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Thursday, 5 December 2002
Page: 7311

Senator COONAN (Minister for Revenue and Assistant Treasurer) (4:58 PM) —I thank my colleagues for their contributions in the debate on the Taxation Laws Amendment (Structured Settlements) Bill 2002 and for their substantive support of this very important piece of legislation. When the decision to exempt from income tax those annuities paid under structured settlements was first announced, the government was motivated by the desire to assist injured people to make better financial arrangements for their future. The subject was considered in the context of the review of the law of negligence, chaired by Mr Justice Ipp. The Ipp report—and I will quote this because I think it is important that we have it on the record—said:

Structured settlements have significant advantages over lump sum compensation, at least in serious cases. Structured settlements are in the interests of plaintiffs, because the plaintiff is relieved of the need to manage their compensation. Various studies have shown that, where the lump sum award covers a long period, the amount awarded often runs out before the end of that period, even if it is well and wisely invested. A structured settlement provides the plaintiff with a more secure source of income in the longer term. This is good for society generally, as well as for injured persons. It is therefore in the public interest that, in cases where large sums of damages are awarded for personal injury and death, the parties have the opportunity and incentive to conclude a structured settlement.

Since the former Assistant Treasurer's announcement, issues have emerged in relation to the availability and affordability of public liability insurance. At ministerial meetings convened to discuss these problems, Commonwealth, state and territory ministers and the President of the Local Government Association of Australia have agreed to remove impediments to the use of structured settlements. This bill will allow the Commonwealth to give effect to its commitment.

With the moving of government amendments, which I understand have been circulated, the bill goes further in that it also makes provision for court ordered structured payments. There are cases where a plaintiff wants or needs to take the matter all the way through court to defend his or her rights, to have their day in court. The benefits which a plaintiff and society in general derive from a structured arrangement should not be lost simply because the matter has gone to a hearing. The Ipp review also went on to recommend that states and territories should require mediation before the award of a large amount of damages, with the aim of encouraging structured settlements. I note that this legislation has been introduced in New South Wales at least.

I know Labor and the Democrats will suggest some amendments to the bill. However, I would point out that the bill has been carefully considered and drafted with a considerable degree of assistance from plaintiff representatives and the Structured Settlements Group. On behalf of the government, I would like to thank all of them for their interest and for giving us the benefit of their experience, which has been invaluable. I note too that the legislation contains a provision requiring a review of the working of the structured settlement law in five years time. The issues raised can then be more usefully considered in that context when we have some practical experience to work with. I commend the bill and once again thank my colleagues for their support for the substantive measures in this bill.

Question agreed to.

Bill read a second time.