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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2016-04-12 Daily Xml
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Compulsory Third Party Insurance Regulation Bill

Committee Stage

In committee.

Clause 1.

The Hon. R.L. BROKENSHIRE: I have said much in the second reading speech on the privatisation of the Motor Accident Commission and in fact spent as much energy and time as I could find to oppose what the government was doing. Family First still stands by that, and I want to thank the Hon. Rob Lucas, the Hon. Dennis Hood and others who have been looking into a reference that I put through this house to the relevant committee.

However, it is apparent now that the government is going ahead, because unfortunately it can privatise the Motor Accident Commission without legislation being debated on the merits or otherwise of privatisation. This is a government that said it would never privatise anything, and that attacked the last government for privatisation. This is now one of the last jewels in the crown that we have seen privatised, after several privatisations by the Labor government, so it is a nonsense that it is not into privatisation.

We now have a situation where in just a few weeks, by 1 July, we are going to need a regulator. I have spoken at length to members of our party, and our party is not prepared to have the Treasurer nominate his hand-picked public servant to, potentially, really be doing what he wants, rather than have a truly independent, parliamentary-approved regulatory system with an independent regulator. After trying at length to get the government to backflip on this decision, which will see a significant increase in CTP rates after the three-year cap has ended, we believe it is in the best interests of the motoring public to have an independent regulator.

In speaking to clause 1, I advise the chamber that after very careful consideration and much discussion we are not prepared to accept the Treasurer's nomination that he could capitalise on, because he has put us into a very difficult position. For that reason we will support the relevant legislative requirements to ensure that there is a proper and independent regulator in place. I believe we have no choice but to do that.

If this legislation does go through, in an independent way, I would ask that the independent regulator ultimately appointed understands and analyses the full debate on the privatisation of MAC, and that we therefore ensure that that independent regulator works appropriately as an independent regulator with thorough scrutiny in every respect. That way we can try to eliminate, as much as possible, what is going to be a very negative situation for the wallets and purses of those people who register motor vehicles, trucks, motorbikes or any other motorised vehicle in this state. Those few words explain why we are now supporting an independent regulator.

The Hon. R.I. LUCAS: I rise to speak at clause 1 in the committee stage and indicate that the Liberal Party will maintain its position in relation to when this bill ought to be debated, and I will briefly outline the reasons for that.

When we last debated this, we had not formed a view in relation to the role of an independent regulator. When we last debated this issue the Legislative Council supported a motion—I cannot remember now whether it was moved by the Hon. Mr Brokenshire or myself—to refer to the Statutory Authorities Review Committee the issue of the matters covered in this particular bill; the original intention was to refer this bill to the Statutory Authorities Review Committee, which was already doing a review, I think, on the motion of the Hon. Mr Brokenshire into the privatisation of the Motor Accident Commission. The Hon. Mr Brokenshire's colleague, the Hon. Mr Hood, is on that committee with myself and the Hon. Mr Wade and others.

As I said, a successful motion was then passed and the argument for that motion was, simply, that the government's advisers had advised the upper house members that the government did not need an independent regulator to proceed, that they intended to proceed with the privatisation anyway—that is what was outlined—and that the provisions that would be in this bill would be (and have been now) incorporated into the contracts with each of the four private sector operators.

For the benefit of the Hon. Mr Brokenshire, I think he needs to bear in mind (and we will tease this out if we get to the committee stage this week, as might be the case) that, even if this legislation is passed, the role of the independent regulator will be virtually non-existent for the first three years of private sector operation, because the government has already written contracts with the four private sector insurers. They have written in CPI-like (or whatever it might happen to be) increases, and when we get to the committee stage I am sure that they will be the sorts of questions we can ask and get put on the record in terms of exactly what has been incorporated into those contracts and what the premium increases will be.

The first independent decisions of this regulator will not be felt or undertaken until 2019; that is, from July 2016 to July 2018 the independent regulator, on what we have been advised (and again we will put the questions at the committee stage of the debate) will in essence be setting itself up, getting established, getting its offices, getting its systems in place, getting itself ready, doing its hair in the morning (or whatever it might happen to be), getting paid and being ready to operate from 2019.

