Dr Kerryn Phelps, AMA President, and Senator Helen Coonan, Assistant Treasurer, with Tracey Grimshaw, Channel Nine, 'Today'

To take us through the plan, we're joined now by the Assistant Treasurer Senator, Helen Coonan. Senator Coonan, good morning.

COONAN: Good morning, Tracey.

GRIMSHAW: You have said that liquidating UMP might not be inevitable. How could it be saved?

COONAN: Well, I think it's really important to understand, Tracey, that the normal process that a company goes through when it gets into some difficulty is being followed in this case. This is a commercial matter for the company. And the company has decided that they're going to appoint a provisional liquidator and the grounds on which they're appointing a provisional liquidator are that it is just and equitable and fair to the members and fair to the company that it should proceed with provisional liquidation.

The appointment of a provisional liquidator enables a number of options to be considered. And the company will then proceed to be liquidated or, alternatively, if there is any basis upon which the company could continue to exist, that will be identified by the liquidator. I think it's important also to understand here is that one of the companies does have assets. And we need to look at what all the assets and liabilities are and to look at what other obligations all of this group has.

Now, I think it really is very important to understand that it will be going into provisional liquidation. Usually a company will then proceed to be liquidated. All the Government is saying is that if the provisional liquidator identifies some options we will look at them.

GRIMSHAW: All right. If it turns out that to save UMP the government has to kick in more money, would you look at that? And how much more? Have you done some costs?

COONAN: Well, the Prime Minister has said yesterday that he doesn't have, and he's not prepared to just write blank cheques. And certainly, in principle, the Government is not interested in propping up a failed commercial organisation. Nothing that happened yesterday alters that in principle position.

The Government, on the other hand, is interested in assisting doctors to move to other insurers, if that is what is necessary. And we have identified some commercial insurers prepared to write this line of business if there is no possibility of any kind of option being identified with the existing infrastructure of UMP AMIL.

GRIMSHAW: Can I ask you on that, exactly what is the Government's preferred strategy here? Is it to save UMP? Or is it to attract commercial insurers in the market to take over UMP's clients?

COONAN: Well, it's certainly not to prop up any failed company. That's a commercial matter and that's a matter for the directors. What the Government, of course, wishes to do is to have a strong and stable medical defence indemnity sector. It wants to have its doctors able to get insurance at a reasonable cost. It wants premiums to be within reach of doctors. And it certainly wants patients and medical services to be available both in, of course, metropolitan areas and in rural and regional Australia. So the Government has a much broader interest than looking at a failed commercial provider of medical indemnity.

GRIMSHAW: Doctors and surgeons seem to need something in writing before they'll go back to work. Are you going to give them that today?

COONAN: Well, that's been raised with me this morning. I spent most of yesterday engaged in negotiations with the AMA, which I understood was able to represent most of the doctors interests. If - I am interested in doctors working and continuing to provide the services that people need. If there is some additional need to provide any further assurance about the guarantee the Government has given, well I'll be in touch with those doctors today to see what I can do about that if they need it in writing as well.

But I think what we have to understand here is the Prime Minister has given this guarantee. The Treasurer has given this guarantee. I have given this guarantee. And we're prepared to back it up in legislation, which we have said will be in place by the end of June. The guarantee also covers any future claims that might arise out of any incidents over the next two months.

GRIMSHAW: Okay.

COONAN: So it's a very comprehensive guarantee. It is ironclad. I can't imagine what further assurance doctors would need. But if they need it, I will give it.

GRIMSHAW: All right. Thank you for your time.

COONAN: Thank you, Tracey.

GRIMSHAW: Senator Helen Coonan. Also involved in yesterday's meeting to broker a solution was the President of the Australian Medical Association, Dr Kerryn Phelps, who also joins us now. Kerryn, good morning.

PHELPS: Good morning, Tracey.

GRIMSHAW: All right. Are doctors safe to go back to work today? Are surgeons safe to go back or is there still a grey area?

PHELPS: Some of the doctors groups are being given legal advice that they have to see it in writing before they can be safe to go back to work without the risk of losing everything they've ever worked for. Now, you can understand that that would create a great deal of uncertainty for the doctors who are planning to go to work.

We have said, from the AMA's point of view, that we are prepared to take on faith the assurances of the Prime Minister, the Treasurer and the Assistant Treasurer, that there will be cover for doctors from now and into the future for any work done from yesterday to June 30th.

Now, if - it is necessary to see that in writing. The draft legislation won't be through until late May, which means that those doctors are feeling quite vulnerable, quite exposed. And I think that's understandable.

GRIMSHAW: So would you recommend therefore - are you prepared to say we recommend at the AMA that doctors and surgeons go back to work today. That it's okay?

PHELPS: We are saying that we are prepared to accept on faith the Government's assurances. I think it is important, though, that that is put in writing and that the surgeons are able to see exactly what is on offer so that they can show that to their own legal advisers.

GRIMSHAW: Kerryn, is there a flip side to doctors liability in all of this? If someone dies or perhaps more likely is handicapped as a result of not being able to get access to a procedure right now because doctors and surgeons are not operating, might they be liable for that?

PHELPS: Well, that's a fine point of law and I'm afraid you'd probably have to ask a lawyer about that. But it is a very uncertain time for doctors. And I think it's unfair of the Government to talk of UMP as just a failed commercial enterprise, because it is the Government's own prudential regulations that has actually tipped UMP over into this situation of having to appoint a provisional liquidator. They had been able to trade through their difficulties at the moment. It's just that at June 30th the ground rules change and they had to come up with $175 million in order to keep trading. And that's a very difficult call.

GRIMSHAW: Should UMP be saved, though, under the current circumstances? Or would it be better to bring in commercial insurers and allow their competitors to take up the shortfall?

PHELPS: We're concerned about commercial insurers coming into this market. Number one, once they've realised what the medical indemnity environment is like they seem to scuttle off at a great rate of knots. We've had St Pauls, which is a global insurer, getting out of medical indemnity insurance right around the world. And they pulled out of the Australian market just recently. So it would be unusual for a commercial insurer to come in.

The other problem is that the commercial insurers will only come in if this large tail - this almost half a billion dollars of previous claims are still sitting there on the books. So that is a very big cloud in this silver lining. What happens to this large unfunded, what we call the 'tail' or the claims that have been incurred in the past but are not funded? Now, this is a big concern for doctors as well. And commercial insurers are not just going to pick that up and pay for it.

GRIMSHAW: All right. Thank you both for your time this morning.

COONAN: Thank you.

PHELPS: Thank you.

Ends