Ms O’CONNOR – Thank you, Chair. I’m just interested in a broad response from the Treasurer to the state about government businesses on what seems to have been – what seems to look like ‑ the consequence of 11 years of running down our GBEs, where former treasurer Peter Gutwein was taking 90 per cent dividends from GBEs and you’ve now got the Auditor‑General sounding the alarm about a number of GBEs, from TT-Line, Hydro, to TasNetworks – I think even MAIB, from my recollection. Can you understand why the casual observer might form the view that our GBEs have been mismanaged over the past 11 years?
Mr ABETZ – Look, there is no doubt that the governance reforms that we’ve introduced have been absolutely welcomed and I think deemed as necessary, given some of the unfortunate events of the TT-Line, in particular.
In relation to the Motor Accident Insurance Board, we have the lowest premiums in the country, the most generous and quick payments out, so I think the MAIB runs a very good operation. What the Auditor-General has pointed out is that the low premium has been, if you like, subsidised by the exceptionally good investments they make, and the interest earned from those investments sort of backfill what would be the otherwise shortfall in the premiums.
As I understand it, the economic regulator provides, from time to time, guidance to the MAIB, given it is a monopoly supplier as to what it may be able to charge, and the MAIB has, in general terms, sought to charge premiums below the top level that the economic regulator has –
CHAIR – Allowed.
Mr ABETZ – Allowed. I was going to say ‘suggested’, but I think it is an ‘allowed’. Thank you, Chair.
In those circumstances, I don’t want to be a shadow director – and that is, I must say, one of those very real difficulties of being a shareholder minister, that you don’t fall into the trap of being a shadow director, because the directors are appointed to run the show – but given that advice, whether MAIB premiums could do with a bit of an uplift, given that report, that will be a matter for the MAIB board to consider.
Ms O’CONNOR – Thank you. You didn’t really answer the question, because when you step back from the situation that our GBEs and state-owned companies are in, they’re in a lot poorer shape than they were 10 years ago. Perhaps – so, the policy of government under your predecessor a few predecessors ago, Mr Gutwein, was that GBEs in general would be required to pay a 90 per cent dividend – I think it was on after-tax profits. So, for those first few years of the Hodgman government, there was a real scouring of the GBEs’ capacity to put money away, to invest in capital works, for example, and repairing their assets.
Do you agree, as a broad observation, of someone who’s been in state parliament for a couple of years, that they haven’t been particularly well-managed over the past 11 years, on the numbers?
Mr ABETZ – Despite two elections, I still haven’t been here for two years.
Ms O’CONNOR – Haven’t you? It seems like longer! I’m sure it does to you.
Mr ABETZ – I know. It seems like an eternity for you, I know.
CHAIR – The question.
Ms O’CONNOR – Look, you’re not going to answer that, so what’s the dividends policy of government now? What’s your, as Treasurer, dividends policy towards GBEs?
Mr ABETZ – Look, I don’t have a policy. The Cabinet has a policy, and the Cabinet’s policy remains –
Ms O’CONNOR – What is it?
Mr ABETZ – Like with all other policy positions, we will review –
Ms O’CONNOR – What is it?
Mr ABETZ – The companies; they write to me and the shareholder and the portfolio minister suggesting what they can and cannot pay by way of a dividend each year.
CHAIR – Isn’t it based on your policy though?
Mr ABETZ – Yes.
Ms O’CONNOR – What’s the policy now? Is it the same policy as it was in 2014-15?
Mr SWAIN – Ninety per cent was kept. It still remains as the default edition.
Mr ABETZ – I’m not aware of any change in the last few months.
Ms O’CONNOR – It’s an election promise to establish another GBE, which is TasInsure, or a state-owned company. Given your track record of running GBEs into the ground, it’s not particularly promising at this point.
CHAIR – Can you get to the point?
Ms O’CONNOR – Has government done any modelling on the viability of establishing a state-owned insurance scheme, particularly given what we know is coming down the line in terms of extreme weather events ‑ fire risk, for example, to the city of Hobart ‑ which is not funded to be mitigated in this Budget.
CHAIR – Is that a question?
Ms O’CONNOR – It’s about TasInsure. What is the modelling? What have you –
Mr ABETZ – We are out to market to get a – what? – scoping study undertaken and if you’re doing the – what’s it called? – expression of interest or request for tender, whatever it’s called, to engage somebody to assist, but the secretary can provide the detail.
Mr SWAIN – Thanks Treasurer, so we recognise that while we have some broad knowledge, we don’t have specialist knowledge in relation to insurance. We are going to market to seek to get some expert advice that will help both refine the problem and examine the solutions that might be available to deal with the challenges identified.
Ms O’CONNOR – Sure. As part of that conversation, would you, for example, have a chat with the RACT, which, if you did talk to it about the risks to insurers now, will tell you that in and around Hobart, for example, there are properties that are becoming uninsurable because of the fire risk.
CHAIR – Have you spoken to RACT?
Ms O’CONNOR – Has the Tasmanian government engaged, for example, with Tasmania’s primary community insurer, that is, the RACT on the risks involved with setting up another insurance company?
Mr ABETZ – Look, full disclosure, as a member of the RACT – as I think the vast majority of Tasmanians are, but put that on the table – yes, I’ve had a number of discussions and formed a good working relationship with the CEO whilst I was minister for Transport.
As you may imagine, the RACT has a lot of interest in that space and formed a good relationship with him. Then since changing portfolios, I’ve had a few discussions with him as, I believe, the Premier has as well.
Ms O’CONNOR – The last question on this line of questioning. Does government accept, given that you’ve talked to RACT and have some understanding of climate risk, that to embark on a project like TasInsure potentially places the state’s finances at some risk in future?
Mr ABETZ – Look, it depends on how you do it, and we have every confidence that as we set about doing it, we will get all the appropriate advice to ensure that we don’t prejudice the state’s future finances.
