JOHN MACKENZIE:
Arthur, thanks for joining me on the program.
ARTHUR SINODINOS:
Good to be with you again John.
JOHN MACKENZIE:
I've got to say, you've unleashed a wave of excitement up here. There's a tiny little light at the end of the tunnel. I can tell you there's people up here that were considering leaving, packing up and leaving just on the basis of these horrendous insurance premiums we're being charged.
ARTHUR SINODINOS:
Well look, you say there's a tidal wave of excitement. We're reacting to a tidal wave of indignation from before the election. I've been up there since the election as you know and Warren Entsch and others have been doing a great job of keeping the government informed about what's been going on. So that's why we've taken action now. It's an election commitment so we've needed to get started from day one. I haven't promised that overnight everything will be fixed, but by doing the things we're doing like the insurance aggregator which is the name and shame device you were talking about before, actually flushing out the prices people are charging so they're more appropriately compared – you can compare apples with apples, oranges with oranges.
It's something that's been used elsewhere. It led to significant reductions in motor vehicle and other insurance costs in the UK. Because it reduces the costs of consumers looking for what is the best deal and the cost of transacting those best deals. They can make more informed decisions about their insurance purchase.
So, this is actually greater transparency in north Queensland, but if you're in north Queensland as you were saying before, you can also look at what people are paying elsewhere, compare it more directly and when we get the study finished – the Australian Government Actuary Study – which is going to cover eight years – from 05/06 to 2012/13 – that's going to allow us to compare across northern Australia as well as Adelaide, Sydney, Melbourne. So, people will be able to see that for particular types of events how much people get charged elsewhere and I'm also conscious that people up there feel like they've had to carry the burden for things which have happened down the coast in places like Brisbane for example…
JOHN MACKENZIE:
Yes
ARTHUR SINODINOS:
…and they've argued that our damage in a particular storm or cyclone wasn't that great, but look at the cost we have to bear vis-à-vis people in those other bigger centres down south.
So, that study by a man, the Australian Government Actuary – the person who provides actuarial advice to the Australian Government – will look at all this across north Queensland very, very soon and we're also going to be talking to James Cook University and the insurance industry about funding those examinations of how we can reduce the risk of damage to buildings when major disasters and natural disasters occur.
JOHN MACKENZIE:
Now Arthur, when you use this term aggregator, I'm sure people have got a broad or a vague picture of how it might work. But on the ground, how does it work? How do people get access to it and once they've found for example, they might find out that there's nobody providing anywhere near the premium relief to us up here that they are in Adelaide and Sydney and Melbourne in which case, what could be done about it?
ARTHUR SINODINOS:
Well, it's essentially putting information in an accessible form on a website that we make generally available to people, right. So that they can compare the different prices available. We also use it as a device as I mentioned to you when I was up there to try and encourage new players into the market, including foreign players who might see the prices being charged up there and the opportunity to make a profit by coming in and charging more realistic prices and encouraging customers to switch to them.
JOHN MACKENZIE:
Alright, now these new players, I wonder about this. I mean I would imagine there's nothing stopping foreign companies from coming in here now is there? Aren't most of these companies based in a foreign country anyway? Some of them are anyway.
ARTHUR SINODINOS:
Some are, but mate we're putting more information out there – greater transparency - and a more informed market includes a more informed market for the insurers themselves and we are actively out there looking for the sort of insurance that could come into the market. That's something I also alluded to when I was up there the last time.
JOHN MACKENZIE:
Now they mentioned – I haven't got the Financial Review copy in front of me, but I vaguely remember at some stage it suggesting that you would take action in conjunction was it with the Queensland government. I didn't quite understand what you were getting at there.
ARTHUR SINODINOS:
What we're getting at there is we've discussed the issue with them and they were happy to roll in any initiatives they might have including in terms of works that mitigate some of the risks of disasters up there. They were keen to make sure that any administrative thing they could do at their level which complement what we're doing, they were happy for that to come forward, but what we've said to them is that they should proceed with whatever they want to do. We just want to know what they're doing and when they're doing it. We don't want to stand in the way of them doing it by saying we've got to do everything jointly. So we've encouraged them to get on with whatever measures, practical measures they can implement on the ground. But I'm taking responsibility for what we do at the federal level and I've announced what we're going to do and we're going to get on with it.
JOHN MACKENZIE:
We just would like to know how committed the federal government is. Now, in a way we've discussed these other options that seemingly work very, very well in New Zealand for example, which is crippled quite often with earthquakes. They pay a fraction of what we do. You know of course in Darwin which was the site of the 1974 Cyclone Tracy. They pay a fraction for their insurance compared with what we're paying here. So, we're wondering just how committed, how determined are you as a federal government to deliver the relief we desperately need when we look at people in other parts of Australia and the world getting much better deals than us?
