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Tag: Submission

20/08/2021

Submission to Statutory Review of Motor Accidents Act 2017

20 August 2021

This is a review of the 2017 Motor Accidents Act by Clayton Utz, lawyers, and Deloittes, accountants. It is under the umbrella of SIRA, but it is for the Minister for Customer Service, Victor Dominello as part of the review of the legislation.

The terms of reference are in the Discussion paper, which is the first reference at the end.

Summary of this Submission:

The key message of this submission is that the major problem of the CTP system is the insurers’ ability to refuse treatments, and SIRA’s unwillingness to force them to pay for reasonable treatments. What is happening is at the level of systematic corporate fraud.

The CTP system exists to pay for the treatment of people injured in Motor Vehicle Accidents, yet a concentration on premium levels and the financial aspects of the scheme has led to a neglect to examine the workings of what should be a medical system. If two parallel hospitals had grossly different medical results, medical administrators would be called in to examine what was wrong. Yet when the CTP system and Private health system get wildly differing results from similar populations of doctors and patients, lawyers and accountants are called in. Clearly medical expertise is needed and this needs to come to the actual processes that the insurers are using to pay or deny treatments. Tinkering with the wording of Acts, Regulations or Guidelines will make no difference if they remain poorly enforced.

SIRA needs to take a more active role in regulating the medical decisions of insurers. It should also refer to injured people as patients, not ‘customers’. The word ‘customer’ suggests that there is choice. There is not. The patients do not want to be customers at all, though they did buy a policy from someone (often a different insurer some years before).

CV of Dr Arthur Chesterfield-Evans

I am a currently practising GP with degrees in surgery and Applied Science in Occupational Health principally treating WC and CTP injuries.

I have worked in Occupational health for 40 years and was for 9 years an Australian Democrat MLC.

I have written submissions to the Hayne Royal Commission on Banking and Financial Services with regard to the NSW WC and CTP insurance schemes, the Dore and McDougall inquiries into WC, and can make these available. I include some appendices with information about insurer behaviour as appendices to this submission.

Perspective

I am writing a submission to this review from the position of a Nominated Treating Doctor (NTD), and as such see the scheme as it actually works in practice. I submitted to the Hayne Royal Commission into Financial Services, but that inquiry did not have time to look at State insurance schemes, (though they stated that they were within its terms of reference). It seems that the key problem is that the whole scheme and orientation and skills of those both creating the scheme and those conducting the inquiry have been in the area of accounting or law trying to supervise insurers.

I note in the Background introduction to your discussion paper that there was ‘extensive consultation and deliberation on the part of the NSW Government, SIRA, the insurance industry, the legal profession, road users and other stakeholders as the best way to reform the scheme[1]’. Presumably the patients for whom the scheme exists and the doctors who treat them are covered as ‘other stakeholders’, but the fact that they are last and not even specifically mentioned exemplifies the distorted priorities of the scheme. Hopefully it does not presage the same approach in this review, but I note that it is being done by lawyers and accountants, who will need to consult more widely if they are to get much insight into why the system is such an expensive failure.

My view as a Nominated Treating Doctor is that the key problem is that the whole scheme is viewed through a financial prism, with relatively unsupervised insurers gouging profits by refusing treatments to injured people. The amount of money gouged can be seen from the percentage of the money actually paid to treat as opposed to overheads and profits. The appalling medical results are a consequence of the treatments delayed and denied by insurers. The system will not be fixed until the issue of insurers interfering in treatments is addressed. This will involve a much tougher regulatory regime where insurers are made to pay for treatments. Currently there is no punishment or disincentive that discourages unreasonable treatment delays or denials. The simplest solution is to require insurers to pay the reasonable medical costs. Obviously there would also have to be some effort to contain unreasonable medical bills. Compulsion and Punishment are harsh words, and politically difficult, which is the reason that it is not spoken or much less done, in a political context where the wording of legislation appears to be dictated to ministers by the insurers.

The Key Issue

The key issue overlooked is that CTP is a medical insurance scheme, which primarily exists to pay for the treatment of people injured in motor vehicles. The standard of medical care should be that achieved by privately insured patients. If there were two hospitals with similar populations and staff competence but wildly varying outcomes, a medical administrator would be asked to look at the situation and would look at the medical results and ask doctors. Yet in the WC and CTP schemes for some reason they ask lawyers and accountants. Tinkering with the words in Acts, Regulations and Guidelines are of no use if they are not enforced.

The Economic Framework

To look at the broader economic framework, it might be noted that because the two World Wars were fought over access to markets, the conference at Bretton Woods in 1944[2] set up the world to be one market, with those who succeeded in selling their products advancing at the expense of those who did not. It has been reinforced by trade treaties that have prevented countries having protectionism and lessening trade barriers. It may have prevented wars. But it has allowed the rise of multinational companies, who cannot be controlled by any one government and can avoid taxes. Some of these companies have become more powerful than many governments and governments are increasingly unwilling to intervene in markets. Often they see themselves as pleading for capital investment in their jurisdiction, so their key objective is to lower costs for business.

In terms of the cost of products, in this case insurance, a market system will only reduce prices when there is real competition, and this requires transparency. If there is an imperfect market, it needs to be regulated. The NSW CTP scheme is like this. It is a cartel that is poorly regulated. Added to this there has been a rise in the corporate ethos that the sacred duty of a manager is to make a profit. This was most famously espoused by Milton Friedman in 1970 who said, ‘The only social responsibility of business is to use its resources and engage in activities designed to increase its profits…so long as it stays within the rules of the game, which is to say engages in open and free competition without deception of fraud’. The first part of this quote has set a new norm, and sadly the government no longer fills the second half of the quote; the role of setting boundaries in terms of insurer behaviour.

