Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the document.

This document is the government response to the Economics References Committee report on Australia's insurance industry. I make the point that this was an inquiry which I was privileged to chair. The title of this report, Australia's general insurance industry: sapping consumers of the will to compare, sums up the situation quite well. The market does not make it easy for consumers to find the best deal when it comes to general insurance. Labor has a proud history of standing up for consumers, and the Senate report went some way to addressing the issues that face consumers in this industry. The committee held two public hearings and made 15 recommendations, and I'm pleased that the government has now provided a response.

I'm choosing to see this response as a glass-half-full moment. The government response doesn't go far enough in some areas, unfortunately, but I am pleased to see that once again the government has followed Labor's lead in protecting consumers, agreeing with eight out of the 15 recommendations and agreeing to have the Commonwealth Treasury do further work around a number of these.

Before I jump into the detail, I will just give the Senate a short summary of the key issues that we looked at in the course of this inquiry. As I have indicated, I am pleased the government is tasking Treasury with working on reforms around the disclosure of, for example, last year's premium price on renewal notices; component pricing; a review of the standard cover regime; standard definitions; improving key fact sheets; and removing the general insurance exemption from unfair contract terms. There are a lot of mechanics to work out, but the government's response is very good to see and a welcome start to improving outcomes for consumers in the insurance industry.

Secondly, I do hope the Commonwealth uses its influence to work with the states in reforming strata insurance, particularly in uncovering potential kickbacks to strata managers and insurance brokers. Thirdly, in response to recommendation 1 of our report, the government has finally released its well-overdue response to the Northern Australia Insurance Premium Taskforce report. Fourthly, I mentioned that the ACCC northern Australia insurance review is welcome. I am a fan of the ACCC, but I am worried that there is a risk of death by a thousand reviews on this particular issue. The final report is due by November 2020. I'm concerned that, in the meantime, premiums in North Queensland will continue to be a burden for many Queenslanders.

While the government has agreed to the majority of our recommendations, it's not all rosy. I am disappointed that the government is refusing to reconsider its response to the Productivity Commission review and the benefits that increasing investment in mitigation could bring. I'm also disappointed that the government is rejecting the recommendation to do a detailed evaluation of a comparison web site. There are issues with private comparison web sites and there would be merit to understanding whether a publicly run web site would be of benefit. That is a quick overview of some of the issues.

I return to the reasons why Labor secured this inquiry in the first instance. We know that consumers need insurance. It is one of those necessary evils, particularly in areas prone to natural disasters, like my home state of Queensland, which has significant rain events, floods, cyclones and bushfires. And we know that governments want consumers to have insurance. It is in the public interest. It's in our interest, therefore, to make it more appealing, and transparency and affordability are crucial. That's why Labor recommends the government's acceptance of the recommendations requiring more transparent disclosures from insurers on policy renewal documents and to force insurers to explain price rises to consumers when queried. Labor also welcomes the government's recognition that consumers want to know where their money is going, tasking Treasury to do further work around component pricing. As I said, this is a welcome start.

I raise again the issue of strata insurance. As our population continues to increase, particularly in urban hubs, more individuals and families will live in unit complexes and high-rises. It's vital that these consumers are not ripped off when it comes to insurance because of, at best, unclear or, at worst, unethical practices in body corporate insurance purchasing processes. While Labor acknowledges that governance of strata title issues rests with state and territory governments, we assert that the Commonwealth also holds applicable policy levers that we can utilise to assist the states and territories. I'm pleased that the government appears willing to do this.

With regard to the government's response to the Northern Australia Insurance Premiums Taskforce report, I ask: why did it take a recommendation by a Senate inquiry for the government to do its job on this issue? The government says:

The Government has been carefully considering the findings of the Northern Australia Insurance Premiums Taskforce (the Taskforce) and all options available in detail.

Perhaps that explains why the response is 18 months overdue, but it certainly doesn't explain why it offers no practical solutions for the people of North Queensland.

While we're on the subject of North Queensland, I reiterate my concerns about the lengthy time frame given for the ACCC report, and I'm concerned generally about this government's record of acting on report recommendations and the government's record of ignoring North Queensland, as evidenced by what's happening with the Northern Australia Infrastructure Facility. We have $5 billion of commitment there, and yet it's to deliver a single project on a single job for Queensland. This would be laughable if it weren't so serious. This NAIF facility appears to be Minister Canavan's personal plaything, but even his mates on the board here probably aren't thanking him now after the quite embarrassing performance at last week's public hearing in Cairns, where NAIF was unable to explain whether the Aurizon project was active or inactive.

Another disappointment in the government's response is its failure to reconsider the response to the Productivity Commission's inquiry into natural disaster funding arrangements. The inquiry recommended that more money be invested in mitigation measures, leading to a lesser spend on disaster recovery. The government has rejected this despite acknowledging in its response to recommendation 1 that mitigation activities do reduce the risk of damage from cyclones and are the only way to reduce premiums on a sustainable basis. I've already expressed regret that the government refuses to explore the idea of a public comparison website. I won't elaborate on that point except to say that any consumers who've used a private comparison tool know that they are not without their problems. But I expect the Prime Minister and the Treasurer don't have to worry about using comparison websites, just like they don't have to worry about premium increases on their private health insurance. We all know that they're well out of touch with the cost-of-living pressures facing everyday Australians. Labor is standing up for these everyday Australians. If a public comparison website can save a struggling family a few dollars a week whilst ensuring they have appropriate insurance cover when disaster strikes then we think it's an idea at least worth further investigation.

Finally, while Labor welcomes the government's commitment to release proposals in early 2018 to remove the exemption for general insurers to unfair contract terms legislation, I am somewhat cynical about the timeliness of the government. They have proved time and again that they can't be trusted to follow through on their promises. I hope on this occasion I'm proved wrong and that they will act on this report in a timely manner. I seek leave to continue my remarks later.

Leave granted; debate adjourned.