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- 13 March 2002
Motor Accidents Compensation Amendment (Terrorism) Bill
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Page: 365
Second Reading
Debate adjourned from 27 February.
Mr HARTCHER (Gosford) [10.41 a.m.]: The Motor Accidents Compensation Amendment (Terrorism) Bill seeks to amend the Motor Accidents Compensation Act to exclude acts of terrorism from insurance cover. All of us are aware of the terrible events of September 11, 2001, and all of us are conscious of the need to take appropriate measures in many areas since that terrible day. I am sure that all of us strongly support the United States of America in its world leadership against terrorism and strongly support the Australian Government in its commitment of Australian forces in the struggle against terrorism. All of us accept that there will be additional searches at airports, and accept the additional powers given to Federal police to guard against terrorist acts.
The consequences of those acts of terrorism on the insurance industry are well known. Worldwide the insurance industry is reeling from the enormous liabilities arising out of the events of September 11 in both New York and Washington and is aware of the consequences of future potential terrorism. However, this bill, while seeking to protect the Government's own insurers, who operate under licence under the Motor Accidents Compensation Act, deserves some scrutiny. The bill deserves scrutiny because of its definition of "an act of terrorism". The bill states:
(2) For the purposes of this section, an act of terrorism is an act that:
(a) causes or threatens to cause death, personal injury or damage to property, and
(b) is designed to influence a government or to intimidate the public or a section of the public, and
(c) is carried out for the purpose of advancing a political, religious, ideological, ethnic or similar cause.
In June 2001 a major demonstration was held outside Parliament House against the proposed workers compensation legislation. That demonstration was designed to influence the Government. That is why it was held, and there is nothing wrong with that. That demonstration complied with new section 15A (2) (b). There was every reason to believe that the demonstration could have complied with new section 15A (2) (a), which states:
(a) causes or threatens to cause death, personal injury or damage to property,
Motor vehicles, trees, fences and other property could have been damaged. That demonstration easily fell under the definitions contained in paragraphs (a) and (b). An act that is designed to influence a government is a perfectly democratic aspiration. That demonstration easily fell under the definition contained in paragraph (c), because it was designed to advance a political cause. Again, that is accepted behaviour in a democracy. The trade unionists who were assembled outside Parliament House had the potential to damage property and to influence the Government, and they were advancing a political cause—they complied completely with the definition of "terrorism" in the bill. That definition of "terrorism" is inadequate and ill drafted, because the demonstration outside Parliament House that I referred to complied with all three criteria. The Minister for Information Technology laughs, but in his gutless way he hid behind the police that day. Oh, no, he suggests he did not: he was outside with the other left-wingers who refused to cross the picket line. The Minister was holy and pure that day; he would not cross the picket line.
Mr Yeadon: I did. You don't know what you are talking about.
Mr HARTCHER: It was his right-wing mates who hid behind police while the Premier scurried through the corridors of the State library and into the car park. The Minister interjects that he did hide behind police.
Mr Yeadon: I did not. I walked through the park, across the picket line.
Mr HARTCHER: The Minister walked through, hiding behind police. The Minister crossed the sacred left-wing picket line. The record will show that our left-wing Minister crossed the holy picket line of the left-wing with his Construction, Forestry, Mining and Energy Union mates all engaged in straight-out political violence, resisting police so that he could break the picket line and walk through into Parliament House. I will teach the Minister not to interject when I am talking about the definition of terrorism. The bill's definition of terrorism is inadequate. It is clear that almost any set of circumstances could fall within that definition. Any demonstration that is designed to influence the Government for any religious, political, or ethnic reason and could possibly damage property would fall into that definition.
