I welcome Michael Egan's announcement that the State Government is going to stand behind its own insurance schemes and I now call on all other State Governments to stand behind their own insurance schemes. The announcement by Michael Egan today is due recognition that if the States run insurance schemes then they have to stand behind those insurance schemes, and given that the States do put in place the CTP and Workers Compensation schemes, it is only appropriate that they stand behind those schemes. The NSW Government deserves credit for standing behind their insurance schemes, other State Governments have to stand behind their schemes.
This morning I met with the provisional liquidator who indicated to me that the situation at HIH is worse than even he first thought. He has indicated by press release yesterday and by his discussions with me today that he will not have any final figures for at least two weeks. This is extremely disappointing for the Federal Government who is working on a large number of options to try and address the severe financial hardship that some people are experiencing as a result of the collapse of HIH. We are working on a number of options that will help to address hardship. But the first issue that we must all understand is that where legal responsibility lies it must be dealt with and the fact that the NSW Government today indicated it is going to stand behind its own insurance scheme indicates that other States Governments should stand behind their own insurance schemes.
REPORTER: The State Government has described this as a show of good faith and is asking the Federal Government to show similar good faith and to put some money up for victims now as well.
MINISTER: I have spoken to the Minister for Community Services, Larry Anthony, who has indicated that CentreLink has already started processing HIH individuals who are in financial distress. So the Department of Community Services and CentreLink are already helping those people in most need as a result of the collapse of HIH. Those facilities of CentreLink will continue, obviously, to work overtime. So the Federal Government does support those who are already suffering hardship as a result of the collapse of HI. But it time for a true package of initiatives that are going to help individuals. We are working very closely on that package very closely with the industry, with the provisional liquidator. This morning I had a telephone conversation with Michael Egan. We discussed the matter at length. We have indicated that we will meet next week to further discuss some of the very complicated issues in the collapse of HIH. I have also indicated to the Victorian Government that I am prepared to meet them at any time should the opportunity arise to discuss the collapse of HIH. It does need to be a co-ordinated effort. We are working on proposals. We have received individual proposals from the insurance industry, from a range of other stakeholders.
But until we receive firm numbers from the provisional liquidator we are walking in the dark. And that is proving enormously frustrating for us. But in the national interest when we respond to the provisional liquidator it must be with a complete package.
REPORTER: Why do you need to see the provisional liquidator's report before you can respond and put your options on the table?
MINISTER: Because Michael Egan runs the Compulsory Third Party scheme in NSW and because the State Government runs the scheme they know exactly what the numbers are and they know where the shortfall lies. The Federal Government does not run home and contents insurance, it does not run theft insurance, it does not run reinsurance, it does not run a whole range of other insurances. They are run by the market. And in those situations when there is no Government insurance program, like the CTP or Workers Compensation scheme, it is very difficult to get overall numbers. Michael Egan has received, as have other State Governments, the full details of the CTP and Workers Compensation scheme shortfalls because they run the schemes.
REPORTER: You are responsible for the regulation. Surely there has been a failure on your part to keep a proper eye on the way this system itself is running.
MINISTER: The Federal Government is not getting into the blame game. No policyholder wins out of trying to apportion blame one way or another. Policyholders win when we come up with solutions. The insurance industry is the most complicated in our economy, bar none. It is extremely complicated. There is a grave danger when people rush in making grand statements and not being able to follow up. Now, we will be very interested to see how Mr Egan structures his support for the building industry, how he structures his support for workers compensation and how he structures his support for Compulsory Third Party. Insurance.
REPORTER: While you don't have the final figure, how big is the problem in terms of what you have been told today?
MINISTER: The provisional liquidator was unable to give me a firm figure. There is a very clear indication that the size of the problem at HIH exceeds all expectations.
REPORTER: Egan said about $1 billion. Is it much more?
MINISTER: I am not going to speculate on the figures. It is up to the provisional liquidator who has a very large team in the company that is working overtime to indicate what the size of the problem is at the private company. The Government does not run, no government runs private insurance companies. Goverments got out of running insurance companies some time ago and quite appropriately. And if you wanted an indication of why governments should not be running insurance companies then the collapse of HIH is a very good indication.
REPORTER: Why are you stalling on holding a national conference?
MINISTER: We are not stalling on a national conference. We are quite happy to receive any submissions. I have spoken with Mr Egan on HIH on a number of occasions. We have spoken about the issues involved. We are working for a common solution. It is very easy to get into the blame game. No one wins out of the blame game. We want to focus on what is best for policyholders and those people in most distress. And if anyone has a submission to give, the Government will respond to it, will receive it, will consider it. But the main thing is there needs to be strategy. We are going through that strategy. We cannot move until we've got some figures. The provisional liquidator has, disappointingly, still not provided us with firm figures.
REPORTER: Can't you come up with a formula before you get the figures?
MINISTER: No one yet is prepared to commit very large sums of money, taxpayers money to address a problem that no one can quantify. It is completely irresponsible for any government to throw large sums of money I am talking about hundreds of millions, if not billions of dollars at a problem, when you can't quantify the size of the problem. As Michael Egan has indicated, the $50 million committed by NSW is a short-term solution. And it is a short-term solution only. It is nothing more than that. The Federal Government is looking at options that will help address the concerns of people into the future. Not just those people who have already lodged claims but people that have HIH policies and may have claims in one, two, three, four or five years or more.
REPORTER: The Government has said it is determined to help those people in most distress. Those people need money now. Is there no way you can put up .
MINISTER: We are putting up. CentreLink, which is the Government's welfare agency, is providing significant support to those most in need at the moment. And they have been doing this for a number of weeks. They have been expediting the claims with anyone associated with HIH. So the Federal Government has provided a safety net to those in most dire financial need through CentreLink, and we will continue to do so. But in the interim what needs to be addressed is the size of the problem. Now Mr Egan also indicated today was that problem was much bigger than what the $50 million is. He recognised that the State Government has responsibility. He has committed money to address the State Government's responsibility. The Federal Government will be responding as soon as it receives information from the provisional liquidator.
Thank you