Corporate Responsibility

The lack of any sense of social responsibility was well illustrated in the testimony of John Nagle at the Parliamentary Inquiry into iCare where he was trying re-define the end point of treatment and payment by iCare to be when people were declared fit for partial work, rather than when they actually returned to work[3]. This would have saved iCare a lot of money by pushing people off workers compensation to a much lower level of Centrelink NewStart benefit. In other words, he displayed no concern for the social consequences of his actions, he was merely concerned with the financial result for iCare. His personal sense of entitlement[4] to benefits and nepotism are another issue, again as a result of the emergence of a new class of managers who have little understanding of or care for those who are affected by their decisions. The situation in the CTP system is analogous to the WC system.

Government Oversight

In terms of the government’s oversight or regulation of the CTP insurers, it is illustrative to look at the dismal history of government regulation in Australia. Governments never ‘regulate’ powerful interests effectively. Banks, casinos, insurers, nursing homes, mental health systems, media, miners, builders have all had recent scandals. They all in theory have had regulatory bodies but any change comes from whistle-blowers, never regulators. Even after the scandals the inquiry reports make little difference. NSW insurers have had the Dore report, the McDougall Report and a Parliamentary committee, but insurers continue to dud patients, and SIRA still does not discipline them, support NTDs, collect relevant statistics or even look at relevant areas when complaints are made.

I note from the SIRA website that there have been 40,879 claims. Of these 16,315 (40%) requested internal insurer reviews, and there are 7,169 (18%) disputes[5]. The Dispute Resolution Service (DRS) had 77% Medical disputes, which are basically insurers refusing to pay for treatments, but only 40% of these had been resolved with another 11% withdrawn. We might ask wonder what the average delay was, and note that people sit in pain for months waiting for these disputes to be resolved. We might also ask why so many were withdrawn- perhaps they got treatment elsewhere. The DRS also only upheld the complaint in 422/742 (56%) of cases[6]. SIRA did not give figures for the percentage of Internal Reviews that upheld the original insurer decision, but my experience is that it is high, perhaps 80%. It is hard to believe that these internal reviews are other than a time-wasting fob-off measure so that the patient will go elsewhere for treatment.

The government has been keen to keep insurance premiums low and seems willing to let insurers compete to do this with minimal supervision of their activities. The NSW government has a vested interest in trying to shift the CTP costs to the other health funding bodies, the Federal government (Medicare), Private Health Insurers and patients. Naturally this is unstated.

Consumers’ Lack of Power

Since the consumers do not know which company delivers the best deal, the market is no discipline at all. SIRA was set up by insurance interests as if to regulate insurers and make sure that they were very diligent in not paying too much. SIRA do not have a corresponding diligence in making sure that insurers give a fair deal to patients. It is hard to escape the conclusion that if SIRA were to have the temerity to challenge insurers seriously it would have adverse effects on the careers of those within SIRA. The only way that the situation will be improved is if SIRA’s role is changed to that of an auditor and policeman. Currently the incentives are all for treatment denials as the insurers are in a perpetual conflict of interest situation. Any moneys that they avoid paying to patients, they keep as profits, so if no one stops their treatment denials, that is what they will do.

Health Insurance Efficiency

A comparison of health insurance systems is illustrative. Medicare’s overheads are about 4.5%. Private health insurers, who compete but are obliged to pay at least a proportion of doctors’ fees, have overheads of about 12.5%, whereas CTP insurers only pay out about 50% or less. The US Health System is widely regarded as the worst in the developed world at delivering equitable health care, and US key health indices, infant mortality and life expectancy are very poor as a result. The US health care system is however, the best in the world at doing what it was arguably set up to do, to turn injury and illness into profit. Comparing US health funds, their overheads vary from about 12.5% to over 35%, and it might be noted that they control which doctors patients may go to, and what those doctors may do. They have high costs in terms of patient churn, and the need to account for every tiny procedure and to run a parallel record system. Because of the complexity of the systems, it is difficult for the patients to make real comparisons of the service that they may or may not be getting. So the insurers wishing to increase their profit tend to increase supervision and restriction of doctors to keep the costs down, rather than improve services so that they can claim to offer a better product. The Australian CTP insurers are following this model.

Lack of Power of Nominated Treating Doctors (NTDs)

From the point of view of the Nominated Treating Doctors (NTD) it would seem that the insurers’ aim is to replace the role of the NTD by their algorithms or flow charts and control the treatment. (iCare spent a lot of money on computer software to this end). Cost control is often achieved by refusing investigations, referrals to specialists, or treatments and also by encouraging premature return to work (RTW). To achieve this last they send their representative, a Rehabilitation Coordinator, to be a presence at a significant number of doctor consultations both to report back to the insurer and often to pressure the Nominated Treating Doctor to follow whatever path that the insurer thinks will minimise their costs. The Rehabilitation Coordinator is in theory chosen by the patient, but in practice the patient has never heard of such a person and if they are given a choice by the insurer, the choice is from a list that the insurer has compiled. Again in theory the Rehabilitation Coordinator is a professional who acts in the interest of the patient. But the individual Rehabilitation Coordinator gets their work from an agency that is chosen by the insurer, so that professional has to please the agency that has to please the insurer. Most rehabilitation coordinators see the insurer as the client, rather than the patient, which is hugely undermining of their professional role. Many Rehab agencies simply advertise to insurers or employers. The words ‘patient’ or ‘doctor’ are not even on their websites. The Rehab coordinators should be chosen by the patients in consultation with their doctors. If this happened the Rehab coordinators would market to doctors and owe their loyalty to patients as they should.

