Travel Agents Repeal Bill

Second Reading

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Justice Reform, Minister for Planning, Minister for Housing and Urban Development, Minister for Industrial Relations) (16:14): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

The Bill will repeal the Travel Agents Act 1986. It implements a key recommendation in a national travel industry transition plan approved by a majority of State and Territory governments on 7 December 2012.

The Bill illustrates the South Australian government's ongoing commitment to remove unnecessary red tape for businesses and promote efficient and adaptable regulation.

The transition plan recommended sweeping changes to existing travel agents regulation, which has been in place since 1986, following the introduction of a cooperative scheme for the uniform regulation of travel agents, known as the national scheme.

The terms of the national scheme required jurisdictions to enact uniform legislation requiring travel agents to be licensed and for those agents to become and remain members of the Travel Compensation Fund, or TCF.

The TCF monitors the financial position of travel agents and administers compensation to consumers who have suffered financial loss because their travel agent has failed to pay a travel or travel-related service provider on their behalf.

Now, after over two decades in operation, the national scheme has steadily become ill suited both to modern industry practices and to how consumers purchase travel today.

The rise of electronic commerce in particular has fuelled the growth of direct distribution channels. Making travel arrangements is now predominantly an online business, with consumers cutting travel agents out of many transactions.

It is now estimated that two-thirds of travel and travel-related expenditure—or $18 billion out of $27 billion—is now made without relying on a travel agent. Growth forecasts predict that this trend is likely to continue.

As a result, a significant number of consumer transactions are currently falling outside the scope of the existing regulatory scheme and the pool of consumers who are eligible to access compensation by the TCF is shrinking.

However, the compliance burden associated with satisfying the TCF's prudential oversight requirements remains high relative to its declining benefit to consumers: in March 2011, PricewaterhouseCoopers estimated the cost to industry of complying with the TCF's requirements alone at around $19.3 million; in 2012, KPMG put this cost at $18.4 million.

The industry itself is also increasingly globalised, with many overseas players entering the local market, bypassing the national scheme altogether.

Recent collapses of well-established, local agents controlled by offshore corporations indicated how complex ownership arrangements are undermining the effectiveness of the TCF's prudential oversight. These are circumstances which the national scheme cannot prevent and future similar incidents are not unlikely.

In addition to its shrinking coverage, the national scheme also raises concerns about regulatory duplication.

Travel agents—particularly those that are incorporated or publicly listed—are already subject to financial controls under laws of general application and other industry-led mechanisms such as accreditation obtained through the International Air Transport Association, IATA.

In practice, these controls cover the majority of the travel agent market, which is dominated by a small group of large companies.

It was in light of these challenges that State and Territory Consumer Affairs agencies developed a Travel Industry Transition Plan, taking into account two independent cost-benefit analyses, and two rounds of public consultation.

The transition plan envisages a regulatory scheme for travel agents informed by contemporary market conditions.

These reforms consist of two key changes, to be implemented by the end of 2015.

The first change removes the TCF's prudential supervision function and puts measures in place that would trigger the closure of the fund. This was achieved through changes to the TCF's governing trust deed on 1 July 2013.

The second change involves repealing travel agents' licensing legislation by 1 July 2014.

This Bill will achieve this requirement and will also preserve, for a limited time, certain powers relating to the TCF.

These powers provide for additional matters that are not included in the TCF's governing deed, such as the right of the TCF trustees to sue and be sued in the name of the TCF.

Other provisions that will be preserved are the Minister's original power to declare the TCF as an approved compensation scheme.

The limited continuation of these provisions is required in order to align with the TCF's termination date. This is currently either 31 December 2015, or as soon after 30 June 2015 as the TCF's obligations are met and the fund is officially closed.

Removing the national scheme will not leave travel agents unregulated and consumers without redress.

The Bill will enable fuller reliance on the Australian Consumer Law and existing company laws, as well as industry-led regulatory mechanisms and remedies such as credit card charge-backs.

A key advantage of the ACL is that it applies existing levels of consumer protection to transactions with all travel agents as well as travel providers.

Complementing these measures will be a new industry-led accreditation scheme, to be administered by the Australian Federation of Travel Agents, or AFTA.

The scheme is required to be implemented from 1 July 2014, coinciding with the proposed commencement date of the Bill.

With the help of a one-off grant of $2.8 million funded by the TCF, AFTA has significantly progressed its voluntary scheme. It has also negotiated with UK insurer, International Passenger Protection, to introduce new insurance products into the Australian market covering defaults by both travel agents and suppliers.

Such developments have not been possible in the presence of the national scheme, with travel agents already subject to TCF and licensing costs.

TCF funds will also be used to support the creation of a consumer voice.

The transition plan recommended that a one-off grant be made for the purposes of consumer research and advocacy to assist in empowering consumers who transact within a globalised travel industry. CHOICE has been the successful tenderer to undertake this project.

The Bill is the culmination of a lengthy process of collaborative reform on foot since early 2009.

All jurisdictions are cooperating to achieve the passage of similar legislation within the required time frame; the State of Victoria passed its repeal legislation in March 2014. New South Wales and the Australian Capital Territory have introduced their repeal Bills and expect them to be passed by both Houses in May; Queensland expects to have its repeal legislation passed by 1 July 2014.

The Bill will enable travel agents to transition into an environment that is appropriate for contemporary market conditions and existing regulatory coverage. It will also enable an experienced, well-established industry to play a central role in overseeing the activities of its representatives in the absence of more prescriptive regulation.

Importantly, the Bill will help place the Australian Consumer Law centrally as the most appropriate form of protection for consumers, and regulation for travel agents both at present and in the foreseeable future.

I commend the Bill to the house.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause provides the short title.

2—Commencement

This clause provides for the commencement of the Act and ensures that, even in the event that the Act is assented to by the Governor after 1 July 2014, the Act commences from 1 July 2014.

Part 2—Repeal of Travel Agents Act 1986

3—Repeal of Act

This clause repeals the Travel Agents Act 1986.

4—Transitional provisions

This clause provides transitional provisions to preserve specified sections of the Travel Agents Act 1986 relating to the administration of the Travel Compensation Fund until the termination of the trust deed according to its terms, as follows:

(a) the approval of the trust deed by the Minister made under section 19 will continue to apply;

(b) section 21, which permits appeals to the District Court against certain determinations of the trustees, will remain in force;

(c) section 25, which provides that the trustees may enforce rights (subrogated to the trustees due to payment from the compensation fund) against the directors of a licensed travel agent (or former licensed travel agent) that is a body corporate, will remain in force until the termination date in relation to a claim made against the compensation fund in respect of matters occurring before the repeal date;

(d) section 26, which provides that the trustees may sue and be sued under the name 'The Travel Compensation Fund', will remain in force in relation to any legal proceedings brought by or against the trustees before the termination date in relation to a matter occurring before the repeal date.

Mr PEDERICK (Hammond) (16:14): I advise the house that I will not be the lead speaker on this bill.

