Gary Humphries (ACT, Liberal Party) Share this | Hansard source

I oppose clauses 152-1 and 152-20 in the following terms:

(1)      Clause 152-1, page 117 (line 3) to page 118 (line 5), TO BE OPPOSED.

(2)      Clause 152-20, page 119 (lines 21 to 24), TO BE OPPOSED.

I am asking the Senate to omit clauses 152-1 and 152-20 of the bill, and I value the opportunity to explain why. The question of the obligations imposed on directors of health insurance companies was a matter which was touched on in submissions made to the Senate Standing Committee on Community Affairs inquiry into these bills but not a matter that was greatly dwelt on by the committee and, with hindsight, perhaps it should have been.

The legislation imposes on directors of health insurance companies a set of obligations to the policyholders of those companies. And it is, of course, possible that a health insurer may have both policyholders—that is, those people who insure with the company—and shareholders, to whom an entirely different set of obligations are owed under the corporations law. The point was made by members of the industry during the inquiry that some of the compliance elements of the legislation appear to exceed the standards of conduct expected of company directors under the Corporations Law. And the point was made that the government had undertaken to ensure that compliance and corporate governance standards in the new legislation did not exceed those expected in any other sphere of business, and that it may have been the case that the legislation had strayed into new ground. In other words, these obligations with respect to policyholders contained in 152-1 are not a feature of the current law and therefore this puts a new complexion on the legal position of directors of those organisations. The industry made the point, I think quite fairly, that that extra statutory duty imposed on those directors could create confusion and could result in there being, indeed, a conflict between the obligations that a director owed to shareholders and the duty that the director owed to policyholders. This conflict was not resolved—or, indeed, even averted to, particularly—in the legislation.

There are two key points there. One is the question of what decision a director needs to make in the circumstance of a conflict. The other is that, with a great deal of uncertainty in this field, it would be logical that some people of standing, some people with qualifications who were eminently suited to this particular role in the industry, might forgo that obligation because they were unsure as to their personal liability. Indeed, the legislation makes it clear that, for breaches of that obligation in 152-1, the directors of an insurer are personally and severally liable to pay the insurer an amount equal to any loss which results from a breach of those provisions. So the obligations imposed are very severe, and the relationship between those obligations and those under the Corporations Act is not made clear.

I have discussed this matter with the industry in the time since the committee had the chance to look at this issue. I think it would be wise of us not to proceed at this stage with those changes. And I think that there is an opportunity to go back and have further discussions on this area to identify possible ways of identifying appropriately what obligations towards policyholders should attach to directors and perhaps to look at revisiting that issue when there is a suitable examination of the effect of the legislation.

As the minister has made very clear, this is a bold new world with respect to health insurance. There are many things about this which dramatically change the parameters for health insurers and for their directors, and we need to be able to flexibly consider the way in which this legislation impacts on the sector. I think there is an opportunity for us to come back to this issue in the future.

The amendments I am proposing would simply remove the provisions that might contradict the Corporations Law, and will not replace in any way the obligations already on directors under the Corporations Law. If the Senate agrees with that, the directors will not have this dual responsibility to have to try and juggle.

I congratulate the government for having picked up a number of other amendments that were suggested by the Standing Committee on Community Affairs. I am particularly pleased that the statutory rules will be amended to ensure that recommendations on a care plan charter are picked up—that is a very important part of the legislation as far as the committee is concerned—and that there will be better transitional arrangements while these new arrangements are being put in place; in particular, that professional standards and accreditation regimes will continue to apply to providers in this field while new accreditation arrangements are being put in place for a possible commencement date of 1 July 2008. I hope that that date will come forward and that we will not have to wait until 1 July but, whatever period of transition there might be, we have clear arrangements under the amendments the government has picked up to cover that situation. I think that will greatly relieve the minds of many people who work in this sector. I commend the amendments I have suggested to the committee.