The position of the NTD is also undermined by the insurer using Independent Medical Examiners (IMEs) to give opinions on the treatments. NTDs generally do not even get the courtesy of a copy of these opinions which are often used to deny either liability for the pathology or treatments for it. SIRA has declined to insist that the doctor gets a copy of the report, which may be denying his/her patient’s treatment.

Independent Medical Examiners (IMEs)

The role of IMEs needs to have close attention. Insurers seem much enamoured of doctors who will write reports that shift the liability elsewhere, deny that the pathology is serious, deny that the treatment is necessary, or conclude that the patient is ‘faking or exaggerating’. The doctors are often hired through agencies that take a commission and agencies presumably also will not engage doctors who do not please the insurers with their reports. I have observed that some of these doctors are flown in from Canberra, Brisbane, Melbourne or Lismore, so clearly the work is very lucrative. One might ask why there are not enough doctors in Sydney capable of doing such work?

I have also looked at websites like www.ratemds.com which give patient feedback on the doctors who examine them. Some doctors who do IMEs have glowing reports about the kindness and competence from the patients that they treat, but terrible reports from the patients having IMEs. One might term this the Dr Jekyll and Dr Hyde syndrome which seems to be that their judgement and manner changes in different situations, perhaps because they have a predetermined view of patients coming to them with a controversy over their legitimacy, or perhaps the fee structure influences them.

Quantifying Insurer Treatment Denials

I kept statistics of insurer denials of requests for MRIs or specialist referrals, and sent these to the Hayne Royal Commission. I have included this as Appendices 3 and 4. There were considerable differences between insurers which, if made public, would have had a huge effect on the sales of CTP insurers. I also asked SIRA on a number of occasions to supervise insurers more closely and compile these type of figures, but they have declined to do so. It might be noted that insurers suffer no sanction if they refuse treatments. You might note that I successfully introduced amendments to the Workers Compensation Amendment Bill in 2000 to penalise insurers who defrauded patients[7], but these provisions are at the discretion of SIRA and have never been used. They do not even exist in the CTP legislation. Making these insurer treatment denial figures public would be a sanction that would change insurer behaviour, but it seems that the rhetoric of ‘transparency’ is only rhetoric.

It must be understood that when insurers refuse treatments, the NTDs are under pressure from the patients to find alternatives. They therefore use their private health insurance, Medicare, or their own resources to get this treatment. If they succeed in this the CTP insurers have saved money, and so are rewarded for their refusal. If the case is contested, which is rare if the patient gets treated and recovers, the worst that the insurer suffers is that they have to pay for the treatment, which was usually cheaper than if it had been done at CTP rates. Rewarded again for refusal! The money is also taken out of the patient’s legal settlement. It might be noted also that the AMA Guides to the Evaluation of Permanent Impairment also rate people who have had back operations as more impaired, so the insurer benefits from the patient not having had surgery, so tries to delay and hinder the surgery.

All these activities that are aimed at profit maximisation but delay treatments and worsen outcomes. The CTP system is a great cash cow, but does not achieve its principal purpose, which is to treat injury. Like the US system it increasingly emulates, it just makes money for the insurers while the government is loath to rein it in.

It must be conceded that there are examples of doctors overcharging. Some of this is the premium because of the extra paperwork generated by insurers demanding justification for everything. There is also a risk that the doctor will be in an adversarial situation or be called to court, though this is now less frequent. But some fee disparities are huge. With come negotiation it is possible for an NTD to get an MRI for a patient for close to the Medicare price of about $250, but the CTP fee is $1750 and a radiology practice, Alfred Radiology was reputed to have changed hands recently for $100 million. This is not in the interests of patients, as the insurers’ response is simply to refuse investigations. As an NTD, we have no information except via the patients as to what the specialists charge, so NTDs cannot influence this. I have had a letter from an insurer who demanded that I choose a different specialist as he was too expensive, but there is no data on specialists’ charges or success rates and the insurer merely assumed that I would find a cheaper one in response to their demand.

Control of the process needs to be given to the treating doctors. The NTDs are almost all GPs, and so have very modest fees relative to the specialists, rehab coordinators, exercise physiologists, physiotherapists, psychologists and presumably private detectives who are quietly and silently used. The role of private detectives is not usually seen by NTDs either, but what happens in practice is that the patient has their liability denied or treatment refused. When they then try to work, often against medical advice, they are photographed and this is assumed to prove that they are fit to work but faking illness and their treatment is even more unequivocally denied. Usually they only tried to work despite their pain because they had absolutely no money. The myth that CTP is a non-adversarial system is a nonsense, and it seems that only SIRA tries to believe it to justify their highly passive role. I have spent 35 years in the workers compensation area. I started believing that I had to use my medical expertise to diagnose patient fraud. I have concluded that very few patients feign injury, of the order of 2% at most, but insurers’ mighty efforts not to pay results in their perpetuating the myth that either there are a lot of people faking, or they have to be very vigilant less anyone be faking. The cost of all this checking costs far more than the treatments would cost, but it seems that insurers would prefer to spend money on anything but treating people. I have an example of genuinely injured people who have 4 specialist reports and a security report all trying to deny liability for treatments that were obviously necessary. 3 years after his injury, the man is still substantially untreated.

