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The Disaster of “No Fault” Long Term Compensation Schemes

https://www.abc.net.au/news/2019-05-21/severely-injured-woman-workers-compensation-difficulties/11135264

With almost the sole exception of Queensland, the last 30-40 years have seen most states of Australia, as well as the Commonwealth Government for its employees, transition their workers compensation schemes away from lump sum damages compensation towards long term instalment benefits and ongoing, if not indefinite, rehabilitation and treatment funding.

This has been a terrible, terrible mistake.

Initially, these schemes have a superficial appeal to both Governments and to the general public. What could be better than a no fault system that supports an injured person over the long term rather than a one off payment, however generous that may be? Plus governments and Insurance companies can save money by stringing their costs out over a longer period rather than funding large lump sums up front. Everyone wins, right?

Wrong. Universally the lived experience is that these are horrible, dehumanising schemes that end up being little more than a rump on the social security system, forever entrapping seriously injured people in an ever diminishing scale of benefits. But don’t take our word for this – just read the stories of “clients” of the miserable NSW system in the ABC 7.30 report article (see link). Or ask anyone who has been or is on one of these schemes – be they injured workers or car accident victims in NSW, or South Australia or New Zealand, or Commonwealth Government employees, including veterans.

Even for Governments, the initial attraction proves to be a mirage as the reality of funding the long term injured hits home and they are forced to cut costs and corners to try and keep their schemes in the black, which in turn ramps up the pressure on the people with long term injuries that these schemes are supposed to be helping.

In contrast, lump sum damages compensation empowers the individual to make their own choices about their lives without constantly going cap in hand to either private or public sector bureaucrats to eke out some support for their ongoing needs. The injured person in receipt of that lump sum has genuine power to make decisions for themselves – to take time to retrain into suitable employment, to study, even to establish a business suitable to their disabilities that itself becomes a source of employment and economic stimulus. A participant in one of the long term schemes is far less likely to be able to do any of these things.

The Queensland worker’s compensation system continues to be a beacon of good sense among the fundamentally flawed systems adopted by other states and the commonwealth. It provides for some limited initial treatment and rehabilitation while maintaining a right to access common law damages that brings complete finality to the process both for the injured worker and for the Workers Compensation Insurer. Its financial viability is the envy of workers compensation regulators everywhere. It can only be hoped that Queensland Governments of whatever political hue will continue to preserve this excellent system, and not be lured by the superficial appeal of “long tail” systems, which ultimately act only to the detriment of the injured and the public purse.

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