This speech was delivered on 20.09.2016 in the NSW Upper House. You can read the original contribution here.
I speak to this unanimous report, entitled “First Review of the Compulsory Third Party insurance scheme”. It is the first review for this Parliament. A series of them have been produced every two years by the Legislative Council Standing Committee on Law and Justice. For some offence I committed in a past life, I have been a member of the Standing Committee on Law and Justice for three of those reviews. I wish to highlight a number of matters. The system that has been put in place provides fair compensation to people who have been injured as a result of the negligence of another driver. If a motorist has been injured as a result of the negligence of another driver, or a pedestrian or a cyclist is injured, then the law says that we rely on the common law tradition of this country to say that a court will work out what their ongoing economic loss will be.
If a carpenter is driving to work one day and someone sideswipes her ute she might suffer a back injury that is assessed as a 5 per cent or 6 per cent whole person impairment[WPI], but if she can no longer carry on her profession—if she can no longer engage in her chosen occupation—she will potentially have 20 years of wage loss. The system decides that a court can determine what that loss is and award appropriate compensation.
It is a good system but there are some restrictions in it. One cannot get a lump sum in damages for one’s pain and suffering—the damage to one’s person and the inconvenience and misery of being physically or psychologically injured—unless one is assessed at greater than a 10 per cent whole person impairment. That means that a lot of elderly people who are injured on our roads, who may not have ongoing economic loss, have limited access to compensation because often their only loss—apart from ongoing medical expenses—relates to pain and suffering. They do not get a large amount out of the current system but as a general rule the system provides fair and ongoing wage loss compensation for people who have been injured as a result of the negligence of others.
Indeed, the system also provides for fair and ongoing future medical expenses. If somebody has injured a person by operating a motor vehicle negligently and that person has an ongoing need for physiotherapy or further medical operations—for example to a shoulder or back—the driver should pay the full freight. Nobody should be out of pocket because he or she is injured as a result of someone else’s negligence. That is the system we have.
The person who is not covered in this system is the negligent driver. As a general rule, people do not consciously crash their cars in order to cook up claims or to injure other people. So negligent drivers are not covered unless they are catastrophically injured, in which case everybody is covered. People pay for that lifetime care and support cover when they get their green slips. If somebody is a paraplegic or a quadriplegic or has a significant brain injury as a result of a motor accident, regardless of whether or not they are at fault, they are covered in one of the best systems in the world, which provides for their ongoing medical needs. If they have been injured as a result of the negligence of another person they will be covered not just for their ongoing medical and assistance needs but also for their ongoing wage loss. It is really one of the finest systems in the world for protecting people catastrophically injured in motor accidents.
At the other end of the scale, if it is modest injury, again there is a no-fault element where people can be paid up to $5,000 for ongoing wage loss or ongoing medical expenses regardless of whether or not they were the cause of the accident. For many people that is all they need—a couple of weeks off work, a couple of trips to the GP, one trip to a specialist and a few trips to the physiotherapist. Regardless of fault, they are covered. People get all that protection—everybody gets it—when they purchase their green slips. All the occupants of the car are protected by the driver’s green slip and by the green slips of other motor vehicles. It is one of the most cost-effective insurance policies going.
If individuals wanted to insure for wage loss through private income protection almost certainly it would cost them much more than what the green slips scheme costs. That is why it is a real concern that the Government is proposing to junk this system and remove the protection for ongoing economic loss and ongoing medical expenses for those people who have been injured on the roads as a result of someone else’s negligence and who have less than a 10 per cent whole person impairment. I am talking about people who rely on their bodies to earn their livings—manual workers and shop assistants. With regard to the 10 per cent whole person impairment threshold and the prospect that the Government reforms will cut people off from future economic loss, the report says:
Stakeholders continued to express concern about the threshold during the current review. For example, the New South Wales Bar Association urged the government to ‘avoid scheme reform that uses arbitrary and unjust WPI numbers to exclude from the recovery of economic loss those who suffer genuine injury with a genuine impact upon earning capacity’, insisting that ‘it does not take an 11% WPI injury for that injury to have a catastrophic effect upon earning capacity.’
The report quoted an example given by the Bar Association:
In economic terms, a foot fusion (4% WPI) may be more severe for a bricklayer’s labourer than a foot amputation (28% WPI) for a deskbound computer programmer or corporate executive.
The report continued with respect to the evidence of the Bar Association:
Mr Stone emphasised that ‘[i]njuries under 10 per cent whole person impairment are economically disabling for labourers, nurses and for people who rely upon their physical strength for their job.’
But the Government’s proposed reform will see potentially all those people, regardless of whether they were injured as a result of the negligence of another driver, cut off after three, four or five years and be left on their own thereafter. The regulator is asleep at the wheel. My real concerns about the reform agenda that is being driven by the Government is not with respect to the Minister. People say that Minister Dominello is genuinely consultative and they compare him favourably with the non-consultative approach of the Hon. Greg Pearce. They say that Minister Dominello is consulting with stakeholders.
The Hon. Greg Pearce: I was in a bit of a hurry.
Mr DAVID SHOEBRIDGE: I hear that the Hon. Greg Pearce was in a bit of a hurry. People are genuinely concerned that with the reforms whole classes of people—working-class people, as a general rule—will face being thrown on the scrapheap with no ongoing protection. The regulator advising the Government about this new scheme is the same regulator that has been asleep at the wheel for past 16 years and that has been allowing insurance companies to rip super profits out of the scheme. Every year the regulator says, “We did not know that the filings that they had, and the prices that they were putting in for green slips, would result in these super profits.” The regulator was surprised in the year 2000. It was surprised in the year 2001. It was surprised in the year 2002. My goodness, it got a shock in the year 2003! The year 2004 really frightened the regulator. In 2005 it was surprised again. In 2006—oh my goodness!—the regulator was shocked. In 2007 the regulator was surprised. In 2008 it was surprised. In 2009, 2010, 2011 and 2012 it was surprised. The Motor Accidents Authority was very surprised, but that is okay because in 2012 and 2013 it was surprised. In 2014 who would have thought that insurance companies were getting super profits. In 2015—what do you know?—there were super profits again. In 2016, the last set of findings, I can tell members now that the regulator will say, “We didn’t know; we are surprised.”
Over the course of the scheme these insurers have pulled out 21 per cent of premiums as super profits, and every year the regulator has been surprised. I think it is time that the regulator woke up and smelled the roses. I think it is time that the Government got a new regulator, because the present regulator has shown itself to be utterly incompetent. The regulator has also been asleep at the wheel when it comes to dealing with fraud and exaggerated claims. We have known that this was coming—that a bunch of people would be doing claims harvesting and making exaggerated claims—because it has been happening in the United Kingdom for the past five years. The regulator did absolutely nothing until it became a problem in this country. The regulator waited for the problem to happen. It waited for the scheme to start creaking and then it laboriously came forward and proposed changes. The problem with the scheme is an incompetent regulator. We need a nimble and competent regulator. If we get that the Government will receive some decent advice and we will see genuine scheme reform which will not leave manual workers out in the cold.