If an injured person exaggerates their symptoms, IMEs will all write reports and private investigators will film them. They will be denied and vilified. Yet insurers systematically set up overlong protocols so that there are inherent delays and denials that inconvenience every case, create suspicion, an adversarial system, financial hardship and depression and then frequently deny treatment that is entirely justified, but they are never called out. It is my opinion that over 95% of the fraud in the CTP system is perpetrated by the insurers and less than 5% by patients. The cost of all this checking, which is far more than the fraud that it supposedly prevents is another reason why the system is a failure. The Banks were criticised by Hayne for their systematic deceptive conduct. Insurers are considerably worse, as they are able either to allege widespread fraud or to claim that they are preventing it. Frankly this is nonsense. Very few people pretend to be injured and almost no one ever volunteers for surgery that they do not need.

It might be noted that while medical records can be subpoenaed with absolutely no privacy for the patients, insurer records of denials are in no way available for scrutiny, because while the medical system is supposedly non-adversarial, the legal system is and its privacy is regarded as far more important. If the insurer records are merely keeping track of the patients history and we are in a non-adversarial system, let them justify the ‘medical decisions’ that they make as doctors have to justify theirs. I will not hold my breath. My view is that insurers make their decisions for cost and legal reasons which would often not stand any reasonable medical scrutiny from someone who actually knew the patient.

It might also be noted that insurers have recently been pushing for treatments to be assessed by their ‘cost-effectiveness’. This might sound fine but if we consider an experiment where two groups of patients with back pain were treated with one group having a GP who regularly prescribed pain killers, and the others had no treatment, arguably at the end of the year the backs of the two groups would be the same, so a year’s pain relief would not be ‘cost-effective’. Insurers should pay for standard treatments and negotiate with medical colleges if guidelines are needed to define these. If they wish to pay for research on the success rates of various regimes, let them liaise with SIRA and the doctors and set up protocols to do this. The NTDs would probably be willing to assess the end points. Insurers should not merely be able to refuse treatment venally or at whim, which from an NTD perspective appears to be the current situation.

Insurers Influencing Treatment Guidelines

The creation of treatment guidelines also need to be mentioned. There are guidelines for the treatment of Whiplash injuries. The combination of whiplash injuries with low back pain is probably the commonest GP presentation of motor vehicle accidents. Patients are rear-ended and get whiplash and low back pain. Medical guidelines were produced on the treatment of whiplash which suggested that no scans were needed unless certain ‘red flag’ conditions were met. The groups who are most responsible for treating whiplash would be emergency doctors and neurosurgeons. Neither of these had a representative on the committee that created the guidelines which had insurer representatives and doctors who all took a very long-term view of the situation. Whiplash however is an acute condition, and an early diagnosis can save months of time for the cost of a simple MRI (or even a CT, though these have dangerous levels of radiation if done as a routine in a population). Yet these Whiplash guidelines have been widely used by insurers to deny scans on MVA patients. The lesson is that SIRA should not have any insurer representatives either in the creation of guidelines or in the selection of doctors who are to adjudicate the disputes that the insurers create.

Objectives of the Act

The key elements of this submission relate to Objective (a) to encourage early and appropriate care. As is stated[8] the key to this is post-accident recovery, not monetary compensation. This means optimum treatment as soon as possible.

The insurers have a lot of time to make their liability decisions and can even ask for more time to do exhaustive investigations and demand past medical records, and deny liability or treatment until these are obtained. Doctors regard this as tiresome, as the records may be old, the patient may no longer be with them. Overseas students of visa holders may not have records available, and often see doctors at random as they have no Medicare. Insurers boast (e.g Allianz) that they have a flexible workforce with part-time workers which is good for women. This is fine, but the injured people have to wait until the claims manager is back and the decision is delayed. The delays and denials have immense effects on the mental health of injured people and the insurers then sometimes endeavour to prove that they had previous psychological problems. The fact that they are injured, in pain, cannot work, and have their personal and family relationships undermined, have a loss of income and have had their treatment refused is presumed to be not relevant. I attach a list of 83 examples of insurer misdeeds that I sent to the Hayne Royal Commission as Appendix 1. This list is somewhat dated now, but new examples continually recur at much the same rate.

The key point is that the insurers are the chief cause of the failure to deliver timely and appropriate care, and are the reason why the treatment and results are inferior to normal private patients, or even Medicare ones (when the Medicare delays are ignored. The Medicare waiting time for non-urgent operations is often over a year). No progress will be made in fixing the health aspects of the CTP system until the insurers are made to pay for the treatments that the NTDs try to initiate. The insurers try to undermine and supplant the roles of the NTDs, but have neither the expertise nor the patient contact and knowledge to make this a viable proposition. The insurers manage the claims to minimise their costs and do not acknowledge that letting the doctors get on with the cases would be the best way to optimise outcomes.

