Civil Liability Bill



About this Item
SpeakersDella Bosca The Hon John; Ryan The Hon John; Gallacher The Hon Michael; Cohen The Hon Ian; Chesterfield-Evans The Hon Dr Arthur; Breen The Hon Peter
BusinessBill, Second Reading


    CIVIL LIABILITY BILL

Page: 2397
    Second Reading

    The Hon. JOHN DELLA BOSCA (Special Minister of State, Minister for Industrial Relations, Assistant Treasurer, Minister Assisting the Premier on Public Sector Management, and Minister Assisting the Premier for the Central Coast), [8.15 p.m.]: I move:
        That this bill be now read a second time.
    I seek leave to have the second reading speech incorporated in Hansard.

    Leave granted.
        On 7 May I released a consultation draft of the Government’s Civil Liability Bill 2002. Today, after three weeks of consultation, I introduce the Civil Liability Bill. The Bill will implement stage one of the Government's tort law reforms. Three weeks ago, I was in no doubt that these reforms were vital to the survival of our community. I have heard and seen the damage that the public liability crisis is doing to our sporting and cultural activities, small businesses and tourism operators, and our local communities. On May 7 no further evidence was required. However we have had more evidence, such as the damages award against Waverley Council and news today that local councils across the State face a 35 percent rise in insurance premiums from 1 July.

        Since I released the consultation draft of the Bill, I have met with many local government and community representatives who have told me that the approach of the courts to public liability is unsustainable. The Government agrees with them. We need to protect our beaches and parks, our roads and schools, from unrealistic standards. Standards imposed by the courts with hindsight and with no regard for the cost to the community.

        This Bill implements stage one of the Government's tort law reform program. I will introduce stage two of the Government's tort law reform program next session. I have already outlined many of the issues that we will address in stage two. Stage two will introduce broad-ranging reforms to the law of negligence. It will ensure that risk warnings can operate as a good defence for risky entertainment or sporting activities. It will address the test for professional negligence, including medical negligence. Stage two will also ensure that public authorities have a good defence to a negligence claim if they comply with standards set for the particular activity. There will be special protections for good Samaritans. There will be an end to special consideration for people who were drunk when they were injured. There will be no damages for people suing for injuries they sustained while committing a crime.

        These reforms are urgent and I understand, and share, the sense of urgency. But stage two will introduce broad-ranging reforms to the law of negligence. Stage two will reform an area of the law that the Parliament has not previously addressed. The reforms that I am introducing today in stage one are tried and tested. They have worked in health care liability, in motor accidents and in workers compensation. In contrast, stage two is uncharted waters. We need to take the time to get it right. There are fundamental rights involved in what we are drafting and no-one wants to deprive the genuinely deserving of compensation. That is what we risk doing if we rush into stage two. It is more important to take three months longer and get these reforms than it is to rush in with hasty and piecemeal changes.

        Before I turn to the detailed provisions of the Bill, I want to say something about premiums and insurance companies. Some people have suggested that there is no real evidence that these reforms will have any impact on insurance premiums. However, I have the evidence. I seek leave to table the Government's actuarial advice on the stage one reforms.

        PricewaterhouseCoopers has costed the Government's stage one reforms and its best estimates of the reforms is as follows. There will be a 17.5 percent reduction in the cost of personal injury claims. There will be a 14 percent reduction in the cost of public liability claims as a whole. Most importantly, there should be a reduction of some 12 percent in public liability premiums. While there might be variations between insurers and particular policies or classes of risk, this report shows that premiums should fall by some 12 percent. The New South Wales Government cannot guarantee that premiums will fall. However, we can put in place the necessary reforms to enable them to fall and that is what we are doing with this Bill.

        But to be sure that premiums will fall and that insurers will not make gains from these reforms, the Commonwealth must act. I have repeatedly called on the Prime Minister to take action to ensure that the Australian Prudential Regulation Authority, the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission monitor insurance premiums and make sure that insurers pass on savings to consumers. Today, I have written to the Prime Minister. I have given him a copy of our actuarial advice. I have shown him what our reforms are capable of doing and I have called on him to take immediate action to ensure that the benefit of these reforms goes to the community.

        I turn now to the Bill. I want to express the Government's appreciation for the contributions a number of groups have made to the consultation process. In particular, I thank the Bar Association and the Law Society for their constructive contributions to the Bill. I think they understand the Government's resolve to pursue reform. I also acknowledge the contributions of the Local Government and Shires Associations and the Insurance Council of Australia.

        Councillor Tracie Sonda, the Mayor of Sutherland Shire Council, is in the gallery. She is a strong supporter of the legislation. Why would she not be? Sutherland Shire Council has two claims made against it every day and, like all councils in the State, is under pressure to settle them out of court.

        We cannot go on like this. I have heard reports from the local government representatives that I spoke to yesterday and from the community representatives that they know of three generations of one family living off compensation claims; that they have stories of repeat claimants; that tripping over a defective pavement is a common syndrome. As people tell stories that they put money down on the lawyer's table and got a return from a judge dressed in Santa Claus gear, the practice will spread. People will think, "Why not take your chances?" Lawyers advertise in the print media, "Come to us. If you lose, we won't charge you." We have banned them from doing it in the print media and we have banned them from doing it in the electronic media. This is ambulance chasing to the nth degree. Local government cannot carry the cost of it; society cannot carry the cost of it; surf clubs, show societies and sporting organisations cannot carry the cost of it. It is a national problem. According to media reports on the weekend, equestrian events in Queensland are in trouble.

        I refer to retrospectivity. As I made clear on 7 May, this Bill will apply to proceedings commenced on or after 20 March. That is the day on which I announced the reforms following public consultation, however, we have amended the Bill to ensure that the Government does not claim the benefit of retrospectivity. The Bill now provides that claims against the Crown, including statutory authorities and state owned corporations, can proceed under the old law provided they satisfy two conditions. First, the claim must have been notified to the Crown before 20 March. This means that claims that were subject to settlement negotiations before that date can proceed to be determined on the old law. Second, proceedings must be commenced before 1 September this year. The only exception to this date will be if the claimant’s injuries have not stabilised in time for them to meet that 1 September deadline. The exception will not apply to health care claims that were already subject to the Health Care Liability Act 2001.

        The Government can afford to give up the benefit of retrospectivity because these reforms are about reducing public liability premiums. The Government is self-insured—it does not pay premiums in any real sense. We can make this concession on the Government’s liability without affecting the overall strength of the reforms. The Government does not want to disadvantage people who have been negotiating settlements with the Crown. The Bill introduces important controls on the calculation of damages. It also imposes new requirements on lawyers. Today I will focus on some of the changes to the Bill arising from the consultation we have been involved in since 7 May.

        Under clause 9 the Bill will apply to awards of personal injury damages. This includes personal injury damages awards made in public liability claims and health care claims. Clause 9 (2) sets out the awards that are excluded from the operation of the Bill. Importantly, intentional acts done with intent to cause injury or death or acts involving sexual assault are excluded. This exclusion ensures that the compensation for injuries arising from serious criminal acts is not limited by the Bill. The exclusion is not intended to cover claims against health care providers where informed consent to treatment may be an issue. The Bill will apply to claims made under the Fair Trading Act. This is to ensure that claims that would ordinarily be dealt with under the law of negligence are not re-fashioned into claims under consumer protection law or contract law.

        Clause 12 limits damages for lost earnings, loss of earning capacity or expectation of financial support. It requires the courts to disregard any amount claimed by the plaintiff that is greater than three times average weekly earnings. This will affect very high-income earners only. The test of three times average weekly earnings has been adopted in preference to the dollar amount in the consultation draft of the Bill. It is consistent with the test announced by the Queensland Government. Clause 15 adopts a number of requirements to apply to damages for gratuitous attendant care services. These are drawn from the motor accidents and health care liability schemes.

        A number of submissions on the draft Bill called for the removal of the requirement that a carer must have lost income or forgone employment before these damages can be payable. The Government has deleted that requirement from the Bill.

        Clause 16 of the Bill introduces a threshold for damages for non-economic loss. It also fixes the maximum amount of non-economic loss. The provision is drawn from the Health Care Liability Act. Guidance on it can be obtained from the second reading speech introducing the Health Care Liability Bill 2001. I draw Members’ attention to our actuarial advice on the threshold.

        This measure is the biggest contributor to savings, both directly and through its effect on legal costs. Our actuarial advice shows that the threshold will exclude smaller claims for general damages and will discourage people from bringing smaller claims. But, importantly, our actuarial advice shows that the threshold will lead to increased general damages for the more seriously injured plaintiffs. These are the people who have suffered the most and they will get more because of the threshold.

        Clause 21 deals with exemplary damages. As a result of consultation on the Bill, the prohibition on exemplary and punitive damages has been narrowed.

        These damages will be excluded only in negligence actions and actions where the fault concerned is negligence. For example, where an employer is sued on the basis of its vicarious liability for its employee's negligence, exemplary or punitive damages will not be available. The prohibition has been extended to aggravated damages. These are more commonly awarded in defamation cases than in personal injury cases. However, the Government does not want to provide an avenue for the courts to award other categories of damages to avoid the new provisions on the general damages.

        I turn to the amendments to the Legal Profession Act. These provisions have been amended since the Government released the consultation draft of the Bill. The cap on plaintiff lawyers' costs for claims under $100,000 will be the greater of $10,000 or 20 percent of the amount recovered by the plaintiff.

        The cap has been extended to the defendant lawyers' costs where it will be the greater of $10,000 or 20 percent of the amount claimed by the plaintiff.

        Importantly, the Bill now makes it clear that the cap applies to solicitors' and barristers' fees and the fees of their agents or employees. It does not apply to any other disbursements, such as medical reports, investigation reports and filing fees. The cap will not be a standard fee for lawyers to charge their clients. It is the maximum fee which applies unless there is a costs agreement. In many cases, the Government expects lawyers to charge significantly less. Bills of costs will still be subject to the normal costs assessment rules in the Legal Profession Act. Lawyers will not be permitted to inflate their costs up to the cap.

        The cap on fees will promote efficiency on the part of the legal profession and help to contain claims costs. The cap on costs will be the most that can be recovered from the other party in proceedings, unless the exceptions in clauses 198F or 198G apply. Clause 198F will enable the court to award indemnity costs against a party if that party refuses an offer of compromise where the eventual outcome of the claim is no less favourable than the terms of the offer. The indemnity costs would apply for the period after the offer is made. Clause 198G will enable the court to order that some costs are not covered by the cap if it is satisfied that the costs are for legal services that were required because the other party took action that was not reasonably necessary for the advancement of its case.

        For example, a defendant might make a number of pre-trial applications to the court, requiring the plaintiff's representatives to attend court and argue the various points. If the court finds these applications were not reasonably necessary for the defendant's case or they were intended to unnecessarily delay or complicate determination of the claim, the court can order the defendant to pay the plaintiff's costs of those applications in addition to the capped costs. The Bill does not prevent a client agreeing to pay a lawyer extra fees in addition to the cap. However, extra fees can be paid only if there is a costs agreement between the lawyer and the client.

        Clause 196 contains a regulation-making power which will enable the Government to introduce a cap on those parts of lawyers' fees which are not regulated by the Bill. This is a consumer protection measure. The Government will not hesitate to make a regulation to impose a cap on the fees that can be agreed between lawyers and clients or to introduce a scale for those fees if plaintiff or defendant lawyers take advantage of their clients.

