Monday, 10 September 2012
Aviation Legislation Amendment (Liability and Insurance) Bill 2012; Second Reading
That this bill be now read a second time.
I seek leave to have the second reading speech incorporated in Hansard.
The speech read as follows—
This bill will modernise Australia’s arrangements for air carriers’ liability under the Civil Aviation (Carriers’ Liability) Act 1959 (the CACL Act) and the Damage by Aircraft Act 1999 (the DBA Act).
The bill will deliver on one of the key commitments announced in the Government’s Aviation Policy White Paper by significantly increasing the outdated cap on carriers’ liability for domestic travel and the level of mandatory insurance required by air carriers.
In addition, the bill will update technical provisions relating to the scope of liability for air operators.
The increase in the cap on carriers’ liability for domestic travel to $725,000 per passenger represents a 45 per cent increase on the current arrangements.
This is necessary to ensure that victims of aircraft accidents are adequately compensated.
The cap has not been adjusted since 1994.
The new level will reflect 21st century realities, not those of almost 20 years ago.
While Australia has a proud aviation safety record, it is important that the Government puts in place this much needed and welcome increase in compensation for domestic passengers or their families affected by aviation accidents in Australia.
The bill also seeks to increase the amount of mandatory passenger insurance for domestic travel.
Mandatory passenger insurance legislation was introduced in 1995 in response to the tragic Monarch Airlines fatal accident.
This accident led to a requirement that our domestic airlines insure against the full extent of potential liability under the CACL Act.
The bill proposes an increase in the level of mandatory passenger insurance proportionate to the proposed increase in the cap on carriers’ liability.
As it is a strict liability regime, it is important that there are adequate funds available for the complete compensation of air crash victims in accordance with the air carriers’ potential liability.
In terms of the cost impacts on airline operators, the Government is advised that insurance represents only a small component of the total cost base, that is, around two to three per cent of total costs for smaller operators, and significantly less for larger operators.
For smaller aircraft, the majority of the insurance premium also relates to the cost of insuring the aircraft hull, rather than liability risks covered by this bill.
Raising mandatory passenger insurance requirements from $500,000 to $725,000 per passenger would therefore have only a modest impact on insurance premiums.
But it will, of course, represent a significant improvement in the compensation available to a passenger in the event of an accident.
The bill also harmonises Australia’s commitments under the Convention for the Unification of Certain Rules for International Carriage by Air, signed May 28 1999 (the Montreal Convention) by amending references in the CACL Act concerning ‘personal injury’ and substituting it with ‘bodily injury’.
This brings our domestic liability arrangements in line with the international framework established under the Montreal Convention and implemented by more than 100 States around the world.
This will mean that domestic carriers will no longer be liable for mental injuries irrespective of whether other ‘physical injuries’ have also been incurred.
A similar measure is proposed for the DBA Act.
Limiting carriers’ liability under the domestic system to ‘bodily injury’ will ensure that compensation for injuries is treated consistently for both domestic and international aviation.
Taking into account the outcomes of previous litigation (Cook v Aircair Moree 2008), the bill also makes amendments to the DBA Act.
It rectifies an anomaly in the DBA Act whereby a defendant could not previously mitigate their loss by proving contributory negligence on the part of the victim.
The Government recognises that it would be very rare that a third party victim could be considered partly negligent in causing the damage that they suffered.
However, it is appropriate that defendants retain the opportunity to argue that their liability should be reduced if they can show that the victim was partly negligent in causing the damage.
The bill has also been strengthened so that defendants can seek a contribution towards damages for which they are liable from other parties who have contributed to the damage claimed under the DBA Act.
In conclusion this bill is an important and vital step in improving the rights of air accident victims flying domestically in Australia.
I commend the bill to the Senate.