The question for this inquiry should be, ‘How do we make insurers actually meet their obligations under the Act when every dollar they save by not treating patients goes to their bottom line?’ It is understood that insurance staff, who are somewhat pretentiously called ‘Case Managers’ which assumes either that they have supplanted the doctors’ role or that the money is more important than the medicine. They are paid bonuses to get the cost of claims below certain targets. This results in the Claims clerks managing the money, rather than the patient’s interest. One might ask how they can be expected to manage in the interest of the patient, when their own interest is to minimise the cost of the treatment? The problems in the insurance schemes are the incentives and protocols from top management, yet the Claims clerks are the ones abused for refusing treatments, and in most cases will not give their surnames, calling themselves Alison S. or similar. For people whose job is to give out money to help people this alone is a good indication that they are not working as the legislation intended. Claims clerks should be referred to as claims clerks, not case managers, by SIRA. Insurers should be prohibited from providing incentives for these clerks not to treat people. SIRA should audit insurer records systematically and random checks should be carried out by dedicated medical teams to see that insurer protocols are reasonable. Currently insurers routinely demand complete medical records of patients, but there is no transparent process that looks at their records. SIRA, even when acting on complaints merely asks the insurers for explanations and in the writer’s experience accepts them. They do not even look at the records of cases against which complaints are made. Insurers have far too much power against patients and doctors.

Objective (b) to provide financial support for persons injured is very important and was a major improvement in the 1999 legislation. Many people live from payday to payday and are unable to buy food or pay the rent if there are interruptions to their incomes. This is particularly the case in students on visas or people on work visas, who it must be noted have no Medicare so are completely at the mercy of CTP insurers when they are unable to work. It is my view that there should be significant penalties for insurers who unreasonably deny liability or treatment as currently there is no sanction for this. As a minimum the rates of denials and delays by insurers should be collected by SIRA and published to have some consumer pressure to discourage unreasonable and venal insurer behaviour.

Objective (e) is not being met because consumers have no data on which to base their purchase decisions. Competition only works if consumers have data on which to base purchase decisions and it behoves the regulator to set up a framework for competition. Simply setting up an opaque oligopoly market will not deliver any benefits for consumers, as this system amply demonstrates. SIRA must get data on the rate of refusals of treatment requests by different insurers and publish them. Currently the only data consumers have is price or ads on TV.

Objective 9(f) to discourage fraud in connection with third party insurance is a worthy objective, but it must be recognised that the main fraudulent behaviour is by the insurers setting protocols that systematically delay or deprive patients of benefits that they are reasonably entitled to. Any effort to control the alleged fraud by patients should not take more resources than the fraud is likely to cost. It seems that the allegations of patient fraud are grossly exaggerated, and the process of excluding it a huge and unjustified overhead of the system as a whole. Currently it is a make-work scheme for insurers, investigators, IMEs and lawyers.

Objective (h) is being met very poorly. There is no comparison of insurer behaviour and no research into successful treatment in areas such as back surgery where the systematic collection of data could yield real benefits. NTDs would benefit from knowing which surgeons did certain procedures, what they charged and what their results were. The NTDs could also have input into an assessment of the pre- and post-treatment condition of the patient.

I note that you are in the First Stage of the Review and that you are considering whether it is necessary or appropriate to engage ‘directly with stakeholders’. I can assure you that it is. The remarkable feature of the SIRA Surveys of WC and CTP surveys is that they seem to be couched in the most euphemistic terms imaginable. There were 893 CTP patients surveyed and 885 WC patients[9]. The result of this is frankly shocking, but SIRA seems extremely sanguine in their report. 25% of CTP patients have a mental illness, 22% have moderate of extreme pain and those who have such pain, 40% have had a poor experience of their CTP insurer. Only 56% of patients felt that the insurer was efficient in their dealings with them, i/e 46% did not. Only 51% said that they resolved concerns quickly, 49% did not, and only 54% felt that they acted with empathy, 46% did not.

There is no way that anything like 25% of people have a mental illness before their car accidents, so as any working doctor is likely to tell you, the mental problems are caused by the accident, and mostly by the poor way they are treated by the insurer, who, if it gets serious enough sends an IME to probe their private life and find another reason for their distress. Only just over half those surveyed are happy with the insurers at all. Yet SIRA seems totally unfazed by this very unsatisfactory picture. It is reported almost without comment except that the information might help insurers.

Minor Injuries

Some definitions need to be addressed also. ‘Minor injuries’ have been greatly used by insurers to lessen their liability. While the discussion paper claims (page 9) that ‘minor injury’ is a technical term’ in the Act, in practice it is equated with triviality and used to deny payments. Whether it is merely a term of denial or whether it is term of denial because the injury is considered insignificant by the insurer is surely lost in practice. It seems that insurers take the wording of diagnoses from the first certificate and on the basis of that determine that it is a minor injury and are very reluctant to change that classification as further facts come to light, or if the patient does not recover as they would like. Emergency Departments try to limit their work to looking after emergencies, so tend to note diagnoses that are likely to be fatal, and discharge patients with significant pathologies such as back or neck injuries that are not immediately life-threatening. I have had three patients discharged by EDs with significant spinal injuries requiring surgery and one requiring neck surgery. None of the three back surgery patients (from 3 different hospitals) had that diagnosis mentioned in their hospital discharge summaries.

The diagnosis ‘soft tissue injury’ is basically a meaningless nonsense. Apart from bones, all tissues are ‘soft’. The exclusion of nerves, tendons, ligaments, menisci or cartilage means that most orthopaedic injuries are not soft tissue, yet whiplash and back pain are routinely dismissed as ‘soft tissue’. It has merely become a convenient term to dismiss inconvenient persistent pain.

