HANSARD EXTRACT
|
Trade Practices Amendment (Personal Injuries and Death)
Bill 2004: Second Reading |
| 14 September 2005 |
Mr HAYES
(Werriwa) (11.21 a.m.)—For
some time community groups, individuals and businesses have all
expressed concern about the rising cost of public liability
insurance. No doubt many members on both sides of the House have
been lobbied at various times about the cost of such insurance to
various community based groups that have sought to obtain public
liability insurance or, more appropriately, as the member for Hunter
pointed out, that have found that it is just not available to them.
The problem of public liability insurance premiums is one of the
principal reasons that the government has brought the
Trade Practices Amendment (Personal Injuries
and Death) Bill 2004 before the parliament, but it is
also a reason that I find somewhat lacking. The government has
brought this bill before us on the basis of arguments that, after
some closer analysis, are particularly unconvincing.
The Trade Practices Act has undergone many
amendments but remains an important piece of legislation, outlining
a number of key consumer protections and governing the activities of
companies and some individuals. The provisions of the act allow for:
the prohibition of unfair, unconscionable, misleading and deceptive
conduct; the right of consumers to purchase goods of acceptable or
merchantable quality; consumers injured by defective goods to seek
compensation for their injuries; the Commonwealth minister to set
product safety and information standards; and the Commonwealth
minister to ban supply of unsafe products or to order their recall.
These are significant and important provisions
that should not be discarded lightly. The provisions of this bill
seek to remove an important provision from the Trade Practices Act.
As the Minister for Revenue and Assistant Treasurer correctly noted
in his second reading speech, part V division 1 of the Trade
Practices Act prohibits, under civil law, unfair practices,
including misleading and deceptive conduct, from trade and commerce.
Penalties for such actions are provided under part VC division 2 of
the act. As the minister noted:
The measures contained in this bill will amend
the Trade Practices Act to prevent individuals, and the ACCC in a
representative capacity, from bringing civil actions for damages for
personal injury or death resulting from contraventions of part V
division 1 of the Trade Practices Act.
Obviously such a significant reform to the act poses the question:
‘Why?’ The minister went on to explain:
These reforms are aimed at limiting public
liability claims costs in order to reduce pressure on insurance
premiums and assist in delivering affordable public liability
insurance.
I have no doubt that those groups and individuals who have faced
considerable increases in public liability insurance premiums and
those who have been unable to obtain public liability insurance at
all would welcome any action to reduce the upward pressure on
premiums. However, like everything that seeks to sweepingly remove
important provisions in legislation, the consequences—perhaps not
the immediate ones but certainly the ones in the not too distant
future—also need to be taken into account.
It is far too simple to say that the problem
will disappear or that a solution will present itself when we simply
remove sections from legislation. Often when we try to apply a quick
political fix to a situation some unintended consequences are
missed. Before we take action to throw the baby out with the
bathwater, I think it is time for a closer examination of the
issues. There is no doubt that the premiums associated with public
liability insurance have been the source of much concern over recent
years. We all remember the headlines about the community groups,
about the local scouts and about the school fetes that could not go
ahead because of high public insurance premiums—or because such
insurance to underwrite an event in the first place could not be
secured.
As the minister has noted, the driver for this
legislation is to reduce public liability claim costs and reduce
pressure on insurance premiums, in order to assist in delivering
affordable public liability insurance. I find it interesting that
this remains the driver for this legislation, given the trend in
public liability premiums. For example, the New South Wales Chamber
of Commerce conducted a survey which indicated that there was a 43
per cent reduction in the number of businesses having difficulty
obtaining public liability insurance over the 12 months to July
2003. Another example is that a leading commercial insurer, CGU
Insurance Ltd, has cut its commercial liability insurance rates by
10 per cent in
New
South Wales—and, I assume, in other states. In addition to this, the
Australian Competition and Consumer Commission commenced monitoring
premium prices in July 2002 to assess whether the insurance industry
is reducing public liability and professional indemnity insurance
premiums. In January 2005, the ACCC reported that the average public
liability insurance premiums had decreased by 15 per cent between
31 December 2003 and
30
June 2004—a reversal in the pattern of premium increases that was certainly
obvious during the period around 2000.
Of course, this evidence is probably not enough
for the government, but the government did commission two
Commonwealth reports which found that public liability premiums were
down by between four and five per cent in the year to December 2004.
When the minister released these reports, he said that the results
came about because of the tough action of federal, state and
territory governments. Needless to say, the results that the
minister took the opportunity to praise make you wonder why the
government continues to pursue these amendments. It makes you wonder
why, with these amendments, the government is pursuing removing the
rights of consumers.
I was looking through the bill and thinking
that there must be something else to keep this alive—that maybe
there was an industrial relations implication. But, after going
through the bill, I find there is not. It seems that this is just
another example of the government’s pursuit of bottom standards on
so many fronts. That is the likely driver for the continued
existence of this bill.
If the evidence of the insurance premiums is
not enough for the minister and not enough for the government, maybe
they should have a look at the dissenting report of Labor senators
of the Senate Economics Legislation Committee. It noted that the
justification for the bill—the fact that the Trade Practices Act has
the potential to undermine state and territory reforms—was regarded
as less than convincing. The Law Council presented evidence to the
committee that only nine examples of cases could be found in which
people had tried to recover personal injury damages based on part V,
division 1. These nine cases were not in the last six months—they
were not even in the last 12 months; they were between the years
1989 and 2002. That is, nine cases were found over 13 years. And, of
those nine cases, there were a number through which no damages were
recovered.
