TRAVEL COMPENSATION FUND

The Hon. J.S. LEE (15:11): I seek leave to make a brief explanation before asking the Minister for Consumer Affairs a question about the Travel Compensation Fund.

Leave granted.

The Hon. J.S. LEE: On Friday 21 May 2010, the Travel Today magazine raised concerns from the travel industry about the Travel Compensation Fund. I will quote from the article:

The Travel Compensation Fund has warned that any changes to its regulatory functions could put the health of the industry at risk and expose consumers to financial turmoil.

The Travel Compensation Fund (TCF) is an essential organisation that enforces financial stability and consumer security in the Australian travel industry sector. TCF compensates any eligible consumer who has suffered loss as a result of financial collapse of participating agency businesses. However, the Australian Federation of Travel Agents has proposed to abolish the services of TCF and for it to be replaced with an accreditation scheme, which will bind all travel services, including suppliers and intermediaries.

According to the minutes of the Ministerial Council on Consumer Affairs dated 30 April 2010, the objective is to 'improve consumer wellbeing through consumer empowerment and protection'. In the Travel Today magazine on 21 May, it was reported that the chief executive of TCF opposed the replacement of the Travel Compensation Fund functions with an accreditation and self-regulation scheme. He said that, without the stringent financial checks, more travel companies will be put at risk and consumers will not be protected. My questions are:

1. If the Travel Compensation Fund is abolished, how will consumers be considered empowered and protected when they are unable to financially claim against a fault in travel agencies?

2. What amendments would the minister take into account to ensure that consumers are protected and the operation of travel agencies can remain financially sound within the Australian travel industry sector?

The Hon. G.E. GAGO (Minister for State/Local Government Relations, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for the City of Adelaide) (15:13): The future of the Travel Compensation Fund is a matter that the Ministerial Council on Consumer Affairs has been considering for some time, and it has directed the Standing Committee of Officials of Consumer Affairs (SCOCA) to commission a review on the effectiveness of current consumer protection measures in the travel-related services market.

The travel industry's current national cooperative regulatory scheme dates right back to a framework that was established in the 1980s, I think, or something like that. It has been around for a long time, so it is not surprising that it has become a bit outdated in a number of ways, given the advances in technology, particularly with activities such as consumers using online services rather than going through travel agents. I think all of us here have probably gone online and booked ourselves into something, somewhere.

A key aspect of the cooperative scheme is the Travel Compensation Fund (TCF). The TCF, as the honourable member mentioned, is a mandatory industry-funded scheme for compensating consumers in the event of a loss of prepaid moneys to intermediaries. The cooperative scheme has been an effective model for nationally harmonised regulation of the travel services industry. However, there have been, as I said, significant changes in travel services markets since the 1980s, particularly in relation to purchasing processes and the use of online services.

Following the public tender process, the Ministerial Council on Consumer Affairs has engaged PricewaterhouseCoopers to undertake the review to examine and make recommendations for improving the existing industry-specific consumer protection law and administrative arrangements for the travel industry. It is expected that PricewaterhouseCoopers will present that ministerial council with the report in June this year.