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Monday, 21 October 2002
Page: 5512


Senator ELLISON (Minister for Justice and Customs) (4:55 PM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (SPECIAL BENEFIT ACTIVITY TEST) BILL 2002

As part of the 2000-2001 Budget, the Government announced a range of measures addressing the issue of unauthorised arrivals in Australia. This bill gives legislative effect to one of these measures.

From 1 January 2003, certain recipients of special benefit who hold a visa of a type that has been issued for temporary protection, humanitarian or safe haven purposes will be subject to an activity test regime that is similar to the one that currently operates in relation to newstart allowance.

Under the new special benefit activity test, nominated visa holders will be required to search for work, to participate in vocational training, the Work for the Dole program and other prescribed activities, and to enter in Special Benefit Activity Agreements. They will also be subject to compliance testing, including fortnightly reporting requirements, and to penalties for non-compliance with the activity test or with the terms of their Special Benefit Activity Agreement.

Nominated visa holders will also be subject to other conditions relating to industrial action, seasonal work, and moving to an area of lower employment prospects. These conditions are all comparable with conditions that apply to newstart allowees.

The activity test and these other conditions will only apply to nominated visa holders who, from 1 January 2003, apply for special benefit and are of work-force age, or who reach work-force age after that date.

The new conditions will not apply to people who are permanently incapacitated for work. Provisions in this bill also provide for exemptions from the activity test where a person has caring responsibilities, is temporarily incapacitated for work, and in special circumstances and other prescribed situations, similar to newstart allowance.

The measures contained in the bill aim to encourage social and economic participation by treating work-force age holders of visas issued for temporary protection, humanitarian or safe haven purposes in a similar way to Australian nationals of work-force age. That is, they will be required to be self-reliant and to fulfil a mutual obligation to the Australian community. The measure also reinforces community support for the humanitarian immigration program.

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FAMILY AND COMMUNITY SERVICES LEGISLATION AMENDMENT (BUDGET INITIATIVES AND OTHER MEASURES) BILL 2002

The Family and Community Services Legislation Amendment (Budget Initiatives and Other Measures) Bill 2002 will enable the implementation of one Budget initiative and one non-Budget measure.

First, the bill provides for a 2002 Budget initiative relating to nominees. The amendments form a part of the measures being undertaken to give effect to the Government's commitment to implement a simpler and more coherent social security system.

In terms of the day to day administration of the social security system nominees are very relevant to youth allowance, age pension and disability support recipients who have difficulty managing their own financial affairs.

Currently, the law only provides for a payment nominee and arrangements relating to correspondence are dealt with administratively. Similarly, the current law does not clearly set out the duties and obligations of nominees. With an ageing population the use of nominees is likely to increase so it is considered appropriate to address these issues now.

This bill repeals the current nominee provisions in the social security law and the family assistance law. It inserts new Part 3A in the Social Security (Administration) Act 1999 and new Part 8B in the A New Tax System (Family Assistance) (Administration) Act 1999, which addresses the deficiencies in the current law.

The provisions in the bill distinguish between a correspondence nominee and a payment nominee and sets out the duties of payment nominees in relation to payments they receive.

The bill also consolidates within the framework of the social security law a number of administrative practices relating to nominees.

The Privacy Commissioner will be consulted in relation to the implementation of the nominee amendments because of privacy issues that are involved.

Finally, the bill also includes amendments relating to profoundly disabled children aimed at allowing more people caring for certain terminally ill children to qualify for carer payment. The need for these amendments was identified in the Government's response to the Review of the measure to extend carer payment eligibility to carers of children with a profound disability.

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MEDICAL INDEMNITY AGREEMENT (FINANCIAL ASSISTANCE—BINDING COMMONWEALTH OBLIGATIONS) BILL 2002

On 3 May 2002, a provisional liquidator was appointed to United Medical Protection and its subsidiary, Australasian Medical Insurance Limited (the UMP Group). This followed a resolution of the Boards of the UMP Group on 29 April 2002 to make an application for the appointment of a provisional liquidator.

The purpose of the Medical Indemnity Agreement (Financial Assistance-Binding Commonwealth Obligations) Bill 2002 (the bill) is to appropriate funds for payments in accordance with an indemnity agreement between the Commonwealth and the UMP Group. The bill also confirms the Government's commitments under the indemnity agreement.