        These provisions in the Bill will contain legal costs, while protecting clients. The Government has changed the standard for assessing unmeritorious claims in the Bill. Under clause 198J, the standard will be that the solicitor or barrister must reasonably believe, on the basis of provable facts and a reasonably arguable view of the law, that the claim has reasonable prospects of success. This requirement will also apply to defendant lawyers, so that they cannot advance spurious defences. In either case, solicitors or barristers must reasonably believe that the material available to them provides a proper basis for alleging the facts on which they want to rely.

        We have excluded from these requirements preliminary advice on damages claims. A solicitor or barrister must be able to take initial instructions and advise the client on whether or not their claim or defence has reasonable prospects of success without being in breach of these clauses. Under clause 198L barristers and solicitors must satisfy the standard of reasonable prospects of success before they commence proceedings or file a defence.

        Under clause 198M they risk having costs awarded against them if they act without reasonable prospects of success. This Bill introduces vital tort law reform. I will be sending this Bill and the Government's actuarial advice to my counterparts in all other States and Territories. The Bill builds on the Government's work with the insurance industry and other jurisdictions to find solutions for people affected by the public liability crisis. I commend the Bill to the House.

    The Hon. JOHN RYAN [8.16 p.m.]: If we were to believe the Premier we would think that the current crisis in public liability is just a matter of running down some ambulance-chasing lawyers and curing the greed of the few irresponsible claimants who seek an easy and irresponsible windfall. In response to that sort of approach, which is abundantly clear from the Premier's second reading speech and his public comments, I can do no better than borrow some words from the editorial that appears in today's Daily Telegraph, which states:
        The search for a chief villain who has caused destruction of liability insurance is hampering the quest for a system which works.

        It is a wasteful and pointless exercise, ultimately a selfish one.

        Politicians, insurers, lawyers and accident victims have got to stop trying to pin the blame on one particular group so as to avoid it themselves.

        Not only would that be unfair, it would lead participants in this debate to think that the problem is simple, and needs only a simple solution.
    Sadly, I cannot go any further with that editorial because it then contradicts itself entirely. Indeed, the front pages of the newspaper that published that editorial do not contain many examples of the newspaper taking its own advice. The point I make to the Premier and to the Government is that the problem we are seeking to address is complex. It is not helpful to have Government members simply sloganeering in other places, whether it be the rather outrageous attempt by the Premier to politicise this issue at this morning's shires conference or in other places where he has basically tried to bully this House into accepting the Government's legislation almost without question. Notwithstanding, I recall that the Opposition had not seen the text of the bill on the morning of our party meeting that was meant to consider it. As the bill was unavailable, we deferred our meeting until the evening so that we could determine a party position.

    The Opposition acknowledges that the case for reform in public liability insurance is inescapable. Every day we hear new stories of how the increasing price of public liability insurance or the straight out withdrawal of liability cover has caused great disruption in the community. For example, it has caused increasing costs to the tourism industry, and adventure tourism and horse riding groups have been unable to get cover. Community groups and those involved in activities ranging from life savers, Anzac Day, floral shows and scouting groups have complained that they are often working and fundraising for insurance companies rather than for their community objective or that the events and activities they organise are placed at risk because they are unable to get appropriate insurance.

    While we are not able to understand all of the causes behind the current crisis we understand the effect. Underwriting for insurers has become a much more scarce resource, and consequently it has become more expensive. The overriding principle behind any reform is to ration that scarce resource to those who are most in need. There is a scarce resource, there is not enough of it to go around, so we need to fairly and equitably ration what is available to the people who are most in need. The Opposition has tried its best to participate in this reform process in a principled manner. At the very outset my leader, Mr Brogden, wrote to the Premier and offered a responsible position from the Opposition. He said that we would not seek to make this debate one of partisan political comment. We offered to work with the Government in a co-operative manner and in a bipartisan spirit. On 24 April the Leader of the Opposition wrote to the Premier outlining our approach, which was recorded in one of his press releases. It stated:
        Mr Brogden has written to Premier Bob Carr offering to work in a bipartisan way to bring this issue under control.

        "Public liability is the greatest challenge facing small businesses and community groups and the Coalition is prepared to work with the Government to identify as much common ground as possible", Mr Brogden said.

        "This issue needs to be resolved as quickly as possible, as many community groups and small businesses have been forced to cancel events and activities because they can't afford the massive hike in Public Liability premiums", Mr Brogden said.

        The Liberal Leader said the Coalition had put forward a number of proposals for immediate adoption, including moving away from the 'blame game', encouraging 'pooling' to reduce costs and separation of large and small claims.

        Mr Brogden said the community expects its leaders to approach this important issue in a co-operative manner to resolve it quickly, before more precious cultural and business events are lost forever.

    The Opposition offered that approach but, sadly, the Government did not take up the offer. The Premier, in particular, has not stopped trying to score crass political points on this issue at every possible opportunity—for instance, this morning's meeting at the shires association conference. We know that with respect to insurance the multitude of smaller claims make a disproportionate amount of claim costs and that it is not the odd large payout that causes the problem. From media reports and some comments of the Premier, referring to a particular number of payouts that have been made, one would think that the problem is higher payouts. In most instances, it is not. Most people who get very high payouts deserve them because they have suffered significant loss which is going to cost thousands of dollars to overcome.

    In most instances, the most pernicious and difficult claims are the small ones. For example, I acknowledge that many councils have been paying out small amounts to people in settlement rather than litigating claims they might well win. However, the costs of litigating them overwhelms the cost of simply settling them. When a person receives a settlement for slipping on a footpath it is not unusual for a dozen more such claims to emerge, and the council is in a similar position and has to settle them. The Opposition acknowledges that that is a factor of the cost, and we support any reasonable attempt to weed out small claims to the amounts that are necessary. For example, it is reasonable that a person should be able to receive medical attention and that medical expenses incurred as a result of the claim be covered. However, a realistic approach must be taken to other parts of some claims, such as pain and suffering.

    It is acknowledged that someone who has a small claim from a trip or a slip—particularly as a result of negligence—has had a problem with pain and suffering. However, in this current crisis if it is the result of a terrorist attack—such as occurred on September 11—or of a war-type situation it is appropriate to ration those claims to those that are larger. For example, quadriplegics and paraplegics should not only get the medical attention they need but also additional money to provide them with income for the rest of their lives. Unfortunately, the Government has chosen a blunt instrument with this bill and it will have myriad inequitable outcomes. Another principle that should guide reform is that the cost of reforming a scheme should be equitably shared. In that regard, the Government's bill fails and, in my view, can be legitimately attacked. The bill savagely cuts benefits to claimants, and it limits the operations of lawyers, but it places absolutely no restraints whatsoever on insurers.

    The Hon. John Della Bosca: How are we going to do that?

    The Hon. JOHN RYAN: I will explain a little later how that might be done. Even more outrageously, the bill as drafted creates two classes of claimants. It is also likely that the retrospective clauses of the bill will create some significant anomalies, particularly in their transitional phase. One thing is for sure. This bill will not be the end of this matter. The bill has been cobbled together in a rush, and because the Government has consulted with very selective hearing, it will leave a large number of victims in its wake.

    First of all I would like to deal with insurers and answer the challenge that the Government apparently has issued to us by asking what could the Government have done to make the situation more equitable with regard to insurers. The fact is that it was not impossible; the problem is that the Government has not even tried. It is impossible to ignore the fact that insurance companies are the big winners in this settlement. They have been lobbying for tort law reform for some years. Unlike most industry groups, as a result of their own misfortune, and in one case as a result of their total incompetence, they have, in a very short period of time, been able to achieve every item on a long list of changes they have been seeking from governments, State and Federal, for some years.

    The insurance companies have been able to get this market exactly where they want it. They have achieved caps on maximum payouts for claims. Some of the risks they face have been reduced. The amounts that victims can claim have been discounted. The insurance companies have been able to limit the level of litigation they face. This bill wipes out thousands of administratively expensive small claims. This legislation will wipe from the books of insurers thousands of cases that the insurers previously have made provision for in their reserves and to some extent in their premiums. It is acknowledged all round that this legislation creates a windfall for insurers. They have been collecting and assessing in the expectation that they would be receiving claims—claims which this legislation will wipe out either effectively in law or effectively because of the restrictions placed on claimants' access to litigation resources. Will the insurers be refunding any of those windfall premiums? Not likely.

    We carry on as if this underwriting crisis is a permanent problem. Of course, it is not. History tells us that the current level of risk in regard to terrorism will eventually subside. The HIH catastrophe will soon fade into history, and the very tight constraints under which insurance companies are currently operating eventually will be relaxed. This legislation effectively abolishes public liability claims where damages are likely to be less than $100,000—with the exception of medical assistance—and that will be most of them. Public liability cases generally involve injuries to the young and the elderly—pensioners, shoppers and so on. This bill places severe restrictions on what an injured person can pay for legal representation, and that will mean that most accident victims will be unrepresented by lawyers and will be left at the mercy of insurers, who can spend virtually whatever they like in defending cases. This legislation reduces the quantum of remaining cases by imposing a higher discount rate on future loss. It abolishes most claims for voluntary care, and in due course makes it much more difficult for the injured person to succeed.

    What do the insurers have to do in return? Do they have to provide rehabilitation services to the injured? No. Do they have to pay reasonable incurred and associated medical expenses? In some instances, no. Do they have to admit liability, where the injuries were caused by clear negligence, at an early stage? No. Do they have to make offers of settlement when the injuries have stabilised? No. The Government first attempted to make the claim that this legislation would reduce premiums. That apparently was what insurers were supposed to give. Eventually, under pressure from the media, the Government has had to concede that this legislation may not result in a decrease in premiums. At best, a PricewaterhouseCoopers report tabled in the other place by the Premier suggests that the legislation will provide for a potential reduction in premiums of 17.5 per cent. But there is no obligation on the insurers to do anything. If the market does not require them to act, they will not act. To some extent, people have got used to paying the premiums that they are at present paying, so it will not take long for those premiums to drift back to exactly where they were, even if they are reduced for a short time initially.

    The Premier and the Government have tried to fob off responsibility for premium reductions to the Commonwealth. We recognise that the insurance market is a national one, but that has not stopped past governments from coming up with draft uniform legislation that can be picked up by other States. If New South Wales were leading the debate—as the Premier claims—the Government could have introduced a more comprehensive package of reforms that included provisions requiring legislation by the Federal Government and by the other States. Only a few years ago the Carr Government claimed that it could legislate to bring down motor accidents insurance premiums, for example. It has made no attempt to act in that way. But there are other measures that the Government could have taken to regulate the behaviour of insurers that are quite distinct from premium reductions. The Government has simply failed to do so.

    Unlike the motor accident scheme, this bill does not impose any requirements on insurers to pay a penalty if they unduly delay payment on legitimate claims or fail to admit liability early when it is obviously appropriate to do so. There is no incentive or penalty on insurers that deliberately engage in unproductive litigation in the hope that the claimant will go away. And under this bill there are huge incentives for claimants to go away, because, unlike insurance companies, claimants have very severe limits placed on the legal resources to which they may have access. I will deal with that in a little more detail later.

    Unlike the workers compensation scheme, there is no requirement on the insurers to contribute to rehabilitation programs, or alternative dispute resolution mechanisms—none at all. Unlike other insurance schemes in New South Wales, like home warranty or workers compensation, there is no provision for efficient assessment schemes or less expensive alternative means of dispute resolution, such as tribunals. That might be one way of levelling the ground between the two players. But the Government has made no attempt to even discuss such a possibility. The truth is not that the Government can do nothing to even up the score between insurers and claimants in order to make more equal the settlement between insurers and claimants. The plain fact is that the Government has not even tried to do what it could have done. As a result, this settlement can be justly attacked for being a one-way street—a total victory for big insurers, and the devil can take the hindmost of the poor victims, who in the main are the elderly and the very young. Some may say that this is a strange method of operation for a Labor Government. In my experience, it is not strange at all for the Carr Labor Government to abandon battlers.

