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Thursday, 12 December 2002
Page: 7978

Senator MURRAY (8:32 PM) —On behalf of Senator Ridgeway, I seek leave to incorporated his speech on the second reading debate on Trade Practices Amendment (Liability for Recreational Services) Bill 2002.

Senator Mackay —Can you give us a summary of it?

Senator MURRAY —I think the whip is saying that she is quite content that it be incorporated but that, as she has not seen it, she would like a brief summary of it. So I will move to Senator Ridgeway's conclusion. He indicates that the Trade Practices Amendment (Liability for Recreational Services) Bill 2002 should be supported but that it needs amendment. In arriving at that conclusion, he has run through a number of points concerning the important matters at hand, which, as you know, concern making sure that people take responsibility for risk but, equally, being aware that the providers of those services should ensure that they in fact allow for proper safety procedures.

Leave granted.

The speech read as follows—

Today I rise to speak about the Trade Practices Amendment (Liability for Recreational Services) Bill 2002.

This Bill is yet another attempt by the Government to solve the problems faced by the community with respect to rising insurance costs.

If we examine the track record of the Government so far on this issue, it is easy to see the pattern developing—all responsibility on the individual and no blame anywhere else.

The community has not only had their businesses, their services and events jeopardised by, among other things, an unfavourable insurance market, they have also borne the brunt of the reforms so far.

One the one hand, when the Government has shown reluctance to intervene, it has argued that while the cost of claims is a driver, this is a market issue and the downturn in the international market for insurance has had a huge impact on the cost and availability of reinsurance.

I assume the rationale here is that when there is an upturn in the market, the community can look forward to better pricing and more availability of insurance. I will come back to this point later.

Yet on the other hand, in relation to claims as a cost driver, with little hesitation, the Government has endorsed and facilitated a position whereby tort law reform should be implemented throughout the country.

This approach shows little regard for the way in which the courts have developed tort law over many decades, and little regard for those who rely on compensation to help with medical costs— sometimes long term.

Nor does it show much regard for claimants who will depend on compensation to meet other expenses when they have been injured or suffered damage as a result of another person's negligence.

As I have mentioned on previous occasions there is a general consensus that there is a lack of comprehensive data on claims costs. This is a significant constraint in the appropriate pricing of premiums by the insurance industry, and this is especially the case for sporting groups and adventure tourism operators.

While few people would argue that individuals should take responsibility for their own safety, we as legislators, must also ensure that people are encouraged to take responsibility for their own actions.

Having said this, I believe it is also our responsibility to strike the appropriate balance so that whatever measures are put in place today, we also reaffirm and indeed strengthen, community safety and business responsibility. It would be wrong to throw the baby out with the bath water, so to speak, and this is what I think the Government is doing in this Bill if it remains in its current form.

This Bill inserts a new section—68B—into the Trade Practices Act. This new section enables companies that supply recreational services to give effect to contractual terms which limit their liability for death or personal injury, where there has not been a failure to provide services with due care and skill.

Currently, recreational service providers cannot contract out of their liability by virtue of section 74. Section 74 of the Trade Practices Act states that in a contract where a corporation supplies services to a consumer, there is an implied warranty that services will be rendered with due care and skill.

So in the event that companies do not provide their services with due care and skill, they will be in breach of the warranty implied into the contracts.

A service is deemed to be provided with due care and skill if it is of a standard and quality that could reasonably be expected from a competent person in the particular trade or profession.

While this may appear to be an appropriate safeguard for the protection of consumers, under the Government's Bill I fear that this protection will be lost and I fail to see where notions of safety and accountability have been captured in the Bill.

That is why I think that if service providers want to rely on waivers and disclaimers then there needs to be greater emphasis placed on the maintenance of high safety standards and minimising risk.

Recreational service providers should not be permitted to rely on contractual terms without ensuring that they have taken all steps within their control to minimise the risk of harm or injury.

A loose acceptance of waivers and disclaimers for a seemingly endless variety of activities is neither desirable for consumers nor high quality recreational service providers who take pride in their good safety record.

Opening up the operation of waivers and disclaimers in this way creates a real risk that less than scrupulous operators will be able to enter the market and skimp on safety in order to undercut safety conscious, more legitimate competitors.

That is why a more stringent standard must be applicable to service providers in circumstances where a waiver is to apply. I believe, and I am sure that you would agree, that a `near enough's good enough' attitude to community safety is unacceptable and so there should be no leeway for the recreational services environment to diminish in any way its responsibility to safety.

The provisions of the Bill do not take into consideration the power imbalance between those who provide the service and seek to rely on the contract, and those who use the services.

Consumers who knowingly and honestly enter into contracts with recreational service providers do so under the impression that the service provider has gone to great lengths to ensure that the service is safe and reliable. Mere competence alone may not be an appropriate standard to ensure the safety of the community, let alone the unknown standard that might be applicable in the future should this bill proceed unamended.

In relation to what activities are potentially captured by this Bill, the new s.68B(2) of the Trade Practices Act defines recreational services. While the Government stated that this Bill was originally intended to allow providers of `inherently risky activities' to contract out of the implied warranties in the Trade Practices Act, in fact, the proposed definition is broad enough to capture all companies that supply recreational services.