On 29 April 2002, the Government announced that it would provide a short-term indemnity to the UMP Group to allow the members of the UMP Group to continue practicing.

On 1 May 2002, the Minister for Health and Ageing wrote to medical practitioners stating that the Commonwealth would guarantee to the provisional liquidator the obligations of the UMP Group to pay any amount properly payable in the period 29 April to 30 June 2002 for claims under a current or past policy. Interim arrangements for the payment of some claims were entered into on 22 May 2002 and approved by the Supreme Court of New South Wales on 24 May 2002.

The Commonwealth also committed to providing a guarantee to the provisional liquidator or to any subsequently appointed liquidator to enable the provision of cover in respect of valid claims that arise at any time for:

· holders of a current policy, for events that occur between 29 April and 30 June 2002; and

· holders of a policy that expires and is renewed by the provisional liquidator before 30 June 2002, for events that occur between 29 April and 30 June 2002.

On Friday 31 May 2002, the Prime Minister announced an extension of the guarantee to 31 December 2002 on modified terms. These arrangements allow the provisional liquidator to:

· meet claims notified in the period 29 April to 31 December 2002 under an existing (or renewed) claims made policy;

· renew policies on a claims made basis for the period until 31 December 2002; and

· continue to meet claims that were notified before 29 April 2002 and are properly payable in the period 1 July 2002 to 31 December 2002.

The Prime Minister also announced on 31 May 2002 that the Commonwealth would introduce a levy to fund any liability incurred by the Commonwealth under a Medical Indemnity Agreement as a result of the extension of the guarantee on modified terms. This levy would be part of broader levy arrangements to meet the unfunded incurred but not reported liabilities (IBNRs) of medical defence organisations. Separate legislation for the levy on certain medical practitioners, and the IBNR scheme will be introduced once the details have been finalised.

It is intended that a deed of indemnity between the Commonwealth, the UMP Group, and the provisional liquidator of the UMP Group will be entered into and will form a binding legal agreement between the parties to give effect to the arrangements announced by the Government. That is, the Medical Indemnity Agreements covered by this bill will be legally binding notwithstanding the operations of this bill. The provisions of the bill are not intended to imply that any future Commonwealth indemnity needs to be supported by legislation.

This bill provides for an appropriation out of the Consolidated Revenue Fund for the purposes of payments in accordance with the bill. While funding is not required immediately, the bill will provide for the funds when required.

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INSURANCE AND AVIATION LIABILITY LEGISLATION AMENDMENT BILL 2002

The purpose of this bill is to amend two Acts to ensure a sustainable basis for liability for third party damage on the ground and the provision of aviation war risk (including terrorism and hi-jacking) insurance in response to the post 11 September withdrawal of this cover by the commercial market. The amendment to the Damage by Aircraft Act 1999 ensures passive owners (such as lessors and financiers) are exempted from third party liability to damage on the ground. The amendments to the Insurance Contracts Act 1984 will allow for the exemption, by regulation, of third party aviation war risk insurance from the cancellation and variation provisions of the Act. We are also taking the opportunity to correct a minor technical error in the Civil Aviation (Carriers' Liability) Act 1959, to ensure foreign charter operators are excluded from certain liabilities under the Act.

The Damage by Aircraft Act 1999 imposes strict and unlimited liability on both the owner and operator of an aircraft, who are jointly and severally liable. The Act ensures that an innocent person (or that persons' family) is properly compensated if an aircraft, or part of an aircraft, causes death or injury to the person or damage to their property on the ground. As a result of the 11 September attacks, aircraft lessors and financiers have expressed their dissatisfaction with this liability rule arguing that it is unfair and inconsistent with other sectors of the economy and the law in other countries. The amendment exempts passive owners from liability for damage to third parties on the ground.

Following the 11 September terrorist events, aviation third party war risk insurance was withdrawn from the global market—an unprecedented event. Some insurance has since returned, but major Australian airports and other Australian-based aviation service providers have been unable to purchase sufficient war risk insurance.

While domestic insurers can cover smaller insurance placements, the market for aviation insurance is principally offshore, reflecting the fact that only a global market provides the critical mass for this line of specialised insurance. The provisions of sections 53 and 63 of the Insurance Contracts Act 1984 prevent the variation and cancellation of existing insurance policies. It is standard industry practice for war and terrorism risk contracts to have seven-day or thirty-day cancellation provisions in case some catastrophic event occurs, as losses rising from terrorism can be extremely large. Consequently international insurers are refusing to insure Australian-based aviation companies. The proposed amendment will address this problem by enabling cover for war and terrorism risks to be excluded from sections 53 and 63 where prescribed by regulation. Other aspects of protection provided to the aviation industry will remain.