Dr McFetridge interjecting:

Mr PEDERICK: I thank the member for Morphett for his support. I rise to speak to the Travel Agents Repeal Bill 2014. This bill was introduced in the other place on 22 May 2014 by the Hon. Gail Gago as Minister for Business Services and Consumers. The bill proposes to repeal the Travel Agents Act 1986 as part of a national reform program to reduce red tape and promote efficient regulation.

In regard to the national scheme, in 1986 a cooperative scheme for uniform national regulation of travel agents was introduced. Under the national scheme travel agents are required to be licensed under state legislation and to be members of the Travel Compensation Fund (TCF). This scheme is funded by fees on travel agents and compensates consumers who have suffered financial loss because their travel agent has failed to pay for travel or a travel-related service provider on their behalf.

After two decades of operation, the following drivers for change have emerged. One is the growth of direct distribution channels. A large proportion of travel arrangements are now made online. Online bookings in Australia increased from 5 per cent in 2001 to almost 35 per cent in 2008 at an average annual growth rate of 34.6 per cent. Globally this figure is estimated at over 50 per cent. Two thirds of travel and travel-related expenditure ($18 billion out of $27 billion) is now made without relying on a travel agent, and most consumer transactions fall outside the scope of the existing scheme and are not covered by TCF compensation.

This brings to mind a conversation I had with a semi-retired travel agent the other day where he informed me of the issues of booking online with international carriers. This is quite relevant to the legislation we are debating at the minute because people who go online, who might be looking at Singapore Airlines or Air France, do not realise that they are actually booking with an operator who is based in either Singapore or Paris, which circumvents everything around compensation. When it comes to the TCF and wanting to claim some compensation for a trip that goes pear shaped, they cannot, and they end up in a world of strife.

The second driver that has emerged is globalisation and consolidation. As I just said, the industry is becoming increasingly globalised and many overseas players have entered the local market, bypassing the national scheme altogether, and complex ownership arrangements undermine the effectiveness of the TCF's prudential oversight.

As a result of consolidation, the market is largely dominated by a small group of large companies that collectively hold almost 60 per cent of the market share. The TCF is no longer able to guarantee to compensate consumers in the event that one of the major travel agent businesses collapse.

Part 3 is about compliance costs, where the cost to industry of complying with the TCF's requirements is estimated at $19.3 million, and this was quoted by PricewaterhouseCoopers in 2011, and $18.4 million was quoted by KPMG in 2012. Then we get to four: regulatory duplication. Travel agents, particularly those that are incorporated or publicly listed, are already subject to financial controls under the laws of general application, the Franchising Code of Conduct and under industry-led mechanisms, such as accreditation obtained through the International Air Transport Association, (I-A-T-A).

Ms Redmond: IATA.

Mr PEDERICK: IATA, thank you, member for Heysen. In practice, these controls cover the majority of the travel agent market, which is dominated by a small group of large companies. In regard to the reform plan, from 2009 state and territory consumer affairs agencies developed a travel industry transition plan, taking into account two independent cost-benefit analyses and two rounds of public consultation. The plan was approved by a majority of state and territory governments on 7 December 2012.

The reforms are taking effect in four phases. In phase 1, from 1 July 2013, travel agents were not required to lodge annual financial returns to the TCF. Phase 2 involves the repeal of travel agents' legislation by 30 June 2014. Phase 3 is the introduction of a voluntary industry accreditation scheme from 1 July 2014. Phase 4 will mean closure of the TCF by mid to late 2015 and final payments of any consumer claims by 30 June 2015.

In oversight beyond the TCF, travel agents will continue to be regulated and consumers have redress through the following measures. Australian consumer law and existing company laws will continue to apply existing levels of consumer protection to transactions with all travel agents and travel providers. The transition plan also supports industry-led accreditation. Many travel suppliers already insist that only an accredited agent can provide a particular service, such as issuing tickets or selling boutique travel products. A new accreditation scheme, the AFTA Travel Accreditation Scheme (ATAS), is being established and administered by the Australian Federation of Travel Agents (AFTA)—we have plenty of acronyms here—and commences from 1 July 2014.

AFTA has received a one-off grant of $2.8 million for ATAS, funded by the TCF. To become accredited, a travel intermediary must agree to abide by the code of conduct and charter, confirm that their corporate policies, procedures and any consumer marketing activity will comply with Australian consumer law, be a fit and proper entity, be a registered Australian Business Number (ABN) holder, comply with relevant sections of the ASIC administered Corporations Act 2001 as required, and provide certified financial accounts to prove solvency.

They also must provide evidence of adequate public liability insurance and professional indemnity insurance, demonstrate an adequate level of staff education and training, and provide evidence of an adequate complaint handling policy and procedures. Other accreditation available includes the International Air Transport Association (IATA), the Cruise Lines International Association (CLIA) of Australasia and the National Tourism Accreditation Framework using the T-QUAL symbol.

Obviously within the industry there are some concerns about where we will be with consumer protection moving forward from 30 June 2014. Typically, current consumer travel insurance only covers the cost of cancelling or changing any travel arrangements for unforeseen reasons, lost luggage or travel documents, legal bills and overseas emergency medical expenses. Most policies do not offer protection when consumers' travel arrangements fail to go ahead as planned because the airline or other end supplier collapsed or became insolvent.

Just digressing a little bit, I cannot remember the name of the show (I think it was only on last night) about travelling to Bali and the disastrous—

Ms Redmond:What Really Happens in Bali.

Mr PEDERICK:What Really Happens in Bali. Thank you, member for Heysen. It certainly proves that insurance is vitally necessary, especially in regard to medically related expenses. I know that I have never gone overseas without having medical insurance for myself or my family, when they have accompanied me, because there can be massive costs. I think it was around $70,000 to get someone out of Bali with a medical evacuation. It might sound a lot for someone to pay for their emergency medical insurance at the start of the trip, but it is pretty cheap pocket money if something goes wrong while you are overseas.

ATAS accredited agents are only required to hold public liability and professional indemnity insurance. Agents can opt to take out three types of insolvency protection offered by international passenger protection, represented locally by Gow-Gates: travel agent and intermediary failure insurance, which is only available for ATAS accredited travel agents; scheduled airline failure insurance, which covers insolvency of an airline; and end supplier failure insurance, which covers losses arising from the insolvency of an airline and other end suppliers.

It is not compulsory for travel agents to be accredited or for accredited agents to have any of these insurances. TCF funds will also be used to support the creation of the consumer voice. Choice has been a successful tenderer to undertake this project. In regard to the winding up of the TCF, all jurisdictions party to the national scheme need to repeal their travel agents' legislation. South Australia is the last state to introduce the legislation.

The TCF funds at the end of 2013 were $27,071,647. The TCF trust deed requires any funds remaining after the TCF closes to be redistributed to participating jurisdictions. No portion of the TCF funds will be redistributed to agents; however, the transition plan approved a range of uses, including funding educational and informative material about the reforms for businesses and consumers. As I mentioned earlier, a travel agent came to me with some concerns, and there are criticisms about these proposed reforms.

Some people are saying that instead of abolishing the TCF, it could have been reformed and it should not be abandoned before an effective replacement is in place. That is one criticism and certainly a valid one in this case. Also, the fact that both accreditation and insolvency cover will be voluntary, even for accredited agents, it will lead to market confusion and consumer vulnerability.

