Page 1952 - Week 06 - Friday, 6 May 2005
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subject of questioning before the public accounts committee. It was a revealing episode, to put it mildly, and hopefully one that will not be repeated in the future.
The Auditor-General also pointed out that the insurance authority did not have enough assets to meet its liabilities, and that its ability to meet long-term liabilities and any unexpected losses had deteriorated over recent years. In response to these findings, the insurance authority said that it shared the same concerns and advised that, as a consequence, it was involved with Treasury in exploring options for addressing the causes of its problems.
This bill is the outcome of those explorations. The bill seeks, firstly, to restructure the insurance authority and take a whole-of-government view of acceptable insurance risk, as distinct from its own operating result and balance sheet. Secondly, it establishes an advisory board to provide technical and market advice and, thirdly, it gives the insurance authority improved access to agencies’ data and other information relating to claims and their management—a lesson from the bushfires.
The basic functions of the insurance authority will not change as a result of this bill. I certainly can see clear benefits from the experience and expertise provided by the advisory board. There may have been documentation, but I am not aware of who the people are that make up that group. I am assuming, in good faith, that we will be getting some high-quality advice for that board, to ensure the most efficient management of our insurance needs in the territory.
The other benefit I see for the authority is in having access to better information on the causes and basis of insurance claims. As you would expect, we support the insurance authority promoting best practice risk management in government agencies. That is a fundamental philosophical view that is certainly supported on this side of the house.
One aspect of the bill on which I would appreciate further clarification from the Treasurer is his reference in the presentation speech to the need for a more robust yet flexible administrative platform. That sounds like a quote from a management textbook. I would like to know what the Treasurer means by “robust yet flexible” in this context. Possibly it is the description of a centre half-back. We are not too sure what it is really trying to tell us.
Another point in his speech on which I would be grateful for an explanation is what is behind the Treasurer’s observation in the presentation speech that the existing insurance authority has a government structure that mirrors more commercially focused businesses, and that this gives rise to potential divergences in views between Treasury and the board.
He goes on to say that the potential for divergence arises from a natural inclination of the board to take a very conservative risk position from the point of view of the authority’s balance sheet and operating result. He adds that this may conflict with Treasury taking a whole-of-government view of acceptable insurance risk. It would be helpful if that could be expanded upon.
We would appreciate it if, in his explanation, the Treasurer could give us an illustration of the different approach and the different results, and also tell us whether, in Treasury’s whole-of-government approach, there is an element of cross-subsidisation that may arise
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