Minor psychological and psychiatric injury that is ‘not a recognised psychiatric diagnosis’ has resulted in a lot of semantics, as psychological definitions are not as precise as one might like. People are often very stressed after accidents, and this is very often compounded by long delays and callous behaviour by insurers, who take no responsibility for this, and often use Psychiatrist and Psychologist IMEs to deny it, prying into their personal lives.

In Regulation 4, an injury to a spinal nerve that results in neurological signs is significant, and should not be a minor injury. I recognise that cavilling over medical definitions may beyond the scope of this inquiry, but this is part of the framework that allows insurers to deny claims and hinder treatment, which is why the current CTP scheme is so unsuccessful compared to the results achieved by normal private medicine where the doctors are able to get on with their work without venal interference.

The CTP scheme needs to cover ‘at-fault’ and ‘not at fault’ drivers equally. (Section 3.11)

The purpose of the scheme is to cover the cost of motor vehicle accidents. If a person has an accident and are at fault, they should be punished according to the Highway Code. The penalty should not be that they cannot get treatment for a condition that might be life changing. Even an episode of gross negligence does not justify a lifetime of suffering or the withholding of treatment. It merely seems petty vengeance or venality at a legislative level.

Entitlement to Benefits and treatment overseas

It is interesting that treatment benefits are not available outside Australia. I have quite a number of Korean patients on student or work visas who were injured in MVAs here. Often these were denied reasonable treatment and it was hard to avoid the conclusion that insurers simply wanted them to go home so that they could avoid paying for necessary surgery. A least 2 of them went home and had successful surgery in South Korea and commented that the surgery was better than in Australia and about a third the price. If refusal of overseas surgery is to continue the price and availability of surgery here needs to be improved.

Restricted Duties Support

While in theory patients can have support during recovery by having some degree of wage subsidy, there has been quite a lot of abuse of this provision. Some insurers have been keen that patients do any ‘make work’ task that allows them to classified as ‘fit for restricted duties’ and thus entitled to less damages. Some employers have been happy to take such workers while their wages were subsidised, with no intention of employing them beyond the subsidised period. Insurers have also been generally unkeen to pay for vocational training with the same amount of money as there was not a certain job at the end of the training. Often the patient’s best interest was not much a consideration in this reckoning. There is an absence of ‘good faith’. I note that ‘insurers…must manage claims consistently with the principle of proactively supporting claimants to optimise their recovery and return to work activities,‘ and that ‘Compliance with this obligation is, as with all requirements of the Guidelines, a condition of each insurer’s licence to issue third-party policies’.

These type of heavy sanctions are very unlikely ever to be applied and tend to be imply an all-or-nothing sanction regime, while there is minimal oversight from SIRA for the day to day monitoring of individual claims management. Obviously SIRA cannot oversee every decision on every claim, but if it were to investigate thoroughly a significant number of complaints and impose graded sanctions on insurers who had been unreasonable or unfair, it might make some difference to insurers’ currently unsatisfactory behaviour.

The General Questions in the Discussion Paper:

