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Mr CADMAN (Mitchell) (9.14 p.m.) —The Trade Practices Amendment (Liability for Recreational Services) Bill 2002 is important legislation which deals with some of the risk factors that have been experienced by community and sporting bodies following problems in the insurance industry which have been brought about for a whole range of reasons.

This legislation seeks to limit the liability that is confronted by community organisations because the cost of insurance, if they have unlimited liability, would drive them out of business.

I have here a collection of press clippings relating to different organisations, some of which I know extremely well, whose representatives have made statements about the cost of increased insurance, the cost of premiums, and what it will do to their organisations. Following a meeting of the states and the Commonwealth in May this year, the federal government agreed to amend federal law so that waivers signed by consumers undertaking what it has termed `inherently risky activities' cannot be overturned unless the business acted in a grossly negligent fashion. The organisations that I am referring to are organisations that all members of parliament have day-to-day contact with. It is interesting to note that Mr Jeff Lehrer, the President of the Outdoor Recreation Industry Council of New South Wales, says that his organisation has 300 groups engaged in abseiling, rock climbing, canoeing, bushwalking and all those sorts of activities which are basically thought of by most people, I believe, as fairly passive recreation. However, there are high-risk factors in this industry. Mr Lehrer says: [start page 5543]

... while bushwalking is still almost universally acceptable to insurers it is, in fact, the activity with the greatest percentage of injuries.

He is quoted as saying:

“Bushwalking is still being insured without question, yet it is one of the higher-risk activities when you compare it to other sports. This is because of the stricter way that paddling and rope activities are managed.”

Mr Lehrer also says that he believes that unless changes are made the industry could close down. He is quoted as saying:

“People are saying `it's not worth being involved anymore' or `I can't run an operation the way I have been, charging what I have been and expect to survive'.”

Part of the problem is that 70 per cent of these activities are insured overseas. For some period no new underwriter was found, but eventually one new underwriter was found for many of these activities so now they are insured.

I go on to draw the attention of the House to other organisations, in particular the Australian Horseriding Centre Association of New South Wales which predicts that 60 per cent of its 30 centres will cease horse riding. The Australian Pony Club Council is also regarded, for the purposes of insurance, as being involved in a risk activity. I note here the comments of the Chief Commissioner of Guides Australia, Barbara Horsfield. She said that the organisation had always been out there to help girls and women grow into confident, self-respecting and responsible community members—and nobody would gainsay that: it is a wonderful organisation. But I know from Barbara and from other people within guiding that the Guides for a period were facing an incredibly difficult problem to cover their insurance. I notice here that state membership fees for guiding are around $56 a year and that girls are contributing up to $5 a week for materials. Adding to that a massive hike in insurance costs brought Barbara Horsfield, the Chief Commissioner of Guides Australia, to say:

Guides Australia's philosophy is that the cost of membership is affordable—ensuring that all girls and young women are not denied the opportunity to experience guiding. The increase in the cost of insurance must result in an increase in the cost of Guiding, and consequently disadvantage some members of the community. This increase to our insurance premium is an untenable situation, particularly when the history of claims for public liability from activities undertaken by Guides Australia has been minimal.

That is right: it is a magnificently managed organisation. Yet the fact that insurers want to charge massive increases to insure against any accident, protecting themselves from liability, is something that most community members cannot understand. Most people cannot understand why activities generally undertaken by fairly passive community groups—whether it be a P&C association, a country women's association or a progress association, and you would not think that there would be too many high-risk activities in a progress association—have led to them being lumped together.

That was the situation until this legislation. This is the value of what is being done here tonight in the parliament. By agreement between the states and the Commonwealth there is a drawing together of a will to separate out high-risk activities—or those that are seen by the insurer to be high-risk activities. I think that is very important, too, because all community group activity in Australia faced terrible costs. Small organisations were unable to charge their members for insurance premiums that doubled or trebled. The businesses involved in these high-risk activities include horse riding, rock climbing and whitewater rafting. They are the ones from a business perspective that face high public liability insurance. However, not only businesses face that sort of high cost.

I notice that the Prime Minister on 29 June is reported as saying that he wanted to see new legislation passed which:

... would allow state governments to change their laws of negligence to allow people engaging in dangerous activities such as bungee jumping to waive their right to sue for damages.

What that means basically is that, if somebody wants to undertake a risky activity and they can be assured that all precautions have been taken, they can sign off and say, `I understand the risks. I'm going to take a risk here and, if there's any accident or any problem following my activity, I'm not going to make a claim.' The extent to which this disclaimer will or will not work is quite unusual. Recently I have been involved in a community group of 200 young people on a weekend of leadership. They wanted to do some service in the community by landscaping a nursing home. It is not a very dangerous activity; it is not high-risk stuff, you would have thought. But it was impossible to gain insurance, in case there was a problem. All of those young people have written disclaimers saying: `We understand that there may be some risk factors in planting trees'. But I am told by the legal advice to that organisation that those disclaimers are not worth the paper they are written on.

The law needs to change—and that is what is happening—so that smart lawyers cannot go digging back to disprove disclaimers. Even though a person may say that they understand the risk and they are not intending to sue if something goes wrong, it is possible, until this legislation is through, for them to sue anyway, no matter what the disclaimer says. This legislation is absolutely essential if we are going to get confidence back into those community groups that do physical activities at weekends—organisations such as pony clubs, Scouts, Guides, boys brigades and girls brigades. Those sorts of organisations, that are the very heart and soul of our community, need these protections. [start page 5544]

When governments became aware of the dangers of very high insurance closing organisations down, they came together. In a meeting which was attended by representatives of state and federal governments it was decided that the whole process of insurance would be examined. The ministerial meeting on public liability held in Melbourne on 30 May this year issued a communique, a statement, which covered a whole range of topics which I believe go to the crux of what has been wrong with the insurance industry. It covers the role of the ACCC; volunteers and not-for-profit organisations, which I have been discussing; law reform; the tort law reform process; and the waivers on risky activities. The Commonwealth made a commitment that it would legislate to allow self-assessment of risk for people who choose to participate in inherently risky activities, such as adventure tourism and sports, subject to preserving adequate protection for consumers under the Trade Practices Act—and that is the legislation that is being dealt with by the House tonight.

