Travel Compensation Fund

23 Jun 2011 questionsarchive

I seek leave to make an explanation before directing a question to the Minister for Consumer Affairs on the subject of the Travel Compensation Fund.

The Hon. J.M.A. LENSINK: I have asked a number of questions about the Travel Compensation Fund in this place. In particular, in 2009, it had been widely reported that the industry was finding the state-based licensing and the fund ineffective—clogged with red tape and discrimination. More recent reports demonstrate that industry hostility has not ceased and the TCF is viewed by one of the peak bodies as having, 'measures in the regime [which] are duplicate, obsolete and disproportionate'. In September last year, the minister advised that she would bring back some responses but, to date, as far as my records show, this has not happened, while the industry concerns continue.

My questions for the minister are:

1. Can she give us a response about whether this regime is effective?

2. What information does she have that we can provide to industry so that their concerns will be addressed?

The Hon. G.E. GAGO (Minister for Regional Development, Minister for Public Sector Management, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for Gambling) (14:31): I thank the honourable member for her questions. Indeed, if she had been listening to one of my responses yesterday in question time where I gave a response to a government question, I gave an update on ministerial council results that went to this issue. Obviously, she was not listening, so, in light of that, I am happy to just give a bit of background information yet again.

The Ministerial Council for Consumer Affairs (MCCA) directed the Standing Committee of Officials of Consumer Affairs (SCOCA) to commission a review of the effectiveness of the current consumer protection measures in travel and the travel-related services market. The travel industry's current national cooperative regulatory scheme dates back to a framework that was established right back in the 1980s, I think it was.

A key aspect of the cooperative scheme is the Travel Compensation Fund (TCF). The TCF is a mandatory industry-funded scheme for compensating consumers in the event of loss of moneys to prepaid intermediaries. The co-operative scheme has been, I believe, an effective model for nationally harmonised regulation of the travel industry. I think it has served us well in the past.

However, as I have mentioned in this place before, there have been significant changes to the travel service market since the 1980s.

Firstly, the relative cost of travel has significantly declined over time. Also, as we know, more people are making their bookings for their airfares and also for their accommodation and other travel packages and are more inclined now to make those transactions online, choosing to book directly with travel suppliers over the internet, rather than through travel agents. So, that exchange of funds is not taking place.

I have reported here before that, in 2009-10, PricewaterhouseCoopers undertook a review to examine and make recommendations for improving the existing state-based industry-specific consumer protection law and also the administrative arrangements for the travel industry.

PricewaterhouseCoopers presented their report at the end of June 2010. As a result of that, a public discussion paper listing possible options for reform was released for consultation in March and April of this year.

The Ministerial Council on Consumer Affairs considered feedback from the consultation process at its recent meeting in Canberra on 3 June 2011, which I reported on yesterday. The ministerial council acknowledged there is a need for reform and modernisation of travel industry regulations in Australia, particularly as consumers now have a variety of options available to them and a greater degree of personal autonomy in relation to internet booking arrangements.

Other developments include the Australian Consumer Law providing increased protections for all consumers, including travellers, and the adoption of the national tourism accreditation framework where travel agents will be able to become accredited providers. However, ministers agreed at that MCCA meeting that the modernisation of the regulatory framework for travel needs to foster ongoing consumer confidence, business compliance and financial capacity, as well as competition and innovation.

As a result, ministers agreed to the development of a travel industry transition plan in consultation with industry and consumers. I have to say that there is a wide range of different views across the industry sector itself. There is also a wide range of different views coming from consumers and, certainly, the jurisdictions—different ministers in different states—also have different views on this.

So it does take considerable work to find a position that balances those needs across the sector and that we can get people to land on. This work will now commence and aim to modernise the travel industry regulatory framework whilst maintaining consumer confidence and protection. As I said, a lot of work has gone into this and a lot of consideration has been given to it, and we need to continue discussions with the industry.