The objectives of the Act are acceptable, though in practice the preoccupation with saving money in claims and premiums has allowed a lax regulatory regime to be set up by insurance interests in SIRA and a distortion of their priorities to optimising insurers’ already enthusiastic cost control. This has allowed insurers to get away with unreasonable costs in investigating claims and denial of treatments, which has meant that the medicine actually delivered is of far poorer quality than the private medicine equivalent that it is supposedly funding.
A detailed analysis of the faults of the Acts, Regulations and Guidelines are somewhat beyond me at this time, but the lack of supervision and sanctions on insurers make lofty words and intentions often more noted in the breach than the observance. The lack of detailed knowledge of the Act, Regulations and Guidelines by both patients and doctors has made this easy for insurers. SIRA has not stepped up to ensure reasonable insurer behaviour. Tinkering with wordings of the Act, Regulations or Guidelines is unlikely to be helpful without far better enforcement.
The evidence for the failings of the CTP system are in this submission and in my submission to the Hayne Royal Commission. (I attach my statistics on insurer denials from my submission to this inquiry and my list of patients who were subject to unreasonable insurer decisions as Appendices 3 and 4. Some of these decisions were WC and some CTP.) Further evidence of insurer misdeeds are in my submissions to the Dore Inquiry and the McDougall inquiry, while those submissions were directed to the WC system have great parallels in the CTP system. The government has tried to make the two systems behave similarly, and to a large extent they have succeeded in practice, with iCare behaving as a private insurer and denying treatment in a similar way, though not quite as badly as in CTP, as the legislation supports the patients better, and the influence of Unions as advocates may contribute positively towards patient welfare.
In general terms policing the existing laws offers more hope than minor tinkering with them, At fault drivers should have the same benefits as not at fault drivers, Section 3.11. The Whiplash guidelines need to be re-written with significant input from emergency doctors and neurosurgeons and no input from insurers. Similarly insurers should have no input to SIRA medical appointments or future guidelines. The insurers’ role is to pay for treatments, not to determine what they are, and this needs to be made clear in the acts, regulations and guidelines and policed by SIRA.
As stated above, the care delivered by the CTP system is grossly inferior and far more expensive than comparable privately insurer health cover, when they should be similar. This is really a matter requiring investigation by a competent medical administrator, who has unfettered access to insurers’ files and can analyse the reason for their adverse decisions. The inherent delays in approving obvious treatments should be removed and probably the best way to do this would be to have the medical colleges define reasonable treatment pathways for common conditions and have NTDs able to do these without waiting for insurer approval. An alternative would be to have doctors able to treat the patients as they saw fit, limited by costs per procedure with medical panels looking at any over-servicing or overcharging and counselling the doctors. This might allow some initial problems, but in the longer term would sort out acceptable norms and lower the current unacceptable waiting times and treatment denials.
This writer is of the opinion that delay in payment to victims is unacceptably long, but is unsure of what is the reason for this.
The lack of payment for attendant care services considerably worsens the situation for injured patient where the partner has to give up time to look after them. Partners are unable to do their own paid work or have their study disrupted by looking after patients and insurers are often reluctant to give them home care for significant hours or for significant periods of time. ADL (Activities of Daily Living) assessments should be done by an assessor not chosen by the insurer and the carers given reasonable help and this should not be prohibited by Section 3.25, which should be repealed.
As above. Section 3.25 does limit achievement of the objectives of the Act.
The term ‘Minor injury’ is an artificial construct which merely reflects a finite period after which the insurers wish to have the right to cease payments without having to argue over every case. Most patients discontinue treatment when it becomes unnecessary, and the arbitrary selection of 6 months is merely for insurers’ convenience. The term could not be defined because it was not in any way a medical term. It should not exist as a medical entity. If insurers choose to review claims at a particularly point of time they may do so, but their bullying of doctors and use of Rehab coordinators to do this should have some sanction.
The definition of ‘minor’ does align with a lack of perceived seriousness of an injury. Naturally this does make it likely that it will resolve in a shorter period of time. But if it does not do so the patient should still be entitled to be treated. The idea that treatment should be ceased because the patient has ‘stopped improving’ also needs to be challenged. Insurers often want to close claims which are stable but have serious ongoing pain, such as knee, neck or back injuries, which often require ongoing pain relief or later surgery. The early definition of ‘minor injury’ has caused a lot of angst and dispute, and should be disallowed.
Statutory benefits for at fault and not at fault persons should be the same. The treatment or non-treatment of motor vehicle accidents should not be a mechanism for punishment of driving misdemeanours. It is also very poor policy to have a CTP scheme yet leave a segment of the population without medical treatment.
As above
As above
From the point of view of the injured at fault drivers it would be a great improvement. It would not affect not at fault drivers who would get the same service that they get now. It would presumably raise premiums as some people would have increased coverage. It would lessen the strain on other parts of the health system that presumably pick up the tab for the treatment of the at fault drivers. It is extraordinary that these questions are even being asked!

Statutory benefits in the form of weekly payments equivalent to weekly wages are a major benefit of the 2017 scheme. It might be noted that many people live from week to week. It would behove SIRA to survey and be aware what percentage of the recipients are in this situation and in which demographics and to concentrate their efforts on giving these people a better deal. Changes in the IR laws have meant a casualisation of the workforce with less job security, the use of job agencies which have the discretion to reduce shifts at whim without actually sacking anyone. There has been increased use of sub-award wages and cash payments, particularly in overseas students or working visa holders. Often these people are unable to prove their income and efforts need to be made to ascertain or verify their pre-injury incomes so that they can get paid fairly, as most people do not have a significant surplus in their incomes and a major medium-term income downgrade often spells extreme financial stress and mental depression. SIRA should develop protocols to assess this income and have an appeal mechanism. Sometimes bank statements are evidence, but this does not always seem to be accepted. It is also important that these benefits are paid promptly. SIRA should keep records of when injured people supply their income details and the delays they experience. If this were monitored, it is likely that insurer performance would improve. The cessation of payment should be when they are recovered from their injury, not at an arbitrary 6 months. The fact that 24% of people with ‘minor injuries’ have not returned to work at 6 months is further evidence that the injury was not minor. Obviously if they were not working at the time of the injury, they will not be getting these payment in any case.

The various categories of time for cessation of benefits seem to exist so that the costs of the treatment of MVAs can be passed from the State CTP scheme to other elements of the health system in Australia, i.e Private Health Insurance funds, Medicare or the patient themselves. In general, if someone is injured in a motor vehicle the motor vehicle scheme should cover their loss of income and treatment, and the premiums of road users should cover this.

I note the list of obligations that the injured persons have to the insurers (page 14). These are usually trumpeted as part of the case management plans which come from insurers. Conspicuously missing from these plans is the insurers’ obligation to pay for reasonable treatment in a reasonable time frame. The obligations of both parties should be set by SIRA, who should provide the templates for these insurer statements. At present they are like the bank sending notice of variation of interest rates; non-negotiable. They simply define what the insurers want, and serve to set a norm in the insurers’ interest, often requiring a signature of assent at the bottom. Both the patient and the doctor have to sign to get paid.

Damages seem to vary very widely depending on the competence of the patient’s solicitors. Some solicitors seem to go for high-turnover cases with low settlement values. This needs to be examined systematically. Some of my patients with ongoing serious problems have been settled for derisory amounts, which they are not supposed to disclose. The non-disclosure clause seems very much in the insurer’s interest.

