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Wednesday, 25 June 2003
Page: 17432

Mr HUNT (10:05 AM) —I rise to speak in support of the Trade Practices Amendment (Personal Injuries and Death) Bill 2003. This bill addresses a problem which I believe is common to representatives of every seat within the House. It is a problem that each of us has within our electorates. People have dedicated their working lives to creating small businesses or larger businesses which focus on adventure tourism and which provide opportunities for physical outdoor activities, such as horse riding, river rafting or rock climbing—activities which involve some form of inherent danger or risk. The very raison d'etre for their existence is that people consciously, wilfully and willingly choose to pursue activities which carry an element of risk—that is their attraction. It is about challenge and personal development. It is about pushing oneself to the edge within controlled circumstances. Each of us has experienced within our electorates, because of the changing nature of the international and domestic insurance market, many of these businesses facing potential closure. The reason for that is the level of personal liability and public liability insurance claims, either the cost of the premiums or the consequences of claims. This bill will address the problems of organisations such as the Ace-Hi Ranch on Boneo Road in my electorate of Flinders, many other horse riding organisations and many other small businesses which are focused on some form of personal challenge and adventure tourism.

In addressing this bill, I wish to proceed in three phases: firstly, to outline the background to the bill; secondly, to address its importance; and, thirdly, to consider some of the specific provisions. In looking at the background to the bill, we find that public liability insurance premiums have been rising greatly in recent years, in particular over the last two years. The Senate Economics Committee inquiry into the impact of public liability and professional indemnity insurance costs identified three principal causes of those increased premiums. Firstly, there was an external shock to the market due to the effects of September 11. It was a shock that resulted in approximately a $60 billion drain on international underwriting and the amount of money available for payouts, and—following the tragedy that was September 11—this shock had a ripple effect throughout the worldwide insurance industry.

Secondly, within Australia, there have been corporate collapses which have taken out major players from within the insurance industry, which in turn has closed the market and has led to a situation where it is much more difficult for those organisations and small businesses seeking public liability insurance to obtain public liability insurance. Thirdly, the hardening of the public liability insurance market has been caused by the level of claims. The nature and level of claims against public liability insurance have increased both in terms of the quantity of claims and the quantum of claims.

The Trade Practices Amendment (Personal Injuries and Death) Bill 2003 goes directly to the question of how we can ensure that there is a reasonable and proportionate level of claims in relation to personal liabilities and injuries—not a level which creates a lottery mentality and a condition where those who have an injury will actually profit from their injury. That is what is driving out small businesses and closing non-profit community organisations and preventing them from carrying out activities. The increasing cost of claims is the specific target of this bill.

This bill is designed to address the cost and availability of public liability insurance. It encourages the states and territories to reform the law of negligence in a nationally consistent manner. It is important to recognise that the bill is part of an overall agreement—brokered between the Assistant Treasurer, Senator Helen Coonan, and the respective state finance ministers—whereby the states will adopt a more regimented negligence policy and steps will be taken at a federal level. The aim of this agreement is to close off a lacuna or an unexpected loophole within the federal Trade Practices Act. This loophole was being exploited by those who would seek to secure additional avenues and grounds for making personal injuries claims.

In the May 2002 ministerial meeting on public liability insurance, which was attended by Commonwealth, state and territory ministers, a series of agreements were reach-ed, including the agreement to conduct a review of the law of negligence. The finding of that review was that the existing set of laws both at state and at national levels was inadequate to cope with the changed circumstances brought about by the international shocks, the domestic market and the changes in legal practice.

The current legislation at both state and federal levels needs to be amended to address the rising premiums of public liability in-surance. These increased premiums mean reduced availability of public liability insurance and therefore a reduction in the capacity of ordinary businesses and ordinary citizens to go about activities which they deem to be desirable and which they choose voluntarily and willingly to pursue.

A problem with the current legislation is that it does not address the potential exploitation of the Trade Practices Act. Currently the Trade Practices Act allows plaintiffs to bring actions claiming damages for personal injuries resulting from conduct in contravention of division 1, part V of the act. That means—and this is what the review found—that lawyers will inevitably search for different courses on which to base negligence claims. Provisions of the Trade Practice Act will provide an obvious target for this search.