    The next item worthy of our consideration is what the bill does with regard to legal representation. It seeks to limit claims by controlling the amount of money that a claimant can spend in litigating a claim under $10,000. It limits the amount that a plaintiff can recover for personal injury damages, if the payout does not exceed $100,000, to 20 per cent of the payout or $10,000, whichever is the greater. In the original draft of the bill put out for discussion this litigation limit was confined to plaintiffs only. The Premier claims to have levelled the playing field by now placing caps on defendants. But, on closer examination, the attempt to level the field is largely cosmetic.

    While plaintiffs are limited to a $10,000 pay-out or taking a risk that a court may award them more, insurers are limited to a cap of $20,000—double that allowed to plaintiffs—or 20 per cent of the sum being claimed. That figure is known before the action commences, so the insurer can budget with a level of confidence and certainty. The claimant cannot. In addition, most insurers can use in-house legal resources, which will never come to the attention of the court. Those resources will be factored into premiums as a cost of the insurer doing business. I could illustrate that more fully by quoting a letter from a law firm I heard being read on the Alan Jones program a couple of days ago. Whilst I would not agree with absolutely everything said by Alan Jones, I think this letter aptly illustrates the point that I am trying to make. It says about the legislation:
        It restricts legal costs that can be charged to injured people when the claim does not exceed $100,000. Most people might say, "Terrific, the lawyers won't be able to make as much money." But, unfortunately, there is no similar restriction imposed on the lawyers acting for the insurance companies, who have enormous resources to fight the battler. I ask you to think, "Is it fair for the persons on struggle street... to be restricted in the legal representation they can obtain when bringing a claim against someone who has negligently injured them?" Quite frankly, if it's uneconomic for the lawyers to represent an injured person, they won't do so.
    There is little doubt that this bill does not create a level playing field. Any suggestion to the contrary needs to be countered. I should point out that the retrospective aspect of the legislation will possibly hit some claimants harder than others. One lawyer wrote to Mr Jones as follows:
        At the moment I have a claim in which my client fell from a building as a result of the blatant negligence of the owner and the real estate agent in keeping repair to the standard that anyone would expect acceptable. As a result of the fall he suffered severe brain damage. He will never work again and because his statement of claim was filed in April, and this Act is retrospective, he is now subject to the new limitations of the Bill. Our costs are so severely limited that we have already exceeded them in investigating his claim by a substantial sum.

    If that claimant wins anything, it is possible that costs will have to be deducted from the costs that are won under other heads of damages, similar to medical and other expenses. The retrospective costs of this apparently well-intentioned bill make it a blunt instrument, as the Government has discovered, and as it has acknowledged by introducing changes affecting claimants against the Crown. I understand that later the Government may also introduce amendments to meet the requirements of claimants who suffer dust-related diseases.

    Before I conclude my remarks on legal representation, I place on the record a query raised by my colleague the Deputy Leader of the Opposition, Chris Hartcher, when he was speaking to this bill in another place. Unfortunately, the Attorney General made no reference to this point during his reply at the second reading stage, so perhaps the Government will provide a response during this debate. The Deputy Leader of the Opposition referred to a letter he received from Vandervords, a firm of solicitors, in which they commented on a change which was announced by the Premier on Tuesday when he introduced legislation to impose a cap on lawyers who act on behalf of defendants. The letter states:
        There is a requirement that a defence be filed within twenty-eight (28) days of service and Section 198J has effect at that time. It would be appreciated that "provable facts", such as would provide reasonable prospects of success in the defence, would not be available and as your own experience would indicate the number of occasions when an occupier is successful in the defence of proceedings is rare. In many cases, the best that can be achieved is to … reduce the claim for damages which the Plaintiff seeks.

        One would imagine that the Premier would be anxious for the defence of proceedings to be vigorously pursued in order to reduce the exposure in this field and thereby achieve a reduction in costs with a counter balanced reduction in premium.

        In order to achieve this solicitors acting for the Defendant Occupier on instructions from the Insurer should be deleted as the original draft provided.

    That is an interesting possibility, but it would also be interesting if the Government responded to that point. The retrospectivity of this bill has been debated quite fulsomely in another place and in the media. To demonstrate the impact it might have, I refer honourable members to recent television news coverage of a visit by a current rock star, Shakira, to a shopping centre. The visit was marred by the actions of a person who deliberately and maliciously dropped bags of concrete dust into the thronging crowd below. One youngster suffered not only breathing difficulties as a result of that action but also significant damage to her back. This incident illustrates a typical public liability claim. Clearly, there is an arguable case that the promoters of the visit should have better anticipated the crowds that gathered to see a remarkable and very popular personality, and they should have provided sufficient security and crowd control for that event.

    The event was not a gratuitous effort to give people the opportunity to see their favourite rock star. The event was organised in order to get shoppers to a shopping centre and spend money. There was a requirement on the part of the organisers of the event to control it properly. That is an arguable point that is yet to be proved, but it is nevertheless a reasonable proposition. That incident is typical of the types of claims that will be limited by the retrospective provisions of this bill. Many people saw the girl being carried out across the heads of the crowd and she obviously was suffering significant discomfort and injury. She will be affected by the retrospective provisions of this bill. It is not possible to simply write off this bill as not affecting people; it does, and it affects people whom we have seen suffering with our own eyes.

    The Government claims that if the bill is not made retrospective its financial impact will be so reduced that it will have no impact on premiums. The Government misses the point that a person must have suffered an injury before making a claim. I suggest that there will be a limited number of people who will deliberately attempt to injure themselves to make a claim. To some extent the concern about a rush of claims should be tempered by reality. Moreover, the Government has referred to claims made by the Labor Mayor of Sutherland Shire Council, Ms Tracie Sonda, who claims that claims against local government have suddenly spiralled. A proper examination of the claims being made against local government has revealed that claims are being made at the same rate as they have been made for the past 10 years.

    The Hon. John Della Bosca: When did Tracie Sonda join the ALP?

    The Hon. JOHN RYAN: She is certainly an ALP supporter.

    The Hon. John Della Bosca: Is she not running for preselection for your party?

    The Hon. JOHN RYAN: Hardly. We have selected our candidate for that area, and a very good candidate he is too.

    The Hon. John Della Bosca: Who is that?

    The Hon. JOHN RYAN: Councillor Kevin Schreiber, who will be giving Barry Collier a good run for his money.

    The Hon. John Della Bosca: Who is it in Cronulla?

    The Hon. JOHN RYAN: We have an excellent member for Cronulla in Mr Malcolm Kerr.

    The Hon. John Della Bosca: He is retiring, is he not?

    The Hon. JOHN RYAN: He is not retiring at all. The Opposition is concerned that the bill as currently drafted creates two classes of claimants. In response to political agitation, at the last moment the Government changed the legislation to allow the retrospective provisions to be modified for people who have claims against the Crown. The problem is that those who have claims against non-Crown entities, that is, private parties, are in a completely different position. What is the justification for that different position? It is not that the injuries are different, because their injuries are very similar to the sorts of claims that would be made by people who suffered as a result of the rail accident at Glenbrook in the Blue Mountains. The pain and the impact on lives will be the same and the only thing that will be different will be the entities against whom the claims are made.

    The Opposition's position is that there is no reason, given that insurers have already taken premiums to cover these types of claims and that insurers are getting a windfall as a result of the introduction of this legislation, why the Government's level of compassion for claimants against the Crown should not be extended to claimants who have to rely on private insurers. The fact that it is a different pot of money, as the Government claims, is irrelevant. There is no reason why people should be accorded a different claims status simply because the Government feels that is politically expedient. To that end, the Opposition has drafted a simple amendment for the consideration of the House.

    The Opposition’s amendment is designed to deal with one specific aspect of the legislation. It is a very small change and the Government will have a hard time trying to explain how the amendment will drastically change premiums to effect relief for insurers. The amendment will not do that. The only difference will be that some people will claim against a private sector entity whereas those who are exempted in the bill might just want to claim against the Government. The Attorney General might have to deal with rail accident claimants in his own electorate, so special consideration is being given to them. In contrast, the Opposition believes that if cuts in compensation are to be imposed, they ought to be shared by all people equally and special consideration should not be shown for some people just because they are making a claim against a Crown entity. Another significant problem with the bill is that discounting of small claims is a means by which relief is provided. The way that the Government has approached this matter may not provide a lasting solution. A letter from Goldberg Partners, solicitors, quite wisely explains the position:
        Setting of thresholds below which people are unable to obtain any compensation for their injuries often has the effect upon a tribunal of the tribunal being more willing to find a threshold exceeded so some compensation can be given. Hence a relatively minor injury may cause a Court to find that it is a case that is 25% of the most extreme case which would generate a damages award of $22,750.00. Once that happens there is a dragging up effect of the value of other injuries in the Judge's mind.

    It could well be that, because of the way in which this legislation has been drafted, its effect will be temporary. A more long-term solution might be necessary down the track. As I said earlier, in my view this is not the last time that we will visit this issue. There is bound to be not only a stage two of this legislation—an issue to which the Premier keeps referring—there is bound to be a stage two of the provisions in this bill. This bill does not protect people such as lifesaving clubs, small businesses, community groups, those who are running cake stalls or good Samaritans from what have been referred to as outrageous claims. It does not address what are frequently called the rorts in this scheme. Using a more tempered term than the term "rorts", I refer to issues such as contributory negligence, the effect of waivers, or appropriate exemptions for volunteer groups. Those are the sorts of issues that must also be addressed.

    When the Premier holds a gun to our heads and says, "We will not carry out the review function that we would normally carry out in relation to this legislation, and action is needed", we know that that has nothing to do with this bill. Those issues will all be dealt with in another piece of legislation that is to come before this Parliament. Government members run around this place beating their chests in bullyboy fashion and saying: "The work is done. Everybody should put aside their differences and just trust the Government. Forget about the submissions that you have received from your constituents." It is all right for Government members such as the Attorney General to forget about issues in their electorates—issues that they believe to be politically expedient. However, everybody else is being asked to forget those issues and to trust the Government as the job has apparently been done.

    There are good cases to suggest that the job has not been done. One issue that will be raised later by the Leader of the Opposition in this Chamber is the fact that there are four different compensation schemes for people who are largely suffering from the same injuries or from the same sorts of negligence: the workers compensation scheme, the medical negligence scheme, the victims compensation scheme and the motor accidents scheme. Some complainants have suffered the same injury as a result of negligence but there is no-one against whom they could make a claim. I made reference to the fact that many of those schemes have some useful features that could be included in this scheme to make settlements between insurers and claimants more equitable.

    Honourable members would be aware that, under this scheme, only a 15 per cent body impairment benchmark is required. However, under the motor accidents insurance scheme only a 10 per cent body impairment benchmark is required. There appears to be a good case to reform these schemes and to make them more uniform. Another area of reform is needed in the future. The Opposition will not oppose this legislation. However, it will seek to move one amendment which it believes will make the scheme fairer. The Opposition has approached this scheme responsibly—an issue about which this Government has not been grateful.