Finally, the bill makes amendment to the Civil Aviation (Carriers' Liability) Act 1959 to correct an inadvertent error which imposed a liability on foreign charter operators which is inconsistent with Australia's international obligations under the Convention for the Unification of Certain Rules relating to International Carriage by Air, Warsaw 1929 (the Warsaw Convention). The correction ensures that Australia imposes certain liabilities only upon Australian airlines, not foreign charter operators.

I should note here that the world aviation community, through the International Civil Aviation Organisation, has proposed a new international liability regime to consolidate and reform the Warsaw Convention. Australia is currently well advanced on a process that is expected to lead to the ratification of the Convention for the Unification of Certain Rules for International Carriage by Air, Montreal 1999 (the Montreal Convention). There is nothing in these amendments that would be inconsistent with eventual ratification of the Montreal Convention by Australia.

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AUSTRALIAN ANIMAL HEALTH COUNCIL (LIVE-STOCK INDUSTRIES) FUNDING AMENDMENT BILL 2002

The amendments to the Australian Animal Health Council (Live-stock Industries) Funding Act 1996 will enable the new Emergency Animal Disease Response (EADR) levies and charges to be paid to Animal Health Australia through the normal appropriation process from the Consolidated Revenue Fund. The Amendment Bill also provides a mechanism for levy and charge monies collected in excess of a livestock industry's liability to the Commonwealth to be appropriated to fund the promotion or maintenance of the health of animals as well research and development activities as requested by industry.

In February 1998 the then Agriculture and Resource Management Council of Australia and New Zealand (ARMCANZ) “endorsed the need for a national policy on funding principles for pest and disease emergency management”. Following a lengthy and detailed process commencing in 1998, Governments and industry determined that the cost sharing arrangements in place since 1955 were inadequate to deal with the scale of most existing or emerging emergency animal diseases. The Australian Animal Health Council (AAHC), known as Animal Health Australia, coordinated the development of new national cost-sharing arrangements for EAD responses, through an exhaustive consultation process involving governments and livestock industry stakeholders. A new cost-sharing agreement, the Government and Livestock Industry Cost Sharing Deed in Respect of Emergency Animal Diseases, was prepared by Animal Health Australia based on the outcomes of that consultative process. This agreement is known as the Emergency Animal Disease Response Agreement (EADRA). The arrangements provide for the sharing of the eligible costs of a disease response by governments and affected industries and will replace the previous Commonwealth-States Cost Sharing Agreement.

Under the terms of this new agreement, the Commonwealth may be required to underwrite a livestock industry's share of costs of an emergency animal disease response. The Commonwealth has agreed to underwrite the cost of reacting to an emergency animal disease outbreak on the proviso that livestock industries, which have signed the EADRA, agree to an appropriate repayment scheme. These signatories have agreed and will fund their responsibilities, under the new agreement, through the imposition of a new animal disease levy. Initially, the new levy will be set at zero, with the exception of the honey bee industry. For all current signatories, except the honey industry, this means that there will be no increase in the levy burden from the outset. To allow the repayment arrangements via a levy or charge to come into law, it is necessary to amend the Australian Animal Health Council (Live-stock Industries) Funding Act 1996.

Once an industry's debt to the Commonwealth has been acquitted, the Amendment Bill provides for monies collected in excess of this amount to be redirected to fund the promotion or maintenance of the health of animals. This may include re-direction to the industry's R&D Corporation and be deemed to be R&D levy or charge. This R&D component will be matched by the Commonwealth, as is currently the case. The new EADR levies and charges component will not be matched.

Clearly, the benefit of returning any excess levy collections to research activities is that the industries will benefit from these funds as well as the Government's matching dollar for dollar research and development funding.

In addition, the impact on business will be minimised as existing levy and charge collection arrangements are to be used with no change to the paperwork required of businesses/producers already paying levies and charges.

This legislation has the full support of industry groups and producers. It establishes arrangements for the long term funding of emergency animal disease outbreaks and so assists in providing certainty for the planning of EAD responses.

Ordered that further consideration of these bills be adjourned to the first day of the next period of sittings, in accordance with standing order 111.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.