AILA BREAKFAST BRIEFING SEMINAR NDIS (National Disability Insurance Scheme) no fault schemes, recovery actions & implications for the insurance industry Paper presented by Ralph Bönig Special Counsel Finlaysons Lawyers Tuesday, 1 April 2014
insurance industry. Table of Contents A. Introduction 1 B. The NIIS Vision 2 C. Implementation 5 D. The NDIS Scheme Act 2013 ( the Act ) 6 E. Compensation Payments and Recovery Actions Under the Act 10 F. Where Is The NIIS At By Reference To SA s Commitment 12 G. The NDIS Today How Is It? 19
insurance industry. A. Introduction In 1972 then Prime Minister, Gough Whitlam commissioned an inquiry into a national compensation scheme. The inquiry was headed by Justice Owen Woodhouse of the New Zealand Supreme Court. Justice Woodhouse had completed a similar inquiry in New Zealand which had resulted in the introduction of no fault accident compensation scheme across the country. His report was the catalyst for Prime Minister Whitlam to introduce legislation in the Federal Parliament in 1974 seeking to establish a national compensation and rehabilitation scheme for the injured and sick. The Bill lapsed with the sacking of the Whitlam Government in November 1975. Following the Coalition win in the resultant election the former Prime Minister sought to revive the Bill with the introduction of a private members bill in 1977 but was not able to garner enough support for its passage. On 17 February 2010, the Gillard Government referred the concept of a National Disability Long Term Care and Support Scheme to the Productivity Commission. The introduction to the Terms of Reference contained the statement that: The Government is committed to finding the best solutions to improve care and support services for people with disabilities. An exploration of alternative approaches to funding and delivering disability services with a focus on early intervention and long term care will be an important contribution to the national disability strategy. 1 The Productivity Commission released its final report in July 2011. The Commission recommended the introduction of a National Disability Insurance Scheme ( NDIS ) and a National Injury Insurance Scheme ( NIIS ). The Commission summarised the two schemes as follows: 1. The NDIS would be like Medicare in that all Australians with a significant and ongoing disability would get long-term care and support (but not income which would be left to private insurance and the Australian Government s income support system). 1 Productivity Commission Inquiry Report: Terms of Reference
insurance industry. 2 2. The NIIS is a second smaller scheme (which) would cover the lifetime care and support needs of people who acquire a catastrophic injury from an accident. The smaller scheme would be based on the motor accident compensation schemes that operate in some States and Territories. 2 B. The NIIS Vision Chapters 17 and 18 of the Commission s report deal in detail with the structure and function of the NIIS. In Chapter 17, the Commission analyses the pros and cons of fault and no-fault schemes. In the introduction to Chapter 17, the Commission makes the following key points 3 : 1. Only about half of people injured catastrophically will have access to some form of insurance. The remainder rely on the tax-payer funded health scheme. 2. Fault-based insurance arrangements do not always meet the injured party s care costs efficiently. 3. Legal costs in pursuing fault-based compensation can be substantial. 4. No-fault schemes generally produce superior outcomes. In Chapter 18 the Commission sets out its vision for the NIIS. It states that the scheme should: - Provide an all encompassing system for managing the care and support needs of all people experiencing catastrophic injury. - Primarily be funded from insurance premiums and, where appropriate, include experience and risk-rating to help prevent injury. - Be structured as a federation of separate, State-based schemes. 4 2 Productivity Commission Final Report, July 2011, Executive Summary, page 5 3 Productivity Commission Final Report, July 2011, page 789 4 Productivity Commission Final Report, July 2011, page 851
insurance industry. 3 The Commission identified that there were a number of choices available when designing the Scheme, all of which need to take into account questions relating to the severity of the injuries to be covered, how common law arrangements may co-exist, the interaction between the NIIS and the NDIS, coordination across the States and Territories to ensure consistency, timing and appropriate sources of funding. 5 The Commission advocated for the abolition of common law actions in respect of damages for lifetime care and support on the basis that, under the no-fault scheme, high quality care and support would be provided, making recourse to the common law redundant. In order to facilitate this, the Commission recommended that it be a priority for jurisdictions that did not currently have a no-fault scheme for lifetime care and support in place to establish such a scheme. As the Commission rejected the idea of a Federal NIIS and recommended a federation model, it has therefore proposed that matters such as funding options, pricing and the establishment of the legislative infrastructure be dealt with on a State/Territory basis. Consistent with this, the Commission recommended that funding for the NIIS be sourced from existing insurance premium sources. 