Clearly, from prior to July 2019 (I do not know how long it will be; we will ask the questions—it might be six months, 12 months), they will start taking submissions and evidence in relation to what the appropriate arrangements for premium increases might be to operate from 1 July. The Hon. Mr Brokenshire will be familiar with the work of ESCOSA, where it takes evidence over a six to 12-month period prior to making regulatory decisions. They do not just happen—there will be a period of time. I think we ought to disabuse ourselves of this notion that, come 1 July, this regulator actually will be doing anything. Again, we will put that on record when we come to the committee stage of the debate.

The position of the Statutory Authorities Review Committee (and I do not think I am breaching any confidences here, because I think this aspect is on the public record) is that we took evidence from the independent New South Wales regulator only last Monday in relation to how independent regulation operates there. If we accept that the government is going to privatise, if we accept that there is going to be an independent regulator as opposed to a government-appointed third party premiums committee, what are the rules that should apply to the independent regulator? That is what this bill essentially is about and what the committee is looking at.

The New South Wales regulator came and gave evidence, and he has taken a series of questions on notice, to which we have not yet received answers, and next Monday, 18 April, the government representatives are giving evidence to the Statutory Authorities Review Committee. The reason they are giving evidence is that, having concluded its inquires and taking evidence, as the Hon. Mr Brokenshire will know, the committee gives the opportunity to the proponents to come back and rebut all of the issues that have been raised by all the other witnesses.

So Treasury and the government advisers will be given the opportunity to answer the questions in relation to a whole range of claims made by other witnesses during the evidence. That is the end of the evidence taking by the Statutory Authorities Review Committee, and the committee will then be in a position to produce its report and present it to parliament. I am just a simple member of the Legislative Council, but having agreed as a parliament to refer something to a committee to report, to me it would seem to make sense to actually receive the report so that we can be informed in terms of what the committee has established. That was my view and will continue to be my view.

If ultimately the government, with the support of other members, gets the numbers this week to force a vote on it before the committee is able to take the final evidence from the Treasury officers and to get the answers from the New South Wales regulator, then so be it. That will be the situation and we will just have to work our way through that situation tomorrow and Thursday if that is the position.

I indicate to the Hon. Mr Brokenshire and to the others that it is still the Liberal Party's position that we will seek to report progress until we have had the opportunity to receive the report from the committee, and we will outline the reasons why that has not stopped the government from proceeding, firstly, with the privatisation and, secondly, it is not going to stop the independent regulator from doing what it has to do by the time it has to start making decisions in relation to independent regulation of premiums in South Australia.

I want to give one example of the sorts of areas the committee has raised. I raised this in the second reading explanation, so it will not be unfamiliar to members if they recall my contribution. I raised the question during the second reading to say that under the old premium setting arrangements the third party premiums committee—that is, the predecessor to this new independent regulator—was actually required to look at premiums and set premiums that were fair and reasonable. This has been an issue that we have been exploring in the committee.

When we took public evidence from the New South Wales regulator and we asked him, 'Do you have to consider issues of fairness and reasonableness when you are setting your premiums?' I do not have his exact evidence with me, but he said, 'Look, yes, I'll take it on notice and I'll send you the details.' We have not yet received that but, given that I heard that we might be forced into having to make this decision before we actually get the answers, we have had a quick check of the New South Wales legislation. It would appear that, under guidelines issued under the New South Wales legislation for their independent regulator, they have to consider affordability, which is a similar notion to fair and reasonable premiums.

Under the old arrangements in South Australia, whoever set the premium had to consider fairness and reasonableness. The New South Wales independent regulator at least appears to have a guideline that says when you set your premiums you have to look at them being affordable, but the bill that we have before us does not have any of that. If the Hon. Mr Brokenshire and others, with the government, force us to a vote this week, then we will hurriedly try to craft an appropriate amendment to talk about either affordability or fairness and reasonableness in premium setting. I would hope that if we are forced to a vote, then we will have to hurriedly circulate an amendment to members, and that at least that issue might be considered by members. I would be very surprised if the Hon. Mr Brokenshire and others would not support some notion of fairness and reasonableness, or affordability, or something like that, in the drafting of this particular bill.