We all accept that demonstrations are part of ordinary life in a democratic society. We accept that demonstrations are an attempt to influence the Government, sometimes for a political or a religious reason. We all accept, rightly or wrongly, that demonstrations have the potential to damage property. And that is what the definition requires! Surely the words "damage to property" should be excluded from the definition of "act of terrorism". Acts of terrorism are designed to cause death or personal injury on a major scale. The bill says nothing about the scale of damage. Two or three people could be accused of terrorism for the purposes of this section. The Minister looks bewildered and shakes his head. He does not know what this bill says. The Minister simply reads the speech given to him by his advisers. When I make any remarks he runs over to his advisers to get them to scribble a note he can use in reply. He does not understand the bill he has presented to the House. He should try to understand it. How will the Minister respond to my remarks about the definition of "terrorism"?
Mr Yeadon: "Reasonableness", you silly person. Read the definition where it refers to "reasonableness".
Mr HARTCHER: Where is the definition of "reasonableness"? The Minister looks upset and hurt that I should criticise him. The definition of "reasonableness" is not there. Can the Minister show me the definition of "reasonableness"? What section is it in?
Mr Yeadon: It is in the dictionary. The bill states that the act can be reasonably characterised.
Mr HARTCHER: Reasonably characterised by whom?
Mr Yeadon: By the courts, if necessary.
Mr HARTCHER: The bill does not say that. It states:
(2) for the purposes of this section, an act of terrorism is an act that:
(a) causes …
(b) is designed …
(c) is carried out …
Where does it say "can be reasonably characterised"? The Minister has not even read his own bill. The words he just used are not there. The bill is inadequate; the definition of "terrorism" is far too wide and it is rejected. I place on record that the Opposition reserves its rights in the Legislative Council to look at or sponsor any appropriate amendment to ensure that the definition of "terrorism" is appropriate. We certainly do not accept any assurances from the Minister, who has not read his own legislation and therefore does not understand it—and who admits that he crossed a left-wing picket line when he came into Parliament last June, contrary to the sacred tenets of the Labor left.
The Opposition does not accept the bill in its present form, and our representatives in the Legislative Council will take the measures deemed to be appropriate when it is presented in that House. We believe that the Government should not be allowed to simply rush through this Parliament, in its usual way, wildly and ill-drafted legislation for its own inadequate purposes. The Australian Labor Party has clearly reached the stage where it simply puts before Parliament any legislation that is drafted for it by its ministerial advisers and its bureaucracy, without the Minister applying any proper filter. As the political head of his department and the person who brings legislation before this House, the Minister has a duty to ensure that a proper filter is placed upon the Australian Labor Party and that it serves the good governance of the people of this State.
All the Minister has done is to place before this House words that are thrown at him by his department, without properly considering their implications. When challenged by me, the Minister's only defence is to say words to the effect of, "can reasonably be interpreted" or "can reasonably be so argued". Such words may appear in the Minister's second reading speech, but they do not appear in the bill. The bill speaks for itself. It indicts the Government, which has drafted this most extraordinarily worded legislation, in respect of which we reserve our rights to proceed appropriately when it comes before the Legislative Council.
Mr BARTLETT (Port Stephens) [10.51 a.m.]: It is strange how life works. Six weeks before September 11 the honourable member for Wagga Wagga and I visited the World Trade Centre. We went to the restaurant at the top of the centre, and were obviously served by people who subsequently lost their lives in the disaster on September 11. Six months after the disaster, we are debating a bill that is linked to that day. The object of the Motor Accidents Compensation Amendment (Terrorism) Bill is to amend the Motor Accident Compensation Act 1999 to exclude, temporarily, liability for acts of terrorism from the coverage provided by compulsory third-party insurance policies under that Act. The principal reason for the introduction of the bill is that companies would otherwise not be able to obtain previously available reinsurance, or, alternatively, premiums would be increased by $100, $500 or even $1,000 a year.
On 21 February this year, on behalf of the Minister Assisting the Premier on Hunter Development I held a summit in Port Stephens on public liability insurance problems facing people in that area. The summit was attended by people from various walks of life, including events and tourist operators, from the Hunter, Lake Macquarie and areas as far afield as Lake Cattai and Gloucester. It seems that insurance companies will simply not provide public liability insurance. Indeed, I was told that currently only one company in Australia provides public liability insurance. The summit, which was attended by 75 people, made eight major recommendations as a way of going forward, including keeping costs down and coming up with a fair system, but also allowing companies to survive and keep their employees in jobs.