    The Government has simply used this legislation as an opportunity for the most obscene politicking that we have seen for some time, particularly given the fact that it is politicking at the expense of victims and battlers—those people whom Government members claim to represent. The way in which Government members have been politicking against them suggests otherwise. This Government is about satisfying some sectors in the community at the expense of others. Apparently, insurers are the flavour of the month at the moment. The Government will satisfy insurers and it will not listen to other sensible arguments that might be put forward.

    The Hon. MICHAEL GALLACHER (Leader of the Opposition) [8.55 p.m.]: I congratulate the Hon. John Ryan on his thorough and analytical approach to this debate. It is unfortunate that on an issue as serious as the Civil Liability Bill the Special Minister of State elected to incorporate his speech. He added nothing to the contribution made by the Minister in the other House.

    The Hon. John Della Bosca: I will be replying.

    The Hon. MICHAEL GALLACHER: The Minister said he will reply later to this debate. However, he will reply only to contributions such as those made by the Hon. John Ryan and others in this debate; he will not bring us up to speed with what has occurred since this matter was first debated in the Legislative Assembly. There is no reference to what has taken place in the past few weeks. There is no preparedness on the part of the Government to refer to those issues; it wishes only to adhere to what was said earlier. It does not want to make this issue too difficult given what has been said in the public domain. As I said earlier, the Special Minister of State elected simply to incorporate his speech.

    There are striking similarities between this debate and an earlier debate in this Chamber relating to workers compensation. The Premier did not stand on the steps of Parliament House with a two-fingered sign for injured people who feel aggrieved by these reforms. The Government's approach to this issue has been to rely on the old adage that when you are on a good thing stick to it. Honourable members might remember that some concern was expressed when workers compensation reforms were introduced in this Parliament. We were told that, if that legislation was not passed holus-bolus, workers compensation premiums would increase and every business in this State would be hit with a debt recovery plan for that unfunded liability.

    Do honourable members remember that threat by the Premier? He said, "I will get rid of that unfunded liability because every business in this State will be hit with a debt recovery plan that will clear that unfunded liability overnight. The Hon. John Ryan rightly stated earlier that the Premier has made other threats relating to civil liability. The Government is of the view that, as it worked last time, it should do it again. It is not giving honourable members an opportunity to debate this issue or to rectify some of the glaring mistakes in the legislation. The Government is not admitting, as it did in the workers compensation legislation, that it might have it wrong. It will not entertain any suggestion that this legislation needs to be rectified. The Government is following the script exactly to the letter.

    The Hon. John Ryan was 100 per cent correct when he said this legislation will create two classes of citizens in New South Wales. I will not labour the point as there has been a considerable amount of debate in relation to that issue in this Parliament and outside the Parliament. There will continue to be debate on this issue. The Hon. John Ryan also pointed out that this will not be the last time we debate this issue. Earlier, when the Hon. John Ryan was making his worthwhile contribution, the Minister said he had already made that point. Debate on this legislation is similar to debate on the workers compensation legislation. We have been told about a second wave of reform that will be introduced some time in the never-never.

    Honourable members might remember that the Government promised that the third tranche of workers compensation reforms would be presented to this Parliament during the spring session. We are now being told that the third tranche of reforms includes the concept of scheme design, but we do not know exactly what that means. I have a fair idea that it means a restructure of WorkCover, but we will not see those reforms until after the next State election. The Government is saying that it will revisit this issue after the next State election. If this Government continues to operate in that way, a Coalition government will have responsibility for addressing the scheme's design. The present Minister, who will then be in opposition, will wonder why he did not address this issue. A Coalition government will rectify the mistakes that this Minister has made and continues to make across a broad spectrum.

    I intend in my speech to touch on a couple of issues. However, I will keep my contribution as short as possible. The Hon. John Ryan raised some interesting points. A matter I found quite interesting, not only in his contribution but in the general debate now permeating the community, is the reference to anomalies in personal injury legislation. What are the thresholds in New South Wales? The motor accidents legislation—again, the Minister's legislation; he has a lot sitting on his head—specifies a 10 per cent threshold. Workers compensation legislation specifies a threshold of 15 per cent. Medical negligence legislation specifies a threshold of 15 per cent. For public liability insurance the proposal is 15 per cent, with a sliding scale applying under 15 per cent.

    I highlight the example of a Central Coast mother who drives her husband to the railway station each morning. The husband is on his way to work, the wife is driving the car, there are a couple of kids in the rear seat of the car, and along the way another motorist drives his vehicle through a stop sign and wipes out the family's car. If the husband and wife receive exactly the same injuries, the wife is dealt with under the motor accidents legislation. Under this Government's legislation, the wife is dealt with differently at law.

    The Hon. John Della Bosca: It's been like that for 68 years.

    The Hon. MICHAEL GALLACHER: The Minister says it has been like that for 68 years. That is the point, Minister. There comes a time when one has to concede that a policy has been in place for so long that it is simply not working and it is no longer fair. The reason we are in our present predicament with a broad spectrum of insurance in this State is that this approach has been in place for such a long time. The Minister says, "It has been in for 68 years, and therefore it must be right." But the time has come to look seriously at a broad range of issues across various forms of insurance.

    In the classic example I have cited, the wife is dealt with under motor accidents legislation—different legislation from that which applies to the husband. The children might even decide to sue the car manufacturer because of some fault identified in the vehicle as a result of which the children were not adequately protected. Of course, they would still have access to motor accidents legislation compensation if they are injured. However, the situation becomes more and more difficult because of the distinction between the various claims. The Government speaks about simplifying the law, but it continues to push thresholds that are inconsistent and allow clear distinctions between forms of insurance. The Minister throws his hands in the air and says, "Look, it has been in place for 68 years. Really, it is a bit too difficult for us; we can't do anything with it." The fact is that there is something wrong, and the Minister knows there is something wrong, but the Government is not prepared to tackle the issue.

    What caps have been applied for these forms of insurance? Motor accidents legislation was indexed from 1999 at $284,000. Workers compensation claims were capped at $50,000 for pain and suffering. Medical negligence claims were capped at $350,000. For public liability, the proposal is also $350,000. Once again, there are discrepancies in relation to the caps that are applicable. What path is available to applicants who want to take their matters to court? For motor accidents, they are off to the Assessment Resolution Service. For workers compensation, they are off to the new Workers Compensation Commission. For medical negligence and public liability, they still go to court. By the Minister's admission, he does not want to address the issue. He says, "It has been in place for 68 years; there is nothing we can do about it." But these are fundamental inconsistencies in the system that the Government is failing to address. Not only is the Government, by this legislation, creating two classes of injured individuals in New South Wales; it is further compounding the inconsistencies that exist between the various forms of insurance.

    The other place has heard debate about actuarial advice given to the Government with regard to the steps that are available to it. In this Chamber the Minister spoke at length about actuarial advice has received in relation to workers compensation. Again there is a similarity between the messages we are getting from the Government on workers compensation and public liability insurance. Whether the fact is that the Government is threatening to declare all-out war against us if we do not let the legislation go through holus-bolus, or that it is simply not prepared to address some of the problems that have been referred to—with the attitude "It has been in place for 68 years and it is all too tough for us"—the constant theme is, "We will bring it back next year with the second tranche of reform."

    We have heard a lot about actuaries and the contribution they have made. Earlier today the Minister spoke about the savings in workers compensation. A lot of this is based on the same actuarial advice around which the public liability debate, both inside this place and in the wider community, has developed over the past couple of months. On 7 January the Minister proudly proclaimed using the actuarial advice—when it was available to him—claiming that there will be a $1.3 billion saving in workers compensation—such a significant saving on workers compensation that it was really quite sobering. People were saying, "A $1.3 billion saving as a result of all the reforms that went through this Parliament? Perhaps Della got it right." The media were reporting, "Maybe this guy has made the right decision." But today we were told that it was not quite $1.3 billion, it was $200 million—a miscalculation of a mere $1.1 billion!

    Again referring to actuarial advice, this afternoon during question time the Minister said that if the scheme had continued without the reforms, there would have been a further blow-out of $757 million. But if the Minister goes back to the advice he proudly presented to the committee in October 2001 in relation to the reforms, his own actuaries—the very people who provided him with the information about the effect of the reforms on public liability—gave him information in relation to the projected scheme deficit in workers compensation, between June 2001 and June 2002, of a further $460 million. But today we have heard that that deterioration is now about $750 million—far in excess of the figure provided by the Minister, the general purpose standing committee on workers compensation relating to the projected financial impact of the scheme had the Minister's reforms not gone through.

    Earlier the Minister said, "You can trust the Premier." Whom do we trust? Do we trust the actuary, who is prepared to put pen to paper and say that in June 2002 the difference between 2001 and 2002 would be a further deterioration of $460 million? The Minister tells us that in March this year it was in fact $750 million in addition to the June 2001 figure. Someone has got it wrong. Is it the Minister? Is it whoever is advising the Minister who has got it so grossly wrong? Or is it the actuary who has got it wrong? I might add that once the actuary started divulging to the committee some rather interesting views in relation to workers compensation he found himself sacked. This actuary has been taken out and shot, so to speak, and we are not going to hear from him again. Some significant questions are hanging over not only the Government's head but also the Minister's head about how they act upon the advice they are given by actuaries concerning their management of the various schemes for which they are responsible. We must not lose sight of the fact that workers compensation continues to be a huge issue for the Government. Nor are we on this side of the Chamber convinced that the Government has any understanding of what needs to be done with regard to public liability insurance.

    The view of the Opposition is that if this bill is passed, no distinction should be made between injured persons in New South Wales. It should not be possible for someone to sue the Government and be given an open chequebook, yet not be able to sue an insurance company. That is not a fair playing field. There was a time in New South Wales when the Australian Labor Party fought for ordinary people. Unfortunately, this Australian Labor Party Government has lost its way. Going by what I am hearing from centres such as Wollongong and Newcastle, Labor's traditional voter base is leaving in droves.

    The Hon. Ian Cohen: They are going to the Greens.

    The Hon. MICHAEL GALLACHER: They are turning from red to green, are they? If the Government opposes the amendment that will be proposed by the Hon. John Ryan on behalf of the Opposition, it will be digging an even deeper grave for itself.

    The Hon. IAN COHEN [9.10 p.m.]: The Civil Liability Bill has been introduced because of the crisis in public liability insurance premiums, which have increased substantially over the past year. Some sectors of the community, such as not-for-profit organisations, community groups and adventure tourism operators, have been particularly hard hit. The impact of the increased premiums has seen some operations close down, while others have been forced to absorb the costs, causing them considerable financial hardship. While insurance for many organisations and businesses operating in these sectors has been largely unaffordable, some have found it impossible to secure insurance cover at any price. It has been reported that in some sectors there have been premium rises of up to 400 per cent and higher. The Combined Pensioners Association has reported premium increases of 1,000 per cent.

    What sorts of services and events have been impacted upon? Tumbarumba Shire Council cancelled the Tooma Gymkhana, which has been held over Easter for the past 50 years, because premiums increased from $1,600 to $10,000. The event was to have raised funds for the Tooma local hall, which needs a new fence, costing about $3,000, to enable it to continue as a temporary child care centre. Other events cancelled include the Lake Illawarra water-ski championship and the Bombala local growers market. Last year, Oakvale Farm near Port Stephens was forced to stop offering $2 pony rides after its premiums rose from $7,500 to $20,000. In Dubbo the Victoria Park concert and fete was cancelled, as was the Man From Snowy River Mountain Muster, which has been held since 1987. The event was scrapped this year because rider insurance would have cost organisers more than $8,000. Last year the premium was less than $3,000. In Mudgee the Christmas fair and carols by candlelight concert were cancelled, and in Diamond Bay commercial abseiling operations were cancelled. These are a fraction of the events that have recently been cancelled, and a number of events, services and operations are currently under threat.

