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Legislative Assembly for the ACT: 2001 Week 6 Hansard (13 June) . . Page.. 1603 ..

MR HUMPHRIES: It could be, Mr Speaker. But then again, as Mr Quinlan himself said a little while ago, do not let the truth get in way of a good line. So I understand what he is saying.

Mr Quinlan raised two issues about the government's budget for, I assume, 2001-02 and our capacity to maintain the bottom line that we predicted of about $12.6 million over that period. First of all, let me say that the HIH contribution of $30.7 million is, on my advice, adequate to cover the losses which are likely to be sustained by the workers compensation insurance fund. The fund was set up to make sure that if an insurer went belly up there would be funds available to meet claims made against that insurer so that workers were not left without proper compensation. That fund was set up in 1980.

In 1985, I think it was, contributions to the fund were discontinued because money was building up and there were no calls on it. As would be Murphy's law, in 2001 the fund is needed but, not having been supplemented for over 15 years, we are left in the position of not having enough money in the fund. There is $9 million in the fund at present and I am advised that about $40 million is required. I am further advised that a contribution of $30 million to the fund at this stage would be sufficient for the fund, with interest and so on over a period of time, to be able to meet the cost of claims which are expected to come through the door in respect of HIH policies.

Of course, I cannot be absolutely certain about the capacity of the fund to meet that amount. No-one can because we do not know what the claims are going to be, how much they are going to amount to and whether they might change over the next little period of time. But my advice at this stage is that it appears that with the contribution of $30 million plus the feeding of the fund by a levy on employers of 3 per cent on the policies that they write from 2002-03, there ought to be moneys in the fund to be able to meet those claims.

Also, approximately $0.7 million is being put aside for people who have home owner warranties covered previously by HIH. Claims in this area are, again, hard to predict because those warranties extend for some five years into the future and it is quite possible that we will not know for five years from now whether those funds will be called upon. However, my advice is that that is sufficient for the time being.

The bottom line will not be affected because the funds are being provided this year as a contribution to that fund from this year's surplus. This will be adequate to ensure both that the fund receives the full $30 million and that the surplus that the government has predicted will not, at this stage we believe, be gone beneath.

As far as the prison is concerned, the government has indicated that it will, if it needs to, borrow to be able to build the prison. At the moment the cash position is very strong and the government will be exploring ways to pay interest if we borrow money to build the prison without having to affect the bottom line. That is, the cash position at the present time is a possible source of funds to ensure that the interest payments on the amounts borrowed, which of course will not be the full $110 million in the first year, might be met. That is being considered.

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