Compulsory Third-Party Insurance

The Hon. M.C. PARNELL (15:20): Supplementary: I thank the minister for his answer. Just to be clear, going forward, so rather than the previous arrangements, is there any barrier to the government doing exactly what it did in the superannuation scheme, which is basically saying, 'We will provide an ethical option'? In other words, you could have a subgroup of insurers and invite companies to tender for that particular component of the market. That's effectively what happened with the compulsory state insurance. They said, 'There will be an ethical option,' and they went and found one. Could you not do the same thing for compulsory third-party insurance?

The Hon. R.I. LUCAS (Treasurer) (15:21): I think the problem with the analogy the member is seeking to draw is that, in relation to superannuation investment, that was a decision of the government. The government controlled the superannuation scheme. This is now a private sector—either privatised or outsourced—model where you have four private sector operators competing in a market. The superannuation analogy the member is trying to compare it with is one where the government is the monopoly provider of superannuation through the government scheme.

We were not in a position to go out to the private sector insurers, for example, and say, 'You must do this in terms of ethical options.' In relation to the funds management of the government superannuation scheme, the government had control of those issues, but that's not comparable to the situation that we have. We have a private sector or an outsourced model scheme in relation to CTP insurance. Four companies have paid large lumps of money to be the lucky winners of that particular privatisation or outsourcing and they now have certain rights and entitlements tied up in quite complicated legal agreements and contracts that they have signed with the government.

I would imagine there are significant restrictions in relation to the government either inserting itself back into the market, if it wanted to, or trying to bring in someone with different rules and guidelines. As I said, I do know there is the option for new competitors, if they want to, to go through a regulatory process to see whether or not they can compete. We are not in a position to redraw legally binding contracts that people have paid money for on a certain understanding that they are entitled to compete in the CTP market subject to the regulation of the independent regulator.