House of Assembly Fifty-Second Parliament, First Session (52-1) 52 1 Parliament of South Australia House of Assembly published Ministerial Statement Compulsory Third Party Premiums COMPULSORY THIRD PARTY PREMIUMS The Hon. K.O. FOLEY House of Assembly Port Adelaide Deputy Premier Minister for Federal/State Relations Minister for Defence Industries The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Federal/State Relations, Minister for Defence Industries) (14:11): I seek leave to make another ministerial statement. Leave granted. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: Today I wish to inform the house of the annual increase in compulsory third party premiums that will apply from 1 July 2010. As members would be aware, compulsory third party premiums are set each year in order to maintain the net asset position of the compulsory third party fund managed by the Motor Accident Commission to meet the estimated future costs of third party vehicle insurance payouts. Each year the fund pays around $450 million to South Australians who are injured as a result of road trauma. Members will also recall that, due to the impacts of the global financial crisis on the value of the commission's investment assets, last year the government capped the increase in premiums to 8.5 per cent. Although we appear to be emerging from the worst effects of the global financial crisis, its impact on government investments, including the Motor Accident Commission's investment assets, continues to be apparent. As at 1 July 2008 the commission was in a strong net asset position of 115 per cent. Due to the financial crisis this declined to 103 per cent as at 1 July 2009. Even though this represented a net asset position it fell short of the higher, more prudent financial targets that I have set for the compulsory third party fund since coming to government. On 17 May 2006 as Treasurer I established a higher, more stringent legal of solvency for the Motor Accident Commission called 'sufficient solvency level'. This comprises: The fund's liabilities; plus 10 per cent of the outstanding claims liabilities provision; plus 10 per cent of the premium liabilities provision; plus 10 per cent of the investments in equities and properties. As at 30 June 2009 this higher, more prudent sufficient solvency level stood at 91.3 per cent. As at 30 April 2010 the level had improved to 97.6 per cent. Improvements in the level are due to stronger investment returns than the previous year and a return of the bond rate to the long-term average, which the actuary has used to value the long-term liabilities in the scheme. Given the fund is yet to return to the government's sufficient solvency level target, a further increase in the average compulsory third party premium is required again this year. The government has approved an average increase of 7.2 per cent in premiums from 1 July 2010. I will give some examples of what the increase will mean in dollar terms: In district 1, Adelaide and surrounds, a class 1 vehicle (the average family car) will increase from $440 to $476. A class 15 vehicle (a 51cc to 250cc motorcycle) will increase from $203 to $218. A class 19 vehicle (an historic or left-hand drive vehicle for those who have them— Martin, do you have one of these? Mr Hamilton-Smith House of Assembly Mr Hamilton-Smith: Yes, two. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: You do; two. The member for Waite, along with other members who have cars— Mr Hamilton-Smith House of Assembly Mr Hamilton-Smith: I took out three years; I knew this was coming. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: You took out three years; prudent. It is going from 119 to 128. The Hon. P.F. Conlon House of Assembly The Hon. P.F. Conlon: You saved $27. The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: That man should be the shadow treasurer. Mr Marshall House of Assembly Mr Marshall: Hear, hear! The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: The member for Norwood just went, 'Hear, hear', when I said that the member for Waite should be shadow treasurer. He is following on, Madam Speaker, where— Mr Marshall interjecting: The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: He should be treasurer. What about the member for Davenport? What a revelation here just now. The member for Norwood is calling on the member for Waite— Members interjecting: The Speaker House of Assembly The SPEAKER: Order! Mr WILLIAMS House of Assembly Mr WILLIAMS: Madam Speaker, I rise on a point of order, that being relevance. I believe it is standing order 98. The Speaker House of Assembly The SPEAKER: I fail to see how we can have a point of order on relevance when the Deputy Premier is making a ministerial statement. He can make a ministerial statement on whatever he wishes. However— Mr WILLIAMS House of Assembly Mr WILLIAMS: I don't think he is. I think he is engaging in a debate with members over here. The Speaker House of Assembly The SPEAKER: Deputy Premier, have you finished? The Hon. K.O. FOLEY House of Assembly The Hon. K.O. FOLEY: No. Just following on from the praise from the member for Norwood for the member for Waite last night, he has now called on the member for Waite to replace the shadow treasurer. You are fantastic—the gift that keeps on giving mark II. Keep interjecting member for Norwood. I accept that drivers are unlikely to welcome this increase. However, it should be remembered that, in the years when the financial performance of the fund has been strong, the government has been in a position to reduce third party premiums. This was the case in both 2005 and 2006. The government remains committed to ensuring the fund's long-term viability so that South Australians injured on our roads continue to receive financial assistance to get their lives back on track.