But enough about why this legislation is not
needed because of the movement of insurance premiums or the number
of actions brought about through the Trade Practices Act. Let us
consider exactly what we will be losing under the provisions of this
bill. Once the Trade Practices Act is amended it will remove the
capacity for individuals, or the ACCC acting on behalf of
individuals, to bring civil action under part V of division 1.
Granted, while the option to pursue civil action may be removed,
government members have been quick to point out that the ability to
pursue damages under common law will remain.
We have all seen the difficulty of the
individual to pursue things under common law, and that will be
particularly so once the government rams through its industrial
relations agenda. Those of us on this side of the House know that
having an action at common law for most of us is the equivalent of
not having a means of appeal at all. An appeal based on the common
law for damages for most people is near on impossible. People cannot
afford to take long legal actions against major companies through
the courts. Even if an individual has a legitimate case, the company
they are up against can in most cases economically starve them out
of an action through protracted litigation. Oftentimes it is a
David
and Goliath battle in which
David, in this instance, would not stand a fighting
chance. To naively rely on the common law to solve problems is an
economically inefficient approach. The costs associated with
bringing an action would, from a societal perspective, no doubt
outweigh any benefit.
The Trade Practices Act has had an important
influence on the psyche of Australian business. The provisions of
the Trade Practices Act, particularly in part V, division 1, have
created what is often referred to as a ‘culture of care’ within the
Australian business community. As the Law Council noted in evidence
to the Senate Economics Legislation Committee:
One of the consequences of that legislation, I think, has been that
it has significantly improved the standards of behaviour that we
have seen across the whole corporate world ... in terms of product
safety and the actions of corporations in terms of their potential
to cause physical harm to individuals, there has been this strong
benchmarked potential liability imposed upon them. On the whole, I
would say that it has led to general improvements and one should be
loath to go down a path of in a wholesale way taking out whole areas
of action.
This is an important piece of evidence that the government and the
minister have clearly ignored. Product safety is important to
consumers. Consumers have rightly developed through time an
expectation that they will be able to purchase products that are
safe and, after taking into account the marketing hype, will, to a
greater or lesser degree, do what they are supposed to do.
It is also interesting that both the minister
and the government have managed to ignore other evidence to the
Senate committee. They have ignored the fact that, even though a
number of groups expressed opposition to the bill, they expressed
some support for alternative arrangements. The government has
managed to ignore the fact that the proposals had a common theme in
that the parties thought that the Trade Practices Act could be
amended so that damages for breaching part V, division 1 could be
bought into line with state and territory laws. That being
achievable, the justification for this bill would be very weak.
I find it difficult to believe that nine cases
over 13 years—a number of which were, as I indicated earlier,
unsuccessful—have driven up insurance premiums and will cause people
to jurisdiction shop. I have no doubt that rational individuals, if
they think they have a better chance or have a chance at achieving
greater damages, will exploit the rules in any situation, be it
through the Trade Practices Act or any other means. If nine cases in
13 years is the most that the Law Council could find in terms of the
use of these provisions of the Trade Practices Act, it is probably a
measure of the success of the act.
As I noted earlier, the fact that these
provisions exist and that actions can be taken against companies for
misleading or deceptive conduct that results in injury or death has
created a culture of care amongst manufacturers and suppliers. The
fact that legislation exists in which a means is created for
consumers to seek redress and that legislation exists that creates a
potential liability, be it implied or otherwise, has certainly held
producers to a higher standard. The numbers tell the story. Nine
cases over 13 years is a measure of the success of these provisions,
not a justification for their removal. The number of cases and the
amount of damages should be judged, quite frankly, as the
effectiveness of this piece of Commonwealth law. A small number of
successful cases being actioned under the provisions of the Trade
Practices Act are a measure of the strength of the law, a measure of
its success, not the justification for its dilution. They are a
measure of the seriousness with which producers take the act and a
measure of the discipline that is imposed throughout the corporate
world.
In this case, Labor’s proposals should be
adopted. Under the proposals of the opposition, the important
protections that have existed for some time would remain, the
protections described by the Law Council as having ‘significantly
improved the standards of behaviour that we have seen across the
whole corporate world’ would remain, the protections about which the
Law Council also noted that they would be ‘loath to go down a path
of in a wholesale way taking out whole areas of action’ would
remain, the ability for David to take on Goliath in something that
looks like a fair fight would remain.
The opposition’s amendments are simple. They
will retain the longstanding consumer protections under part V,
division 1. They retain the essence of the rigour that is imposed on
companies, implied or otherwise, under the Trade Practices Act. The
culture of care that has emerged as a result of these provisions
will remain. The discipline that companies have imposed on
themselves because of the consequences of having the Trade Practice
Act in existence will also steadfastly remain, because there is no
escape clause. However, as we pointed out, the bill could be
constructively amended to minimise jurisdiction shopping by aligning
the damages for breaches of the act where that would be consistent
with those within the state or territory jurisdictions.
But there is no way of dismissing the genuine
concerns of people in relation to death or serious injury by saying
that the only recourse they have is by applying the rigours of the
common law. This government may be in a race for bottom standards
when it comes to the conditions of working Australians, particularly
in relation to the industrial relations agenda. It may be willing to
throw everything away in an effort to outbid everyone else in a
quest for the cheapest, but there are some protections that should
remain and the provisions of the Trade Practices Act, quite frankly,
are one of them. I cannot support the removal from this act of the
capacity of individuals, and the ACCC in representing individuals,
to obtain redress through civil claims. I do not believe the
evidence supports it, and I do not believe that the public wants it.
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