    There is disagreement about what is responsible for the increase in premiums. The Greens believe that further investigation of this important issue should be undertaken before proceeding with this bill. It is pointless targeting one sector of the public liability industry without targeting the other. The bill seeks to reduce injured persons' rights and to make it more difficult for lawyers to get a fair deal for their injured clients in court. The Australian Plaintiff Lawyers Association [APLA] in a sophisticated submission to the national Ministerial Summit into Public Liability Insurance argues that the causes of the increases are the result of market forces, in particular a lack of regulation in the Australian insurance market, aggressive competition between domestic insurers in the 1990s, the collapse of HIH industry mergers, a renewed focus on profitability by the insurance industry, increases in reinsurance costs, changes in the international risk environment since September 11, a decline in investment earnings, the cyclical nature of insurance profitability and premiums, new capital adequacy requirements, and the impact of taxes and levies. According to the APLA:
        Major disruption occurred in the Australian and international insurance market in 2000/1. The Australian Prudential Regulation Authority (APRA), the body responsible for prudential regulation of the Australian insurance industry since 1998, claims that it inherited "flawed and outdated" systems for supervision and regulation of the general insurance industry.

        This relaxed regulatory environment permitted insurers in the HIH group to compete irresponsibly with very low premiums and inadequate prudential reserves.
        The Australian insurance market was aggressively competitive throughout the late 1990s. That competition forced other insurers to lower their own premiums to unsustainable levels and contributed to the magnitude of the eventual HIH collapse.

    This is not denied by the insurance industry. In fact, an actuarial analysis commissioned by the Insurance Council of Australia found the public liability insurance industry has been running at a loss for a decade. The report specified:
        The industry actually made a loss of 3 per cent over the last 10 years.

    The APLA argues that this situation is about to change. In a position paper it argues:
        Towards the end of 1999 premiums started to increase. In 2000 they had gone up by about 15-20%. The upward trend in premiums has continued in 2001, and will likely continue into 2002 …
        At present, insurers are moving out of the lower end of the cycle. When the economy improves they will, for a while, make very high profits before again entering into the downward phases of profitability.

    The association argues that insurance company profitability is a cyclical phenomenon, just as in every other sector of the economy. Cumpston Sarjeant Pty Ltd, consulting actuaries, were asked by APLA to comment on the long-term trends in public liability premiums, claims and profits. In summary, that firm observed that premiums have dropped from about 0.20 per cent of gross domestic product [GDP] in 1987-88 to about 0. 15 per cent in 2000-01; claim payments have grown long term as a proportion of gross domestic product, increasing in the past 12 years about 5 per cent per annum faster than GDP; insurer profits averaged about 18 per cent over the 20 years to 1996-97; and the substantial losses in the four years to 2000-01 may reflect a more pessimistic view of outstanding claims, as well as premium-cutting by HIH. Other projections suggest that insurers will suffer a loss of about 4 per cent in 2001-02, and make a profit of about 17 per cent in 2002-03, without any changes to legislation. One wonders who we are trying to protect. APLA argues that because of the collapse of HIH remaining insurers in the market have been able to pick and choose their customers while at the same time increase premiums, similar to the way that Qantas has been able to increase its market share since Ansett collapsed.

    Of significance in this debate is the role of reinsurers. Since September 11, foreign reinsurers have been reassessing their role in overseas markets such as Australia. Many reinsurers are pulling out, leading to a contraction in the reinsurance market, less competition and increased reinsurance costs. On top of all this is the world economic outlook. Interest rates are at their lowest for decades. This provides poor investment return for insurance companies. The Greens are concerned that the bill will not fix the crisis. It can be seen that the real reason for premium increases are market forces—that is, the lack of competition, previous underpricing of premium rates, mismanagement and poor underwriting of risk, reinsurance costs globally and a decrease in earnings by insurers' funds management arms. The bill does not force the insurance industry to lower premiums. In fact, it targets the insurance industry very little.

    This Government is the only government on the eastern seaboard not to identify that the insurance industry and international events—not lawyers or their clients—are largely to blame for the crisis. A key component of the Federal Government's plan to fix the crisis in public liability insurance drawn up at the national Ministerial Summit into Public Liability Insurance has been attacked quite rightly by the Victorian Attorney General, Mr Hulls, and his Queensland counterpart, Rob Welford. This was reported in the Australian Financial Review on 4 April. The Attorneys General recognised that the limits on the right to sue over accidents might be a way of boosting profits for insurance companies. Rob Welford claims that the debate over public liability insurance has been skewed to focus on legal systems instead of any shortcomings by insurers. Mr Welford and Mr Hulls argue that broad-based tort reform should not occur until insurance companies "open their books" and provide more information about the real causes of the blowout in public liability insurance premiums. Mr Hulls told the Australian Financial Review on 4 April that insurance companies had produced no evidence to show a connection between increased premiums and increased court payouts. He said:
        They seem to want to line their pockets with premiums while pick-pocketing the rights of ordinary Australians.

    He said also that insurance companies had used public relations firms to run an extraordinary media campaign aimed at taking away the rights of ordinary Australians. He went on to say:
        Insurance companies cannot be allowed to trample over people's rights simply because they want to prop up their bottom line.

    Why does the Government not demand from the insurance industry answers to similar questions? There has been no questioning whatsoever of the insurance industry position. Mr Carr even said publicly to the Sydney Morning Herald on 17 May, and repeated in his second reading speech to the bill on 28 May, that there is no guarantee that the bill will lower insurance premiums. An actuarial report by Cumpston Sarjeant Pty Ltd, commissioned by the Law Council of Australia and APLA, analysed long-term trends in public liability premiums, claims and profits. The report said that the State's insurers will be back in the black by the end of the year and averaging profits of 17 per cent within 12 months.

    Insurer profits averaged about 18 per cent over the 20 years to 1996-97 but had incurred substantial losses in the four years before 2000-01. These figures do not take into account any changes to the law which, if the retrospectivity clauses in the bill are passed, will deliver to the insurance industry a windfall of $100 million to $150 million in six weeks. The Insurance Council, in a meeting with crossbenchers, could give no exact indication of how much it expected premiums to decrease, but it floated figures of 10 per cent to 12 per cent. This is backed up by the PricewaterhouseCoopers actuarial advice provided to the Government and quoted in the Premier's speech. The Premier said:
        While there might be variations between insurers and particular policies or classes of risk, this report shows that premiums should fall by some 12 per cent.
    When one considers that some organisations are facing increases of many hundreds of percentage points for premiums, 10 per cent to 12 per cent will still be totally unaffordable. The bill will significantly reduce the rights and benefits for injured people. In particular, the bill will limit the costs recoverable by plaintiffs' and defendants' lawyers in claims below $100,000 to $10,000, or 20 per cent, whichever is the greater. We have had many submissions on this and other aspects of the bill. T. D. Kelly and Company, Solicitors, points out the practical effect of this clause. In a letter it stated:
        In short, the costs provisions of the Bill will effectively annihilate the prospects of existing and future litigants in personal injury cases from obtaining or retaining legal representation in respect of their cases, other than in matters which are relatively straight-forward on the issue of liability and which are likely to result in an award of at least $100,000.

        As only a small minority of personal injury cases are within that category, the prejudice which may be suffered by claimants can be expected to be very severe. For all practical purposes, the costs provisions will deny the overwhelming majority of claimants the ability to enforce their rights in court.

        Included in that disadvantaged group will be young children who have suffered gross disabilities as a result of cerebral injury arising from alleged medical negligence. Few cases in that category are clear cut winners on the issue of liability, and the risk of a financially ruinous costs order being made against a claimant's lawyers will be a potent deterrent to taking on, or continuing to act, in such cases.
    On the abolition of exemplary, punitive or aggravated damages, the letter stated:
        In fact in Australia such awards are rare and where they occur are relatively minuscule.

        The effect on premiums of the removal of the power to make such awards will be zero; all that will be achieved is that removal of a deterrent … to reckless conduct.

        Such awards are presently confined to wilful or deliberately reckless or malicious conduct, such as the mining of blue asbestos or intentional assaults (and probably sometime in the future, the trafficking in tobacco products).
    The Greens are extremely concerned that important public interest cases in which exemplary, punitive or aggravated damages are awarded, and which in turn have led to a complete overhaul of organisational or industry practice, will no longer be accepted. We are concerned that people's safety will be compromised because of falling safety standards. Once the threat of large payouts is removed through the imposition of exemplary, punitive or aggravated damages, together with a cap on non-economic loss, it is likely that industries will reduce best and safe industry practice. The T. D. Kelly letter concludes:
        There is one aspect of the present problems of public liability insurance that appears to have been wholly overlooked or at least unaddressed in the current debate.

        The present problems about premiums are in large part due to a lack of competition within the insurance industry (including the lack of any competition from a State insurance office) that has been exacerbated by the HIH collapse.

        The GIO it will be recalled was originally founded in the 1920s to prevent such a situation developing in workers compensation insurance.

        Public liability insurance is in its way just as socially important as workers compensation insurance.

        The ability of the State to ensure the supply of such insurance cover at proper rates to citizens of NSW was lost with the privatisation of the GIO. It could be regained by the creation of a new State Insurance Office.

    The direction governments have taken with this type of public liability is an absolute tragedy and travesty. At this stage we should be looking seriously at the reinstatement of a State-based, government-run insurance industry.

    The Hon. John Della Bosca: The Greens are socialists.

    The Hon. IAN COHEN: I am a little shocked by the Minister's comment. He is sitting in the Chamber smiling about an issue like the loss of the Government Insurance Office and its value to the community.

    The Hon. Duncan Gay: He is the same bloke who is selling the coalmines.

    The Hon. IAN COHEN: Indeed. Regardless of the political complexion, it seems that the major parties cannot quite agree on something of such major benefit to the people of New South Wales as a government insurance office. The Greens are particularly concerned about the retrospectivity aspects of the bill. Backdating the provisions will save no premiums because the premiums have already been collected. The retrospectivity simply represents a massive transfer of funds from existing accident victims to private insurers. Backdating is grossly unfair to people who have held back from seeing a lawyer while they tried to recover or stabilise their injuries, or for those engaged in negotiations before they sue.

    Additionally, some individuals whose claims have not been lodged because of the court's pre-trial procedures and those who have commenced action relying on the existing law will be particularly affected. As mentioned before, it is estimated that retrospectivity will provide a $100 million to $150 million windfall to insurance companies, based on figures released by consulting actuaries Cumpston Sarjeant Pty Ltd. The bill is designed to discourage tort actions when the injury is at the lower end of the injury scale. These individuals would normally be entitled to smaller awards of damages. This will mean that for individuals without private health insurance their medical expenses and care costs will be borne by the public system through Medicare and the public health system, rather than be paid for by the private sector through the tort and damages system. A Coalition for the Injured has been set up as a response to this bill. The coalition covers a wide section of the community. I shall read onto the record a few quotes from coalition members. Catherine Waolthuizen, the Finance Policy Officer at the Australian Consumers Association [ACA], said:
        With a stroke of a pen, Bob Carr is threatening to do away with fundamental civil rights and protections consumers have spent decades fighting for.
    In a letter to my office dated 3 June the ACA said:
        It is the strong view of the ACA that this legislation will severely undermine the legal rights and protections of consumers in the name of reducing insurance premiums, with little evidence this outcome will be achieved.

