Dr Kerryn Phelps, AMA President, to the AMAQ Medical Indemnity Rally, Brisbane

That's right - patient care. That's what the medical indemnity crisis is all about.

This crisis has been a threat to doctors, not a threat by doctors. And if doctors can't practise medicine, it is the patients who are disadvantaged, it is the community that loses out.

We want to help our patients. But we need the government to help us to be able to help our patients.

The Prime Minister made a good start with his announcement yesterday. A good start, yes. But is it enough for the long term? No.

I am pleased that the Prime Minister made mention of working with the AMA in his statement yesterday.

This is a clear signal that the work put in by the AMA - the work put in by every one of you here today - has been heard and heeded by the Federal Government.

By raising your concerns over the past couple of months, we have been able to explain in simple terms the enormity of the problem caused by the UMP troubles.

The public was left in no doubt that this was something that affects every man, woman and child in Australia. It was a national crisis of the highest order. And it was a social problem with an all too real human dimension.

The Government had no choice but to act.

So, where does yesterday's announcement leave us?

Before discussing the pros and cons of what is on the table, I will give you a summary of the key elements of the Governments package.

Firstly, there is to be a six-month extension to the Government guarantee with one modification.

From now until 31 December this year, the provisional liquidator of UMP will be able to meet any settlements that fall due, and any claims that arise over this period will also be covered by a government guarantee on a claims made basis for some years into the future.

This is a change from the current claims incurred arrangements from 29 April to 30 June 2002, and is necessary to meet UMP reinsurance contracts.

This is welcome news because, provided it is approved by the courts next week, UMP will be able to renew any policies that fall due for a six month period and it will give time to get some effective longer term remedies in place.

UMP may well be able to continue insuring doctors and this is what the AMA has been seeking all along.

The second major component of the government's announcement is that the government will guarantee in perpetuity "the tail", the IBNR currently hanging over the head of UMP members.

The "tail" guarantee will cover IBNR up to 1 January 2001. Most doctors can purchase tail cover from 1 January 2002.

The IBNR will have to be reported in the annual accounts of UMP. This should have happened years ago.

The sting in the tail of this one is that the doctors will be expected to pay a levy over five years (or possibly longer) in order to effectively fund the IBNR.

While doctors will have their tail covered, it will come at an unavoidable cost.

The exact cost and how many years to spread it over will be negotiated with the Government when we have an accurate estimate of UMP's IBNR.

There are a thousand questions in relation to how this levy will work in practice.

I assure you today that I will be working with the Government to minimise the effect of this levy on you all.

Already there is talk of a possible subsidy for high cost specialties such as obstetrics, neurosurgery and orthopaedics.

And we can't have a system where low risk doctors must pay high-risk premiums for medical indemnity.

Initially, I expect retired doctors will be exempt and allowance will be made for young doctors.

However, there is a vast range of issues for us still to negotiate with Government and all we can say at this time is that doctors are not going to be left without tail cover - but it's going to come at a price.

Obviously, it is extremely unlikely now that the liquidator would institute a call given that the doctors will be being levied towards the IBNR.

Thirdly, we understand that arrangements are being entered into such that the capital reserve requirements of the prudential regulator, APRA, will not be a barrier to UMP continuing to trade, at least in the medium term.

I think at this point we can say that the Federal Government has responded positively in terms of providing a short to medium term reprieve. It will enable doctors to continue to keep practising with both current and retrospective medical indemnity cover. Not a bad initial result.

However, we still have to tackle the fundamental causes of the medical indemnity crisis.

These are the court system and the cost of long term care for severely injured patients.

Tackling the state court systems and their processes is a matter for the State Governments and it has been most disappointing that the Queensland government has not really grasped this nettle.

The Beattie Government is going to have to do a lot more. If not we will be back here in six months time for another rally and another rally until we get some action.

We need a national scheme for the long-term care costs of severely injured people. This is a very large component of the big payouts and, if we can take it out of the court system, it will have a significant impact on the overall cost of medical indemnity.

Most people who are unlucky enough to suffer severe and incapacitating injuries in Australia are mostly a consequence of motor vehicle accidents or work site accidents.

Less than about two or three per cent of major accidents occur in the health system.

The motor accidents and work site accidents are, in most states, handled through a statutory authority and do not come to the court for huge multi-million dollar damage awards.

The AMA view is that a similar system has to be put in place for major medical accidents. It must be community funded and taken right out of the medical indemnity system.

This would be much fairer on patients than the often inconsistent, unpredictable and extremely lengthy processes surrounding the court system.

It would help to keep medical indemnity premiums at a more manageable level than they are today.

Today's medical indemnity crisis has been steadily bubbling to the surface.

For many years the AMA has been warning governments that, without tort law reform and a scheme for long-term care costs, the crunch would come.

That crunch has arrived and the Government is endeavouring to deal with it within the framework of the existing MDO structure and with minimal exposure to taxpayers.

We understand where they are coming from and the immediate crisis has been averted.

We are not sure at this stage whether the levy will be equitable or whether it will place an intolerable burden on doctors already being forced out of practice at today's premium rates.

We have already raised this issue with the Government. They are listening but I anticipate some tough negotiations on this point.

If the State and Federal Governments can come back to us with tort law reform and on long term care reform, the size of the tail and the cost of the levy may be manageable.

Without those reforms it could impose a major burden.

As I said at the outset, your concerns about your patients and your practice have raised this issue high in the public consciousness and to the top of the Government's priority list.

It will only be with your support that we will be able to negotiate this through to a workable long-term package.

Your advocacy must not stop until we have the right solution for you and your patients.

In closing, let me further clarify one thing - the AMA will not blindly accept a levy on doctors to fix this problem unless it is fair, equitable and affordable.

Doctors have paid enough. Patients are paying enough. Further costs will be passed on to patients. We have made that clear to the Government.

We will not pay a 'Claytons call'.

Thank you again for coming here today and thank you for raising this issue to new heights.

The Federal Government is involved in medical indemnity more than ever before. We now need all the State Governments to do their bit.

We are close to a workable solution that will satisfy doctors and patients for the long-term. Our governments must deliver. If not, this and future generations of Australians will never forgive them. Thank you.