While the United Kingdom and New Zealand have a voluntary approach, both provide some default protection against travel agents' failures. I think this is somewhere that the Australian legislation, as committed by the states and territories, could have—

Ms Redmond interjecting:

Mr PEDERICK: Yes; and we could have followed suit and put some protections in place. AFTA claims that the TCF program lacks consumer awareness, with 97 per cent of the public unaware of its existence, according to them. Yet, the new regime puts a greater onus on the consumer to be informed beyond accreditation to insurance cover. ATAS is not independently governed from AFTA as the plan intended. ATAS has been developed to benefit AFTA and the large operators that constitute the board, who are determined to avoid volumetric insurance under the TCF.

The market arrangements are said to be unfair, with AFTA members being told that they have to be ATAS accredited, and travel agent and intermediary failure insurance only available to ATAS accredited travel agents; also, fees are relatively high for smaller entities. The current fee for TCF is $425 per annum for a head office or sole location and $320 for each additional location. ATAS participation is subject to an annual fee and based on an entity's annual gross total transaction value. The fee for an agent with a turnover of $1 million would be $1,350 for a non-AFTA member. If the agent's turnover was $250 million, the fee would be $20,000 for a non-AFTA member, and that is 15 times higher for a 250 times increase in turnover. However, the accreditation does not relate to any form of insurance cover.

Without the protection of a statute, the client trust accounts held by travel agents are vulnerable to claims from financial institutions. We on the side of the house seek clarification—and we will hear back from the minister—about the security of agent-held client funds, with the repeal of the act, and the fairness of the market and governance arrangements. We think that there is need for a higher level of consumer awareness of the new arrangements, and the implementation of ATAS needs to be fair to small to medium operators.

I note that in the second reading speech made in the other place, the minister talks about the government's ongoing commitment to remove red tape. In the first instance, I think that is a great thing, but in the second instance, when you delve into the situation—I have had some feedback from some travel agents in my electorate—there could be some real issues in what happens in the actual running of the act if it does come into place in the near future. There are some real issues with whether people will have compensation.

You talk to people involved in the travel game, and they are very good operators. You can hear some of them advertising on the radio and they have their nightly shows, and they are very good operators, in the main. They have 24-hour call service—because obviously with the time zone differences you could be anywhere in the world—where you can ring your agent (if obviously they are one of these more reputable agents) and get service and get it all sorted out if something has gone wrong with some sort of tour, river cruise or a guided tour, or whatever tourism activity that someone is taking up. In talking to some of the operators in my area, what they are concerned about is that, under the new regime, someone can just set up shop across the road from someone who has been dealing with travel for the last 20, 30 or 40 years and decide to go into business with no accreditation and—

Ms Redmond: No knowledge.

Mr PEDERICK: Yes—no knowledge and no safety net, no fallback for the consumer. We all know how easy it is for people to go for the cheapest rate and think, 'Fantastic, I've stolen that trip. It's only cost me $2,000' where perhaps with the agent across the road who has been accredited for 20 or 30 years it might have been $2,300, but it might have come with all these protections and that client and operator service that you need when or if there are problems in regards to the tour.

If you are in Europe, North America, Canada, or anywhere in the world for that matter, you are a long way from home and the last thing you want when you are away is for something to go wrong. So, I seek assurance from the minister's comments to the house in regard to the protections that people will have under this scheme and the fairness that will be implemented for operators who have been involved in the travel industry for decades, who have done good work and who have looked after their clients and how that stacks up equitably with people who just pop up if this legislation is introduced and decide to run perhaps not such an honourable business venture.

Ms Redmond: Fly-by-night.

Mr PEDERICK: Fly-by-nighters—thank you, member for Heysen. As I said before, we on this side of the house are very keen to see red tape reduced, but we also want to see it reduced in a way that still gives people equity. We do not want to see thousands of people who are having distinct problems with new legislation, because what we have had in the past has done the job and next thing we have some fly-by-nighters or some not so honourable people setting up businesses.

Then when it all goes wrong when people are away on their holidays and they just want to enjoy that little bit of time they have got with the opportunity to travel, it can cost them many tens of thousands of dollars and not have any redress in regard to that. So, I will be very interested in the government's remarks on this bill and to see how it progresses through the house.

Mr VAN HOLST PELLEKAAN (Stuart) (16:34): I rise to make my contribution to this bill and indicate that I am the opposition's lead speaker, but I will not trouble you or the timekeepers for the unlimited amount of time that is available to me. I will not even come close. The member for Hammond has already made a fulsome and thorough contribution. I think that is outstanding and I thank him for that. I also direct all members towards the contribution from the Hon. Mr Stephen Wade in the other place, who has essentially dealt with this on the opposition's behalf already, so I will not go over all of that old ground, but I will outline the opposition's position and touch on a few other issues as well.

The Travel Agents Repeal Bill 2014 is something that has at least been agreed in principle by all states. I do not believe it has actually been finalised by all states with regard to their parliaments. I believe it has been introduced in all states, but I do not believe it has actually passed all states' parliaments. I might stand to be corrected on that, but I think everybody is really working up against that 30 June deadline that we have at the moment, and the opposition does not intend at all to thwart that or get in the way of that.

This bill proposes to repeal the Travel Agents Act 1986 as part of the national reform program to reduce red tape and promote efficient regulation. It would not surprise anybody to know that the Liberal opposition wholly supports that endeavour, because additional red tape and inefficient regulation are certainly the scourge of businesses and households across our state, so we are very much in favour of that.

Travel agents are currently required to be licensed under state legislation and to be members of the Travel Compensation Fund (TCF). The scheme is funded by fees on travel agents and compensates consumers who have suffered financial loss because their travel agent has failed to pay travel or a travel-related service provider on their behalf. It is important to recognise that this is not the same as travel insurance. This is not the sort of insurance that private people—travellers or business travellers—could take out on their own behalf, and they will still have to do that. They have always done that. If they choose to do that in addition to this, that does not change, and I think that is an important distinction. This is just about financial loss related to, essentially, poor performance by the travel agent.

After two decades of operation, the following drivers for change have emerged. I will not go into as much detail as the member for Hammond has because, as I said, he has covered that. First, essentially, there is the growth of direct distribution channels. We all know that more and more things are done online these days, and certainly more and more travel bookings are done online. In 2001, approximately 5 per cent of travel bookings were done online and it was 35 per cent in 2008. Globally, this figure is estimated to be about 50 per cent. So, quite understandably, Australia really is not going to be any different to the rest of the world, because we can all access travel online.

I am sure we would all be familiar with anecdotal stories shared with us where, if you book through an Australian agent in Australia, it can often be more expensive than if you book with an agent based in your destination for the reverse round trip, if that makes sense. I am sure that is not always the case, and I am sure the Australian travel agents are doing absolutely everything in their power to look after their Australian customers, but there is a certain amount of arbitrage, essentially, that exists at the moment with regard to online bookings, and that will only continue.

