By SCOTT HANNAFORD

Canberra Times

Public liability insurance laws in Australia could be overhauled by establishing a national injury compensation scheme, the Federal Government proposed yesterday, in an effort to combat skyrocketing insurance premiums.

The Minister for Small Business and Tourism, Joe Hockey (pictured), called on the states and territories to come up with a solution to rising costs of insurance premiums, saying the current system was forcing small businesses to close.

"It is unsustainable for small businesses and communities to keep paying these massive insurance premium increases. We've heard stories of fetes and local fairs being closed down because they can't obtain public liability insurance," Mr Hockey said yesterday in a radio interview.

He gave the example of a horse-riding school in Western Australia which had seen its insurance premium jump from $2438 in 2001 to $21,439 in 2002.

Under the plan based on a New Zealand model, businesses would pay a levy to the Federal Government, which would dispense funds to the victims but would cap the amount of compensation for each type of injury.

He said the number of claims had increased annually from 55,000 to 88,000, due partly to the actions of lawyers offering no-win, no-fee services, but also to members of the public being more willing to sue.

The Law Council of Australia said the cost of rising premiums was not due to "greedy lawyers" and called for a meeting with the Government to help come up with a solution.

Council president Tony Abbott said, "Any system dealing with personal injuries must meet a number of goals. One of those is being affordable to the community, but another equally important is to properly compensate injured persons."

The proposal received widespread support from tourism and business groups keen to see a change in public liability cover.

ACT and Region Chamber of Commerce and Industry chief executive Chris Peters said a national system of cover would benefit the ACT, with many businesses on the brink of closing because of the difficulty of obtaining insurance.

"Outdoor tourism is a classic example," he said.

"We have been seeing increases of 500 per cent [in premium costs] and in some cases our members are simply being told it is impossible to get insurance in Australia.

"There have been 11 outdoor tourism businesses in Victoria which have had to close because they were unable to get insurance and while I don't know of any cases in the ACT, it is only a matter of time," Mr Peters said.

Since the collapse of HIH Insurance and the terrorist attacks of September 11, the situation had become critical for ACT businesses, he said.

The Insurance Council of Australia called for a national forum to discuss the crisis in rising insurance premiums, with executive director Alan Mason calling for a task force to be established.

A spokesman for ACT Treasurer Ted Quinlan welcomed the proposal, but said it was shallow and needed to be fleshed out by the states and territories.

"I'm sure there is a range of options so I hope the Federal Government isn't just going to put this on the table and say 'this is it'," the spokesman said.

"We are very happy to talk and hope that the Insurance Council will contribute and bring their experience to the discussions."

He said the issue would be top of the agenda at the treasurers' conference in March, with all states and territories keen to see a national solution to the problem.