Bills

Compulsory Third Party Insurance Regulation Bill

Second Reading

Adjourned debate on second reading (resumed on motion).

Mr WINGARD (Mitchell) (15:58): I rise today to speak on the Compulsory Third Party Insurance Regulation Bill and to place a few facts on the record about what the government is doing by passing this bill.

Firstly, it must be noted that the government does not need to pass this bill to make the changes it is proposing. They have considerable powers under the existing Motor Vehicles Act, and they can make these changes through altering regulations; but by passing this bill it will make the operating environment for associated insurance companies more stable. So, the government is making these changes regardless, but by passing the legislation it will allow private operators a clear six months to implement all the alterations they need to ensure it is a smoother transition for the South Australian public. However, with that comes a warning that the South Australian public should be aware of, and there is some background that they should know about.

Firstly, the compulsory third-party insurance (CTP) scheme under the Motor Accident Commission (MAC) is South Australia's compulsory third-party insurer and, in 2013, provided approximately $360 million in compensation to road crash victims. CTP insurance is built into the SA government's motor vehicle registration process, and Allianz Australia Limited is MAC's CTP claims manager. They processed approximately 4,600 new claims in the 2013-14 year.

MAC's vision has been to provide a viable system of CTP insurance for South Australia and contribute to road trauma reduction. Their mission has been to ensure the long-term viability of the CTP scheme by working with partners and stakeholders for the benefit of South Australian road users. They have done that with great success but, as we know, the Treasurer is going to close down the MAC in that key role.

In regard to things that have been achieved, I should mention that the chairman of the Motor Accident Commission is Roger Cook. He has been highly successful and there have been some notable achievements. Firstly, MAC has provided sound financial and investment management of the CTP fund, resulting in a net asset position of $1.2 billion and a funding ratio of 155 per cent. I will say more on that $1.2 billion figure in just a moment.

They also achieved a record operating result of $371 million in 2012-13, which was superseded in 2013-14 by an estimated $480-odd million as well. They achieved significant returns of 11.2 per cent in 2013-14, which was the highest since 1997, and that has been a benchmark for the way they have operated. They have done an outstanding job financially.

I will come back to the $1.2 billion in net assets that MAC has had. That money sitting there was clearly a carrot too large for the Treasurer and all his financial mismanagement and the financial mismanagement, primarily from this state Labor government, over the past 13 years. Treasurer Koutsantonis has been clamouring to get his hands on that cash and he needs it to fill the backlog from his overspend.

He has been trying for a cash grab everywhere. The Treasurer has been hitting South Australians' wallets any way he can. We all know about the ESL hikes; plans for more land tax have been on his radar; and we heard today that the Weatherill government has also been having a look at a state-based carbon tax.

We know that state debt is rising towards $14 billion since 2002-03. This Labor government has spent $4 billion more than it budgeted on general government operations. Think about this number. In other words, just running the state, they are $4,000 million over budget. When they need extra funds, they seem to pull it out of the air. They are $4,000 million over budget since 2002-03. When they saw this nest egg that was the MAC—a very well operated business—the Treasurer has jumped at it, closed it down and grabbed the cash.

Forget about how well MAC has been running. Forget about its financial success. The government has seen the value and, in the dire financial straits that they have forced SA into, they have grabbed the cash. Never mind what it means to car owners and what it will add to the cost of registration in future. The Treasurer does not care: he needs the cash and he needs it now.

Other successes of the MAC have been their CTP rollout and that has been a significant achievement. I will mention just a few highlights on how they have operated the compulsory third-party insurance. They initiated and provided strategic advice and supported the state government in the introduction of CTP scheme reforms, including the implementation of legislative changes; implemented significant changes to claims management policies and practices to supplement the scheme reforms and improve claimant experience; increased the focus on optimal recovery for people injured in motor vehicle crashes; and achieved improvements in claims management and scheme performance.

We have heard other speakers talk here today about what it is going to mean. I know that the Treasurer has put in a three-year cap and is bringing in three to five operators. That is still being negotiated. Treasurer Koutsantonis is still finding his way through that, but people who have been here longer than I have seen this government try to operate in this space and try to do this themselves.