Two-thirds of travel and travel-related expenditure—approximately $18 billion out of approximately $27 billion—is now made without relying on a travel agent, so the market is changing. Because of that, most transactions are actually now outside the scope of the TCF anyway, so that is quite an understandable driver for change. With globalisation and consolidation within Australia and across the international borders as well, there are very large organisations dealing with customers, whether they be a Carlson Wagonlit type of company that has the contract to do travel for members of parliament and staff—

Ms Redmond: At a huge premium.

Mr VAN HOLST PELLEKAAN: I will let you get to that—or whether it be just a private company that has grown far more slowly and might have set up alliances with international companies. Certainly, that globalisation consolidation is continuing, and the market is largely dominated by a small group of large companies that collectively hold almost 60 per cent of market share. What is really important here is that, as it stands, if one of those exceptionally large companies happened to fall over, the TCF probably could not handle it anyway. That is another quite logical driver for change—not necessarily a driver for abolition, but certainly a driver for change.

Compliance costs are another very important issue. The cost to industry of complying with the TCF's requirements was estimated at $19.3 million per year by Pricewaterhouse, in 2011, and at $18.4 million by KPMG, in 2012. They are very similar numbers and probably a very good indication. Regulatory duplication is another sensible reason for considering change. Travel agents, particularly those that are incorporated or publicly listed, are already subject to financial controls under laws of general application, whether they be franchising codes, common law, or some other code of conduct or industry-led mechanism.

It is important to point out that, while those things exist, they will not do everything the TCF currently does. Yes, it is a driver for change. Yes, a large number of other backups, if you like, exist in the system, and so that does make a case for change, but it is important to point out that they will not cover everything the TCF does at the moment, but probably the majority of those types would be covered. Just very briefly, in regard to the reform plan, there are essentially four phases:

Phase 1: From 1 July 2013, travel agents will not be required to lodge Annual Financial Returns to the TCF…

Phase 2: Repeal of travel agents' legislation by 30 June 2014

As I said before, we are knocking on the door of that—

Phase 3: Introduction of a voluntary industry accreditation scheme from 1 July 2014—

Again, right around the corner, and—

Phase 4: Closure of the TCF by mid to late 2015 and final payments of any consumer claims by 30 June 2015.

Phase 3 is obviously the key: the introduction of a voluntary industry accreditation scheme from 1 July 2014. Of course, if that goes well, what else do you need? If that is done effectively, responsibly, in consultation, and put into place with a capacity to cover all potential eventualities, then of course what else would you need? For me, that is really the key crunch area. Our world is dominated by voluntary and involuntary schemes, and I think we would all agree that a voluntary scheme would be better. The difficulty is that they do not always work, and I will come back to that just a little bit later.

There is certainly a significant regime established for oversight beyond the current TCF world as we know it. I will not go through all of that, but suffice to say that there are consumer laws that already exist, there is industry-led accreditation, and there are standards of consumer protection that exist. The member for Hammond went through those in detail, the Hon. Stephen Wade has canvassed those issues in great detail, and I know that speakers who follow me will go into the real nitty-gritty of the protection that will be afforded to travellers after this TCF has been wound up.

There is approximately $27 million in the fund at the moment. That is a significant amount of money, as I said before, but it is not enough to deal with some of the extreme potential outcomes. If one of the really large global companies were to fall over, TCF could not manage that anyway. Nonetheless, $27 million in an Australian industry fund is a very significant amount of money, so how that is used is going to be absolutely vital in regard to the success of how we move on.

I mentioned the Hon. Stephen Wade, who really did canvass this issue in great detail, and I would like to bring to the attention of the house and the responsible minister a couple of questions that remain unanswered. I will give her the text of this afterwards to save her from taking some notes.

The Hon. Stephen Wade asked a few questions in committee in the other place; he got some answers, but certainly not all the answers. He did specifically ask me to pass on to the government minister that the opposition is still waiting for an answer, so I will not open up the committee stage, but I would certainly put on record that the minister has given me her assurance that she will come back to the opposition with those answers. The currently responsible minister will get those answers for us.

I will put the questions on record, and one was about the ACCMC, which is the ATAS Code Compliance Monitoring Committee. The committee has five members: one independent chair, two consumer representatives, one nominated by industry or government, and one is the AFTA CEO. That seems pretty straightforward, but the question the minister was asked was: how will the two consumer reps be appointed? The minister in the other place was going to come back but, as I understand it, at least as of this morning, that answer has not come back so I put that question again on the record.

The other question that the minister asked was essentially the same, about the one industry/government representative, because it could be an industry and/or government nominee onto that committee as I understand it. We would like to know how that person will be appointed because, as I said, this can all go swimmingly so long as the new world is responsible, well funded, and fulfils its obligations to people. The five members of that board are very important and those three nominees—the two consumer and the one industry/government nominees—will be very important.

The last question I will just read directly from Hansard. The Hon. Stephen Wade asked the Hon. Gail Gago:

I suppose my next question is going to have a presumption which is based on the answer that has just been taken on notice—

That is the last question about the other members of the board—

but nevertheless let me speculate. I would not be surprised if Choice—

The consumer advocacy group, Choice—

has a role in the appointment of the consumer representative. Choice, as I understand it, is the successful applicant for the tender for being the consumer rep within the ATAS framework. I am intrigued considering that, as I understand it, the consumer protection agencies are stepping back; that is the nature of industry self-regulation. AFTA and ATAS will have perpetual existence. Is Choice's role as the consumer voice perpetual also? Having won the initial bid, will they always be the consumer voice within the ATAS framework?

I think it is a pretty sensible question; again it is one the Hon. Gail Gago is going to come back with, and I look forward to the government's clarification of those issues in this house.

Let me wind up by referring to a few general issues in regard to the travel agent industry. It is one of those industries that when things go well they are fantastic—you go on holiday, you have a great holiday and everything is wonderful; you go on a business trip, your scheduling is right, no planes are late, the weather was as predicted, you have the right clothes, everything falls into place really well, your meetings go well and you come home and think that it was a fantastic productive trip. However, when it goes wrong it can be a complete disaster, and that is really what is at the heart of this and that is why this is so important.

This legislation is not about just hoping that everybody has great holidays or just hoping and supporting and having a backup so that everybody can have useful productive business trips. It is actually about supporting people when the stuff really hits the fan because that is what we deal with here—it is either all great, all goes well or it is really pretty nightmarish stuff potentially.

Whether a travel agent forgot or, through no fault of their own, some payment was not made and a booking was not there so somebody is stuck on the other side of the country or the other side of the world, it is those sorts of issues that are really serious. I am sure, if I think about probably the most prominent example in this place, if the Premier's travel arrangements on behalf of the state were somehow mixed up through fault of a travel organisation, it would be a pretty serious outcome.

I am a bit concerned about the voluntary code of conduct. We in opposition will be watching this very closely. We do not want to stand in the way of reduced red tape and more efficient regulation—we do not want to thwart that—but we do want to make sure that travellers are protected, whether they be private or public travellers, whether they be people on holidays or members of parliament or business travellers, so we will be watching that very closely.

