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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2009-05-14 Daily Xml
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Ministerial Statement

COMPULSORY THIRD PARTY PREMIUMS

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:01): I seek leave to make a ministerial statement.

Leave granted.

The Hon. K.O. FOLEY: Today, I wish to inform the house of the annual increase in compulsory third party premiums that will apply from 1 July 2009. As members would be acutely aware, having listened to Tuesday's federal budget, the global financial crisis continues to wreak havoc on financial markets and, as a result, on the many billions of dollars invested by all funds under management by this government.

The compulsory third party fund, administered by the Motor Accident Commission, is no exception. It is important to note, however, that even during times of exceptional financial uncertainty the Motor Accident Commission has maintained a positive net asset position due to the conservative gearing of its investment portfolio. Alongside this hit to the fund, there has also been a sharp fall from 6.7 per cent to 3.6 per cent in the discount rate which is used to calculate the value of future liabilities to the scheme.

An increase in premiums is necessary this year to improve the financial position of the fund. In 2009-10, the increase in CTP premiums will be capped at 8.5 per cent. Some examples of what the increase will mean in dollar terms: in district 1, Adelaide and surrounds, a class 1 vehicle, the average family car, will increase from $410 to $444; a class 15 vehicle (a 51cc to 250cc motorcycle) will increase from $188 to $203; and a class A19 vehicle (an historic or left-hand drive vehicle, for those who have them) will increase from $110 to $119.

I accept that drivers are unlikely to welcome this increase. However, it should be remembered that each year the fund pays out around $400 million to South Australians injured as a result of road trauma. The government needs to ensure the fund's long-term viability so that injured people can continue to receive financial assistance to get their lives back on track. It must be noted that in recent times, in 2006-07, when investment returns were strong, compulsory third party premiums actually decreased on average by 0.9 per cent.

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