That is one of the examples that I, as one member of the committee, am looking at. If we accept that the government is going to privatise—the industry has basically already done it—do we accept that it has to be regulated? I can only give you my personal view, which is, yes, you have to have a regulator, so you either have the third party premiums committee, which is a government committee, or you have an independent regulator. Bear in mind that this independent regulator is someone appointed by the government anyway, but put that to the side.

If you are going to have an independent regulator, the government's argument was that it should be industry specific, as opposed to ESCOSA. Personally, I can now see that most of the evidence we have taken has supported the notion that it should not be the Essential Services Commission that does it. They would like to have their own industry regulator, and so therefore from that viewpoint there is a tick in that particular box in terms of what the government does.

Then we get to the issue of, if we are going to have an independent regulator, whether we can look at the drafting of the bill that is before us to see whether or not it can be improved. I suspect there are a number of areas where independent regulation might be able to be improved if we are able to produce a committee report and consider it, but if we are not in that position then we will have to shoot from the hip and work off the cuff, whatever other metaphor or colloquial expression you want to use, in the next couple of days and move some amendments and see whether or not there is a majority view for those amendments to be supported.

In relation to the issue of fairness and reasonableness or affordability, next Monday, when we have the Treasury's officers there, that is going to be one of the questions we will be putting to them. What is the problem, if any, with fairness and reasonableness? What about what occurs in New South Wales where they actually use a different word which is 'affordability'? What about in New South Wales where they have it as a guideline?

What I am going to have to do, if we are going to be forced into it, is I will have to move an amendment to the legislation so that the legislation will actually incorporate either affordability or fairness or reasonableness in terms of premium setting. New South Wales, for whatever reason—and we will not know until we get the answers—did not actually do that. They established it as a guideline under the legislation. That might make sense or it might not. I do not know. We have not had the answers back from the New South Wales regulator. We have not had the advantage yet of the South Australian government's view.

For all those reasons, we think that if you get to the stage where we appear to be now where privatisation is going ahead and there has to be regulation and we accept there is going to be an independent regulator and we accept it will be an industry-specific regulator, we then come to the last box that needs to be ticked or not and that is: how do you actually draft the bill? Do you just accept this bill as it is or do you see whether or not it can be improved in terms of independent regulation?

We are saying, at least in one area, that we should explore the issue of fairness and reasonableness of premiums and there might be others. If we are forced to a position tomorrow or Thursday, our position will be that we will continue to report progress until we get the report from the Statutory Authorities Review Committee, but if that is not successful then we will explore these issues tomorrow and Thursday in terms of whether we can improve the bill in terms of the public interest, in particular in relation to premiums.

A number of members have raised the issue of their concerns, post the three-year period, as to what the impact will be on premiums. The committee has taken some evidence. I do not have that with me at the moment. I think we have asked the New South Wales regulator to give us a 25-year history of premiums in New South Wales under government control, privatisation and various forms of regulation. The regulator said that he was going to be able to do that and provide the committee with some evidence on that for its report.

There have been a lot of claims and counterclaims made by people about what the impact of privatisation on premiums has been. Here is somebody, an independent regulator, who is able to actually give us some facts. We think that that would properly inform the debate, but if ultimately we are not in the position to receive it, it will be part of the report after the legislation has gone and maybe people might rue the fact that we got some evidence and some information after the bill had been resolved.

For those reasons we would hope that, at the very least, members would support reporting progress today. I will not move to report progress at this stage, but I indicate that I will move to report progress and if, in the end, we are forced this week to do it, we will be ready to do something tomorrow and Thursday if we are outvoted on another move to report progress.

The Hon. M.C. PARNELL: I did not speak on the second reading of this bill, but I do want to make a few remarks now at clause 1. The starting position for the Greens is that we opposed the privatisation of compulsory third-party insurance. We do not think the government should have done it, but it did do it and it did not need to come to parliament to do it. It is in place and it is happening; that is the starting point. Secondly, given that it is happening, the Greens support the concept of an independent regulator rather than someone who is appointed and accountable to a minister. The bill provides for clauses in, I think, two locations in the bill to say that the independent regulator is not subject to the direction and control of the minister, so we support that.