There are great alarm bells ringing about how the transition will take place and how much control (or otherwise) the government will have over this process and how much the fees and charges will potentially rise, given that the government has, as I said, a very poor history in trying to facilitate these sorts of projects.

The other thing MAC has done well has been strategic business outcomes. They have some significant achievements there as well. They have improved social and health outcomes for South Australian road users through the effective management of the CTP scheme, mitigated risk to the state government through financially responsible management of the CTP scheme, and supported accident and emergency response through the provision of funding and sponsorship of the State Rescue Helicopter Service, hospitals and SA Ambulance Service.

The question that will come is: will these community programs still be funded? We also know the long list of organisations that the MAC has funded, supported and sponsored from a sporting perspective. I know they sponsor the SANFL country football, the Adelaide Lightning—they have just put money in there—as well as Schoolies Week at Victor Harbor which is heavily funded by MAC. I have mentioned the rescue helicopter as well. So, the question out there that people must be asking is: will that still be funded? The minister has said that the new CTP program will have a percentage taken out and put aside to help fund MAC. We want to see more detail on that to make sure that is still going to be the case so that those projects can still go ahead for the community.

Other significant achievements of MAC include road safety points and some of the things that have been outstanding that MAC has done around road safety. Since taking over the government's road safety communications program, MAC has helped contribute to reducing South Australia's annual road toll over the time. They have developed and implemented an award-winning road safety communications program to raise awareness, change attitudes and behaviours of road users and reduce the incidence of road trauma. They have provided $100 million in contributions to the state government in 2014 and that is where the Treasurer saw the money that was on offer and he decided he needed more of that so he has gone now to fully privatising and selling off the MAC so that he can reap in as much money as possible.

Again, what is going to happen to road safety? Will the MAC continue to provide the expertise that they have developed over time, and will it stay at the high standard that we have had for such a long time? They are questions that need to be followed up and answered further.

As I said at the start, the government has made it clear that they are making these changes regardless of this legislation. To stop it would only add uncertainty to the marketplace and potentially be a cost to the insurance companies and businesses making the change, which could potentially flow on to the South Australian public and be an extra financial burden to families and businesses. This is not what our party wants.

But understand this: the Treasurer is making these changes because he needs to flog off assets to prop up his mismanaged budget. At the last state election, SA Labor promised it would not privatise any significant assets. The privatisation of MAC is a massive broken promise to South Australians. It is just what the Treasurer does. Treasurer Koutsantonis has flip-flopped more than my old pair of rubber thongs.

Another outstanding example of this was when the federal Treasurer first announced the Asset Recycling Fund, Treasurer Koutsantonis was publicly vocal in opposing it, shooting his mouth off at every possible opportunity indicating that South Australia would not be applying for funds because they would not be privatising anything in South Australia, then a few months later came the big flip-flop. After bagging the asset recycling grant scheme, Treasurer Koutsantonis applied for money under the exact same scheme. Can you believe it? He asked the federal government for cash under the asset recycling grant scheme for privatising the MAC. So, he put his hand out for money from the feds for doing something that he said he would not do. It is unbelievable but it is true.

The DEPUTY SPEAKER: Could I ask the member for Mitchell to hold off a moment? I am advised by the table that the member for Unley is actually in the gallery and, under the standing orders, you are not permitted even to be in the gallery until your expulsion is finished at 4.21pm. Could I ask you to vacate the gallery? Thank you, member for Mitchell.

Members interjecting:

The DEPUTY SPEAKER: No, just ask him to leave. The member for Mitchell may continue.

Mr WINGARD: As I said, the Treasurer has flip-flopped on this to suit himself and put cash in his coffers to cover more than a decade of financial mismanagement that the people of South Australia are now paying for.

Mr GRIFFITHS (Goyder) (16:08): I commend the member for Mitchell for his contribution. As one would expect when there is legislation that revolves around the sale of an asset, it talks about the political issues attached to that and where there is a very strong belief that promises made in the past have not been upheld, but I commend him on putting forward so many of the good things that the Motor Accident Commission has done over the years, how well driven it has been by its board and its staff, the programs that it has supported across the wider community all based around making our roadways a safer place, because I found that information rather interesting.

