Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I have some significant concerns with the Aviation Legislation Amendment (Liability and Insurance) Bill 2012. At the outset, I should disclose that I am still a lawyer and that I have a very small practice in suburban Adelaide that specialises in personal injury work, but aviation work is an area that I do not think my firm has done.

Whilst I support the increase in liability that carriers are required to hold, from $500,000 to $750,000, I am concerned that there is no mechanism in the bill to provide for further indexation. I also have significant and serious concerns about the 'pure mental injury' provisions in this bill. These provisions will mean that a person who suffers from mental injury when it is not in conjunction with physical injury or property damage will not be able to claim under the Civil Aviation (Carriers Liability) Act. I acknowledge that these measures are already in place for international flights and that this change will bring the domestic sector in line with that.

I also note that these requirements are consistent with Australia's responsibilities under the Montreal convention, but that does not mean that they are right. My view is that we should not lower the level of protection we offer domestic travellers because we can or because that is what everybody else is doing. We should not have a race to the bottom when it comes to compensation for people who are injured in aircraft accidents or who are injured and suffer genuine trauma as a result of an aircraft accident. I understand the reasons behind this change and the need for checks and balances to ensure that insurers are not required to pay out on false or misleading claims, but the courts are there to provide that safeguard in relation to ensuring that the claim is genuine.

But these new requirements in relation to 'pure mental injury' do not seem to address the fact that, like cars, aircraft are getting safer and safer. We are no longer looking at mental injury claims confined to instances such as turbulence, which could be considered as an acceptable risk and one that travellers need to take into account as a typical occurrence and part of air travel. Instead, in recent years, we have seen examples of aircraft that have suffered significant damage but have landed, thankfully, safely with no injuries on board. For instance, in July 2008, an oxygen tank exploded on board QF30 while it was en route from Hong Kong to Melbourne. The explosion blew a two-metre hole in the plane's fuselage, resulting in depressurisation and the deployment of oxygen masks. Some passengers later reported that some masks did not deploy or had deteriorated elastic. These passengers remained oxygen deprived until the plane descended to a lower altitude. QF30 made a safe emergency landing in the Philippines and no passengers were injured.

More recently, in 2010, QF32 suffered an uncontained engine failure a few minutes after taking off from Changi Airport in Singapore. The explosion in the Rolls Royce engine punctured the wing, damaged fuel lines and hydraulics, degraded to other engines and affected the landing flaps and control over the No. 1 engine. The crew circled for over an hour until they could determine the plane's status and whether they could land safely. Captain de Crespigny, who has written a book about it, set out well the circumstances in which he and the crew heroically saved that plane. Eventually, they were able to make an emergency landing in Singapore, but the damage meant that the No. 1 engine could not be shut down, passengers remained on board for another three hours while fire crews doused the engine and aircraft with foam. Again, no-one was physically injured.

Thanks to the remarkable skills of the crews on QF30 and QF32, and to the integrity of the aircraft they were flying, both damaged planes were able to make it to the ground safely. Whilst none of the passengers were physically injured, it is hard to believe that people would go through such an experience without some people suffering some form of mental injury. I know that in both of these cases the flights were international and, as such, passengers were not able to claim under the mental injury provisions. But that does not make it right and it does not mean that we should have the same provision for domestic flights. Ultimately, the advances in aircraft technology and crew training mean that it is no longer reasonable to assume that a passenger who is involved in an accident serious enough to cause mental injury would also have some form of physical injury. As these two examples show, this is simply not the case. Should passengers in this situation be disadvantaged just because they were lucky enough not to be physically injured, whereas they may suffer in some cases a genuine psychiatric injury?

I also want to briefly touch on the indexation of the monetary cap on compensation. The last changes to this cap occurred in 1994—some 18 years ago. In my view, 18 years is too long a period between adjustments and there should be a specific provision in the bill to address this and to allow for future increases. I am grateful to the government for the discussions they have had with me on this issue. It is unfortunate they could not support such a provision.

I will be moving an amendment to this bill in the committee stage that will attempt to find some middle ground. My amendment requires the minister to commission an independent review of these provisions three years after their commencement. The review must consider the issue of indexation and also the effect the change to the mental injury provisions has had on the travelling public. The amendment also includes requirements in relation to releasing and tabling the report from such a review. I hope the government will recognise this amendment as a necessary safeguard in relation to this bill, and I look forward to discussing these matters further in the committee stage. While I support the second reading stage of the bill, ultimately I would find it very difficult to support the third reading stage of this bill because it takes away people's rights to compensation.

Finally, I would like to acknowledge the work over many years that Peter Carter, a lawyer in Brisbane, has done in relation to aviation law. He specialises in this field, and I am grateful for his advice in relation to this and also his concerns about the issue of indexation. I am grateful to Peter Carter for his advice and for his expertise in this field. I look forward to the committee stage of this bill, but I think it is important that there is an appropriate review mechanism for something that effectively is taking away people's rights. If we have to wait another 18 years for indexation or to upgrade levels of compensation, that clearly is not acceptable to the travelling public who may have the misfortune to be injured in an aviation accident.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

On consideration of Senator Xenophon's amendment, we acknowledge the issues pertaining to the indexation and how Senator Xenophon is desirous of liabilities that he spelt out, such as the issue of, I think, Captain de Crespigny—

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Crespigny, yes.

Barnaby Joyce (Queensland, National Party, Leader of The Nationals in the Senate) Share this | Link to this | Hansard source

and the trauma that certain people on a plane may have had by reason of being involved with that event. However, we do not wish to expand the liability for the airlines. The bill as the government has proposed already spells out an expansion of a carrier's liability—from $500,000 to $725,000. We think that the issues pertaining to any liability matters are already carried in that. A future increment or a review of an increment in an airline industry which we can already see is under pressure—we have seen it with Qantas, we have seen it with other domestic airlines—will just exacerbate the issue. We will be supporting the bill but not supporting the amendment.

Kim Carr (Victoria, Australian Labor Party, Minister for Human Services) Share this | Link to this | Hansard source

I would like to commend the bill to the chamber. I thank senators for their contributions. This is a bill that modernises Australia's arrangements for air carriers' liability by increasing various outdated caps on carriers' liability for domestic travel. The $500,000 cap was last increased in 1994. Under this bill it will be increased to $725,000 to account for inflation.

Importantly, the bill will also increase the level of mandatory insurance for airlines. The bill will incorporate the principles of contributory negligence so that compensation payments may be reduced where the victim was partially responsible for damage. The bill will also include a right of contribution so that defendants to a claim under the Damages by Aircraft Act 1999 can seek contribution from other parties who may have contributed to the damage suffered by a person bringing a claim. This bill will ensure that victims are adequately compensated in the circumstances where there is an unfortunate event of a domestic aircraft accident. The government will not be supporting Senator Xenophon's amendment.

Question agreed to.

Bill read a second time.