The Greens also supported, when we debated this back in October or November, sending it off to the Statutory Authorities Review Committee. It made sense. That committee already had an inquiry into compulsory third-party insurance underway and it made sense to send the bill there. There was not any urgency, it seemed, at that time, so we supported that motion. That is mostly last year and the earlier part of this year.

A couple of weeks ago, the Treasurer came to see me and asked if we were now prepared to advance the bill, to allow the bill to go through. I had not heard anything out of the Statutory Authorities Review Committee. I kept a bit of an eye on what they were up to and who they were talking to, but I could not see that anything major had come out of it, so I indicated to the Treasurer that we were happy for the bill to go through.

I then had a conversation with the Hon. Rob Lucas. He pointed out to me that the Statutory Authorities Review Committee was still undertaking its inquiries, that it was almost, but not quite, finished. He pointed out to me, as he just did to the chamber, that they were waiting for a final appearance from the government and for some questions on notice from the New South Wales regulator and the Hon. Rob Lucas asked me whether we would consider further adjourning to allow that process to finish.

I will say that, at that point, what he said made sense. If there are no other pressures, then it does make sense to finish an inquiry before finally legislating. I certainly get that and, in other areas, it is what I have been looking for. On the basis of my conversation with the Hon. Rob Lucas, I then told him I would have another look at the issue and the Greens' position which, I told him, was that we had told the Treasurer we would let it go through.

I went back through all the submissions that were made, the Hansards—those that were available—and the commentary. I then spoke to the Treasurer's staff and suggested that we might support the matter being delayed further. I think the saying about cats and pigeons probably comes into play there, and all of a sudden I had a very large delegation back in my office talking to me about why further adjourning the bill was not in the best interests of the state. That was all on the basis that they knew I was not particularly happy with the regime to start with.

In my further briefing from officers, a lot of information was exchanged. We did explore at some length the Hon. Rob Lucas's issue around whether there needs to be a statutory instruction for premiums to be fair and reasonable or whether there are other ways of ensuring that premiums are appropriate. Part of the catch 22 here is that, like many other people, I have bemoaned the reduction in benefits payable to injured people as a result of the recent changes.

I accept that the catastrophically injured are better off, but I read through the submission from the Law Society and the Australian Lawyers Alliance, and maybe they knew I would be one of the people reading it because most of the case studies seemed to be about cyclists who had been knocked off their bikes and injured badly but not catastrophically and how much worse off they were as a result of the government's changes. It could be alleged that they were re-agitating the 2013 changes, rather than really discussing the merits of the bill, but I certainly accept their view that people are now worse off as a result of the changes.

The dilemma, of course, is that what would help people to be better off would be higher premiums. Higher premiums can go in a number of directions. They can go straight to the Treasurer's pocket and boost the bottom line. They can go into increasing compensation paid to injured people. Some of it will end up in road safety messages and public campaigns which, whilst we are fond of poking fun at them in this place, I think probably are part of the dropping road toll. I think you can actually say that many of these campaigns have worked. It is always a matter of some contention as to whether it is speed cameras, random breath testing or ads on telly which have had an impact on better road safety outcomes.

I do not want to see premiums rise unnecessarily. We do not want to live in a society where only the rich can afford to drive—that would be a very bad outcome—but I am torn by unnecessarily constraining premiums if the real victims of that approach are people who are injured in motor accidents.

Getting back to the time line, I received a lot of information from the government. I put to them many of the questions that the Hon. Rob Lucas had put to me and still needed to be resolved. I looked at whether there was in fact a lot of unfinished business such that us not voting on this bill until the committee had finished its work was the appropriate outcome. It was a bit of a line ball.

One bit of information that I found compelling was that, because this new scheme is coming into operation on 1 July, and because people's registration and CTP insurance notices need to go out before they expire, then, according to the government's advice, they are going to need to be sending out notices in May. If we do not deal with the bill this week, we do not come back until 17 May. I was advised they would actually have to prepare alternative versions of notices that might go out to people to pay their accounts. It sort of struck me that there was a potential for wasted administrative resources and duplication of effort. A range of unnecessary outcomes could arise from not passing the bill this week.

