George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I wish to make some brief comments in support of the amendment circulated in the chamber by Senator Conroy. I did not have a chance to speak in the debate on the second reading of the Trade Practices Amendment (Personal Injuries and Death) Bill 2004, so I will put the comments I want to make on the record now.

This bill is a response to rising insurance premiums, and is predicated upon the argument that increased litigation and increased damages for successful litigation are to blame for the rising costs of insurance. The assumption behind what is contained in this bill is that the only important thing is to prevent law suits. The bill substantially ignores the importance of the Trade Practices Act in protecting the rights of consumers. It follows, in many respects, the reform of tort law and other areas of compensation law, and bears resemblance to the workers compensation changes of a few years ago.

The basic debating point inherent in the bill is personal responsibility versus the right to be compensated when wronged against. The onus in the bill throws the focus back on to personal responsibility, rather than on the rights of individuals to seek compensation when they have been wronged. How can it be a matter of personal responsibility when a problem is due substantially to the negligence of someone else? That is what this bill substantially ignores.

The intent of the bill is to block damages suits related to breaches of part V division I of the Trade Practices Act 1974. The most significant parts are section 52, ‘Misleading or deceptive conduct’ and section 53, ‘False or misleading representations’. The bill seeks to stop ‘forum shoppers’—in other words, people who look for places where their action has the greatest chance of success. People cannot access the TPA for relief when other avenues have been blocked. There is nothing to suggest that there is a vast wave of action in this avenue. This bill substantially seeks to solve a problem that does not seem to exist. Litigation under those sections of the TPA has not been prevalent. According to the information available to me, there have only been nine cases prosecuted under those sections of the act between 1989 and 2002. It obviously cannot be argued that this has contributed to the boom in insurance premiums.

The bill follows on from a review of the law of negligence. This review was conducted by Justice Ipp, and is generally referred to as the Ipp report. The terms of reference for the review stipulated:

It is desirable to examine a method for the reform of the common law with the objective of limiting liability and quantum of damages arising from personal injury and death.

The terms of reference were obviously designed to achieve a contrived solution. The Ipp report stated:

There is no conclusive evidence that the state of the law of negligence bears any responsibility for this situation.

Further, it stated:

There is evidence to suggest that the insurance crisis is at least partly attributable to the conduct of certain insurance companies but that is not to say that the state of the law of negligence has not contributed to the current state of affairs.

This hardly constitutes a rousing call to cut away at the law of negligence.

The Senate Economics Legislation Committee, which reviewed the legislation and reported to this chamber on it, stated in the Labor senators’ minority report that the potential to incur damages is an incentive to make safe products and advertise them appropriately, that the bill could have adverse effects on consumer safety and will force consumers to make greater efforts to ascertain that goods are safe and suppliers are reliable, and that it essentially permits companies to win customers on the back of misleading and deceptive practices over companies that are acting ethically.

The bill simply makes it harder for people to claim compensation. If you take away these avenues to sue, what other options are then available for individuals to seek redress? For example, how can a consumer be sure that a product entering the market is safe? This will free up, in my view, shonky firms from potential damages and encourage them to engage in practices that, at best, are suspect. It will create competitive pressures in order to cut corners and it will reduce substantially, in my view, the incentive for companies to do the right thing.

One area that must be of particular concern is the area of electrical goods where standards in this area are usually pretty high. If you take the brakes off companies in terms of their ability to be sued if they put inferior products onto the market then you are potentially creating a problem of what could be of very substantial and serious proportions. But there also seems to me to be the potential in this legislation to create conflict between the sorts of goods that are entering into our market—which in many respects will be protected from litigation if they are found to be inferior or inadequate—and the standards that we set for production of goods in this country. That is an issue that I think has not been perhaps given enough consideration in drafting of this bill.

I would have thought the Trade Practices Amendment (Personal Injuries and Death) Bill (No. 2) 2004 provides a solution that is potentially better. That bill would have inserted a new part VIB into the Trade Practices Act 1974 setting down principles for calculating damages for personal injury and death where there has been a breach of the Trade Practices Act, barring part V division 1. This bill was also fulfilling a recommendation of the Ipp report. Why cannot the same solution and the same principles be applied to part V division 1 of the Trade Practices Act? If the problem is the quantum of damages and speculative claims pushing up premiums, is regulation of the damages not a better solution than none at all? This would offer some certainty for insurance companies to allay their need to raise premiums excessively. It would also maintain avenues for consumer recourse. This seems to me to be a better idea than simply cutting off those avenues to take action entirely.

In conclusion, this bill seems to me to seek to crack a walnut with a hammer. It aims to solve a problem by completely disadvantaging those who should be protected most from it. While small businesses and community groups may gain some small benefit, consumers in the end will lose what is a very important protection. Consumers will now have an important avenue of action cut off for want of a sensible solution and be denied a protection that they should inherently believe is there when they purchase goods in the open market. I support the amendment circulated in Senator Conroy’s name.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

I thank Senator Campbell for that thoughtful contribution. I move opposition amendment (1) on sheet 4822 standing in my name:

(1)    Schedule 1, page 5 (after line 27), after item 7, insert:

7A Paragraph 87E(1)(a)

After “Division”, insert “1,”.

This is a very simple amendment. As I mentioned during my remarks in the second reading debate, the parliament amended the Trade Practices Act in 2004 to insert a new part VIB. Part VIB establishes a regime to deal with compensation claims for death or personal injury. The regime only applies to specified provisions of the TPA. Section 87E of the TPA sets out the provisions of the act that are subject to part VIB; it includes prohibitions relating to unconscionable conduct and the sale of defective goods. It does not include actions arising under division 1 of part V of the act such as claims alleging injury because of misleading and deceptive conduct.

The effect of Labor’s amendment is to ensure that the damages regime contained in part VIB applies to claims for personal injury damages brought under division 1 of part V. The amendment will limit the amount of damages that are recoverable from misleading and deceptive conduct which causes personal injury in a manner which is broadly consistent with the state negligence laws. This will eliminate any incentive for forum shopping which could undermine state tort reforms. In contrast, the government’s bill proposes to abolish longstanding consumer rights. Labor’s amendment will ensure that all actions for personal injury under the Trade Practices Act are treated in the same way. It clearly deals with the potential for forum shopping and I commend it to the Senate.

Question negatived.

Bill agreed to.

Bill reported without amendment; report adopted.