Northern Territory Second Reading Speeches

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STAMP DUTY AMENDMENT BILL 2002

Madam Speaker, I move that the bill now be read a second time.

Madam Speaker, this is a simple bill with a simple intention. It is an attempt to alleviate some of the pain being suffered both by business and community groups from the insurance crisis and particularly that related to public liability insurance. This is no solution to that crisis, but rather a temporary measure that can be taken now to ease the spiralling increase in public liability insurance premiums. We recognise that much work needs to be done, particularly in relation to the whole area of the law relating to negligence, and this certainly does not tackle that area. We recognise that something must be done to halt the continual increase in claim costs and this does not tackle that.

We recognise that something must be done to contain the cost of insurance and this certainly does tackle that to the extent that government can do so. Insurance premiums attract GST and then on top, the state applies its stamp duty tax. Here in the Territory, it is a 10% impost on every public liability insurance premium. As I said, we may not yet be able to bring down the cost of that premium, but we can influence the tax that community organisations and businesses have to pay on top of those premiums. We can in effect cut the cost of public liability insurance by 9% for every charity, every sporting body and every community group in the Northern Territory.

We can do that by simply exempting those organisations, those not for profit groups, those public benevolent institutions from the stamp duty on their public liability insurance and we can offer some relief for Territory business by putting a cap on the stamp duty that they have to pay for their public liability insurance. We can recognise that these premiums have risen enormously in the past 12 months and show no sign of abating. We can put in place a cap that says to Territory business: ‘You are still up for the 10% stamp duty on the insurance premium you were paying before this crisis got out of hand, but that is enough’. We can say that if nothing has changed in your insurance or the risk that is being covered, if nothing has changed except the cost of the premium has gone through the roof, then you will not have to pay the stamp duty on the increase.

That is what this bill does. We canvassed in earlier debate today the reasons for this action and the fact that it is not some revolutionary act by the CLP, that it is not some way out idea from the opposition, some proposal designed just to spend government revenues or embarrass the government. It is a simple proposal that will help ease the hurt being felt by many Territorians. It is a simple idea that this parliament can act on now and not wait for the full package of proposals that will have to come to address the insurance crisis.

I do not propose to go over again all the ground that was covered by my earlier motion, but rather turn directly to this bill and its contents. The first and most important to note from the bill is that it is retrospective and is deemed to have come into effect on July 1 2001. That date was chosen because it is in the past 12 months that this crisis has rapidly developed and premiums have gone through the roof. It means that community groups and business will be entitled to a refund of the stamp duty, or part thereof, of what they have paid on public liability insurance since 1 July.

It would be rather futile and defeat the very purpose of this act in the way it aims to help Territory business if the cap on insurance premiums was to come into effect from the day this bill receives assent. To set the cap on premiums as they exist today would offer little assistance because, essentially, the horse has bolted. This legislation says we closed the gate 12 months ago. This legislation says that is your public liability insurance premium has increased by a few dollars or a few hundred dollars or many thousands of dollars, then the government is not going to penalise you further.

This legislation says to Territory businesses, the amount of money you paid before July 2001 as stamp duty on your public liability insurance is none. If your risk, your insurance cover has not changed, you do not have to pay the stamp duty on any increase in your premium. It is frozen at the amount you paid before the world of insurance went mad. If the public liability insurance premium plus GST for a Territory business was $1000 before 1 July 2001, then the stamp duty paid to the Territory government was $100. If the premium has now jumped to $2000 and the risk it covers is the same, then the stamp duty is still $100. If businesses have paid more in stamp duty renewing their insurance since 1 July 2001 then they are entitled to a refund. I believe it is up to the government and the businesses to decide whether that refund is paid or is used to off-set the stamp duty on future renewals.

Madam Speaker, this will not solve the enormous burden being placed on Territory businessmen and women by insurance prices but it will help. Similarly, the action of exempting public benevolent institutions who have not paid any stamp duty on their public liability insurance policies will help ease their burden, not wipe it out. For them, any stamp duty they have paid on their public liability insurance premiums since 1 July 2001 need to be refunded.

I do not believe this places an onerous burden on the revenues of the Territory. In many cases, the enormous increase in insurance premiums has meant an unforeseen windfall for the government. I would argue that it is a windfall that government can afford to forego. The total revenue raised by stamp duty on insurance, not just public liability insurance, was some $10m in 2000-2001, and we are talking here about a small part of that revenue.

While that may not appear to be much in the context of government revenues in the order of $2.5bn, it is a windfall desperately needed by Territory businesses and Territory community groups. The bill, as I said, is a simple one. It does not pretend to cure the ills of the insurance crisis but it is something that government can do now while that cure is found. It is something that government and this parliament can do now to help Territorians. I commend the bill to honourable members.


 

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