The Federal Government has moved to reinforce state-based liability caps, closing a legal loophole that allowed claims under the federally administrated Trade Practices Act.

Up until the end of last month, injured parties were able to initiate proceedings under parts of the Act dealing with misleading or deceptive conduct. The industry warned at the time that this could encourage “jurisdiction shopping” and allow injured parties to circumvent the tort reforms made by state governments since 2002.

While only nine personal injuries claims have been made under the Act, Insurance Council of Australia Executive Director Alan Mason says it’s important to maintain the integrity of tort law changes.

“A range of other remedies for people who suffer loss or damage is still available under the Trade Practices Act, and criminal proceedings can still be brought,” he said.

“By closing this loophole, insurers will have more certainty about the cost of claims, which will keep downward pressure on public liability premiums.”

But not all observers are convinced by the reasons behind the change. The Opposition parties had previously blocked the bill in the Senate, saying the changes went too far.  But they no longer have the numbers to defeat Government legislation.

Shadow Assistant Treasurer Joel Fitzgibbon says the Australian Labor Party offered a different amendment that would have capped payouts under the “misleading conduct” sections of the Act. This would have created “an appropriate balance between the rights of consumers and the need to keep insurance premiums down”.

Assistant Treasurer Peter Dutton says the proposed amendments could further undermine state and territory reforms to tort law.

“Labor’s amendment shows their determination to oppose good policy as a matter of course,” he said.

The nation’s plaintiff lawyers say the changes compromise the safety of Australian consumers. Lawyers Alliance President Richard Faulks says businesses are now able to knowingly sell dangerous products without fear of civil penalties.

“The result of the amendments will be to make it more difficult to pursue companies like James Hardie, which has endeavoured to rely on those state reforms to limit damages for asbestos victims.”