        As currently drafted the … bill … risks trading consumers' access to justice and compensation in the event of loss or injury to protect the insurance industry's short-term profitability. The public liability insurance "crisis" is more a function of increased compliance costs following new post-HIH prudential requirements, the sharp decrease in competition in the Australian insurance industry, and the post-September 11 drop in investment returns, which had supported artificially low premiums over the past decades.

        The insurance industry has been unable to adduce evidence to show current tort protections have led to increased premiums, nor that the proposed reforms will lead to lower premiums.
    Another member of the Coalition for the Injured, the President of the New South Wales Council for Civil Liberties, Cameron Murphy, said:
        Insurance company profits should bear the costs of injuries, not victims and their right to fair compensation. Limitations on victims' rights will not halt premium increases, it will only serve to increase insurance company profits at the expense of fair compensation for those injured.

    Morrie Mifsud, Acting State President, Combined Pensioners and Superannuants Association of New South Wales, stated:
        We faced a public liability insurance increase of 1,000 per cent. We were told that our activities, such as holding meetings and playing bingo, are too risky! In New South Wales we would not have this current crisis if the Government Insurance Office had not been privatised. We believe the Federal Government should establish a government insurance scheme or, at the very least, underwrite the insurance for charities and community groups. Answers must be found, but they must not diminish the rights of injured people, especially seniors who are more at risk of injury, to receive the compensation they are entitled to.

    There is no evidence that this bill will lower premiums or stop the current crisis. The Greens want to further investigate other solutions to this crisis. The problem with this bill is that it significantly curtails the rights of injured people and halts important public interest cases in their tracks. The Greens want a system that supports and looks after the injured in the best possible way, a system that meets their physical and psychiatric-psychological needs as much as possible. The Greens do not favour a system that gives advantage to some sections of society over others or some individuals over others. We prefer systems that adequately look after the injured regardless of how their injury occurred. The Greens want a State or Federal—preferably Federal—inquiry into public liability. The inquiry may want to investigate no-fault options, such as occur in New Zealand, Denmark, Sweden and Finland.

    New Zealand has a national no-fault accident compensation scheme which insures all citizens on a no-fault basis for all non-work related injury. In New Zealand benefits available to injured people include weekly compensation of 80 per cent of previous earnings, an independence allowance, cover for medical costs and rehabilitation assistance. The benefits available in fatal claims include surviving spouse weekly compensation and compensation for each child under 18, or 21 if they are studying. Other payments include a survivor's grant and a funeral grant. The scheme is funded from premiums paid by motorists, employers and earners. The New Zealand Government also makes a contribution for injuries that cannot be attributed to the above categories—for example, non-earners. As the scheme has replaced workers compensation and the common law action for damages, employers, motorists and others no longer have to take out insurance against being sued in court for damages and personal injury. Thus, in effect, the scheme is mainly funded by transferring the insurance premiums that were previously being paid to various insurance companies into one central organisation, the Accident Compensation Corporation. I would like to hear the Minister's comments on that scheme as it would relate to the circumstances in New South Wales. That model seems to have worked overseas.

    The Greens recognise problems with the New Zealand model. For example, the scheme has a large unfunded liability and issues have been raised about reduction in safety and increases in negligence. In other words, it is argued that the abolition of tort law may lead to an increase in negligence, a lower standard of care and an increase in accidents. However, despite these two major criticisms, the Greens want the further investigation of a no-fault scheme as it could well be better than our current system. A number of positive initiatives occurring in the community to reduce public liability premiums have been made public over the past few months. For instance, for the past 13 years New South Wales Meals on Wheels has been bulk purchasing insurance for the community sector through its Community Sector Insurance Program. It has been successful in purchasing insurance at competitive premium rates and ensuring that the community sector has the appropriate policy coverage. It currently directs the insurance of more than 600 community groups, and it is in the process of developing separate insurance pools for uncovered arts, youth and senior citizens groups.

    According to Linda Morris of the Sydney Morning Herald, bulk insurance agreements aim to spread risks and costs among not-for-profit community groups by using their enhanced buying power to minimise, where possible, premium increases and widen policy cover. In the wake of the HIH collapse and September 11, Meals on Wheels has managed to negotiate insurance increases of 15 per cent over 16 months in a sector where premium rises of 300 per cent have not been uncommon. It is amazing that once again the community sector comes to the rescue of people. Organisations such as that and the community in general have suffered so much from the extravagances and the collapse of HIH and the unfortunate circumstances of September 11. However, one wonders how and why the insurance industry in New South Wales gets away with it so easily.

    The Council of Social Service of New South Wales [NCOSS] has just been allocated a $220,000 grant to set up another insurance pool scheme. According to Alan Kirkland, the Director of NCOSS, "the potential market is easily 5,000" organisations. The challenge will be to ensure that refuges, hostels for the homeless, drug and alcohol rehabilitation centres, HIV-AIDS services and those dealing with sexual assault victims are able to get affordable insurance coverage as well. Currently these kinds of organisations are finding it extremely difficult to buy affordable insurance and some sectors are being refused entirely. Government underwriting of certain sectors is also worthy of consideration. A number of governments across Australia have offered their support to provide affordable public liability insurance to certain community groups whose contribution to the community is of particular importance. For example, the Western Australian Government has offered to underwrite blue light discos and the Queensland Government has extended its insurance fund to cover State school parents and citizens groups.

    In conclusion, the Greens believe that this bill will not solve the crisis. It will not reduce premiums or force insurance companies to insure sectors of the community it is currently refusing to insure. Past experience of tort law reform in other jurisdictions has found that by itself it will not reduce premiums. An American study into tort law reform, which analysed data from every State in the United States of America between 1985 and 1989, showed no difference in premiums between States with little or no tort law restrictions and those with medium or very high restrictions. The report concluded, "tort law limits enacted since the liability insurance crisis of the mid-1980s have not lowered insurance rates in the ensuing years". The bill will, however, significantly reduce the rights and benefits of injured persons and increase the profits of insurance companies. It is an indictment on any government or organisation that will support reform in this direction and ignore the desperate financial and social needs of the community. Every aspect of community and public entertainment has been impacted upon by recent events and the absolute greed of the insurance industry, supported by the Government in these circumstances.

    The Hon. Dr ARTHUR CHESTERFIELD-EVANS [9.37 p.m.]: I will speak strongly against this bill. It is the third in a godless trilogy of bills introduced by the Tory Carr Government—the best conservative government New South Wales has ever had! The victims of work accidents and motor vehicles accidents have had their rights sacrificed on the altar of insurance companies and as a result of general mismanagement, as I have said before. The Opposition criticises the Government, but it voted with the Government on both the motor vehicle accidents and workers compensation legislation.

    The Hon. John Della Bosca: No, they didn't, they voted against them.

    The Hon. Dr ARTHUR CHESTERFIELD-EVANS: Was it only on workers compensation? The Opposition will vote for this one, too. The Opposition criticises the Government but it votes with the Government on major issues more often than the Australian Democrats. Sometimes the Government and the Opposition vote together and the House does not even divide. The Opposition is on the side of the Government more often than it is on the side of the crossbench.

    The Hon. Charlie Lynn: You only come over here to get your voting average up.

    The Hon. Dr ARTHUR CHESTERFIELD-EVANS: I do not vote tactically. Each of my votes relates to the issue.

    The Hon. Patricia Forsythe: Name them!

    The Hon. Dr ARTHUR CHESTERFIELD-EVANS: I vote on every issue. I cannot name every issue. Name any issue and I will answer that I voted 100 per cent the correct way on it.

    The Hon. Patricia Forsythe: Tell me about your friends on the crossbench.

    The Hon. Dr ARTHUR CHESTERFIELD-EVANS: Some of them are not in my party, which is their error but I do not hold it against them. Members of the Opposition are busy heckling. They criticise this bill but they will probably vote for it anyway. What can they say? They have no credibility. The Coalition is worried because the Government is more conservative than it.

    If one asks the wrong question, one gets the wrong answer. The Government asked how to fix and lower insurance premiums. The simplistic answer seems to have been to cut the payouts to see whether premiums will come down. But today we could not get the Insurance Council to commit to any sort of premium level. It is difficult to believe that the Insurance Council could not use its data to model a change in payouts or a change in circumstances to come up with some ballpark figure. The council said, "It's 12 per cent or 10 per cent, but we can't commit to any per cent." The Government has asked, "How do we fix insurance premiums?" Insurers have come up with their usual callous—and, I believe, thoughtless—solution. The question that should have been asked is, "How do we balance risk and benefit to society in a cost-effective way?" But they were not asked that question. The Government basically asked, "How do we fix insurance premiums?" It has gone ahead to fix insurance premiums without, I believe, thinking the issues through in any comprehensive fashion.

    If we are to solve problems in society, a number of possible questions may be considered. We could ask, for example, "What are the consequences of people being injured or not having a job?" We can either use charities, who use well-intentioned people with nobless oblige, who knock on doors on Sundays to collect money to run soup kitchens all week. That is the charity method of solving social problems. Or we can have the bureaucratic way, through something such as Centrelink, whereby people who do not have jobs or who are socially disadvantaged go through a bureaucratic procedure and get paid. Or we can have the tort method. Honourable members were given some statistical information today by the Insurance Council of Australia in the form of pie charts. I asked for the figures, but the council did not give me figures. From the pie charts of personal injury cases, about 35 per cent of the quantum value of those cases was taken up in legal costs. That means, generally, plaintiffs' costs and defendants' costs. I do not know whether court costs were included, but I presume they were external to the pie chart. They should have been included in the pie chart. Tort law is a 35 per cent overhead of delivering the benefits.

    It is interesting to look at other types of benefits. I do not know off the top of my head what proportion of the welfare budget is apportioned to run Centrelink, but I believe that the cost of running Medicare is about 4 per cent of the amount of money it pays out, so that about 96 per cent of the budget of Medicare goes to those who are being paid to look after the sick. In the case of tort law, 35 per cent goes in legal costs, we do not count the costs of the courts, and the payout figure is less than 65 per cent of the pool. That is a very inefficient way of delivering a social benefit. Compare Medicare to United States health funds, which have administrative costs of up to 22 per cent. Clearly, it is more cost effective for them to work out how not to pay people's bills than to reduce administrative costs. The question is: How much of each social welfare dollar is spent in the administrative cost of working out who is to get the money? One would have to conclude that tort law is quite an inefficient way of delivering a social benefit.

    How would it be if the tort law system were used to dole out money for unemployment benefits? Imagine the shambles. Imagine how much money some would get and how little others would get. The Government should not be looking at how it can use tort law to cut insurance premiums. It should be asking itself, "How do we balance risk and benefit in a way that is cost effective for society?" The Government has not taken a leadership role. It has not thought the problem through. It has come up with a shoot from the hip answer. Presumably it has brought on this debate on the night of the delivery of the budget so that the bill will get little media coverage and there will be little time to pay attention to options.

    There is an extraordinary arbitrariness on personal injury. Some years ago I was cleaning out my gutters. I nearly fell from the roof. I hung onto the gutter for a while before I managed to get my feet back on the ladder. I thought, "That was a close thing!" What would have happened if I had become a quadriplegic? The young fellow who dived into the water at Bondi and was recently awarded $3.7 million has not, I am told, set a precedent because that award was in large part due to inept legal work on the part of the defendants, who thought they could not lose. Many people injured in motor vehicle accidents get quite a lot of money, while those who fall from a ladder at home get nothing. People injured at work in certain circumstances get big payouts, but those injured in certain other circumstances get nothing. In relation to social justice and cost per unit of human welfare, there is great arbitrariness.