ARTHUR SINODINOS:
Well on one level, people like Warren Entsch, Ian Macdonald and others won't let us get away with anything. If we don't deliver, they'll take us on, the party room, they'll report me to the Prime Minister for not meeting our election commitments. I'll be in lots of hot water if this doesn't get fixed. So, I've got every incentive to get this fixed as soon as I can and in regard to New Zealand John can I say, any information anybody's got – I mean we'll review it independently – but any information, if any of your listeners and others have got up there about New Zealand, we'll gratefully take that in. I'm seeing the High Commissioner of New Zealand in the next little while and we will have a further discussion with him…
JOHN MACKENZIE:
Wonderful.
ARTHUR SINODINOS:
...in part around all of this.
JOHN MACKENZIE:
I've got to tell you, the Premier of Queensland is the one that alerted us to the comparison. He came back from Auckland saying my God, I saw how cheap their premiums are compared with what north Queensland is paying at a fraction of the risk! I mean this is the point the Queensland Premier made.
ARTHUR SINODINOS:
Well I'm seeing the High Commissioner of New Zealand on the 20th of March and so we'll follow up on that.
JOHN MACKENZIE:
Have you got a minute or two to take a question or two on how this is going to work?
ARTHUR SINODINOS:
Sure.
JOHN MACKENZIE:
Oh wonderful. I've got Senator Arthur Sinodinos on the line and I've got John on the line also out at Manunda. John, you're talking to Arthur Sinodinos.
CALLER::
Thanks John. Good morning Arthur, how are you?
ARTHUR SINODINOS:
Good mate.
CALLER::
Mate, first of all as I said to John previously, we've been naming and shaming these companies for years. So you officially doing that is not going to help that much and another comment you just made there, this is not going to happen overnight. Mate, this has been going on for years and years and years and we need help now. These communities are hurting, there's people uninsured who have been insured for 40 or more years and they've dropped out of the system because they can't afford it. Now Arthur we need help now. Look, there are many things that I could quote here that a government can do in five minutes if they wished to. So you said to me last year – you and Warren – you're going to drag these insurance companies into a room kicking and screaming and sort this out and get our premiums down. So for goodness sake Arthur, finger out and do it!
JOHN MACKENZIE:
Arthur.
ARTHUR SINODINOS:
Yeah thanks John, on the aggregator it's more than just name and shame, it puts all the prices out there. As I said before we'll also try and find other insurers we can bring into the market. We've had the insurers in the room, we had the roundtable. That's why we're pushing along. This government's been in since the 7th of September, so I've had to deal with this while also getting on with the other election commitments in my portfolio. And the reason I said it won't happen overnight is because frankly as we get into this issue, new information comes along including what John mentioned before about New Zealand. Now if there's something they do better than we do here, I'm happy to look at that as well. But we are getting on with it. You've got a government that's made commitments around this and we will get on with it.
JOHN MACKENZIE:
Got to move on sorry John because I've just got Lindy [inaudible] on the line over here too. Lindy, you're talking to Arthur Sinodinos.
CALLER:
Good morning.
ARTHUR SINODINOS:
Hi.
CALLER:
The question I've got for you is does the government really appreciate at how stifled Cairns is? No development is happening here and our economy is basically going nowhere fast.
ARTHUR SINODINOS:
When I was at the Insurance Council on Friday, that's one of the points I made that we saw this as not just an affordability issue for people as important as that is, but also as an issue that impacted on the potential development of the place. Absolutely, you're absolutely right. It's part of reducing the cost of doing business up there as much as anything else.
CALLER:
There's no building development that's going to happen and we're at crisis levels at two per cent vacancy and our economy's slow. So when the economy starts to go, the only thing that's going to happen is the rents are going to go up and that's going to create another crisis here. I just need to make sure that you're fully aware of that.
ARTHUR SINODINOS:
Yep. Thank you.
CALLER:
Perfect.
JOHN MACKENZIE:
Alright, don't go away Arthur Sinodinos. We might have to leave some of those other calls now, because it's just going to get too complicated. Coming back to where we were Arthur, as far as any sort of a timeframe is concerned and I know this is particularly difficult for you because you just don't know how exactly these insurance companies are going to respond to what basically is your sabre rattling on Friday.
ARTHUR SINODINOS:
How do I expect them to respond? I expect them to respond by cooperating with everything we're doing and hopefully that leads to an early harvest of good results.
JOHN MACKENZIE:
When you say early, I mean loosely what might be in your mind? I mean we've got people up here hanging by the skin of their teeth. They've borrowed money from the bank to pay for their insurance premiums. Are we talking months or years here?
ARTHUR SINODINOS:
No, no, it has to be – I want to see progress this year. I mean I don't want to say weeks and months because mate, you know what this game is like. Joe Hockey and I are putting a budget together as well. So you know, we've got to get that out in early May. So, I've got other things to do, but this is a high priority for me. That's why I'm spending all this time on it.
JOHN MACKENZIE:
So you will stay engaged with Warren Entsch every step of the way of this?
ARTHUR SINODINOS:
We are joined at the hip.
JOHN MACKENZIE:
Alright Senator Arthur Sinodinos, I appreciate your time on the programme today, thank you.
ARTHUR SINODINOS:
Thanks John.