6 In discussing this, the Commission stated that a significant source of revenue would be savings and offsets from the introduction of the NIIS. 7 These savings are said to include savings in legal costs, reduced incentives to litigate and reduced reliance on social welfare for services, reinsurance and capital costs. The Commission also commented briefly on the possibility of expanding the NIIS to other heads of damage. 8 The Commission did not advocate this expansion at this stage but suggested that it be the subject of an independent review in 2020 when the Commission proposed that this issue again be explored. The Commission advocated for the retention of common law rights to sue for pain and suffering and economic loss in the interim. 9 5 Productivity Commission Final Report, July 2011, page 852 6 Productivity Commission Final Report, July 2011, page 868 7 Productivity Commission Final Report, July 2011, page 868 8 Productivity Commission Final Report, July 2011, page 910 9 Productivity Commission Final Report, July 2011, page 911
insurance industry. 4 However, the Commission does go on to comment about the expansion of the NIIS to non-catastrophic injuries. It noted that there were a high proportion of legal costs associated with lesser common law lump sum awards indicating that an expansion of the NIIS to non-catastrophic injuries could generate significant efficiencies. Once again, the Commission suggested that this be reconsidered as part of its 2020 review. Upon release of the Commission s final report, the Federal Government declared its unequivocal support for the Productivity Commission s proposals. 10 This support was not echoed by all of the States, with the West Australian Premier attacking the plan. At that time, the then Assistant Treasurer, Bill Shorten, who was also the former Parliamentary Secretary for Disabilities, stated that the NDIS would meet the missing fifth pillar of Australian society, namely care for the disabled. In a speech delivered to Suncorps National Traumatic Injury and Disability Summit on 17 February 2012, Mr Shorten spoke specifically about the NDIS and NIIS. He noted that four jurisdictions, namely Queensland, Western Australia, South Australia and the ACT did not currently have no-fault compensation schemes for motor vehicle injuries. It is reported that he then said these according to the Commission, are pretty hopeless. 11 He then said: We need to put pressure on the State Governments to move to no-fault motor vehicle schemes across Australia. This can be done, and it can be done quickly. In my view, if Victoria and New South Wales can do this, Queensland, South Australia and Western Australia can too. We are going to set an ambitious timetable. We want minimum benchmarks this calendar year. We do want nation-wide standards established quickly. The report suggests the changes won t cost much: $25-$40 on car registrations will cover it. Although, needless to say, some of the delinquent States are disputing this. But I trust our numbers and I trust the people that have been working on this. And I do believe there are dedicated public servants within State jurisdictions who don t have no-fault schemes who think this is the way to go. 12 10 The Australian, 11 August 2011 11 Transcript of speech, Bill Shorten website 12 Transcript of speech, Bill Shorten website
insurance industry. 5 He then commented on the fact that the Federal Government would not be subsidising any part of this scheme and that the challenge was to get States such as Western Australia, Queensland and South Australia to come to the party 13. He also said that there was a need to crank up a campaign just to focus people on the inconsistencies in relation to the delivery of disability care. 14 C. Implementation There have then been a number of significant milestones since that date. At a Council of Australian Governments ( COAG ) meeting on 13 April 2012 all States and Territories affirmed their commitment to the concept of an NDIS. On 25 July 2012 COAG noted that the launch date for the NDIS was to be 1 July 2013 and that it had in principle agreement from South Australia, Tasmania and the ACT to participate. In August 2012 NSW and Victoria reached agreement with the Commonwealth for their participation. On 29 November 2012 the National Disability Insurance Scheme Bill 2012 was introduced into the House of Representatives. On 7 December 2012 COAG signed an Intergovernmental Agreement with the State and Territories for the launch of the NDIS. The NDIS Scheme Act 2013 was assented to on 28 March 2013 with a substantive commencement date of 1 July 2013. In preparation for the launch and in anticipation of the full roll out by 1 July 2018 the Commonwealth and South Australian Governments entered into a Heads of Agreement in April 2013. 13 Transcript of speech, Bill Shorten website 14 Transcript of speech, Bill Shorten website
