Meet the man behind the man who could stop the levy
John Tsouroutis has taken a $1 million salary cut to join a crusade to make states look after themselves. He’s now on the relative hardscrabble of an adviser’s pay in the office of independent senator Nick Xenophon.
Tsouroutis was managing director of the TIO banking and insurance group from 2003 until 2008 when the commute from Adelaide to Darwin became too much for the family.
From his business career he knows how government can force individuals to insure themselves. Just take third party cover for motorists. He wants to make sure state governments do the same thing, rather than expect someone else to pay reconstruction costs after a natural disaster. Tsouroutis was on an elite salary with TIO and hopes to get back on one soon. But he’s got a big job to complete first.
Yesterday the House of Representatives passed the legislation needed to start the $1.8 billion flood reconstruction levy. But Julia Gillard still has to overcome the Senate.
Xenophon is the man standing between her and adoption of the levy. With one flick of his vote he could delight Opposition Leader Tony Abbott by blocking the one-off tax.
Before he allows it through he wants the Federal Government to provide guarantees that states will insure themselves for natural disasters.
The political decision will be made by Xenophon. John Tsouroutis is helping formulate the demands to the Prime Minister.
It is a cause close to the businessman’s heart, not least because during a business lifetime he has been told by regulators what to do about risk management. He says:
These regulators basically are government telling business the sorts of things we need to do in terms of mitigating our risk. But secondly, as part of my role as running the only government-owned insurance company and bank left in Australia, which was TIO, the second hat I used to wear was as an adviser to the Northern Territory Government on its own insurance arrangements.
And through that process I came to find out that a couple of governments around Australia, namely Queensland and the Northern Territory and Tasmania, didn’t actually have any form of risk mitigation strategies in place in terms of having insurance. Then I found out through the process of two natural catastrophes (the Queensland floods and cyclone Yasi) we were looking at a $6 billion bill.
But more than that, that mums and dads of Australia were actually going to pick up $1.8 billion of that and fund a government that should have been financially responsible. It just tore at my heartstrings.
And therefore I just didn’t think that this was responsible government and something needed to be done so that we wouldn’t be in this situation again.
It might be harder for states to get cover after the disasters here and in New Zealand. Tsouroutis calculates premiums will rise by at least 20 per cent.
He said the current policy of the Natural Disaster Relief Recovery Agreement doesn’t discriminate against uninsured states, it ``essentially writes a blank cheque for 75 per cent’’ of reconstruction costs.
``There is no incentive or disincentive for the states to be doing the right thing,’’ he says.
In 2004 Queensland could have insured itself for $30 million a year, 200 times less than the $6 billion bill they are facing.
He estimates the state might now be able to get cover worth only $5 billion. But he says the state should take up insurance and if, for example, there is a $7 billion natural disaster, the Federal Government would cover the extra $2 billion as an insurer of last resort.
``It’s a bit like kids. They don’t insure their house because dad’s got money in the bank,’’ said Tsouroutis. ``That’s moral irresponsibility.
``As a father, you should make sure your kids insure their house and if at the end of the day (after an accident) they are a few dollars short you come in at the top end.’’
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