There is another issue, of course, that is important in all of this, and that is small travel agents versus large travel agents. As I have already mentioned and other members have mentioned, there is an industry trend towards globalisation, and there is an industry trend towards fewer larger organisations. If memory serves me correctly, 60 per cent of the industry in Australia is handled by very large organisations, so where does that leave the small ones? Where does that leave the small businesses?

I make these comments very genuinely as the shadow minister for small business. Many travel agents are small businesses and many of them are outstanding businesses. These days, you cannot be a small business with a relatively long history of being in business without actually doing a great job, because it is pretty tough. These are businesses that have forged exceptionally good relationships with their destinations, with airlines, with other travel agents overseas but, also very importantly, with their customers.

These are travel agents who have often specialised with regard to providing a particular service for a particular type of travel or a particular travel destination, and have really found a niche market for themselves. They might be travel agents who have got a niche market with regard to their customers. They might service groups of customers with particular language needs, for example, or maybe particular health travel needs or people with disabilities. A travel agent might really understand the difficulties of travelling long distances if you have a physical, mental or some other disability. Agents who have developed outstanding small businesses are providing services that the big boys essentially do not provide or certainly do not provide as well as the small ones.

There is a very real concern that, if the voluntary code that is to be established—that phase three that I referred to before—is not done properly, there is potential for a whole range of outcomes. There is potential for small but effective businesses that provide employment across our nation to go by the wayside and fall over, and the larger ones could take them over.

There is the possibility that, if that happens, then these specialist customer groups, these travellers with specialised needs, may not have anybody who services those needs. It might be people who do not speak English very well, but they can go to that travel agent and get that help. It might be people who are looking for particular support because they have additional needs over and above the average person with regard to their travel.

Making sure that consumers do not miss out is a real concern here because, while we want to free up businesses from red tape, and while we want to improve regulation, we do not want a world where the big guys take over the little guys. We do not want a world where, perhaps on a per unit cost basis, a large company can outbid a small company but not provide the same amount of service. It potentially means that some people who need that service—and again I come back to just two examples, but there are many others: perhaps a language service, or perhaps people who can help with travel for people with disabilities—if they cannot get it from the small business that provides that now (and they might not get it at all) they might not be able to travel at all. That would then accidentally lead us towards some form of discrimination which I am sure none of us here would think was a good thing at all. So consumer protection has to stay front and centre.

The phase three voluntary industry accreditation scheme from 1 July—which is just a couple of weeks away or less—is going to be absolutely vital. I also put on record the obvious question that this legislation begs which is: does the government have intentions to do anything else that is similar with regard to other industries—whether they be real estate or motor vehicles—to remove the requirement for specific training and specific licensing out of those industries, or does the government potentially have any thoughts in the background about removing other protections for consumers like the legal profession or the medical profession have done? Those are the sorts of questions that are very important in the context of this debate, and I will wind up my remarks there.

Ms REDMOND (Heysen) (16:56): I can assure the member for Stuart as I rise to give an address on this particular piece of legislation that in fact this government has already very significantly dismantled the protections previously provided under the Legal Practitioners Act and the guarantee fund under that act. So there is far less protection than there used to be under the act for people dealing with legal practitioners.

I rise to put on the record some very serious concerns about this legislation. I believe that we are jumping the gun in a big way in agreeing to put this through. In fact, I object very much to the timing inasmuch as there was a travel agents' industry conference held in Adelaide at the Crowne Plaza during the last sitting week at which it was announced to those present that the new regime would be commencing on 1 July, when indeed this parliament had not yet had a chance to even debate this legislation. It is quite simple: the legislation before us basically repeals the Travel Agents Act that has existed since 1986.

I object, and I am on the record over many years as objecting, to the idea that various ministers can go off to conferences with various ministers from other states and come to a conclusion that we are all going to pass legislation and thereby usurp the authority of this parliament. I have always objected to it and I will object to it until the day I die. I do not think it is appropriate for ministers to be able to agree to that. I think they should have no more than the authority to say, 'We will look into it and we will come back here and try to have a debate about it.'

To be in a situation where here we are on 17 June being told that this new regime is going to come in and that we have to repeal this legislation in the current week so that this new regime can commence on 1 July is entirely inappropriate, and made more so by the fact that the agreement that was reached on 7 December 2012—two and a half years ago—was only an agreement in principle by a majority of the states and territories.

It could have been that of the six states and two territories there may have been five that agreed to it in principle. Indeed, it has already been mentioned by a couple of other speakers that the legislation relevant to this has not yet been passed in all of the other jurisdictions, and I think it is a mistake to proceed to pass this by 1 July.

I think it is of great detriment to two particularly significant groups of people: firstly, the consumers of South Australia, and, secondly, all of the little travel agents in South Australia, and there are probably hundreds of them operating right around the state. All of those travel agents employ lots of people and I fear that the consequence of this legislation and this move will be the ultimate demise of those travel agents.

It has already been mentioned by earlier speakers that we have seen a huge increase in the amount of direct bookings undertaken by people via the internet. Back in 2001, only 5 per cent of travel was booked through that means and now it is probably in the order of 50 per cent and increasing. True it is that if you do your bookings in that way, you may well find that you do not have the protection created by the 1986 act, and I will just go to what that act says.

It is very similar, in fact, to the regime—it is not the same wording, but similar—set up under the Legal Practitioners Act as it then was, and that is basically that, in order to operate as a travel agent, you have to be licensed, and in order to have a licence, first of all, there are certain requirements for you personally: you have to be at least 18 years of age; you have to not be disqualified by reason of any other behaviours; you have to have suitable arrangements in place which will enable you to fulfil your obligations as a travel agent; you must be a fit and proper person; and, most importantly, you must be eligible to be, and will become, a member of the compensation scheme.

So our act then sets up this compensation scheme. You have to pay an annual fee and, if you are running a business, that business must be managed and supervised. The act actually sets out that, at the moment, if you operate as a travel agent without being licensed under the act, a penalty of $50,000 is applicable, and if you operate without having your company appropriately managed and supervised, another $20,000 fine can apply, and there are disciplinary provisions under the act and all sorts of involvement of the District Court and so on.

The compensation scheme then says—much as the legal compensation scheme used to say—that if you are going to operate as a travel agent in this state, you not only have to have that licence with those various requirements, but you must participate in the compensation scheme; you must contribute to the compensation fund, and the provisions of that fund are set out not in the actual act but in a trust deed established under the act, and I will want to explore that particular matter when we get to the committee stage.

The fact is, as I say, that travel agents first of all agreed to change but, as has been mentioned particularly by the member for Hammond and then the member for Stuart, there is quite a discrepancy between the interests of the people who run the big travel firms and the people who run the little local travel agency. The people who run the big firms do not want to pay what is called the volumetric payment; in other words, a payment that is based on the turnover of their business, because that would clearly prejudice them in comparison to the people who are just running the little business.

The problem is that if we pass this legislation what we will be doing is wiping out that whole regime and not putting anything in place in its stead that will protect consumers. At the moment, as a consumer, if I do use a travel agent—and I must say that the protection offered by travel compensation schemes must be one of the key imperatives these days that drives people to use a travel agent rather than just going direct to the internet—then I know that in this state I am protected by that travel compensation scheme.

