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Compulsory Third Party Insurance (CTP)

Click below to read my speech on the Compulsory Third Party Insurance Regulation Bill

Mr WINGARD ( Mitchell ) ( 15:58 :39 ): I rise today to speak on the Compulsory Third Party Insurance Regulation Bill and to place a few facts on the record about what the government is doing by passing this bill.

Firstly, it must be noted that the government does not need to pass this bill to make the changes it is proposing. They have considerable powers under the existing Motor Vehicles Act, and they can make these changes through altering regulations; but by passing this bill it will make the operating environment for associated insurance companies more stable. So, the government is making these changes regardless, but by passing the legislation it will allow private operators a clear six months to implement all the alterations they need to ensure it is a smoother transition for the South Australian public. However, with that comes a warning that the South Australian public should be aware of, and there is some background that they should know about.

Firstly, the compulsory third-party insurance (CTP) scheme under the Motor Accident Commission (MAC) is South Australia's compulsory third-party insurer and, in 2013, provided approximately $360 million in compensation to road crash victims. CTP insurance is built into the SA government's motor vehicle registration process, and Allianz Australia Limited is MAC's CTP claims manager. They processed approximately 4,600 new claims in the 2013-14 year.

MAC's vision has been to provide a viable system of CTP insurance for South Australia and contribute to road trauma reduction. Their mission has been to ensure the long-term viability of the CTP scheme by working with partners and stakeholders for the benefit of South Australian road users. They have done that with great success but, as we know, the Treasurer is going to close down the MAC in that key role.

In regard to things that have been achieved, I should mention that the chairman of the Motor Accident Commission is Roger Cook. He has been highly successful and there have been some notable achievements. Firstly, MAC has provided sound financial and investment management of the CTP fund, resulting in a net asset position of $1.2 billion and a funding ratio of 155 per cent. I will say more on that $1.2 billion figure in just a moment.

They also achieved a record operating result of $371 million in 2012-13, which was superseded in 2013-14 by an estimated $480-odd million as well. They achieved significant returns of 11.2 per cent in 2013-14, which was the highest since 1997, and that has been a benchmark for the way they have operated. They have done an outstanding job financially.

I will come back to the $1.2 billion in net assets that MAC has had. That money sitting there was clearly a carrot too large for the Treasurer and all his financial mismanagement and the financial mismanagement, primarily from this state Labor government, over the past 13 years. Treasurer Koutsantonis has been clamouring to get his hands on that cash and he needs it to fill the backlog from his overspend.

He has been trying for a cash grab everywhere. The Treasurer has been hitting South Australians' wallets any way he can. We all know about the ESL hikes; plans for more land tax have been on his radar; and we heard today that the Weatherill government has also been having a look at a state-based carbon tax.

We know that state debt is rising towards $14 billion since 2002-03. This Labor government has spent $4 billion more than it budgeted on general government operations. Think about this number. In other words, just running the state, they are $4,000 million over budget. When they need extra funds, they seem to pull it out of the air. They are $4,000 million over budget since 2002-03. When they saw this nest egg that was the MAC—a very well operated business—the Treasurer has jumped at it, closed it down and grabbed the cash.

Forget about how well MAC has been running. Forget about its financial success. The government has seen the value and, in the dire financial straits that they have forced SA into, they have grabbed the cash. Never mind what it means to car owners and what it will add to the cost of registration in future. The Treasurer does not care: he needs the cash and he needs it now.

Other successes of the MAC have been their CTP rollout and that has been a significant achievement. I will mention just a few highlights on how they have operated the compulsory third-party insurance. They initiated and provided strategic advice and supported the state government in the introduction of CTP scheme reforms, including the implementation of legislative changes; implemented significant changes to claims management policies and practices to supplement the scheme reforms and improve claimant experience; increased the focus on optimal recovery for people injured in motor vehicle crashes; and achieved improvements in claims management and scheme performance.

We have heard other speakers talk here today about what it is going to mean. I know that the Treasurer has put in a three-year cap and is bringing in three to five operators. That is still being negotiated. Treasurer Koutsantonis is still finding his way through that, but people who have been here longer than I have seen this government try to operate in this space and try to do this themselves.

There are great alarm bells ringing about how the transition will take place and how much control (or otherwise) the government will have over this process and how much the fees and charges will potentially rise, given that the government has, as I said, a very poor history in trying to facilitate these sorts of projects.

The other thing MAC has done well has been strategic business outcomes. They have some significant achievements there as well. They have improved social and health outcomes for South Australian road users through the effective management of the CTP scheme, mitigated risk to the state government through financially responsible management of the CTP scheme, and supported accident and emergency response through the provision of funding and sponsorship of the State Rescue Helicopter Service, hospitals and SA Ambulance Service.

The question that will come is: will these community programs still be funded? We also know the long list of organisations that the MAC has funded, supported and sponsored from a sporting perspective. I know they sponsor the SANFL country football, the Adelaide Lightning—they have just put money in there—as well as Schoolies Week at Victor Harbor which is heavily funded by MAC. I have mentioned the rescue helicopter as well. So, the question out there that people must be asking is: will that still be funded? The minister has said that the new CTP program will have a percentage taken out and put aside to help fund MAC. We want to see more detail on that to make sure that is still going to be the case so that those projects can still go ahead for the community.

Other significant achievements of MAC include road safety points and some of the things that have been outstanding that MAC has done around road safety. Since taking over the government's road safety communications program, MAC has helped contribute to reducing South Australia's annual road toll over the time. They have developed and implemented an award-winning road safety communications program to raise awareness, change attitudes and behaviours of road users and reduce the incidence of road trauma. They have provided $100 million in contributions to the state government in 2014 and that is where the Treasurer saw the money that was on offer and he decided he needed more of that so he has gone now to fully privatising and selling off the MAC so that he can reap in as much money as possible.

Again, what is going to happen to road safety? Will the MAC continue to provide the expertise that they have developed over time, and will it stay at the high standard that we have had for such a long time? They are questions that need to be followed up and answered further.

As I said at the start, the government has made it clear that they are making these changes regardless of this legislation. To stop it would only add uncertainty to the marketplace and potentially be a cost to the insurance companies and businesses making the change, which could potentially flow on to the South Australian public and be an extra financial burden to families and businesses. This is not what our party wants.

But understand this: the Treasurer is making these changes because he needs to flog off assets to prop up his mismanaged budget. At the last state election, SA Labor promised it would not privatise any significant assets. The privatisation of MAC is a massive broken promise to South Australians. It is just what the Treasurer does. Treasurer Koutsantonis has flip-flopped more than my old pair of rubber thongs.

Another outstanding example of this was when the federal Treasurer first announced the Asset Recycling Fund, Treasurer Koutsantonis was publicly vocal in opposing it, shooting his mouth off at every possible opportunity indicating that South Australia would not be applying for funds because they would not be privatising anything in South Australia, then a few months later came the big flip-flop. After bagging the asset recycling grant scheme, Treasurer Koutsantonis applied for money under the exact same scheme. Can you believe it? He asked the federal government for cash under the asset recycling grant scheme for privatising the MAC. So, he put his hand out for money from the feds for doing something that he said he would not do. It is unbelievable but it is true.

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