insurance industry. 6 On 2 May 2013 the Commonwealth and South Australian Governments reached agreement on their respective contributions to the launch and the intake of participants into the Scheme. 1 July 2013 the NDIS commenced in stages in the following launch sites. NSW Newcastle area local government. Victoria Barwon area. Tasmania 15 24 year olds. South Australia - o Children 0 5 years. o 6 13 years 1 July 2014. o 14 years 1 July 2015. o Full scheme 1 July 2018. Further launches are proposed as follows with WA confirming its commitment on 31 March 2014. ACT 1 July 2014. NT 1 July 2014. WA 1 July 2014. Queensland 1 July 2014. D. The NDIS Scheme Act 2013 ( the Act ) It is not the scope of this presentation to review the entire Act but some relevant provisions which contain the framework include: The establishment of the NDIS Launch Transition Agency (or National Disability Insurance Agency) ( Agency ). This body is tasked with overseeing the launch of the scheme in the four nominated sites in 2013 15. There are certain prescribed principles which are designed to underpin the whole decision making process. 15 Chapter 6
insurance industry. 7 Section 4 - General principles guiding actions under this Act (1) People with disability have the same right as other members of Australian society to realise their potential for physical, social, emotional and intellectual development. (2) People with disability should be supported to participate in and contribute to social and economic life to the extent of their ability. (3) People with disability and their families and carers should have certainty that people with disability will receive the care and support they need over their lifetime. (4) People with disability should be supported to exercise choice, including in relation to taking reasonable risks, in the pursuit of their goals and the planning and delivery of their supports. (5) People with disability should be supported to receive reasonable and necessary supports, including early intervention supports. (6) People with disability have the same right as other members of Australian society to respect for their worth and dignity and to live free from abuse, neglect and exploitation. (7) People with disability have the same right as other members of Australian society to pursue any grievance. (8) People with disability have the same right as other members of Australian society to be able to determine their own best interests, including the right to exercise choice and control, and to engage as equal partners in decisions that will affect their lives, to the full extent of their capacity. (9) People with disability should be supported in all their dealings and communications with the Agency so that their capacity to exercise choice and control is maximised in a way that is appropriate to their circumstances and cultural needs. (10) People with disability should have their privacy and dignity respected. (11) Reasonable and necessary supports for people with disability should: (a) support people with disability to pursue their goals and maximise their independence; and (b) support people with disability to live independently and to be included in the community as fully participating citizens; and (c) develop and support the capacity of people with disability to undertake activities that enable them to participate in the community and in employment.
insurance industry. 8 (12) The role of families, carers and other significant persons in the lives of people with disability is to be acknowledged and respected. (13) The role of advocacy in representing the interests of people with disability is to be acknowledged and respected, recognising that advocacy supports people with disability by: (a) promoting their independence and social and economic participation; and (b) promoting choice and control in the pursuit of their goals and the planning and delivery of their supports; and (c) maximising independent lifestyles of people with disability and their full inclusion in the community. (14) People with disability should be supported to receive supports outside the National Disability Insurance Scheme, and be assisted to coordinate these supports with the supports provided under the National Disability Insurance Scheme. (15) Innovation, quality, continuous improvement, contemporary best practice and effectiveness in the provision of supports to people with disability are to be promoted. (16) Positive personal and social development of people with disability, including children and young people, is to be promoted. (17) It is the intention of the Parliament that the Ministerial Council, the Minister, the Board, the CEO and any other person or body is to perform functions and exercise powers under this Act in accordance with these principles, having regard to: (a) the progressive implementation of the National Disability Insurance Scheme; and (b) the need to ensure the financial sustainability of the National Disability Insurance Scheme.
