Legislative Assembly for the ACT: 2002 Week 11 Hansard (26 September) . . Page.. 3301 ..
MS DUNDAS (continuing):
In other states and federally the blame has been laid squarely at the feet of the legal profession. Small business minister, Joe Hockey said:
It's not good enough for the legal profession to pray upon people's vulnerability and try to take people for a ride, turning the legal system into a lottery system.
The tabloid press has given wide publicity to million dollar cases around people who it appears have not exercised commonsense. Commonsense was lacking by many premiers. I congratulate the Attorney-General for not putting forward a process that strips away rights. I am also pleased with the approach the Attorney and his office have taken in this regard.
My criticisms of the Stanhope government regarding the public liability crisis are reserved largely for the Treasurer, and they are documented in previous comments I have made in this chamber and in the media. To ensure that premiums fall, it is necessary to have a more comprehensive analysis of why the premiums have risen and to address these causes rather than aiming for a cheap headline.
The federal government and the Insurance Council have argued that the principal reason for the rise in public liability premiums is a rise in client claims and in litigation. However, the most recent figures from the Australian Prudential Regulatory Authority show that the growth in claims has slackened off and fell sharply in 2001.
The APRA figures show that June 1999 to December 2000 was a very poor period for public liability insurers. However, the first six months of 2001 saw new claims fall by over 20 per cent and outstanding claims fall to the same level as four years ago. The fall-off in claims was even more sharp in figures for amounts paid out in claims, which in real terms were lower in 2000-01 than they were for the three years before. Over the course of the last five years, claims have fallen from 65 per cent of total claims expense to just 53 per cent.
But insurance is an industry that operates in cycles. While we are all comfortable with the boom/bust cycles of the housing industry, it seems no-one was prepared for such extremes in insurance.
If claim figures are down, that would suggest that litigation is also down. The Productivity Commission annual report on government services showed that total civil lodgments in supreme, federal and district courts were lower in 1999-2000 than in any year since 1993-94.
In short, I believe the following conclusions can be made. There is no evidence of a blow-out in litigation rates in Australia. The cost of settling claims appeared to fall sharply in 2001 and is now lower in real terms than it was four years ago. The number of outstanding claims has returned to the level of four years ago. The cost of claims is a factor, but not the key factor, in driving the rise in public liability premiums, although recouping costs of recent losses could be part of it.
Given these conclusions, there is no reason to strip back people's rights. This bill is a sound approach, placing restrictions on both the insurance industry and the legal profession and working to maintain the rights of citizens.