I commend the table staff on being so observant about the 4.21pm. Can I say it is a little bit unfortunate that that level of bookkeeping and accuracy does not flow through to all levels of government to ensure that every dollar spent is as per budget decrees. I think I read a figure recently that in a whole-of-life since 2002 there has been something like $4 billion spent above what budget figures actually were.

I shall not be very long on this contribution but I did want to say a few words. I understand completely the fact that there is a need to review structures and to ensure that outcomes are there for communities, be it financial, short, long and medium term, to ensure the positives are going to be there, but, for me, this comes back to a cost of living pressure issue. I note that the reference the shadow minister, the Hon. Rob Lucas, has provided to Liberal MPs refers to the fact that we should be ensuring a fair and affordable compulsory third party scheme. That is what the absolute key has to be.

The deputy leader and other members have put on the record the great concerns they have at the circumstances around, initially, a $100 million transfer and then a much larger amount and the efforts made by the Treasurer in seeking financial support from the federal government as a result of turning over these assets. It creates a situation where, and I want to refer back to a couple of words the Treasurer said today in response to a question asked in question time about, I believe, market mechanism and the fact that he supports that.

This will be a market mechanism which will have some controls in it by determining the number of successful operators. From the briefing provided to the opposition, it is between three and five. My question then becomes: how are those who do hold compulsory third party insurance schemes allocated to the different operators? I am intrigued. Is it based upon geographical location, their age profile, the relative safety of their previous driving efforts? I would be interested to know about that because, for me, that is a key one. If there is going to be consistency across it all, I am not sure how the allocation will actually work.

When the Treasurer talks about market mechanism, I immediately think of, and others have mentioned this too, the comparison between those words and the decision made about TAFE funding and the quarantine of 90 per cent of training dollars to go towards TAFE resources, the taking away of the private RTOs and the frustration I have with that because it is inconsistent. The fact is that I, as a member and a person who goes into the community and talks to people every day, want to see a consistent level of decision-making where the same principles are applied all the way through.

That has not occurred in this case, and I am frustrated by that, and the Treasurer and others will be held to account on that. I reflect upon the fact that not that long ago those who used to sit in this chamber in significant seats had a pledge card in front of them that talked about no privatisation. That was displayed rather proudly and in their life in government that would be the fact, but so quickly it changes. Sadly, with not the level of political acknowledgement in the community that I would like to see, people forget about the promises that were made in the past and they live with this new situation and try to adjust to it. The member for Finniss has shown me a copy of the DL flyer that was produced by the then premier that talked about no privatisation. So, we have it now. We are trying to ensure that the system is managed as well as it can be to get the greatest possible benefit for the people who hold the policies, and that is those who drive, those who own cars. It is an interesting process.

I do not want to reflect too long, just to express the frustration I have about where we have come from, where the system ran—obviously from the details provided by others—exceptionally well, where it has been manipulated into a system where it has become a bit of a political football and now has been manipulated into a system where it is seen as a cash opportunity for a budget that is extremely challenged. It saddens me that that is the case. I listened to the words of the member for Heysen when she talked about the fact that it was driven by the people of South Australia, the funds established within the scheme came from the people of South Australia, and now the funds provided by the people of South Australia are going to support a budget that is very challenged, has been rather poorly managed and one that will leave a legacy that South Australians will have the challenge of actually looking after. I look forward to the passage of the bill and hope that the benefit will be there for the people in the long term.

Mr PICTON: Madam Deputy Speaker, I draw your attention to the state of the house.

A quorum having been formed:

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (16:16): I have listened with interest to the remarks of the last remaining socialist left anywhere in Australia in lower houses, and I reject categorically their remarks about the government's intentions. We are about giving consumers choice. We want South Australian motorists to have the ability to choose. Why can't South Australian motorists choose their compulsory third-party premium and the insurer of their choice? Why must we force them to use a monopoly provider?