That was a decision taken by the ministerial council on 30 May. The communique was issued and the Commonwealth is now acting—almost at the very first opportunity—to deal with this issue. There is to be a review of the law of negligence. Compensation is going to be examined. Who could say that some of the extraordinary claims in New South Wales—my own state—are justified, unless they have been agreed by judges who look at the bankroll of insurance companies and say that they can afford it, without counting the cost downstream and what it means to successive claims? Ministers, both state and federal, on 30 May looked at the role of structured settlements; the legal system reforms that were necessary, including the handling of claims; advertising by legal practitioners; data collection; and a benchmark study of claims to be processed.

I would have thought that this industry would have far more statistics and facts on which to base decisions than it actually has. I am really surprised at the paucity of information kept by the Insurance and Superannuation Commission and now APRA, its successor. I really do feel that that needs to be jerked into gear. However can we make decisions in this area, give advice, frame legislation, support the industry and keep the confidence needed in insurance if we have not got available statistics of the types of claims, the classes of claims, how often they occur, what they are and what the decisions are? There are some statistics, but not nearly enough on which to make decisions. I know that it is being rectified, and that has been covered also by the meeting of ministers on 30 May.

What does this legislation do? Having covered the ground that relates to the problem of businesses and not-for-profit organisations, the meeting of ministers was a response to growing public concern. It was recognised by everybody concerned that at common law a person may be liable to pay damages for negligence if it can be shown that they owed the plaintiff a duty of care, the duty was breached and injury or damage was caused as a result. That is the basis of what we are looking at here tonight. One measure that has been endorsed by New South Wales, Victoria, Queensland and Western Australia is to give effect to waivers or disclaimers signed by people, and this is where the Trade Practices Act comes in. Unless the Trade Practices Act is changed to release people from those responsibilities that they hold under state law then the changes that we need cannot be made. So the Trade Practices Act is being amended tonight. It is the critical first part of a change to solve the problems of insurance, a role in which the Commonwealth has a function.

The basis of all this is an interesting Latin phrase which translated means `to a willing person no injury is done'. That is a very nice encapsulation of what we are dealing with here. Whether it be in the gym, bushwalking, riding horses, whitewater rafting or anything else, a willing person can have no injury done to them, because they have gone into that situation gladly and willingly. For an example of this concept, I have from the Parliamentary Library an interesting summary by Chief Justice Barwick. It is from the case of Rootes v. Shelton. The High Court considered the case of a waterskier who was injured in a collision with a stationary boat. In a neat couple of sentences which describe the process, Chief Justice Barwick said:

No doubt there are risks inherent in the nature of water skiing, which because they are inherent may be regarded as accepted by those who engage in the sport. The risk of a skier running into an obstruction which, because submerged or partially submerged or for some other reason, is unlikely to be seen by the driver or observer of the towing boat, may well be regarded as inherent in the pastime. ...But neither the possibility that the driver may fail to avoid, if practicable, or, if not, to signal the presence of an observed or observable obstruction nor that the driver will tow the skier dangerously close to such an obstruction is, in my opinion, a risk inherent in the nature of the sport.

Therefore, a line was drawn about what was a risk and what was not a risk in waterskiing.

At common law, people can sign waivers excusing service suppliers of negligence, but courts really do examine these closely. The advice that I received on the nursing home landscaping was a scrutiny applied by lawyers which they felt courts would apply to any disclaimer written by parents of young people—or by the young people themselves—to say that they would not pursue any injury that might happen to them during this process. I am sure the House will be pleased to know that that landscaping will be done later in September, and that great care will be taken. The nursing home is covered for volunteer workers in this situation—which is a great relief to all those who are involved—and there will be no risk for the young people involved. But without that coverage, here was a great community activity, a great outpouring of youthful enthusiasm and leadership in wanting to do something for older members of the community, that was going to be stopped by the stupidity of endless claims for no reason whatsoever, other than that, because an insurance company stood behind somebody or other, there could be a payout. The fact is that greed drove many of these claims. The process of finding somebody to pay you for your lack of preparation or for your own negligence has been pursued by many. That has in part brought about the collapse of insurance companies and has caused the extremely expensive insurance claims and the extremely costly premiums that people have been facing. [start page 5545]

I am delighted that the government has moved in this direction to change the Trade Practices Act. It is only a slim bill, and the outline of the bill is no more than four or five sentences, but it does cover the concepts that I have described tonight. A simple change to the Trade Practices Act relieves operators, owners and organisations from the responsibilities under state law to take due care of people who participate in activities covered by the Commonwealth Trade Practices Act. I believe this is a significant night to give assurance to Guides, Scouts, bushwalking clubs and businesses who operate in the tourism industry and who are an attractive feature of the Australian environment which many tourists like to participate in. We have a good record for safety in tourist activities in Australia and we need to maintain it. It cannot be maintained, nor can businesses be maintained, unless we have appropriate law and appropriate insurance. That is what is being done tonight. A sensible line is being drawn down the middle. Unless the organisations are absolutely stupid, they are free of responsibility. (Time expired)

Author: Alan Cadman MP
Source: House Hansard - 27th August 2002
Release Date: 2 Sep 2002


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