The member for Hammond went into some detail, thankfully, about what is covered by travel insurance and what is not, and most of us would know that we are covered if our flight is cancelled, if we have a medical injury overseas or if our luggage is lost. All sorts of things are covered by travel insurance, but what travel insurance will not cover is if your travel agent has, to use the vernacular, nicked off with the money you have paid them, or if the travel agent, having paid the money on to a third party supplier overseas who has booked a holiday for you, then finds that that company has gone belly up and there is no holiday for you overseas. That is when the Travel Compensation Fund steps in.

To give you an example (I am paraphrasing) a young chap booked a significant holiday overseas (I think it was from Perth). He had booked his honeymoon—a big honeymoon, quite expensive. He had booked all the trips, the side trips and so on. I think it was to South America. Two days before the wedding—so the honeymoon was obviously imminent—they were advised that the company overseas had failed and they had no bookings in place for their honeymoon.

The benefit of the compensation scheme that we have under this legislation that we are about to repeal in this state, was that that person, through the compensation scheme, was able within that 48 hours to have the entire honeymoon reinstated with appropriate bookings. Under the act, the Travel Compensation Fund is then able to subrogate the rights of that person to pursue whoever it might be, but the consumer has that safety net, and that is unbelievably important.

As I say, it is to me one of the things that will encourage people to continue to use those small travel agents that operate in little towns all around this state. Those people in turn employ people all around the state in those travel agencies, and I have a significant fear that if we go down the path of repealing this legislation so that there is no Travel Compensation Fund and we have abolished the actual requirements of people having appropriate qualifications, being fit and proper people and so on, we will soon see the demise of all those little travel agents.

I have significant concerns about the way that is going to operate. The large operators, as I said, want to avoid the volumetric insurance, but probably the main concern to me in all of this is that the regime that is supposedly going to replace what is currently a compulsory scheme is completely voluntary. Yes, you can have accredited travel agents and they can take out certain insurance, but there is no compulsion on them whatsoever to be accredited or to take out insurance.

Can I tell you that in Victoria, where they are still debating this legislation, only 15 travel agents out of all the thousands of travel agents in Victoria have actually registered for accreditation. The vast bulk of people are not bothering with accreditation. It is removing red tape alright, but it is also removing all the protection that we currently have. It makes no sense to me unless we have an alternative scheme to move to that will give protection.

I know that the notes that we have received say there will be protection because if you are dealing with a travel agent—big, small, whoever—you can still get the same consumer protection that you get under consumer law anyway. Well, I hate to tell people, I do not know if anyone has regularly tried going to the Office of Consumer and Business Affairs, but if you happen to have spent $20,000 with a travel agent who has just done a flit and gone to live in Greece or wherever, you are not going to get much joy. They will tell you that, yes, you have a right to bring a claim and you may have enormous legal fees, but you miss out on the protection given at the moment under our current law.

I cannot understand why this government wants to pursue this instead of saying, 'We agreed in principle that we want to get rid of the red tape. We want to move with the times and recognise that people don't necessarily book their travel through agents any more; they go direct online and we maybe need to think about that, but let's keep this in place until we have sorted out a system that is going to, fairly, give people compensation if they pay their money to a travel agent and the travel agent goes belly up, or the travel agent pays it on and whoever they've paid it on to goes belly up.

I just cannot for the life of me work out why we have at a national level all agreed to throw away a system which has been working for more than 20 years—25 years—in a perfectly satisfactory way, and which has not had any great difficulty. One of the criticisms that was raised was that the current population is not aware of the existence of the Travel Compensation Fund. That is true, but anyone who has had cause to use it is obviously aware, just as you are not aware of a whole lot of things that happen in hospitals, or the ambulance service, or whatever it might be, unless you have cause to use them, and then consumers become aware of them pretty quickly.

But I can tell you that they are even less aware of the fact that they are going to be just left out in the cold with nowhere to go and no way to recover their money if they are in the same situation of that young man from Perth who booked his honeymoon, paid all the money to the travel agent, who did the right thing and paid the people overseas, and then found that the company overseas collapsed, and that person is left without anywhere to go.

As a parliament I cannot understand that we think it is alright to, with the stroke of a pen, wipe out a system that has been serving us well for 25 years for no better reason other than that the big players want to get control of the market. And let there be no doubt that this will push the small players right down. It will really damage the small players, it will damage the consumers in this state, and I can see no justification for it whatsoever.

Dr McFETRIDGE (Morphett) (17:10): Other members in this place have really said all that needs to be said about this particular bill, but I emphasise the fact that we now live in a brave new world and are a mouse click away from the rest of the world, and, as referred to by the member the Heysen, in 2001 about 5 per cent of bookings were being made online, while now, as the member for Stuart said, about 60 per cent are being booked online. That is how my family does it and how many of my colleagues do it. And we certainly do it; my office does it for me.

As a result of that, I want to raise a point now that I also raised in the Supply Bill—and please, for the people at Carlson Wagonlit, I am not having a go at you. You are a very, very good travel company in 150 countries around the world, offering a very good service. However, just to put it on the record—and I understand the contract is still about the same level—the travel agents' contract for managed travel services issued by the Department of Treasury and Finance—and the copy that I have is the 2003-08 one, but I understand it is exactly the same—is for the provision of a one stop shop for all travel management services.

It includes: booking domestic and interstate and intrastate travel; car hire; air travel; rail hire; associated travel services, such as arranging visas, and a management subscription on behalf of any agency, including corporate club memberships, which you also have to pay for yourself, by the way; assistance with group bookings and conferences; travel management and financial reporting tailored to agency requirements; and government analysis and advisory services. It is a five-year contract. This is the managed travel services for the South Australian government, public servants and members of parliament.

Have a guess what you would pay for this service: $80 million for a five-year contract—$80 million. Just to break that down a little bit, we are paying $16 million a year for the management of travel services, or $1.333 million per month, or $307,692.31 a week, or $43,835.62 a day—a day—so nearly $44,000 a day just to manage our travel. That is not including all the airfares, bus fares, rail fares, taxis and car parking and other fares that we have to pay in the process. It is an extraordinarily expensive process to manage travel for the South Australian government. I would not have thought that it would be that complicated. I know that it is not something that smaller travel agents could handle. Being a global company, Carlson Wagonlit do a terrific job. Phil Hoffman down at the Bay, they are—

An honourable member interjecting:

Dr McFETRIDGE: And Semaphore—all over South Australia; in fact, they are all over the world. They won the Australian travel agent retailer of the year 2013. They do an exceptionally good job. You can contact them 24/7 and speak to a live operator to get assistance with your travel. I know a South Australian company would love to have this $80 million contract, the $44,000 a day that we are paying to manage our travel.

The point I want to raise here is that members of parliament are given a travel allowance. We can accumulate that, but nowadays most smart members of parliament are doing their own bookings, or using their staff to book online for them, choosing the flights and travel they want, and then going back to Carlson Wagonlit to organise it, or they may be paying themselves and claiming back through their travel.

