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Legislative Assembly for the ACT: 2003 Week 14 Hansard (11 December) . . Page.. 5214 ..

MR STANHOPE (continuing):

specialists. They call this a lifestyle issue and argue that this is a disincentive to specialists practising within the ACT.

In order to determine what type of threshold should be adopted in the ACT, the ACT has carefully considered the approaches adopted in other jurisdictions and had regard to the views of medical and legal practitioners. I don't propose to canvass the different options at great length here, but I think it would be useful to contrast the two different approaches adopted in New South Wales and Victoria.

I have carefully considered the option of adopting the New South Wales tort law reform approach based on the recommendations of Ipp J. The New South Wales Civil Liability Act 2002 provides no damages may be awarded for non-economic loss unless the severity of the non-economic loss is at least 15 per cent of a most extreme case, effectively imposing a threshold of approximately $50,000, as the maximum amount of damages that may be awarded for non-economic loss is $350,000. A threshold of 15 per cent of a most extreme case would typically exclude people with soft tissue injuries, which heal relatively rapidly, from recovering damages at all.

The Ipp report recommended this change, as the general damages represent a very significant proportion-above 90 per cent-of the total amount recovered, and damages for economic loss a small proportion. The effect of the New South Wales threshold in practice is to cut out of the compensation system not only relatively minor injury cases but also very hurtful events that, nonetheless, heal relatively rapidly.

Victoria has adopted a different approach, opting instead for a threshold based on 5 per cent of permanent physical impairment or 10 per cent of mental impairment. This formulation excludes every case where there is no permanent injury. So regardless of significant bruising and hurt, no non-economic damages may be obtained unless there is a permanent injury. The impact of these different approaches is as yet unclear. The government is reluctant at this stage to remove the right to claim general damages from such a wide class of plaintiffs, including some who have suffered significant internal and external bruising and injury.

On this basis, neither the New South Wales nor Victorian approach is preferred by this government. A number of jurisdictions have opted to apply a monetary threshold. Tasmania has announced a threshold of $4,000 with reducing deductibles to $20,000 and Western Australia has legislated to provide a threshold of $12,000. Having regard to all the information before us, the government proposes that the ACT consider a medical indemnity threshold of $12,000 with reducing deductibles to $20,000. In this regard, the ACT is essentially mirroring the legislation of Tasmania and Western Australia.

This area is highly contentious. The effect of the approaches taken by the states will not become clear for a number of years. The approach I have outlined is not likely to satisfy those who call for the effective removal of non-economic damages or, on the other hand, those who argue that the legislature should not intervene in this matter at all. Accordingly, the bill provides that the threshold will be reviewed, once empirical data becomes available, after two years of operation.

After that two years of operation and the experience gained around Australia in each of the jurisdictions, we will be much better able to determine what impact the imposition of

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