insurance industry. 9 The Scheme is founded on the premise that people with a disability should be given autonomy over what supports they may need. Section 17A - Principles relating to the participation of people with disability (1) People with disability are assumed, so far as is reasonable in the circumstances, to have capacity to determine their own best interests and make decisions that affect their own lives. (2) People with disability will be supported in their dealings and communications with the Agency so that their capacity to exercise choice and control is maximised. (3) The National Disability Insurance Scheme is to: (a) respect the interests of people with disability in exercising choice and control about matters that affect them; and (b) enable people with disability to make decisions that will affect their lives, to the extent of their capacity; and (c) support people with disability to participate in, and contribute to, social and economic life, to the extent of their ability. A person may make a request to become a participant 16. Access criteria include: o Age 17 ; o Residence 18 ; o Disability 19. These criteria are summarised by the NDIS on its website as follows: You may meet the disability requirements if: You have a permanent disability and Your impairment substantially reduces your ability to participate effectively in activities, or perform tasks or actions unless you have o assistance from other people on most days, or 16 Section 18 17 s. 21(1)(a), s.22 18 s. 21(1)(b), s. 23 19 s. 21(1)(c)(i), s. 24
insurance industry. 10 o you have assistive technology, equipment (other than common items such as glasses) or o you can t participate effectively even with assistance or aides and equipment; and Your impairment affects your capacity for social and economic participation and You are likely to require support under the NDIS (and not another service system such as the health system) for your lifetime. An impairment that varies in intensity eg because the impairment is of a chronic episodic nature may still be permanent, and the person may require support under the NDIS for the person s lifetime, despite the variation. If accepted then an individual plan will be negotiated and prepared 20. In essence a participant is entitled to reasonable and necessary supports 21. Support providers must be registered 22 : o Either for managing funds; or o Provision of supports. A dispute resolution mechanism exists 23 with the Administrative Appeals Tribunal being vested with jurisdiction 24. E. Compensation Payments and Recovery Actions Under the Act Some participants will be disabled by injury sustained through the negligence of a third party. The Act recognises that those participants may well have an entitlement to compensation and provides a mechanism to ensure that their entitlement is realised. If the CEO of the Agency forms the opinion that a participant or potential participant has an entitlement to compensation then the CEO can require the participant to take action 20 Chapter 3 Part 2 21 s. 34 22 Part 3 23 Part 6 24 s. 103
insurance industry. 11 within a specified period of time 25. The action required must be reasonable 26 and in deciding whether the action would be reasonable the CEO must have regard to: (3) (a) the disability of the participant or prospective participant; (b) the circumstances which give rise to the entitlement or possible entitlement to compensation; (c) any impediments the participant or prospective participant may face in recovering compensation; (d) any reasons given by the participant or prospective participant as to why he or she has not claimed or obtained compensation; (e) the financial circumstances of the participant or prospective participant; (f) the impact of the requirement to take the action on the participant or prospective participant and his or her family. In the event that there is non-compliance with the notice then any plan that may be in existence will be suspended 27 or any intended plan will not come into effect 28. Furthermore the CEO has the right to take action in the participant s name or take over the conduct of any existing claim 29. In the event that the CEO takes action or takes over a claim the Agency becomes liable for the costs of the action 30. The CEO has the authority to conduct any litigation including the authority to settle and enforce 31. Where a recovery is made the money is to be paid to the Agency who will deduct (a) (b) an amount equal to the total of all NDIS amounts paid to, or for the benefit of, the participant before the amount is paid to the Agency; and the amount of any costs incidental to the claim paid by the Agency. and pay the balance to the participant. 25 s. 104 26 s. 104(2) 27 s. 105(2)(a) 28 s. 105(3) 29 s. 105(4) 30 s. 105A(1) 31 s. 105A(2)