I have weighed up all that information, and again the Treasurer asked me as recently as today, and I said the Greens will allow this bill to pass this week. That does not answer all the questions the Hon. Rob Lucas put forward because new information that he has now given is that he has some amendments in mind. My primary commitment to the government was that we would allow the bill to pass this week. If the Hon. Rob Lucas definitely has amendments he wants to put forward, my inclination is to allow him to do that. I think that does mean that we may need to report progress today, but my primary commitment was that the bill will go through this week.

I think that is the best I can do to make both sides unhappy. The Hon. Rob Lucas, quite reasonably I think, would prefer us not to pass this bill and for the SARC to finish all of its inquiry and finally report. I take his point that they will be reporting to us in relation to a bill that has already passed when they get to it next month or the month after but, by the same token, I do not believe in holding things up if there is no real benefit to the South Australian community in doing so.

Again, I come back to where I started: we do not like what the government is doing. We would rather they had not done it, but they are doing it. We want to see an independent regulator, and this bill is what allows that to happen. I guess what members can take from that is, if the Hon. Rob Lucas wants to report progress for the purpose of him getting an amendment ready for debate tomorrow, then we will support that for now, but we have certainly told the Treasurer, and we will stick with that, that the bill can go through this week.

The Hon. J.A. DARLEY: For the record, I indicated that I did support the motion to refer this matter to the Statutory Authorities Review Committee. That is not to suggest in any way that I would oppose the bill; however, if the Hon. Rob Lucas would move to report progress, I would support that motion and, if that failed, I would certainly be inclined to entertain any amendments he wants to put up.

The Hon. R.I. LUCAS: Before I move to report progress, I indicate that if we are forced to a position of having to conclude debate this week we will, at the very least, be moving one amendment that would explore the issue of fairness and reasonableness and, in the time that might be available, we will look and see what other amendments we might ask the committee to explore. I will, however, indicate again that our position will be, given it appears the numbers are there to report progress today, that come tomorrow and Thursday we will still move to report progress. If that is unsuccessful, we will explore at least the one issue and a number of others.

The only other point I raise is that the Hon. Mr Parnell has had the benefit of an explanation as to why the government evidently does not want to have fairness and reasonableness, because it wants to have higher premiums. That is fair enough, but the Statutory Authorities Review Committee has not had that advantage; I guess we will get that on Monday when we ask the representatives to put that particular point of view on the public record, although via the Hon. Mr Parnell it is already on the public record in terms of the assurances.

Some of the other assurances given to the Hon. Mr Parnell we will explore in the committee tomorrow and Thursday. Frankly, I just do not believe one of them, that is, that the government is in a position of not knowing the premiums—because they have to set the premiums out in May. The government advisers have advised the committee and us that there was this doubt about the independent regulator; that is, up until now the government has had the view that the independent regulator bill might not have passed, and they advised us that that was immaterial and that they would write into the contracts they signed before Christmas all the issues that were covered by the bill anyway.

The issues in relation to premiums are already written into the contracts (so the premiums are already set for the first 12 months), so what the Hon. Mr Parnell has been told, or at least that aspect, is a nonsense. The aspect that the Hon. Mr Parnell has been told—that there is a doubt about, in May, what the premiums to be sent out to people are going to be—is a nonsense because it has already been written into the contracts what it is. The independent regulator, even if we passed this bill tonight, will not be there to help them establish the premiums for next year because it will not even be established by the time May comes around. We can explore that in the committee stage.

The Hon. M.C. PARNELL: Just to clarify the record, I do not believe that I said—and if I did I will retract it—that there was doubt as to the premiums. My recollection of the advice was that there were different versions of the letter or the form that went out, so maybe it is the signature at the bottom of it. I do not know, but I certainly was not told whether or not this bill passes affects the premiums. I do not know how the member got that impression. That was not what I meant to portray. I was told that there were different versions of the bill—

The Hon. R.I. Lucas: Let's explore that when we—

The Hon. M.C. PARNELL: Yes. Different versions of the bill were going out, but I was not told, and I did not mean to portray, that the amount payable would be different on the different—

The Hon. R.I. Lucas interjecting:

Progress reported; committee to sit again.

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