Even the Negligence Review Panel, whose members were appointed by the Assistant Treasurer, recommended a narrower definition of `recreational services' than what is provided in the Bill. Leaving aside the definition of recreation services, Recommendation 12 states that a `recreational activity' means an activity undertaken for the purposes of recreation, enjoyment or leisure, which involves a significant degree of physical risk.

The definition in the Bill captures all sporting and leisure activities regardless of whether they involve any degree of physical risk, not only those activities that could be considered `inherently risky'. Ideally, the only risk that the consumer should be assuming are the ones that are intrinsic to the type of activity in which they are taking part.

Without greater protections for consumers and fine-tuning of the definition of `recreational services', more uncertainty will be generated as to the effect of waivers and disclaimers rather than clarification on the issue.

Firstly, recreational service providers should not escape the implied warranty contained in s74 of the Trade Practices Act where the act or omission causing the injury was done recklessly. In these situations the term of the contract that limits liability should be void. As I mentioned previously, where are the safeguards for consumers and the community? I think it would be irresponsible to allow an unfettered right to enforce waivers.

Secondly, in no circumstances should the new s.68B apply to persons 18 years and under. By codifying the common law position with respect to minors, this will make it abundantly clear that children's rights will not be diminished in any way.

Thirdly, only recreational activities that can be regarded as inherently risky activities should be covered by this legislation. It follows that the types of inherently risky activities should be prescribed in the regulations. These might include for example—skydiving, bungy jumping etc.

Currently, the activities that are subject to the Bill are those that are sporting or leisure time pursuits or activities that involve a significant degree of physical exertion or physical risk. This is a very broad definition. As I have already mentioned, the definition is broad enough to capture those activities that can be considered `inherently risky', which was the original intent of the Bill— but it also captures activities that bear no real risks at all.

Even with the narrower definition provided by the Negligence Review Panel, there would still be a role for the courts in deciding if a particular activity fits within the definition. By highlighting in the regulations the particular activities where consumers could contract out of their right to sue under the Trade Practices Act, this would not only create greater certainty as to the applicability of the implied warranty, it would also overcome the safety concerns that I raised earlier.

Fourthly, in order for service providers to rely on the new s68B, contracts seeking to limit liability must be:

· written in clear and plain language,

· explained to the person assuming the risk, and

· signed by the person assuming the risk.

Since I believe that only a very limited and particular brand of activity should be captured by this legislation, accordingly, there should be an obligation on the service provider to ensure that they have done all that they can to explain the nature of the rights that the consumer is contracting out of, if they choose to participate in the activity.

This would necessarily involve the service provider explaining the terms, having plain language explanations and acceptance of these terms in writing by the consumer.

And lastly, following on from the previous point—in order to emphasise the need to explain contract terms to the consumer, service providers who wish to rely on the new provisions are required to take all reasonable steps to ensure that the person engaging in the inherently risky activity is aware of the risks that they are assuming when signing a waiver or disclaimer.

In addition, in acknowledging the special vulnerability of people from non-English speaking backgrounds, not only should care be taken in outlining the effect of signing a waiver, where practicable, signage and waivers should also be available in languages other than English.

Given Australia's international appeal as a premiere adventure tourism destination—we can safely assume that many of the people wanting to engage in adventure tourism in this country will be from overseas, and as a consequence, not always proficient in English.

As we gain a stronger foothold in international markets such as South Korea and China, for example, we need to be catering to the needs and indeed the rights of tourists from these destinations.

Again, this `near enough's good enough attitude' is simply not acceptable with international visitors who are engaging in potentially highly risky activities.

Before I conclude, this Bill was created with the hope—albeit vein, that it would produce a more favourable insurance environment. Despite the fact that I see the Government's assumption as to the effect of this Bill as mistaken, I see no reason for not accepting, in principle, the notion that individuals sometimes do things at their own risk.

However, given the events of this year and the tort law reform taking place across the country that is causing severe erosions of individual rights to sue and receive damages, it would be wrong to further burden the community with more limitations of their rights without any corresponding responsibility being assumed elsewhere.

As I mentioned earlier, the Government has used claims costs as a basis for recommending sweeping changes to tort law and has used market forces as a reason not to get involved when the situation calls for it.

If we accept, which many people do, that market forces are a major cause of the high price of insurance experienced recently, then we need to keep reform measures in perspective and avoid making large scale changes that diminish consumer rights. I don't think we need to have any fear that the insurance industry won't bounce back at some stage soon with record profits (if indeed they were ever in any real trouble in the first place)!

What we need to be doing is correcting the market through more careful regulation and monitoring to ensure that the peaks and troughs in the future are not as severe as they are today. The problems with taking a path to erode consumer rights too far at this time may become increasingly inappropriate when there is a change in market conditions.

It is important then to consider that when consumers contract to waive their rights, not only should they be well informed of the nature and effect of the terms to which they are accepting, they must also be assured that the recreational service provider has acted with the upmost regard for their safety.

Rather that letting this Bill become another knee-jerk reaction to an insurance crisis, it should be a careful and measured response to a principle that many Australians support.

I commend the amendments proposed by the Australian Democrats to the Senate.