insurance industry. 12 Where a participant recovers by way of a judgment (not being a consent judgment) then s. 106 provides for the Agency to recover any amounts paid up to the date of the judgment. The section provides a formula for the calculation of the recoverable amount. Where the recovery is pursuant to a consent judgment or settlement section 107 provides a formula for repayment of amounts paid to date. The Act makes no provision for the recovery of amounts payable by the NDIS in the future. This will give rise to debate as to whether common law awards should include any component for future care for those items which are otherwise provided for by the NDIS. This topic is for another paper another day. In order to protect its interests the Agency is able to give notice to a potential compensation payer which includes an insurer 32. Where a potential compensation payer receives a notice it must within 7 days, either notify the Agency that it has a liability to pay compensation if that liability has crystalized at the time of receipt of the notice, or when the liability does crystalize 33. The Agency then has the power to give notice of an intention to recover any amounts paid. The provision of such a notice to an insurer imposes a liability on the insurer to pay the amount specified in the notice 34. The issue of either notice operates to suspend the liability to pay compensation while the notice has effect 35. Payment to the Agency of the amount specified in a notice extinguishes the insurer s liability to the participant 36. F. Where Is The NIIS At By Reference To SA s Commitment In November 2011 the Federal Government established an Advisory Group to assist it with the establishment of the NIIS. The group included representatives from the insurance, legal, disability and medical sectors as well as representatives from local government and unions. 32 s. 109(2) 33 s. 110 34 s. 111 35 s. 112 36 s. 113
insurance industry. 13 In the 7 December 2012 Intergovernmental Agreement for the NDIS Launch each of the participating jurisdictions agreed to the following terms: Part 11 Relationship to National Injury Insurance Scheme Launch 112. All States endeavour to agree minimum benchmarks to provide no-fault lifetime care and support for people who are catastrophically injured in motor vehicle accidents prior to the commencement of the NDIS launch. 113 If a host jurisdiction is unable to implement minimum benchmarks prior to or during launch, that host jurisdiction will be responsible for 100 per cent of the cost of participants in the NDIS who are in the NDIS because they are not covered by an existing or new injury insurance scheme that meets the minimum motor vehicle benchmarks. a. During launch, NDIS supports will be provided to people in launch sites who would otherwise have been supported by a National Injury Insurance Scheme (NIIS) if the NIIS had been established for those catastrophically injured through workplace accidents, medical accidents, and criminal and general accidents (occurring in the home or community). Full scheme 114. All jurisdictions endeavour to agree minimum benchmarks to provide nofault lifetime care and support for people who are catastrophically injured through workplace accidents, medical accidents, and criminal and general accidents (occurring in the home or community) by commencement of the NDIS full scheme. 115. Noting that a new Agreement will be agreed with all jurisdictions for the NDIS full scheme, the Commonwealth s position is that on commencement of the NDIS full scheme individual jurisdictions will be responsible for 100 per cent of the cost of participants in the NDIS who are in the NDIS because they are not covered by an existing or new injury insurance scheme that meets the minimum benchmarks for motor vehicle accidents, workplace accidents, medical accidents and criminal and general accidents (occurring in the home or community). 37 37 Intergovernmental Agreement for the National Disability Insurance Scheme (NDIS) Launch page 20
insurance industry. 14 By the time South Australia executed this Agreement we were well down the path of meeting the commitment in clause 112. In April 2012 the State Government released a discussion paper on the reform of the States Compulsory Third Party Motor Vehicle Insurance Scheme. Pages 12 14 of that paper rely heavily on the Productivity Commission Report. Page 15 deals with the proposed NIIS in the following terms: The National Injury Insurance Scheme Proposal The Productivity Commission has proposed that no-fault insurance cover be introduced to provide care and support to those who suffer catastrophic injuries. COAG has agreed to investigate this proposal. The most common forms of catastrophic injury are severe brain injury and spinal cord injury, which give rise to lifetime needs for care and support. People experiencing multiple amputations, severe burns or blindness may also require such support. Accident compensation schemes in some other jurisdictions (such as Victoria, New South Wales and New Zealand) have well established definitions and assessment tools for catastrophic injury. The management of support for those suffering catastrophic injury would be ongoing. This differs from the present system whereby the MAC has no relationship with the claimant once their lump sum is paid. The ongoing support would be provided to all of those who suffer catastrophic injuries regardless of who was at fault and would be based on their individually assessed needs. 38 It is of course now a matter of history that the South Australian Parliament passed the Motor Vehicle Accidents (Lifetime Support Scheme) Act 2013 which commenced on 1 July 2013. Clauses 114 and 115 of the Intergovernmental Agreement deal with those who are catastrophically injured through workplace accidents, medical accidents, and criminal and general accidents. You will note the commitment to no fault schemes for the catastrophically injured. 38 South Australia s Compulsory Third Party Insurance Scheme 2012 Green Paper page 15