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: Yes, the argument opposite from members opposite is: yes, we want an equal playing field. Basically you want equal subsidy across the private sector. Quite frankly, that is not what we are about: what we are about is offering consumers choice. I am stunned that there is anyone left in the Liberal Party who does not think that we should offer people choice. I am concerned—

Ms Chapman interjecting:

The DEPUTY SPEAKER: I remind the deputy leader that she is on her second warning. I would hate to have her excused for the remainder of this debate. I also have a ruling for Acting Speaker Koutsantonis I want to talk to you about later.

The Hon. A. KOUTSANTONIS: I also point out to the opposition, and I ask them to think long term. It is one thing to say that if they had been elected they would not have privatised the Motor Accident Commission and the issuing of compulsory third-party premiums. I think that is a valid thing for them to say. It is probably an ideologically dishonest position to have, but nevertheless it is an honest position. They never said that they would do it if they were elected; they were not elected and they are entitled to hold this position; I do not begrudge them it.

I do think, given that the government is privatising the Motor Accident Commission—it is unstoppable; it is occurring—South Australians deserve to have an independent regulator. They deserve an independent industry-specific regulator. Regardless of your views of the sale, regardless of your views about whether or not this should or should not have occurred, do not disadvantage the South Australian community by not allowing them to have an independent regulator.

This move in the upper house to try to delay the bill by sending it off for a committee review I think has no merit. I say this to the younger members of the opposition: one day you will form government. One day you will try to embark upon reforms and, God forbid, some of those reforms are actually worthwhile, and some of those reforms will improve the efficiency of our economy, create more choice for consumers and a competitive advantage for South Australians, and allow people to flourish in our economy. You do not want these reforms held up in committee, because people like me will remember. People like me are young enough and, quite frankly, better at this than you. I do not believe that it is the right thing to do on this issue.

I understand the opposition's point of view. The shadow minister, who is the lead speaker on this, is a lawyer who is held in high regard by the legal fraternity. Despite my political differences with her, she is someone who I think has a very good intellect, and she has fought this fight. She has gone out and argued. She has made a case, and she has given the alternative perspective. The plaintiff lawyers are, as we speak, carving statues in her honour for the work that she has done for them.

Now is the time to allow South Australians to have the independent regulator that they deserve. I say to the members of the opposition, as I did with the transport development levy: we on this side have many flaws and we have many, many virtues, and one of them is a bloody long memory. I want to thank members for their support and the speedy passage of the bill in this house. I thank them for the support of the second reading in the upper house, but I would also ask them to consider the interests of motorists because, well in advance of the date that we press the start button on this issue—and the start date will not change; it will not change—South Australians deserve an independent regulator; they just do.

The question will be asked: why do we not have an independent regulator like we do with our electricity, like we do with water, like we have with an ombudsman, like we have with other independent bodies who oversee people's rights? The answer will be because the opposition stopped it. So if you want to make arguments about increasing CTP premiums, if you want to make arguments against the government about the impacts of the privatisation, I say to the opposition: give us the independent regulator and we will live and die on the merits of this policy. If you change the policy outcome by not giving us an independent regulator, the consequences are then equally shared with the opposition.

I can assure members opposite that this will be the response on talkback radio: 'We tried to have an independent regulator, we wanted an independent industry expert regulating this industry, but the opposition voted against it. The opposition stopped it.' I would ask members to reconsider that, but I understand you are locked into a position now and it is disappointing. Perhaps, between the houses, we can have an agreement.

I want to thank the member for Bragg (the deputy leader) for her contribution. She has articulated her constituencies' views very well, and I think they would be very proud of her contributions. I on the other hand reject her criticisms and reject the concerns of the opposition. I am stunned that there is anyone left in the Liberal Party who is opposed to the privatisation of monopoly services run by the government, because we know, and I think deep down they know, that the private sector can do this better than a government-run monopoly. I commend the bill to the house.

Bill read a second time.

Third Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (16:23): I move:

That this bill be now read a third time.

Bill read a third time and passed.