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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2016-07-06 Daily Xml
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Statutory Authorities Review Committee: Motor Accident Commission

The Hon. J.M. GAZZOLA (16:37): I move:

That the report of the committee, on its inquiry into the Motor Accident Commission, be noted.

On 1 July 2015 the Legislative Council, on motion of the Hon. Mr Brokenshire, resolved for the Statutory Authorities Review Committee to inquire into the Motor Accident Commission. Until 1 July 2016, MAC was the sole provider of compulsory third party insurance in South Australia. CTP insurance provides compensation to people injured in a motor vehicle accident when the driver, owner or, in some instances, the passenger of a South Australian-registered vehicle is at fault.

In June 2014, the state government announced that MAC would cease to write new CTP insurance policies, and that the South Australian CTP insurance market would open to the private sector on 1 July 2016. Under the terms of reference the committee was required to consider the state government's proposal to privatise the CTP scheme and an alternative proposal that had been developed by the MAC Board for the state government.

During the course of this inquiry, MAC and the Department of Treasury and Finance claimed cabinet and commercial confidentiality over a number of documents that were pertinent to the committee's investigations. Therefore, the committee was unable to review the MAC Board's alternative proposal to privatisation and determine if it may have provided better outcomes for motorists and the state.

Six of the seven initial submissions to this inquiry opposed the state government's proposal to privatise the CTP insurance scheme. The submissions expressed concerns regarding the efficiency of a privatised scheme, insurer profitability, affordability of insurance premiums and the availability of ongoing funding for road safety initiatives. The committee notes that the Motor Vehicles Act 1959 enables the minister to invite interested persons to apply for approval as a CTP insurer. Therefore, in spite of concerns regarding these reforms, the state government was able to progress with its market reform project to open South Australia's CTP insurance market to the private sector within existing legislation. After the inquiry commenced, the Treasurer introduced the Compulsory Third Party Insurance Regulation Bill 2015 SA into parliament to establish the South Australian CTP Insurance Regulator.

On 18 November 2015, on a motion of the Hon. Rob Lucas, the Legislative Council resolved as part of this inquiry for the committee to also investigate current regulatory arrangements and any proposed changes to those regulatory arrangements. Evidence provided to the committee indicated that an independent statutory regulator is crucial for the effective regulation of a privately underwritten CTP insurance scheme. In its report, the committee has recommended that the CTP insurance regulator develop mechanisms to promote transparency in the regulation of approved insurers.

From 1 July 2016, MAC is responsible for managing the outstanding CTP claims and liabilities as at 30 June 2016, and it will continue its role in road safety and as the nominal defendant. Notwithstanding the concerns regarding MAC ceasing its role as the state's sole CTP insurer no witness raised any concerns with the committee regarding those functions. The committee recognises that MAC undertakes an important role in promoting road safety and the committee's report includes a recommendation for MAC to report to the committee in one year on its road safety expenditure. The committee has also recommended that MAC, the Department of Treasury and Finance and the newly-established CTP Regulator appear before the committee in one year to provide an update on the CTP insurance scheme reforms.

On behalf of the committee, I would like to thank the individuals, organisations and government departments who have participated in this inquiry: Mr Grant Harrison; the CTP Executive; the Motorcycle Council of New South Wales; the RAA: the Australian Lawyers Alliance; the Motorcycle Riders' Association of South Australia; the Insurance Council of Australia; the Department of Treasury and Finance; the Law Society of South Australia; PricewaterhouseCoopers; Finity Consulting; and MAC's past and present employees and board members.

The committee also wishes to extend its sincere appreciation to Mr Andrew Nicholls of the New South Wales State Insurance Regulatory Authority, who travelled from interstate to share his knowledge and expertise on the regulation of a privately underwritten CTP insurance scheme. I would like to thank the past and present members of the committee: the Hon. Tammy Franks; the Hon. Dennis Hood; the Hon. Gerry Kandelaars; the Hon. Rob Lucas; yourself, Mr Acting President, the Hon. Tung Ngo; and the Hon. Stephen Wade for their contributions to this inquiry. I also wish to thank the committee secretary Mr Peter Dimopoulos and the committee's research officer Ms Emma Moulds for their assistance. I commend the committee's report to the council.

Debate adjourned on motion of Hon. G.A. Kandelaars.

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