This bill was not even referred to at the summit, because it was not known about by anyone who attended the summit. By the introduction of the bill the Government is seeking to keep third-party insurance premiums at a level that people—the mums and dads, and the businesses that operate in this State—can afford to continue to pay. If the liability of insurance companies is not limited, people will be forced to pay up to $1,000 more for insurance premiums. Following the September 11 terrorist attacks in the United States of America, international reinsurers have withdrawn liability cover for terrorist-related losses. It is not necessary for me to inform the House about the Federal Government stepping in and trying to cover Qantas. The action by international reinsurers has implications for the New South Wales compulsory third party [CTP] motor accidents scheme, as CTP insurers are required to provide unlimited liability cover. All New South Wales CTP insurers reinsure against losses.
However, there is now a potential liability that is unable to be covered by reinsurance. Unless the risk is removed, insurers will need to increase premiums to offset the additional capital reserves required to cover that risk. It is also possible—as is happening in public liability insurance everywhere else—that some insurers may reconsider their continued participation in the New South Wales CTP scheme. During discussions with officers of businesses in Port Stephens that are involved in soft ecotourism adventure I was told that only one insurance company in Australia is now providing public liability insurance. The bill excludes from the CTP scheme all liability arising from a terrorist act involving a motor vehicle. The scope of the terrorist exclusion is strictly limited to circumstances that could, considering the nature and context of the act, reasonably be characterised as a terrorist act.
I listened with interest to the contribution of the honourable member for Gosford and I wish to make the following response. The Queensland Government has legislated to exclude terrorist acts from the Queensland CTP scheme, which, like the New South Wales scheme, is also underwritten by private insurers. In drafting the bill, regard has been had to the definition of "terrorism" adopted by the Terrorism Act 2000 enacted in the United Kingdom. Consideration has also been given to the definition of "terrorist act" adopted by reinsurers so that the scope of the proposed statutory exclusion of terrorist acts reflects the risk excluded by reinsurance policies. The definition is subject to the overriding requirement that, for the exclusion to apply, the act in question must reasonably be characterised as an act of terrorism, considering the nature and context of that act. Importantly, this qualification ensures that the exclusion is limited to acts that are clearly terrorist acts, and will not apply, for example, to other intentional acts involving a motor vehicle.
Following representations late last year from the Insurance Council of Australia about problems with reinsurance cover, the Premier wrote to the Prime Minister on 22 November proposing an urgent national summit on this issue. The international reinsurance issue affects the general insurance sector across Australia and is not limited to the New South Wales CTP scheme. The terrorist exclusions are now being introduced into all general insurance. This requires a Federal Government response. The consequences of a terrorist act will impact upon many areas of society.
The prospect of a CTP claim arising from a terrorist act may be considered remote in contrast to many other areas for which insurance against terrorism will no longer be available, such as building insurance. Following the summit in Port Stephens on 21 February, the residents of the electorate are not really concerned about who bears responsibility for this problem; rather, they are concerned that State governments and the Federal Government get together and solve the problem they are facing. People who are faced with public liability insurance premium increases of between $70 and $250,000 a year will simply go out of business. For example, Port Stephens council's public liability insurance premium has recently been increased from something like $400,000 to $1.2 million.
That increase is almost double the capital works programs for councils such as Parkes. September 11 will have profound effects on the way we deal with public liability insurance in the future. In the next 12 months I will be speaking in Parliament on various issues to try to come to terms with the huge blow-out in public liability insurance premiums that is threatening the viability of businesses that employ 50 people. I hope that the States and Territories can come together to consider the implications for their statutory schemes and take the necessary action to help insurance companies with respect to insurance against terrorism and the vast number of people who can no longer hold events because their businesses and livelihoods are threatened.