This bill, in conjunction with state and territory civil liability reforms, will work to prevent legal loopholes allowing alternative courses for claims. The appropriate place to bring claims for negligence is under negligence laws within state and territory jurisdictions. The review of the law of negligence said that in order for such reforms to work two things have to occur: firstly, changes should be made nationally and in a uniform and consistent way; and, secondly, all jurisdictions need to act cooperatively to ensure that this occurs. This bill is part of an improved national response to rising public liability premiums.

Against that background, what is the importance of the bill? The importance of the bill is simple. The public liability insurance review addressed how we can apply common law principles to negligence in order to limit liability resulting from personal injuries; it considered balanced approaches to the limitation of liability and quantum relating to the awarding of damages—that is, how we can ensure that there is going to be a fair, reasonable and adequate response where there is genuine negligence—and it considered the possibility of limiting claims for negligence to three years after the date of the relevant incident.

The bill goes on to address recommendations 19 and 20 of the public liability insurance review. Recommendation 19 suggests that there should be an amendment to the Trade Practices Act to prevent division 1 of part V being used by individuals to pursue damages for personal injuries. Recommendation 20 of the public liability insurance review argues that there should be an amendment to remove the power for the ACCC to bring representative actions for personal injuries under division 1 of part V of the Trade Practices Act. In essence, what these changes are about is ensuring that the Trade Practices Act will focus on trade practice matters and not be used as a de facto base for negligence actions. In particular, the Insurance Council of Australia has expressed its support for recommendations 19 and 20, and there has been widespread support within private business.

There are three critical benefits which will flow from the process of reform and which will flow through to Australian business. First of all, this public liability insurance reform will provide for greater confidence for businesses. In particular, businesses will benefit from increased certainty, as a potential source of legal action against them is removed. This certainty is particularly important for small businesses that have modest cash flows and significant outlays. If a significant outlay is open to increasing dramatically then, as we have seen, that can have a profound effect on a small business. The second major benefit is that there will be more affordable public liability insurance premiums. The bill is designed to be complemented by other bills within the states and within the Commonwealth regime. It will implement the review of recommendations on the quantum of damages, and already we see that the states are moving on that. The third benefit is that premiums will be monitored with increased attentiveness. At the request of the Parliamentary Secretary to the Treasurer, the ACCC will monitor the cost of the premiums for public liability and professional indemnity insurance. That is a very important role. They are seeking to make sure that any increase in costs is only on the basis of justified market forces, not as an attempt to exploit and to gouge on the basis of the international and national tragedies which have had an effect on the insurance market.

Finally, I wish to briefly address the core provisions of the bill. Item 2 inserts the new subsection 82(1A) into section 82 of the Trade Practices Act 1974. This provides that a person taking civil action to recover damages for personal loss or damage under the Trade Practices Act will be prevented from doing so and that the appropriate place for doing so is under state negligence laws. It is a very simple approach but it is clear, express and absolute. It seeks to avoid a multiplicity of sources and a multiplicity of avenues for what should be a clear point of certainty within the law. Item 5 of the bill inserts the new subsection 87(1AB). This will prevent a court from compensating a person for loss or damage but only to the extent to which the court order is based on conduct contravening division 1 of part V. So an action brought under the Trade Practices Act will focus on action which is in breach of the Trade Practices Act, not on personal liabilities. It should not be a stalking horse.

In summary, this bill is ultimately designed to address the cost and availability of public liability insurance in Australia. In doing so, it helps Australian businesses. In addition, it is part of a package which the Assistant Treasurer, Senator Helen Coonan, has brokered with the states and territories to reform the law of negligence in a nationally consistent manner. I believe it adds to the opportunities and helps provide appropriate levels of protection for businesses such as the Ace-Hi Ranch on Boneo Road in my electorate of Flinders. I commend the bill to the House and I urge all members to support it.