What is the best way not to eliminate this $80 million contract but certainly to reduce it? If you were to halve it, if you were to take off $20 million, imagine if it were $20,000 a day instead of $44,000 a day for this travel, what that money could be put into. I suspect that members of parliament are intelligent enough and certainly honest enough to use that money to its best value.

I am suggesting that what the Treasurer and what this parliament can do is this: instead of having us go through the systems we are using now, include it as part of our salary each year; that is, do what we do with the rest of our money—the electorate allowances and also our global allowances, which are used in our electorate offices. Let's make sure we justify that spend to our constituents and to the tax office. That is all you have to do. It will simplify it dramatically, it will save a lot of money for the taxpayers of South Australia, and we will still have that accountability and that responsibility.

This is not about anything more in it for members of parliament; we can access it now. I would suggest that the taxpayers are going to get better value for money and that there may be considerable savings on this managed travel services contract—$80 million over five years, or nearly $44,000 a day. We should look at that. If you could save 25 per cent of that, that is a significant saving, when you have the debt and deficit this state has. It is not members of parliament, and certainly not me, putting the snout in the trough and wanting more than they are already getting because they are already getting it.

I can live with the pay freezes the Premier has apparently announced, but I have not heard the detail. I can live with that because I am not doing this job for the money. However, part of the job is to travel, and I advise every member in this place to get out there, use their travel and see the world and what is happening out there. You can access it on the internet—as I say, you are a mouse click away from the rest of the world—but get out there and see it on the ground. Talk to the people, see the sights, smell the smells and find out exactly for yourself what is going on out there so that you can bring it back to South Australia and make this an even better place than it already is.

Go overseas and spruik this place and tell them what a wonderful place South Australia is because I honestly think (and I do wear my heart on my sleeve here) that we do live in the best country in the world and the best state in the world. Time and time again Adelaide wins those awards for being the most liveable city in the world, and I suggest it is just brilliant—everyone you talk to just loves this city. So, go overseas and spruik this city, bring back ideas, bring back renewal, bring back fresh ideas, but let's do it for the best value for the taxpayer in South Australia.

When we are looking at changing the travel agents compensation fund, we are not only looking after our constituents, and we all try to do that, but let's also look after them from our side of the fence by making sure that the spend that these individuals in the parliament are spending is being used to the very best advantage of all South Australians so that every time we go out there we are seeing new things, coming back, doing our reports and being responsible to the tax office and to our constituents. We are doing it with the maximum opportunity to save the spend on this travel.

This is something we have to look at, and we have to grasp the nettle. We have to make sure that the media do not scare us into saying, 'It's snouts in the trough.' This is rubbish, absolute rubbish. Members of parliament deserve a bit more respect than they get. How are you going to attract people into this place if you do not give them the opportunity to fulfil their wants and desires—that is, to improve South Australia?

I do not think anybody in this place is in it for their own benefit: they are here to serve their constituents, whether they are Liberal, Labor, Independents, Greens, or whatever. They are here to serve their constituents and they do it very well. I challenge the spectators and the commentators out there to challenge this. This is a money-saving exercise. It is not an extra spend, and if we can do it, and we can enhance the opportunities we have now by managing it ourselves, and I think we can, it is something we should do.

This bill is recognising the fact that there are significant changes. Other members have said what they need to say about the safeguards—and whether it is like any homogenised legislation we are going into in Australia and we need to do it with the time frame that is being suggested is something the member for Heysen has spoken about—but I think we really do need to move with the times. This is not 1914: this is 2014. We need to recognise that there are not six railway gauges in South Australia now, or whatever there are; there is the rest of the world out there. We do need to travel, but let's do it with the most economic benefit for our constituents.

Mr TARZIA (Hartley) (17:19): I acknowledge the esteemed contributions of the Hon. Stephen Wade in the other place and my colleagues in this place, the members for Stuart, Hammond, Heysen and Morphett. The member for Stuart correctly highlighted that there are a number of questions that still remain outstanding. It is certainly not my intention to also enter into the committee stage here, but I would certainly echo the sentiments of the member for Stuart and ask that the government do present those answers to the house.

I rise today to speak in support of the bill. However, the bill also raises many concerns that I would ask the government to consider. I would like to do two things today. I would like to speak a little bit about the background and good reasons for supporting the bill, but I would like to view those in light of the concerns with it as well. As this place has heard, the current bill serves to repeal the Travel Agents Act 1986, and it is part of the national reform to cut red tape in this area, which is understandable.

Currently, the Travel Compensation Fund (TCF) is funded by charges priced into travel agent fees, and it has been an area of much market change, for several reasons, especially in the last 10 years. There have been substantial changes to the travel agent market in recent times, as we all know. It has been published, as we have heard earlier today, that about two-thirds of travel spend is now done without a travel agent. Consequently, most transactions seem not to be caught by the existing scheme and are not covered by TCF compensation.

It seems to be easier every day to book travel online, especially with market players like Wotif, Expedia, etc. Additionally, technology has now bridged the world and the world has become much smaller than it once was. Several overseas firms have entered our local market and simultaneously have bypassed the national scheme completely. A consolidated marketplace has also seen, as we have heard, a minute cluster of players dominate the market. Failure of the scheme has been at the expense of consumer compensation when, arguably, some of these consumers need it the most.

Furthermore, the expense of complying with this TCF has also presented much difficulty. We have heard two figures here today where independent financial firms have actually calculated the cost of complying with the TCF arrangements, being $19.3 million in 2011, calculated by PwC, and about $18.4 million, calculated by KPMG in 2012. Obviously, the overlapping of these regulatory measures leads to many inefficiencies in the economy.

I note that the Travel Industry Transition Plan has been developed to address the challenges after many rounds of public consultation. The plan has notably been established and been passed by a majority of state and territory governments, and it certainly would be prudent to follow suit. I note that travel agents will still be subject to some regulation and consumers will certainly have protection under an array of means. I will give a couple of examples: basic contract law and the Australian Consumer Law. These are some examples where there will be protection provided for our consumers dealing with travel agents and suppliers.

A novel accreditation scheme named AFTA Travel Accreditation Scheme (ATAS) is being established by the Australian Federation of Travel Agents and commences from 1 July. Other accreditation mechanisms already available include the International Air Transport Association, the Cruise Lines International Association of Australasia and the National Tourism Accreditation Framework.

That tells us a little bit about the background of the bill. There are, however, many grave concerns. Any act which purports to reduce red tape and regulation must consider many things, but one of them is the balance between a fair market and a free market. There are many concerns which still need to be ironed out in this bill, and I encourage the government sooner rather than later to answer the questions that we are putting before them.

The first thing that I want to mention is the concern that under it travel agents need not be accredited anywhere near the current level. In recent times, I spoke to the good people at Jetset Glynde, in my electorate of Hartley, which is my travel agent, Deputy Speaker. It is a very reputable organisation, let me tell you, and if anyone needs any travel bookings I would encourage them to go down to Payneham Road and consult with Rick Pirone and John Longo, the good people at Jetset Glynde. They tell me especially that they have been in the business for a long time and they have developed much expertise in the area, and they certainly have concern that the level of accreditation is much less post 1 July.