insurance industry. 15 In the April 2013 Heads of Agreement the South Australian Government committed to the following strategies: Workplace Accidents 38. South Australia also hosts a universal no fault WorkCover scheme that provides legislated benefits to workers and their employers in the event of a work related injury or disease, including lifetime care and support where appropriate. 39. South Australia commits to develop and agree, and endeavours to implement, nationally-consistent minimum benchmarks for workplace accidents by 1 July 2016. If nationally-consistent minimum benchmarks are not implemented in South Australia by 1 July 2016, clause 42 will apply. Medical Accidents 40. South Australia commits to retaining its current arrangements for managing risk for the treatment of medical injury caused by fault in its public hospitals. South Australia and the Commonwealth will continue negotiations, through the Standing Council on Federal Financial Relations, on no fault medical injury coverage, with an aim to develop and agree, and endeavour to implement, nationally-consistent minimum benchmarks for medical treatment injury by 1 July 2018. If nationally-consistent minimum benchmarks are not implemented in South Australia by 1 July 2018, clause 42 will apply. General Accidents 41. South Australia and the Commonwealth will continue negotiations, through the Standing Council on Federal Financial Relations, on nationallyconsistent minimum benchmarks for general accidents (including criminal injury), with the commencement date for implementation subject to agreement by jurisdictions. The penalty for failing to achieve these reforms is found in clauses 42 and 43:
insurance industry. 16 42. South Australia will be responsible for 100 per cent of the cost (both administration and care and support) of participants in the NDIS who are in the NDIS because they are not covered by an injury insurance scheme in South Australia that meets the nationally-consistent minimum benchmarks for catastrophic injuries from motor vehicle accidents, workplace accidents, medical treatment injury and general accidents (including criminal injury) by the dates specified above. 43. Jurisdictions that do not implement nationally-consistent minimum benchmarks as specified above will be responsible for 100 per cent of the costs of their citizens and visitors who enter the NDIS due to disability caused by relevant accidents within their jurisdiction. The process by which these commitments are to be achieved varies depending on the injury category (i.e. motor vehicle, workplace, medical or general). The Advisory Group met on 4 April 2013 and in its communique it noted the passing of the NDIS Act as well as the progress nationally in relation to motor vehicle accidents. It also supported the establishment of a specialist medical misadventure group and noted that SafeWork Australia was developing national minimum benchmarks for workplace accidents. In relation to general injuries the communique said: developing a NIIS for general accidents and criminal injury is a significant task. A subgroup was established to explore alternatives to progress components of the general accidents work stream. Workplace Injuries In January this year the State Government released a discussion paper and workers compensation policy statement. On the topic of common law the policy states: Access to common law Currently, there is no access to common law in the South Australian workers compensation scheme.
insurance industry. 17 Common law will be re-introduced to the South Australian system. This recognises that a variety of compensation approaches is often useful in a community, in order to suit different needs. A benefit dependency cycle may be avoided where a worker receives a common law settlement, and can then take responsibility for the ongoing management of their injury and control of their life. Common law will be available to workers with a compensable work-related injury, subject to appropriate thresholds and restrictions. Our common law approach will ensure workers clearly understand the process, likely timeframes and estimated damages and costs. This will put workers in the best possible position to make their decisions. There will be special provisions for seriously injured workers to ensure funds for lifetime care and support are protected. 39 You will note the reference to special provisions for seriously injured workers. If nothing else and in order to honour its commitment there will need to be State legislation which mirrors the motor vehicle provisions for the catastrophically injured. The issue that creates is who will pay? As we saw with the motor vehicle amendments a $100 per car increase in registration premium is to be introduced from July 2014 to pay for the catastrophically injured component of the scheme. The discussion paper does not refer to the current WorkCover premium rate and how it is disproportionate nationally. How this will be addressed in the face of a common law scheme is a challenge. Employers will presumably need some form of cover for common law. If the private insurers are to cover this then they will need to factor in a no fault scheme for the catastrophically injured. It is difficult to see a reduction in overall premium to the employer in these circumstances. Medical Injuries In relation to medical injuries the Medical Misadventure Advisory Group (MMAG) has met on a number of occasions. This group was made up of representatives from the legal and medical professions as well as from medical indemnity insurers. This group has probably conducted the most exhaustive deliberation and consideration as to the Productivity Commission s recommendation versus the practicality of implementation and the future cost of a no fault scheme for the catastrophically injured out of any of the
