Money and injury – big changes afoot
27th Aug 2015
Significant change is now occurring in each of the three main areas impacting the financial circumstances of injured Australians.
Change is certainly needed because, at the moment, nearly half of disabled Australians live at or below the poverty line. But are these changes taking us in the right direction?
1. National changes to government support
There are two main changes going on at a national level – the roll out of the National Disability Insurance Scheme (NDIS) and changes to the Disability Support Pension (DSP).
The NDIS is designed to provide “reasonable and necessary care supports”, not income, to those with serious and permanent disability.
The DSP provides income support to people whose disability stops them from working. Changes introduced between 2012 and 2015 mean that eligibility is now tighter and fewer will qualify.
The combined impact of introducing the NDIS and tightening the DSP is likely to be more people getting support services and fewer people getting income support.
So will people be better off? Who is best placed to work out how limited funds can best be spent?
2. Changes to compensation
Changes to compensation law occurring throughout Australia are largely being driven by the National Injury Insurance Scheme (NIIS), to which all jurisdictions have signed up as part of the Intergovernmental Agreement on the NDIS Launch.
The NIIS aims to provide no-fault care and support to the newly catastrophically injured. The idea is for State and Territory Governments, via existing insurance premium sources, to support the catastrophically injured rather than have them look to the NDIS.
The right to a common law lump sum for future care is to be removed for catastrophically injured people, and instead the provision of care services through a state government bureaucracy is to be mandated.
People who would otherwise have received lump sum compensation and been able to emerge from a 'system' will lose the opportunity to be independent. Many will be forced to continue to live in government housing.
Instead of a learned judge making a single decision based on evidence, injured people will be exposed for life to the vagaries of politics, funding constraints and the beliefs of individual bureaucrats as they decide what is 'reasonable and necessary'.
The overall impact of the changes coming through as a result of NIIS obligations is that a small number of people who previously could not receive compensation will now get access to care services. Many more people will lose access to any compensation or access to lump sum compensation.
3. Changes to disability insurance
Disability insurance was largely ignored by the Productivity Commission when it looked into Disability Care and Support in 2011. The Commission’s focus was squarely on creating two big government “insurance” schemes (NDIS and NIIS) which delivered only services, not cash.
But as soon as the NDIS and NIIS started to roll out from 2011, the impact of change started to be felt by life insurers. Firstly, as people just started to become aware of the NDIS they became slightly less enthusiastic about buying new or renewing existing private disability insurance policies.
Secondly, as people unable to work were starting to find themselves unable to claim workers’ compensation (due to increased thresholds or tightened eligibility critera) or the DSP they started to look to their insurances, usually held in their superannuation accounts, for support.
Life insurers have responded by tightening disability definitions and reducing default levels of cover. Thus, fewer people will be able to make successful claims, and claims will deliver smaller sums. More people will have to look back to the government for welfare support.
Suggestions for government
These changes impact us all. We all pay tax and any one of us could be injured or become disabled any day. How will we support ourselves and our families? Will we have adequate insurance cover, be able to obtain fair compensation, or will we need to rely on welfare and slip into poverty?
In my opinion it’s not too late to shift the direction of change away from big government and towards a healthy public/private sector balance.
I think we all want:
- a balanced budget and a government which encourages independence;
- a good safety net, of which the NDIS will be an important part;
- fair and adequate compensation which gives people the opportunity to be independent; and
- people who can afford private disability insurance to be enthusiastic to acquire it, and confident of their position if they ever need to claim.
State and Federal Governments can help us achieve this by:
- continuing to roll out the NDIS, but slowing down if necessary to get it right;
- maintaining fair access to the DSP for those who need it;
- not using the NIIS as an excuse to cut compensation, but rather supporting the ongoing existence of legal rights so that people can receive fair compensation and lump sum compensation as appropriate to support themselves; and
- encouraging life insurers to develop quality insurance products, fairly and transparently priced and sold, with improved claims management processes.
Hopefully the big picture in the future for Australians with disabilities will be a sustainable one of personal financial security, independence, choice and control.
Jane Campbell is a financial adviser and lawyer at Aeran. She provides independent financial advice to seriously injured Australians. Jane is passionate about improving financial outcomes for injured people. She tweets @JaneCCampbell.
The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).