The New South Wales Government reiterates its call on the Federal Government to work with the insurance industry and the people of New South Wales to find an effective solution to this problem. The Federal Government regulates the general insurance industry and it is reasonable to look to the Commonwealth to develop a solution. For example, Britain has established a national risk pool to fund terrorism-related claims. It will be necessary for many discussions to take place between the States and the Federal Government. The Minister for Small Business and Tourism, Mr Hockey, suggested having a national compensation scheme similar to the scheme that operates in New Zealand. That suggestion was discussed at the summit, but the problem is that although 3.5 million New Zealanders are paying a levy, at the end of the day the scheme has a deficit of about $6 billion. The matters that came out of the summit will obviously be raised in further discussions as debate continues on public liability insurance. I am pleased to support the bill.
Mr ROZZOLI (Hawkesbury) [11.01 a.m.]: It is not my intention to wander through the whole field of public liability insurance, as did the previous speaker, because I do not see it as falling within the leave of the bill. However, I support the comments of the honourable member for Gosford about the inadequacy of the definition in the bill. I have no argument with the need to clarify the position in regard to insurance claims that may arise under third party insurance policies from genuine acts of terrorism. Although in theory the expectation should be that insurance may be taken out against any risk, and that an innocent party who is injured or sustains damage to property should have the right to compensation, the reality is that extreme acts that normally come under the classification of acts of terrorism—and which were personified in the most grim reality by the events of September 11—do create almost impossible burdens on insurance and reinsurance mechanisms.
This means that the insurance industry will be virtually incapable of meeting these claims without huge imposts on the wider community or risks to its own viability and the capacity to meet claims in completely unrelated areas. I do not disagree with the need to act in this area but I question the adequacy of the definition spelt out in the bill. I suggest in all good faith and with great sincerity that perhaps the Government should rethink the definition before it proceeds with this bill in another place. I say that because terrorism must be considered as an act of extremity, an extreme action against a group of people in certain contexts. The definition is in two parts. New subsection 15A (1) states:
… having regard to the nature of the act and the context in which that act was done, it is reasonable to characterise as an act of terrorism.
Unfortunately, new subsection 15A (2) qualifies that by more closely prescribing the events that may fall within an act of terrorism. Many acts contain a degree of violence or potential threat of violence, either impacting on the welfare of individuals or impacting on property and, therefore, fall within the definition. Paragraphs (b) and (c) state:
(b) is designed to influence a government or to intimidate the public or at a section of public, and
(c) is carried out for the purpose of advancing a political, religious, ideological, ethnic or similar cause.
That covers a huge range of activities that would be considered part of normal life. Every day of the week one receives emails or is approached by constituents who seek to influence government. Even the manner in which strident terms are sometimes used are designed to attempt to intimidate a section of the public. The definition qualifies it a little more by requiring, in addition to those two arms, that it must be something that causes or threatens to cause death, personal injury or damage to property. That appears to give it a sharper focus.
I am sure all honourable members have felt intimidated or that their personal safety was threatened—and in some cases have been an innocent party who just happened to be at a certain place at a certain time—and could have suffered an injury that may have led to a third party claim which, under this definition if pursued by the insurance company, would be excluded. However, under no circumstances could those acts be deemed to be acts of terrorism. Acts of terrorism somehow must be constrained to the extreme edge of political activity, ideology and agitation for causes. Much of this activity is accepted by society today as, if not reasonable, certainly falling far short of the definition of a terrorist act.
It is unfortunate that we might be giving insurance companies the opportunity to opt out of their responsibilities on a wide range of actions and that this definition may be tested in the courts, causing great expense while the courts determine the boundaries of this definition which the Parliament has failed to clearly define. The honourable member for Port Stephens said that some reliance is placed on definitions drafted by the insurance industry. Frankly, I think that industry should be the last entity to draw up definitions for this purpose because it has a vested interest—I do not necessarily criticise it for that; it is simply looking after its own interests—in ensuring that the definition is wide rather than narrow so that it may exclude as many claims as possible. I repeat: I support the need for this legislation and the requirement for a practical and sensible definition that will achieve the desired goals. However, I do not think this definition is adequate for that purpose.