    The New South Wales Government, which presumably takes great pride in being a government of equity—which I frankly think is a vain bleat—should think of these issues in the bigger social context. But it has not. It has tried to solve the insurance premium problem, and as a consequence has devised a system that is grossly unfair and that will create an immense number of problems. I will touch briefly on those before I conclude my speech. In seeking a solution on how to deal with this issue, I wrote to Parliamentary Counsel and said:
        I am trying to organise a fairly major series of amendments to the Civil Liability Bill, which is conceptually flawed.

        In short, I want to consider alternative options to tort law as a way of controlling risk in society. What is needed is to balance the risks and benefits of facilities and services in society. This could involve an enforceable inspection and certification mechanism for professions, public buildings and facilities, and entertainment venues. This should be backed up with an education and some sort of punishment system for those who do not behave in a competent and ethical manner. Once these criteria are met, then there should be limitations on the ability to sue, but exemptions for extreme cases.
    In that letter I spoke about a number of quality control systems modelled on professions. For example, medical quality control requires a medical board to control registration, a medical investigation tribunal to investigate mishaps, and a disciplinary tribunal based on the findings of the investigation tribunal. The Health Care Complaints Commission would be a consumer advocate with input to the process. This was a model for finding negligence and discussing things, probably on the principle of what a reasonable person would do, rather than perfection. I think that lowers the bar somewhat, but at least it is lowered equally across the board for those who are injured.

    This model may work for other professions, such as law and engineering, under which somebody applies the reasonableness test. It is not perfect, but it means that people take the risk and some of the arbitrariness is taken out of the process. Premiums will come down because someone is testing whether people acted reasonably in the opinion of the profession. Of course, those in the profession accused of being less than competent will come before their peers in the profession, be immediately identified and be involved in the process, which hopefully will result in a feedback loop of quality control.

    Another example of a model that would work relates to the building industry, which needs a more credible certification and inspection system. As we know, since privatisation of the inspection system a large number of buildings simply cannot be certified as fit for human habitation, or cannot meet fire regulations or other necessary standards. Phoenix companies would have to be stopped as part of that regulatory system, and there would need to be permanent or long-term deregistration of bad builders. The feedback loop is missing in that profession. Of course, as we have seen, insurers in that area also have great problems—problems that I believe are due to the lack of a credible regulatory system.

    Councils and buildings use standards and regulations, and they need to have limitations if the arbitrariness of the tort system is to be countered and facilities are to be raised to a defined and appropriate standard. Some of the money that might otherwise go to lawyers could be put towards maintaining the standards of buildings and facilities per medium of a credible inspection system. That money will result in less accidents. Make no mistake: prevention—which the Government has a congenital inability to understand—is extremely important in a large number of aspects of our life. I talk about the budget and how inept the Government has been in the preventative area. This Government does not think about prevention at all.

    Amusement parks and adventure sports are a difficult area. They may involve a higher degree of consumer responsibility. But, again, there are appropriate standards, and there should be an inspection, regulatory and even disciplinary model in that area. This is a better way of resourcing society than by simply saying that we have our tort law, everybody is frightened, and we will basically change our practices in response to that fear in a far less controlled and inspected way.

    The Government should introduce a number of quality control mechanisms divided into professions or, shall I say, areas. I suggest four areas with which to commence: medical and the professions, building industry, council and building industry regulation, amusement parks and adventure sports. A procedure for the assessment of injuries and long-term impairment is also needed so it does not become a huge matter of legal wrangling. The model reforms I suggest were first mooted for the Motor Accidents Compensation Bill a couple of years ago. Instead of having two teams of doctors arguing in court, three steps were suggested: first, assessment of the injury; second, based on the assessment, an assessment of the disability and potential rehabilitation; and, third, assessment of economic loss. A formula exists which is not derived from the arbitrary American Medical Association guidelines but is, rather, a realistic examination of a person's injury.

    I believe there should be some degree of rights of appeal in tort and some room for litigation in tort, but that would apply to cases that are in a somewhat restricted category. Obviously if malice is involved that would make a difference, and I will deal in more detail with that point later. Known high-risk hazards, such as tobacco and asbestos, must not get an exemption under the law. Well-documented cases show that industry has been cavalier in subjecting people to risks and has shown no concern for the effect that marketing will have. Those industries should not be given an exemption because the Government is frightened of increased insurance premiums. The Government should not adopt the attitude, "Oops! We took huge causes of action away from people because we were busy lowering insurance premiums and did not really notice."

    When I pursued my suggestions—in a form slightly briefer than the one I am currently engaged in—Parliamentary Counsel said to me: "That is six months work, you know, even if it is within the leave of the bill, and you have got four hours of drafting time left, mate. Not a hope!" I did not give myself much hope because I recognised what a huge task it was, but the longest journey begins with the smallest step. I believe that the New South Wales Government and the Federal Government have totally abdicated their responsibilities of examining these problems on behalf of society. The role of governments is to lead. I have often been criticised by the New South Wales Government, which claims that I criticise without offering alternative suggestions, and on this occasion I have offered alternatives. It is the responsibility of government to provide leadership and if this Government wants to lead—and currently it is pretending to lead by offering this cowboy bill—it must grasp the nettle of society's problems and solve them. That is how politicians and Parliament get respect in the community.

    The Government should recognise society's problems, discuss them in an open and clear way, and come up with workable and just solutions. That is what government is all about and that is what the New South Wales Labor Government should be doing but is not doing. The Government gets pushed around by lobby groups, yields to the lobby groups and wreaks vengeance upon society as a whole through legislation of the type that is currently before the House. During this debate there has been mention of the no-fault scheme in New Zealand, which is known as the Accident Compensation Commission [ACC]. I worked in New Zealand as a doctor for some time. New Zealand does not have an equivalent to the Medicare system. If a person suffers a work-related accident his or her medical bills are paid by the ACC. It does not pay his or her bills if the accident is not work related.

    The doctor for whom I was working in a relatively poor timber town on the South Island of New Zealand told me that the best way to get the money out of the ACC was to give a long name to the diagnosis so that the commission would not understand it. She suggested that I should call the condition something complicated. The scheme in one sense replaced a scheme that was similar to Medicare. It must be recognised that universal insurance effectively becomes arbitrary in a welfare scheme, and that is the problem with universal welfare. It is far better to have good preventive systems that are feeding back and delivering a maximum amount of benefit for the amount of money that is invested. The proposition that people's lives can be replaced by a dollop of money after they have suffered major injuries must be recognised as untrue, except for very few cases. Generally speaking, that is not what has happened across the board.

    The insurance lobby seems to have been able to convince the Government that the whole scheme should be backdated and made retrospective on the pretext of preventing a flood of litigation. That is hardly the reality—people are not going to purposely injure themselves to get a better financial deal. The bill should be enacted from the date of its proclamation in line with the convention of dealing with bills. The Premier threatened to sideline this House with a joint sitting. The only State in Australia that does not have an upper House is Queensland. At one stage Queensland had a Premier—if that is the correct term—who had all the power with 28 per cent of the vote, yet was happy to term that a democracy. In this State we have a draconian Government which, with its policy in relation to prisons and law and order, is beginning to rival Joh Bjelke-Petersen's Government. In this House the Government has 37 per cent of the vote, yet it swaggers about saying that it wants 100 per cent of the power and does not want the upper House to obstruct it. Sadly, the Opposition will probably roll over and will not control the Government either. I suppose that remains to be seen, but if I were a gambling man I would say that Opposition members will roll over, despite their heckling.

    At present the Queensland Government seems to be engaging in a consultation process. I believe that the Federal Government and this Government should also undertake a consultation program. Apparently the bill before the House was precipitated by a large increase in insurance premiums, particularly for public liability insurance. Throughout the country a number of sporting and cultural events have been cancelled because of huge public liability insurance premiums being demanded by insurance companies. One of the reasons proffered was the events of September 11, when insurance costs frightened people in Zurich. The terrorist bombings in America made insurers realise that they do not know what the insurance costs are. Premium costs are very high and insurers in Australia are responding accordingly. Other reasons given are that there have been large damages payouts by courts and lawyers, and that HIH artificially lowered the cost of premiums for some years thus sending the whole industry into a period of relative loss. Nevertheless, if those reasons reflect market forces, why should this Parliament pick up the losses? When insurers make profits, the Parliament and the people of New South Wales do not pick up those profits.

    This is a long-term cyclical industry. Its bad periods have to be accepted in much the same way as farmers accept bad times, without this Parliament legislating to destroy other people's rights to address what is, in essence, a short-term problem. The bill contains a number of elements that reduce the ability of an injured person to claim compensation and achieve the appropriate level of compensation. The elements are a cap on the amount of general damages of $350,000, a 15 per cent threshold below which there will be no award of general damages, and a cap on claims for economic loss of three times the average weekly earnings. That is interesting because the Insurance Council of Australia commented today that that is pretty reasonable—after all, most people have life insurance. In other words, another insurance product was going to fill in and the whole idea of damages was really almost trivialised.

    Lump sum damages will be discounted at 5 per cent, whereas at present the rate is 3 per cent. Exemplary, punitive and aggravated damages will not be awarded in negligence cases and defendant's solicitors costs will be restricted. There will be cost penalties for either party who prosecutes a claim that has no reasonable prospects of success, so deciding which claims come into that category is highly risky. The bill will be backdated to 20 March.

    The bill seeks to address perceived problems in the insurance sector in a number of ways. The simple approach has been used by this Government in motor accident and workers compensation legislation. Who can forget the pickets outside Parliament House relating to workers compensation legislation? Tonight, the Government did a lot better. Debate on this legislation is taking place on budget night and there are no pickets outside Parliament House. However, we are basically dealing with the same thing. Payout benefits have been reduced and the Government is hoping that premiums will fall. That has not happened in relation to third party green slips without strenuous encouragement and it probably will not happen in relation to public liability premiums.

    The bill as it stands cannot be supported. Substantial amendments would have to be passed to even approach a workable compromise. The cap on general damages will disadvantage those who are most severely injured and unable to afford the care that is needed. The burden for care will fall on friends and relatives or, in many cases, the health system. The 15 per cent threshold will cut out many deserving claimants on the pretext that small claims are too much trouble. A fairer approach would be to have small claims made the subject of compulsory mediation settlement. Discounting lump sums from 3 per cent to 5 per cent will mean that there will be less money to maintain the severely injured in their advancing years. Making the bill retrospective is unjust, unfair and contrary to Democrat policy. People will not get injured just to enjoy the benefits of the present system.

    I received a letter from Ross Pfennigwerth, a solicitor in Newcastle, who made some valid points which I would like to put to the Minister. If a person sues an assailant, for example, after being attacked and struck in the face with a broken glass, is that person still able to sue the assailant although he does not have personal insurance? In this case entitlements under the Victims Compensation Act were reduced by the Government and a claim may be made against the assailant. Does a case such as that still come under this Act? Have claims for cases such as this been reduced? If so, why? In light of the Government's strong stance in regard to penalising criminal activity, it would seem quite inappropriate for it to reduce the rights of injured persons and to protect wrongdoers from personal liability under civil law.

