In the event of a serious reactor accident at Lucas Heights, Sydney residents would find it extremely difficult or impossible  to pursue compensation claims.

According to Michael Priceman from the Sutherland Shire Environment Centre, “The [ANSTO EIS] report on the  suitability of Lucas Heights as the site for a new reactor ... found that it was perfect, based on what ANSTO described as its  pessimistic assumptions that the frequency of a worst case accident was one in a million per year and therefore the maximum  risk to an individual developing a fatal cancer was one in 6 billion per year. Armed with those sporting odds the Insurance  Council of Australia still refuses to insure the public.”

With respect to government indemnity, nuclear engineer Tony Wood, former head of ANSTO's Division of Engineering and Reactors, said in his written submission to the Senate inquiry that both ANSTO  and the government have “misled” the public and that ANSTO’s EIS was “genuinely confused, or ... had set out deliberately  to confuse.”

Wood notes that, unlike many countries in Europe, North America, and elsewhere, Sydney residents are not protected by absolute liability, which frees the claimant from having to prove anything other than damage as a result of a reactor  accident. Instead, Sydney residents effected by a nuclear accident would only have recourse to common law, which requires  that the aggrieved party prove both damage and negligence.

The government knows that it has misled the public, Wood says, “yet not only has it chosen to do nothing about it, but it has  misinformed the community that a Deed of Indemnity it has produced for a different purpose does provide equivalent  financial security, when clearly it does not.”

Wood says the Deed of Indemnity was designed to attract bidders for the reactor project: “In the absence of absolute liability  of the operator in Australia the Government faced a dilemma because no overseas reactor vendor would consider bidding  because if he were successful he could be held liable in the event of an accident. Although the Government has  chosen not to indemnify its own citizens, it must indemnify the reactor vendor if it wants a new reactor. Hence the Deed of  Indemnity was produced last year, which does in fact indemnify the vendor.”

Wood says it is a “mystery” to him why the Government has not accepted absolute liability: “It looks as if the  Commonwealth lacks confidence in the low level of public risk claimed for the new reactor in the EIS. If it is so low what  is to be lost by offering the guarantee.”

Wood quoted the US Presidential Commission on Catastrophic Accidents, which said in 1988 that applying common law principles to nuclear accidents would result in an outright denial of recovery or a difficult and protracted process.

Wood told the Senate inquiry on October 25, 2000, "If I had to sum up my concerns in one sentence, it would be that for the first time in my long association with ... ANSTO, I do not feel comfortable with what the organisation is telling the public and its own staff."

I would like to concentrate now mainly on the two questions of ‘nuclear liability’ and ‘the worst accident’, because these two items are still both open to the committee to influence change, should it choose to do so. First, on nuclear liability, in our society, if we feel exposed to some risk of financial loss from the activities of some third party, we have two options: we can take out insurance, or we can accept the risk, knowing that if we are damaged later we may exercise our common law right to seek damages through the law courts. However, it would be prudent to check first on the financial status of the party we intend to sue—it could be a man of straw and not worth suing.

It is little different with respect to possible damage from nuclear installations, as Mr Priceman mentioned earlier, because we all know that we are not insured against this risk. He mentioned in Australia; I say around the world, because nobody around the world these days is insured against nuclear risk. For the last 20 years or so, all of our insurance policies have had nuclear exclusion clauses. This does not worry most of us because we are not exposed to the risk.

But let us consider the people living near the reactor, who are exposed to the risk. Let us think the unthinkable: say there was a reactor accident at Lucas Heights and the affected people wanted to sue ANSTO for damages. There are no worries about ANSTO’s ability to pay—the Commonwealth owns ANSTO. However, you may be aware that it is a common law requirement that, for a damages claim to be successful, the claimant must be able to establish not only that he has been damaged, but also that the damage arose from the defendant’s negligence. This last part is the tricky part, because the classical defence is to show there has been no negligence. It would be claimed that either all reasonable steps had been taken or that someone else was to blame. There is no doubt that this would happen. If it did not, the crown lawyers would be in breach of their ethical duty to their client.

In the USA, this is what the Presidential Commission on Catastrophic Accidents had to say in 1988 on the effectiveness of common law in nuclear accidents, and I am quoting from the OECD report, Liability and compensation for nuclear damage: “The Commission expressed the belief that applying the common law principles of actions for damages would result in an outright denial of recovery or a difficult and protracted process.” That is quite unambiguous. Other nations have recognised this too and responded, through conventions or other means, by waiving the requirement to prove negligence. They did this through legislation based on certain conventions in which the plant operator was declared absolutely liable. This removed fault from the basis of liability, just leaving causation.  The citizens of Britain, USA, Canada, Japan, Germany, France and the Netherlands all enjoy this concession.

Given that the Australian government is looking for public support for the project, and given that the EIS tells us that the worst accident would have trivial consequences and hence a close to zero pay-out, one would think there would be a rush to offer this concession to Australian citizens. But, no, the government has refused to offer absolute liability. As a consequence, Australians seeking compensation would have to prove negligence. Recall that the American commission said that this may amount to outright denial of recovery. You might ask: why would the government take such an extraordinarily negative position on this matter? I tried to pursue this in Canberra, with conflicting responses from two ministries. Finally I think I have a clue. It comes from a letter I received from Senator Minchin’s head of science and technology policy, Dr Tucker, which says:

“You have raised the issue of absolute liability. I understand this means the liability irrespective of intention or negligence. It is apparent that the issue of absolute liability has financial implications well beyond the risks associated with research reactor operations at Lucas Heights. I am informed that the Commonwealth, as a matter of financial policy, does not accept such liability.”

What does this mean? I think that the lawyers and advisers in Canberra are not familiar with the concept of absolute liability and are worried and suspicious that if this is offered to the nuclear industry others will want it too. My response to this is that the lawyers in North America, Japan, Britain and other places have managed to negotiate this hurdle. Their world has not fallen in.

Perhaps our people need a little shove from this committee.

Now I come to the worst part of the liability story and that is the deception part. A not so well known aspect of the nuclear liability problem is that no reactor vendor around the world would build a reactor here or anywhere else without receiving indemnity. The government’s response was to produce the so-called deed of indemnity, which we heard about earlier, which indemnifies ANSTO and its officers and agents against loss. There is nothing wrong with this and the vendor was satisfied but then someone had the idea of misrepresenting the deed of indemnity as being something that it is not. ANSTO said in its submission to the parliamentary works committee: "The deed therefore ensures residents are adequately protected in terms of nuclear compensation claims."

And Senator Minchin said in a letter dated 18 February 1999, which justifies the absence of absolute indemnity, that the same ends will be achieved by alternative means. He then went on to describe these means as being the deed of indemnity. This invites us to believe that offering the assurance that ANSTO will pay its bills provides adequate compensation protection to residents and somehow this is equivalent to waiving the legal obligation to prove negligence in a court of law.

I do not know whether you would believe this but I cannot. I seek the committee’s support in influencing the government to offer absolute liability then the deed of indemnity can go back to being what it truly is and that is just a means of indemnifying INVAP. The residents could then enjoy the degree of protection offered to their overseas counterparts and this at no cost to the government.