I have no intention of trying to put to Parliament today a more adequate definition, but I think the matter should be thought through more carefully. A much wider range of advice should be sought on this issue in order to place in the legislation a definition that will catch extreme actions—very few of which have occurred in Australia and so would seem to have little relevance to our insurance industry, but unfortunately such occurrences are always possible. The present definition could apply to many past and future actions, none of which is an act of terrorism. I put it to the Minister that there may be an advantage for all concerned in returning to the drawing board and endeavouring to sharpen the definition so that it is targeted at the outcome that the Government seeks.
Mr YEADON (Granville—Minister for Information Technology, Minister for Energy, Minister for Forestry, and Minister for Western Sydney) [11.12 a.m.], in reply: This legislative change is necessary in order to maintain the effective operation of the competitive green slips scheme in New South Wales. Several compulsory third party [CTP] insurers have indicated that, in the absence of any Government response, they would have to reconsider whether to write CTP insurance. Indeed, two companies advised the Motor Accidents Authority that they were each under instruction from their head offices not to issue any products that exposed their companies to liability for terrorist acts.
Much of the debate this morning has centred on the definition of an act of terrorism. The definition of an act of terrorism in the Motor Accidents Compensation Amendment (Terrorism) Bill is subject to the overriding requirement that, for the exclusion to apply, the act in question must reasonably be characterised as an act of terrorism considering the nature and the context of that act. Opposition members have spoken at great length on this point. The honourable member for Gosford made a foolish contribution to the debate in that he failed to acknowledge that the words "reasonable to characterise as an act of terrorism" are in the amending legislation. For his edification, I refer him to new section 15A (1)—to which the honourable member for Hawkesbury also referred.
As to the contribution by the honourable member for Hawkesbury, I cannot understand where the difficulty lies. The honourable member suggested that the definition in new section 15A 2 (a) could apply to emails of a threatening nature—for example, death threats. I acknowledge that point. That is why new subsection (1) contains the rider that the act must be reasonably characterised as an act of terrorism—in other words, a reasonable person surveys the situation and regards it as an act of terrorism. I cannot envisage any other description, and I will be interested to see the alternative definitions that Opposition members propose when the bill is debated in the other place.
Notwithstanding their criticism, Opposition members offered no examples this morning to prove their point. The honourable member for Hawkesbury claimed that if the wider definition were applied many everyday activities—or at least activities that are not of a terrorist nature—would be excluded under the legislation. However, he failed to provide any examples of such occurrences in the Australian context. I cannot understand the Opposition's point intellectually and I do not know how it would arrive at a better definition, short of listing every conceivable terrorist act—which would be impossible. As I understand it, it is not unique in the law to have definitions that rely on a reasonable person's thinking about a particular aspect, issue or event. Importantly, the qualification in this bill ensures that exclusion is limited only to those acts that are clearly terrorist acts—for example, it will not apply to other intentional acts involving a motor vehicle. The act in question must be reasonably characterised as being a terrorist act.
This amending bill is a temporary measure and an initial response to the international reinsurance market, which is volatile at present. In such an uncertain market we cannot predict what the situation will be at the end of the year. By adopting a temporary measure at this time, we can continue to monitor developments. This will maintain flexibility to explore whether, in light of developments, other viable options may become available. For example, the reinsurance market may remove the current terrorism exclusion or the Federal Government may accept its responsibility and respond to the terrorism exclusion issues in the context of general insurance. The events of September 11 have impacted not only on CTP insurance but on insurance generally—for example, building insurance and the like. The matter requires a Federal Government response, which we hope will be forthcoming.
The New South Wales Government reiterates its call for the Federal Government to work with the insurance industry to find an effective solution to this problem. In the event that no viable alternatives develop in 2002, the State Government will, by necessity, be required to extend the terrorism exclusion into the future. The Government undertakes to continue to work closely with the insurance industry in monitoring the reinsurance position and assessing both the requirements and the options for future action. I commend the bill to the House.
Motion agreed to.
Bill read a second time and passed through remaining stages.
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