the word 'flood 'means in their insurance policy. This an easy fix. The fact is the government has been sitting on information now for a matter of years about how they should best deal with issue of flood. The fact is that the government could have incorporated a definition of the word 'flood' into this bill and not have deferred the matter to regulation.

What is clear is that industry and stakeholders have been yearning for clarity around this issue in their consolations with government and with Treasury. As part of the roundtable inquiry that the House of Representatives economics committee undertook, there was significant discussion around whether industry was confident that the final version that we will see in the regulation will mirror industry expectations, and provide certainty and clarity of the type that was sought. What is also clear is that concerns were raised as well with the operation of the second element of the bill which deals with the key facts sheet that would need to be issued as a consequence of the passage of this legislation.

In both instances, although we are supportive of the bill insofar as it is a pathway to providing surety and clarity, we are disappointed that this information was not contained in the legislation itself. Given the significant period of time that has elapsed since this whole journey began, it is obvious that there would have been opportunity to incorporate that information into the bill. I note in particular the supplementary remarks made by the member for Higgins, the member for Wright and me with respect to the committee's recommendations that the bill be passed. Although, yes, we certainly were supportive, as Liberal members of the committee, we stated we:

... cannot ... agree with paragraphs 2.50 and 2.51 of the report that outlined assurances that outlined assurances the Department of Treasury was engaged in constructive dialogue with industry and consumer groups; as well as the observation that there were 'no points raised in submissions or at the hearing that the Treasury was not already across or was taking steps to consider solutions'.

The reason we focused explicitly on rebutting those two paragraphs was that that was not clear, it was not plain and it was not apparent. The reality is that a number of comments were made by industry stakeholders that actually ran quite to the contrary. Very clear statements were made that it depended on what was actually contained within regulation and that that would dictate whether industry, and indeed consumers, would be better off. Statements were made, during the inquiry about the definition of flood and the impact of it. The transcript states:

Mr Ciobo: Wasn’t that the entire point of this bill—

to define floods?

Mr Anning: Not the actual definition of flood. That is subject to the discussions under the regulations.

Mr Ciobo: So, we actually have no clarification yet of what the impact of this would be on potentially thousands of people …

Mr Anning: … I guess the point is we are not at the point of having the clarity to even form a view.

So if that does not underscore the extent to which there is industry confusion and apprehension about the operation of the regulations of this bill then I do not know how it could be more plainly put. The reality is that all Australians want to have some certainty with respect to flood insurance. In my electorate of Moncrieff, based on the Gold Coast, I have literally hundreds if not thousands of homes that sit on the waterfront. I have so many homes that are placed upon canals, placed upon rivers, and owners that question whether or not there is actually going to be an impact if a flood were to go through. Of course the great flood that people of the Gold Coast still talk about is 1974 flood. People in Brisbane used to talk about the 1974 floods until the 2011 floods. The Gold Coast was spared and had the good grace and good fortune of not having the devastation we saw in Brisbane in 2011. That notwithstanding, people still talk about the 1974 floods and the 1974 flood levels. In this respect, it is obvious that people want definitions and clarity around the word 'flood' because it has direct impact on their coverage.

Take, for example, a home that is situated on a canal. There would be word games played under policies previously where, if as a consequence of rain, there was a flood coupled with a king tide that actually pushed seawater back in the canal estate and caused water to go into the home, whether it was freshwater or salt water would actually determine whether or not your policy was in place—whether or not you have coverage by virtue of the fact that it was seawater or freshwater.

These kinds of examples of hairsplitting ultimately caused the problems that have led to the quest for a common definition of the word 'flood'. In this respect it is clear that we join with the government in wanting this issue to be resolved. But, again, I restate our concern that this was not resolved within the bill and now once again has been deferred to the regulations—something that is still going to take some time to come forward.

The second element of this particular bill deals with the issue of the key facts sheet. The key facts sheet is of itself a good idea. A key facts sheet provides a high-level summary of the information contained within the policy and the operation of policy for the benefit of consumers. It is not, however, a replacement for the policy itself. It is important that not be held out as being the case, because people need to understand that they can look at a key facts sheet to achieve exactly that—the key facts—but not to have a comprehensive understanding.

There are also a number of housekeeping matters that were raised before the House of Representatives Economics Committee inquiry, which Deputy Speaker Leigh would be very familiar with, which dealt with the issue of the operation of the key facts sheet and whether or not the key facts sheet would need to be sent out to consumers for each and every additional alteration to the policy document, or whether it could be, for example, an annual event. Again, there is no clarity around these issues because these issues ultimately are dependent upon the passage of the regulations. For us as an opposition trying to hold this very poor government to account, the fact remains that we are required to now sit idly by and wait for Treasury to undertake its consultation and for that information to be contained within regulations, which would then presumably be subject to a disallowance motion. So for those reasons we think this is particularly poor form the government's part and we think it is not a particularly good way to provide good governance and certainty to industry, stakeholders and to consumers. I will confine my comments to those. As I said, we do support the passage of the bill, but this could have been a much, much better effort.