Legislative Assembly for the ACT: 2001 Week 6 Hansard (13 June) . . Page.. 1665..
MR HUMPHRIES (continuing):
Mr Speaker, the Bill is in response to the placement of the HIH Insurance Group into Voluntary liquidation. Members would be well aware of the widespread impact of the collapse of HIH on the community.
While the Commonwealth Government has announced a $500m rescue package, it specifically excluded compulsory schemes mandated by State and Territory Governments. These include motor vehicle compulsory third party, workers compensation schemes and builders' warranty schemes.
In the ACT, the hardest hit areas are the Workers' Compensation Supplementation Fund, and the Builder's Warranty Scheme.
The Workers' Compensation Supplementation Fund, which meets the compensation claims in the event of the failure of workers' compensation insurer, currently has a balance of $9m. An actuarial assessment, following the collapse of HIH, indicates that the Fund will have a liability of approximately $40m. The Government has decided to provide $30million to the Workers' Compensation Supplementation Fund.
Mr Speaker, without this assistance, there will be a need to increase the surcharge on employers by approximately 10%, and yet the Fund would be required to borrow to meet cash shortfalls in the first few years.
Mr Speaker, a number of home owners in the ACT have also been affected by the collapse of HIH, with claims against the builder's warranty either assessed and unpaid, or lodged but unassessed at the time of the liquidation.
The Government has decided to assist those home owners at an estimated cost of $0.740m. The assistance will be directed to unpaid claims against HIH under the Builders' Warranty Scheme and for valid claims relating to houses covered by a continuing HIH policy issued on or before 16 March 2001.
Mr Speaker, Members should note that the Government has not accepted any liability from the HIH collapse, nor has it accepted liability to make payments to the Fund. The Bill also provides for amendments to the Workers' Compensation Supplementation Fund Act 1980 to allow for the repayment of funding provided by the ACT Government, once the Fund exceeds an amount considered necessary for its ongoing viability, and clarification of government liability in relation to the Fund.
Mr Speaker, the Appropriation (HIH) Bill 2000-2001 provides for $33.814 million for Payments on Behalf of the Territory to the Department of Urban Services. As the Territorial appropriations are gross in nature under the Financial Management Act 1996, the appropriation also needs to provide for GST. $3.074m of the appropriation relates to GST, and will be refunded to the Territory by the ATO. The net impact of the Bill therefore is $30.740m.
The estimated outcome for 2000-01, as published in the 2001-02 Budget Papers is $47.4m. The Government expects that even after providing this assistance, an operating surplus will be achieved in 2000-01.
Mr Speaker, I commend the Bill to the Assembly.
Debate (on motion by Mr Stanhope ) adjourned to the next sitting.