    Will the rights of victims of sexual assault be similarly affected? Many claims come to light a considerable time after such offences are committed. Many victims are legally disabled and they are entitled to maintain actions long after the event has occurred. Will an assailant's personal liability reduce a victim's entitlements? Another class of action relates to claims for defamation in which an element of the claim is for psychological damage. Is such a claim reduced by this bill? One would have thought that, as the Government is making such big changes, it would have considered a notification system such as the system that exists under the Motor Accidents Act which requires insurers to engage in early settlement negotiations.

    The Act seeks to reduce the rights of injured persons, but it imposes no obligations on insurers to fully explore pre-litigious settlement. One of the problems with the present system is that insurers consistently fail to respond to proposals for settlement before litigation so that litigation becomes necessary. If this bill becomes law, that trend will worsen. What has brought us to this present crisis? Ross Pfennigwerth said:
        It should be noted that "the crisis" has been brought about, in no small measure, by two decisions by Governments in the past.

        First, the Government over the objections of the Law Society, legislated to allow solicitors to advertise. The basis of this proposal was that competition would be good for public and profession with the effect of reducing costs. In fact, the reverse has occurred costs have risen as have the number of claims...

        The second action by Government which has contributed to the current circumstances is the decision to privatise the Government Insurance Office. The GIO was always a moderating influence in the insurance industry. While ever it I was responsible to Government it could balance the markets.

    Figures for costs and payouts were well-known to this government instrumentality. If insurers made outrageous claims or responded to overseas reinsurance trends, the Government understood what was going on and it took a far more balanced view. In this instance, however, the Government has panicked and it is doing what insurance companies want it to do. Ross Pfennigwerth also said:
        The experience of caps under the Motor Accidents Act 1988 shows that the imposition of caps results in every case being scaled up in proportion to the maximum available. This increases damages rather than reduces them and is therefore counter productive.

    As a result, courts try to overcome the limitations that have been placed on them. Ross Pfennigwerth continues:
        The 15% threshold under the Motor Accidents Act lead to many cases being scaled up by courts so they would reach the 15% threshold because of perceptions of arbitrary unfairness.

        A better proposal would be not to impose a cap. A cap would apply to very few cases. A provision could exclude claims for damages for non-economic loss where those damages were less than a fixed amount, say $7,500.00 This would give the courts flexibility so that trivial cases were excluded and genuine although small cases were awarded some compensation.

        The 15% threshold would deprive children, the elderly and students to damage in cases where there is little or no economic loss. This is unjust. In such cases, the cost of litigation could be minimised by compulsory pre-litigious settlement processes and conferences. I commend this proposal to you fearful that your Government will come to be regarded as acting harshly and without warrant to effect liability in many cases of genuine merit.

    In relation to exemplary and punitive damages he goes on to state:

        There seems little basis for abolishing these types of damages.

        Aggravated damages are awarded only where a defendant has treated an injured person with contempt.

        In those situations it is inappropriate for the government to protect those who have acted wrongly at the expense of those injured or who have been treated shamefully by a defendant …

        It appears that the intention of the Bill is to exclude these claims because it is thought that they may tend to push a claimant, who otherwise would not be entitled to damages for non-economic loss at all, over the threshold. The cases in which this might occur would be few and it would be just to do so where appropriate. The Government should not interfere with these entitlements as doing so will be seen as protecting those who acted wrongly and hindering those who have been injured from claiming fair compensation …

        The Bill is to apply to claims in respect of injury or death occurring prior to the enactment of the Bill unless proceedings were commenced prior to 20 March 2002.

        The Government gave no notice that this was its intention.
        As you are aware there is a long-standing constitutional convention that, with the exception of money bills, Parliament will not enact retrospective legislation.

    These cost provisions are arbitrary, unfair and unwarranted. If we cannot get legal help, how can we obtain justice in a system that is much too complex for most people? Given that I could not fix the bill along the lines that I outlined earlier, I propose to move four amendments in Committee which will attempt to make the bill fairer. The first amendment will remove the cap on damages for economic loss. If that amendment is not successful I propose to impose a penalty on insurance companies. If premiums do not reduce by 10 per cent that cap will not apply. My third amendment will retain punitive damages for tobacco and asbestos manufacturers. My fourth amendment will refund that part of the premiums that has already been paid as they were calculated on the basis of risk in an unfettered negligence system. In other words, if the risk drops there should be a premium rebate.

    Clearly, we are not getting the same insurance for which we have paid. I believe that there is a good argument for a completely different scheme. I have tried to outline that scheme to the Government. I mention for the benefit of honourable members that the Insurance Council of Australia and some local councils, including Sutherland, North Sydney and Waverley councils, have supported the bill. Perisher Blue ski resort and Murrays coachlines have also supported the bill. However, a far greater number of people have opposed the bill.

    The Alliance for the Victims of Accidents—a large number of groups come under that umbrella—the Australian Consumers Association, the Australian Plaintiff Lawyers Association, the Bar Association, the Law Society of New South Wales, New South Wales Young Lawyers, Wollongong District Law Society, the Coalition for the Injured, Dare to do Australia, the Multicultural Disability Association of Australia and a number of law firms oppose the bill. However, I believe that had more people been aware of the bill they would have asked for a more comprehensive solution, which I ask for. My amendments, if passed, will not do anything other than mildly mitigate the situation. The bill is poorly considered, it is a retrograde step, and the Government should be able to do better.

    The Hon. PETER BREEN [10.10 p.m.]: Firstly I congratulate the Government on producing a consultation draft of the bill. The draft provided the opportunity for community discussion and allowed people adversely affected by the bill to canvass their concerns. New South Wales is leading the country on tort law reform, and I understand the Civil Liability Bill is the first of the proposed laws arising from the meetings between the Federal Government and State governments. The bill addresses the major concerns of all interest groups involved in the consultation draft. Lawyers, in particular, have much to be grateful for, as the bill is a substantial improvement on the consultation draft.

    I could not have supported the bill as contemplated in the original proposal, particularly as it affected lawyers and legal costs. Caps on legal costs were unrealistically low and the test for deciding whether a case was unmeritorious raised serious concerns. Lawyers have been asked to carry much of the responsibility for the need to reform civil liability law. Many people have told me how lawyers exploited the system, and advertisements for no-win-no-fee legal work are frequently cited as evidence of lawyers' greed. As I have said on other occasions in this House, as a group lawyers are hard-working, honest professionals doing the best they can to assist people who are the unfortunate victims of accidents. To pillory lawyers and say they are the driving force behind the personal injury insurance crisis is simply to shift the blame for 10 years of inactivity on the part of successive governments and the insurance industry.

    The Hon. John Della Bosca: We should have been tackling tort law reform before.

    The Hon. PETER BREEN: I agree with the Minister when he says we should have been tackling tort law reform before now. Because we are addressing it now, too late, the reforms are much more wide-ranging than would otherwise have been the case. It is important to note that the bill will address only some aspects of the personal injury insurance crisis. The Premier has foreshadowed changes to the law of negligence to be introduced in Parliament in the Spring session following further community consultation. Some cynics say the Premier wants to get maximum electoral benefit from these proposed legislative changes by introducing them closer to the next State election. If the cynics are right, and this is a deliberate ploy on the part of the Premier, then good luck to the Premier for having the courage to take on those who believe that for every disaster somebody should be standing by with a chequebook.

    The days have long since passed when people could expect, unreasonably, to be compensated for injuries in circumstances in which their own negligence, their own acts and their own fault were not properly taken into account by the courts. The law needs to recognise that life is a risky business and people need to take precautions against the risk of foreseeable injury. I, for one, look forward to the tort law reforms foreshadowed by the Premier. I have some concerns about them, which I will refer to briefly.

    Perhaps only one aspect of the bill remains to be resolved. I refer to the vexed question of retrospectivity. I am advised that insurance companies have already set their current insurance premiums based on the cost of reinsurance. These premiums were calculated following an assessment of the risk under the existing law, not the law as it will be prescribed by the bill. Actuarial advice dated 23 May 2002 indicates that the insurers will make a windfall profit of up to $150 million as a result of the retrospectivity aspects of the bill.

    Today crossbench members were briefed by the Insurance Council of Australia [ICA]. I informed the ICA representatives that I had no objection to them making a windfall profit of up to $150 million, provided this extra money was reflected in lower insurance premiums down the track. Needless to say, I received no guarantees, other than nodding agreement with the principle that premiums have already been paid for existing cover and insurers should honour their part of the insurance contract. The Hon. Dr Arthur Chesterfield-Evans referred to the fact that premiums had already been collected in respect of an insurance contract. On the question of retrospectivity, no doubt the Government will argue that the person injured and whose damages are reduced by the bill is not a party to the insurance contract, and therefore the insurers are not walking away from their contractual obligations.

    To illustrate the point with an example, if a person is injured in a fall on the steps of my premises, I am the one who has paid the insurance premium for public liability cover, not the person who is injured. That is an important aspect of this legislation that needs to be borne in mind. I am getting what I paid for—that is, insurance cover for public liability. If the Government reduces the level of that cover by statute, the insurance contract is not compromised. In other words, under this legislation as it stands after 20 March, the person who falls on the steps of my premises and is injured will receive a smaller pay-out than he or she might have received previously. However, that does not in any way diminish the contractual arrangement that I, as the insured, had with the insurance company.

    This argument in relation to the retrospectivity aspects of the bill might be persuasive, except for the fact that the Government itself has excluded from the ambit of the bill claims against the Crown. It is my contention that the law should apply equally and there is no basis for the artificial distinction between public and private claims. The retrospectivity question raises issues about equality before and under the law, and the way it operates in the bill is discriminatory. On that basis I will support the Opposition's amendment when the bill is debated in Committee, and I urge other members to do likewise.

    I would like to conclude by referring to comments by the Hon. Ian Cohen and the Hon. Dr Arthur Chesterfield-Evans to the effect that the insurance industry is the beneficiary of this legislation, to the detriment of victims of personal injury. The argument may be true in respect of the next series of tort law reforms due in the Spring, but I do not believe it is true in respect of the present bill. Nobody is happy about the problems giving rise to the need for this bill, but there is general agreement amongst the various stakeholders involved in the bill that something needs to be done. We cannot allow people not to be insured. We cannot allow people who get the protection and benefit of insurance not to have proper cover. Doctors are one example that comes to mind. Many doctors in the community are gravely concerned about their level of insurance cover as a result of the collapse of United Medical Protection. Enormous problems have arisen in the insurance industry generally as a result of what occurred in America, and as a result of various other matters that are beyond the control of the people of this State who have taken out insurance cover.

    I have just renewed the insurance on my motor car, and the comprehensive policy premium was up nearly 100 per cent on last year. This is a general problem in the community, and it is not good enough simply to say that it is the Government's problem or the insurance company's problem. This is a problem we all have. In 1999 the Government addressed what it saw as a growing problem with the motor vehicle accident legislation. That was followed by amendments to the workers compensation law, which went down the same track, and then amendments were made to the health care liability legislation. Broadly, those amendments achieved the same objective of reducing somewhat the amount of cover people receive. They also had the objective of reducing premiums. I am the first to acknowledge that the insurance industry is getting off pretty lightly, in the sense that no controls are in place to make sure premiums come down, but the reality is that insurance premiums must be stabilised otherwise people will not be able to afford to be covered.

    This legislation has to be seen in that context. It is one aspect of a wide-ranging attempt to deal with excessive insurance premiums as a result of incidents beyond the control of the people of New South Wales. On this basis I believe the bill ought to be supported. There ought to be general support amongst the community and those who represent the community to make sure that these problems are dealt with. In the absence of any other solution to the problem, I think the bill is worthy of our support.

    Debate adjourned on motion by the Hon. Peter Primrose.