Apart from that, as we have heard today and as the member for Stuart pointed out very well, the relaxing of insurance requirements on the part of the travel agents is also in grave danger. In relation to TCF funds, I understand that the TCF funds at the end of 2013 were $27 million, and the TCF trust deed requires that any funds remaining after the TCF closes will be redistributed to participating jurisdictions. Beneficial projects for these funds to be allocated include funding educational and instructive material about the reform for companies and consumers.

Education concerning the reform is certainly of great concern to me. From talking to these and other travel agents, owners, employees and also their customers and consumers, it is evident to me that community awareness is certainly not where it needs to be in relation to this reform. Consequently, I believe the current government has an obligation to inform customers of the potential perils of the industry moving forward.

While I will support the bill, we certainly must acknowledge these issues confronting the future of the travel industry, not only for consumers but also for existing providers, and that we think about exactly who we want to let into this industry and at what expense. The government must educate consumers of the changes that the bill will present. As I mentioned earlier, we need to achieve the right balance between a fair market and a free market in the travel industry.

The DEPUTY SPEAKER: Member for Goyder.

Mr GRIFFITHS (Goyder) (17:27): Glad you gave me the call, Deputy Speaker; I was so engrossed in what the member for Hartley was saying I did not realise I had to stand up. It is amazing how many people talk about different bits of legislation, and this one has certainly piqued the interest of a few members. In my case, from a previous responsibility as shadow minister for business services and consumers, I had some interest in this issue from a legislative perspective in September of last year, so I did prepare some level of notes about it. I am pleased that the bill has come before the house and that so many members have taken an interest in it and actually expressed their thoughts upon it.

I am a bit of a student of history, too, so I like how things work. It is a different world now compared to what it was when the Travel Agents Act was first instigated in 1986, in which travel agents in South Australia were obligated to contribute to the Travel Compensation Fund, which is identified as a national scheme even though the Northern Territory is not part of it.

In December 2012, a ministerial council of state ministers agreed to implement a travel industry transition plan, with the objective to remove the mandatory compensation scheme which was operated by the Travel Compensation Fund. The TCF is a trust fund administered by a board of trustees comprising of nominees from each state government body responsible for administering travel agents' licences, which is done under the auspicing of Consumer and Business Services in South Australia and industry and consumer representatives.

Any person or company wishing to conduct business as a licensed travel agent in Queensland, New South Wales, Victoria, Tasmania, South Australia, Western Australia or the ACT is required to participate in this Travel Compensation Fund. I found it interesting, as I am advised, that $8,260 is paid by the principal location of travel agents, and an additional $5,515 was paid by each branch location to the fund. All TCF participants are required to renew their participation annually.

I think I overheard the member for Hammond talk about the fact that there is a sole travel agent location fee of $425 for the renewal of it and the annual renewal fee for each additional office is about $320. The penalty for late payment per location is $60 and the failure to pay into the TCF results in a licence being terminated, so it is a very serious action. Reinstatement to the fund participation comes at a cost of $2,300, so that would certainly prompt people to pay on time.

Travel agents must also submit annual reports outlining their financial position. That I find interesting because a fair level of disclosure actually has to occur there to outline your financial position so, yes, they presumably become a public record even though they would be a family business and not in many cases operating under a shareholding arrangement, but that is what they are required to do.

A key function of the TCF is to actively monitor the financial security of all licensed travel agents in Australia, other than the Northern Territory, to ensure that sufficient funds are available to conduct the businesses. That is particularly important in rather challenging times when cash flow is critical to the success of businesses. Issues that might occur in this industry and elsewhere around the world might impact on services being provided, the needs of customers and how that financially impacts upon them.

The TCF provides, as a last resort, compensation for consumers who suffer a financial loss from dealing with a licensed travel agent in instances where consumers have paid a licensed travel agent for travel or travel-related services and that travel agent fails to account (i.e. fraud or suffers from insolvency). The TCF has paid out, I am advised, more than $65 million in compensation to consumers since it commenced operation in 1987, so it certainly has performed a very important service for those people that have been caught through the actions of others.

The current regulatory framework for travel agents was introduced in 1986. Since then, the rapid rise of new business models—and other members have spoken about these new models and it is the way the world operates now—together with technological advancements have gradually reduced the relevance and effectiveness of the existing system.

This market change has also steadily disadvantaged local travel businesses that find themselves competing with offshore providers operating outside the regulatory framework. It is fair to say, though, that a variety of members in this chamber have spoken about the success of businesses that they are aware of, because of the quality of service that they provide to the community.

In 2012 in December, the state and ACT ministers approved a travel industry transition plan which sets out reforms for industry regulations in the Travel Compensation Fund. In 2011 the federal minister announced the need for reform and consultation review was undertaken which resulted in the plan being developed. As a result of this plan, a voluntary industry operated accredited plan will be introduced for travel agents and a consumer advocacy body will be established to deal with consumer issues concerning travel agents.

The development of a voluntary industry accreditation scheme is currently being undertaken and has been formulated as part of this bill, of course, and new industry accreditation will commence together with consumer advocacy agreement in 2014. Under the plan, a new TCF trustee came into effect on 1 July last year, consequently participants in the fund are no longer required to lodge their annual financial review to the fund, but additionally the fund no longer assesses the viability of new agents, so there have been some transitional arrangements in place.

New and existing travel agents will still be required to be financial fund participants until 30 June this year, and under the new TCF trust deed a TCF board of trustees appointed by the ministerial council representing the travel industry, consumers and the participating governments will continue to administer the TCF fund.

Accordingly, until 30 June 2014, the TCF has continued to provide compensation for travel clients who suffer loss when a travel agent collapses and fails to account for money paid by the consumer, providing the relevant travel arrangements or a refund. The TCF will not provide compensation in relation to travel agent collapses after 30 June this year, but its consumers will have 12 months to lodge claims with the TCF for a collapse occurring up to 30 June.

I am amazed that the fund actually has quite significant levels of dollars. I think in one briefing paper I read it referred to fractionally over $27 million, and it appears to me that, with the changes that are proposed, there are lots of questions from those of us on this side who have reviewed the legislation. I commend the various members of the house who have spoken, and also the Hon. Stephen Wade who prepared an initial briefing paper for the opposition on it. It is an important review to take, but indeed there are a lot of question areas.

We live in a world where there are many options available to people, but it is important that the parliament puts these through a very stringent review process, actually. This is a bill which, probably on many other occasions, might have gone through quite quickly, but it is a bill opportunity where the impact can be profound upon people who are found to suffer some challenges when, at the least convenient time, they are actually caught up in a situation beyond their control and need that assistance to exist. That is where the quality of the industry is a key and, indeed, the support that is provided to those who use the industry is absolutely important.

It is likely, as I understand it, that there will be a committee stage about this. There will be some clarification sought in a few areas. The member for Stuart and the shadow minister responsible for it in the house will probably have some questions. I think the member for Heysen has flagged some interest in that area, too. I look forward to these issues being clarified and all concerns that have been put on the record by various members being dealt with so that we can ensure that our community gets the best possible service.

Debate adjourned on motion of Mr Gardner.

At 17:36 the house adjourned until Wednesday 18 June 2014 at 11:00.