Dr Kerryn Phelps, AMA President with Amanda Drury, CNBC Asia

Dr Kerryn Phelps, thank you very much for joining us today. Can you tell us, how does this government package shape up as far as doctors are concerned?

PHELPS: Well, the Australian Medical Association has been working very closely with the Australian Government to come up with this medical indemnity rescue package, and we certainly believe that the Federal Government has gone as far as they can under the current circumstances.

I would, however, warn that the crisis is far from over, because as Mr Roberts said, the States and Territories really need to get whatever tort law reforms they can through in order to make sure that State by State we have containment of the explosion in litigation that has been, that has actually resulted in this explosion in litigation and the cost of litigation insurance.

DRURY: And indeed if we don't see those legal changes - specifically from the doctors and patients point of view - what would the implications be?

PHELPS: If we don't get the changes then we will see an acceleration of what we are already seeing in Australia and that is procedural GPs in rural areas giving up procedures like obstetric surgery and anaesthetics. We will see neurosurgeons not wanting to work in neurosurgery - which means that there won't be brain surgery and spinal surgery.

It's already very difficult to get young doctors to go into that particular speciality because of the litigation, and similarly we're seeing senior obstetricians who are not, choosing no longer to deliver babies, and that's a disastrous situation for mothers and babies.

Now, if the situation were allowed to continue in the way that it went - if the States and Territories don't get on board and follow New South Wales lead with their tort law reforms - then it will be death by a thousand cuts for the health system in Australia.

DRURY: Dr Phelps another thing that Daryl Roberts mentioned was the levy on doctors. I understand that the AMA has been against this. Are you going to lobby against it?

PHELPS: The AMA has not been against the levy per se. What we've been against is the imposition of a levy when we don't know how much that levy is going to be, we don't know what amount that levy is supposed to cover, and we - it's like throwing money into a black hole unless you have tort law reform.

What we've said is we'll look at the notion of a levy but only once the States have introduced their tort law reforms. Until they introduce tort law reforms then we don't know how much this unfunded tale is likely to be. We don't know how much it is that there needs to be in catch-up funding contributed to by the medical profession.

And at the end of the day the argument that we're making - which is a very solid one - is that these costs have to be passed on to patients. So we have to consider the issue of affordability and accessibility of services for patients.

DRURY: If that cost is passed on to patients, do you think there'd be some kind of backlash from the patients, from the consumers against the doctors?

PHELPS: I don't believe the backlash will be from patients to doctors. I think that patients will see that it has been a legal system that has gone crazy that has created this problem in the first place, and that what doctors are seeking to do is to simply recover their costs of running their practices.

DRURY: Very quickly, before we let you go Dr Phelps, how big a problem is it that the package appears to only cover doctors and not nursing staff as well?

PHELPS: Most nursing staff are employed by State hospitals and they are covered by their State hospitals indemnity arrangements. The only people you would find who are working privately who would be affected by this situation would be independently practising midwives.

So I don't know that it has had an enormous impact because in Australia the vast majority of deliveries occur in a hospital setting with employed nurses and either a private obstetrician or an obstetrician employed by the public system.

DRURY: Dr Phelps, a pleasure to talk to you. Thank you very much for your time.

PHELPS: Thank you.

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