insurance industry. 18 injury groups that have been earmarked for inclusion in the NIIS. The MMAG produced a report which to date has not been released for general discussion. One aspect of their deliberations centred around the definition of the phrase catastrophic injury. The MMAG approached its deliberations with a view to achieving national consistency as to the eligibility criteria. In addition the Productivity Commission had recommended the exclusion of individuals suffering from cerebral palsy from any NIIS scheme. This would appear to be a narrow interpretation of a more general class of disability arising from severe neurological impairment. Another issue that concerned the MMAG was how many individuals may actually be eligible for the scheme and the cost to the scheme of the supports that those individuals would therefore be entitled to. This is important because it was the Productivity Commission s recommendation that the NIIS would be financed from savings from a variety of sources including the potential reduced reinsurance costs for medical indemnity insurers. It was envisaged that a proportion of these funds would be applied by the relevant insurers to subsidising the NIIS. General Injuries There is no information in the public domain since the Advisory Group communique of 4 April 2013 as to the progress of any deliberations in this area. At the first COAG meeting since the recent Federal election the progress in relation to the implementation of the NDIS was noted. In addition the meeting noted: the National Injury Insurance Scheme (NIIS) is an integral element of the Productivity Commission s disability reform recommendations and is intended to assist in the financial sustainability of the NDIS over the longer term. The Council noted that while good progress has been made on certain aspects of the NIIS, particularly in relation to motor vehicle accidents, significant technical work remains in order for Governments to take decisions, including in relation to workplace accidents, medical treatment injury and general accidents. 39 A new recovery and return to work system for South Australians A workers compensation policy
insurance industry. 19 G. The NDIS Today How Is It? Several reviews have been undertaken as to the performance of the NDIS since its launch. COAG received a report entitled Quarterly Report to COAG Disability Reform Council 31 December 2013 into the operations of the National Disability Insurance Agency. Separate to that the Agency itself commissioned a review which is the subject of a report entitled A review of the capabilities of the National Disability Insurance Agency (the Whalan report ). Underlying the latter review is a criticism as to the haste with which the NDIS was launched. The Productivity Commission s vision was that the NDIS would not commence until 1 July 2014. It is of course now a matter of history that it commenced one year earlier than this. The Whalan report comments on the difficulties that this has created in terms of the governance and administration of the Agency as well as its ability to deal with the intake of participants through the various launch sites. Separate to this the uptake and cost of the scheme in the first six months has exceeded budgetary expectations. The Weekend Australian on 29-30 March 2014 reported on a briefing by the Federal Treasurer to his State counterparts. In particular the following was reported: The average cost per participant in the NDIS was $46,000.00 per annum (30% over budget). Total cost of the NDIS was $400m over budget for the first six months. This is despite participation numbers at only 50% of the estimated participation rate. The Productivity Commission estimated that the full roll out of the NDIS would cost $15 billion annually in 2011 figures. By 2018 it is estimated that that figure will be $22 billion annually. 40 The intergovernmental agreements set out the respective contributions from the participating States and the Commonwealth to the launch sites. At this point in time the good news for South Australia is that the Commonwealth carries the liability for any overspend with the State s contribution at this time pegged. statement page 5
insurance industry. 20 The 31 December 2013 report contains actuarial calculations as to the future cost of the scheme as against the figures contained in these agreements. The projections, in the case of South Australia, are that the initial funding model significantly under calculated the launch costs. This is as a result of a likely greater number of participants coupled with an increased cost per participant. The Treasurer on 31 March 2014 criticised the introduction of the NDIS and stated there was a need to get on top of the NDIS to ensure it was financially viable. All of this means that there may be a slowdown in the transition to a fully funded NDIS with a release in the pressure to move to those no fault schemes which underpin the NIIS. The May 2014 Federal budget will no doubt seek to deal with the issue of immediate future funding. Ralph Bönig 1 April 2014 40 Senator Mitch Fifield, Address to National Press Club 20 November 2013.