Finally I would be very interested to know what steps you are taking to ensure input from both treating doctors and specialists and from patients to your inquiry. These last are the people for whom the scheme exists, yet it seems that their voice is the least heard. The inquiry was not well publicised to doctors, let alone to patients. Patients also have a poor understanding of the law and regulations, so are less likely to come forward. It might be noted in terms of motoring organisations, NRMA used to have the slogan ‘On the Motorists’ Side’ but since their listing as IAG are now the insurer who on my figures and backed up by a more numerous sample deny more treatments than any other insurer. They cannot be considered to speak for motorists’ interests in this situation.

Assessment of Permanent Impairment

In terms of real improvement of the CTP legislation, there needs to be a better way of assessing permanent impairment. The AMA Guidelines for the Assessment of Permanent Impairment are in the legislation but are a nonsense that delivers very unfair outcomes. The Guidelines are used because the legal process priced itself out of such assessments- more money was spend arguing about the money than there was there to give the patient, so this unfair AMA system was introduced. It now has two lots of vested interest supporting it; the insurers who do not have to pay much, and the doctors who do the lucrative medicals. The problem is that the AMA Guidelines make no distinction between an impairment and a disability. If one has poor vision, that is an impairment. If glasses correct this, there may be minimal disability. Injuries that prevent people doing physical work cause a much greater disability to people who are manual workers than to those who are clerical. But the key problem with these guidelines is that they do not consider pain because it cannot be measured and they try only to use things that can be measured quantitatively. Back pain is the commonest cause of disabling disability, and a painful back may have a similar range of movement to a non-painful one, so that patients may be rated with minimal impairment by the tables, but be hugely disabled and unable to work at all. I suggested an alternative scheme as an amendment to the Workers Compensation Amendment Bill No 2 2001, but this has not been examined further[10]. It involved an expert panel of three comprised of an appropriate medical specialist, a rehabilitation person who looked at what the patient could actually do, and a third member who looked at the labour market and what a person could reasonably be paid, to compare with their previous situation. The amendments were not supported as there had been insufficient discussion of the concept, which remains the case.

Summary

Appendix 1: 83 cases of Insurer Misdeeds as given to the Hayne Royal Commission

This is 2 files, a datafile list of the cases and an explanation of them

Appendix 2: As given to the Hayne Royal Commission, a 2 week sample of my patients, illustrating how many of them had a problem with insurers refusing some standard treatments. It was 76% overall, with the rate varying between insurers

Appendix 4: Insurer Radiology Treatment Denials as given to the Hayne Royal Commission

This has two sample populations, my own practice and a larger survey, which was seeking services from insurers. I do not want to give the source of the second survey, but there is a discussion of the similarity of the results.

[1] Statutory Review of the Motor Accident Injuries Act 2017 Discussion Paper 5 July 2021 p3.

[2] https://en.wikipedia.org/wiki/Bretton_Woods_Conference

[3] parliament.nsw.gov.au/lcdocs/transcripts/2380/Transcript%20-%203%20August%202020%20-%20%20CORRECTED.pdf pp 57-63, 85-88

[4] https://www.parliament.nsw.gov.au/lcdocs/transcripts/2380/Transcript%20-%203%20August%202020%20-%20%20CORRECTED.pdf p57-63, 79-82

[5] www.sira.nsw.gov.au/CTP-open-data accessed 14/8/21

[6] www.sira.nsw.gov.au/CTP-open-data op cit.

[7] https://www.parliament.nsw.gov.au/Hansard/Pages/HansardResult.aspx#/docid/HANSARD-1820781676-22301

[8] Statutory Review of the Motor Accidents Act 2017 5 July 2021 Clayton Utz p8

[9] /www.sira.nsw.gov.au/resources-library/workers-compensation-resources/publications/workers-and-claims/summary-of-the-sira-customer-experience-and-health-outcomes-study

[10] https://www.parliament.nsw.gov.au/Hansard/Pages/HansardResult.aspx#/docid/HANSARD-1820781676-24372

Appendix 1:

Royal-Commission-Banking-Appendix-1-83-Cases-of-Insurer-Misdeeds-Chesterfield-Evans3

Appendix 2

Royal-Commission-Banking-Appendix-2-2-week-Diary-of-Insurer-Treatment-Denials-Chesterfield-Evans Download

Appendix 4:

Royal-Commission-Banking-Appendix-4-Radiology-request-denials-by-insurer-Chesterfield-Evans Download

22/01/2021

Submission to Senate Inquiry into Newstart 29/9/2019

Introduction

This submission addresses the Terms of Reference in order. It is written from practical experience, economic knowledge and with some research. Areas in which the author does not have expertise are not mentioned. This does not mean that they are unimportant. Comments on policy are made in relation to the term of reference, even if they are not directly asked in that term.

An Acceptable Standard of Living including housing.

Two of the Four Freedoms in the UN Declaration of Human Rights are Freedom from Want and Freedom from Fear. It is necessary that in Australia with a relatively high national income that people have enough money for food, shelter and some money to associated with others and enjoy some quality of life. The amount of money needed for this last depends to a considerable extent on how much society’s resources are free, such as parks and health care, how much they cost such as transport, and this to some extent depends on the extent to which monopoly products, such as roads have been privatised.

The most critical item is usually accommodation. The widespread use of negatively geared real estate as an easy route to riches for those who have surplus income has led to property being seen as an asset class that cannot lose money and almost a national Ponzi scheme where everyone buys on the assumption that prices will continue to rise. This has been self-fulfilling[i], but the national private debt has grown enormously[ii], which economists have been concentrating on public debt. The bottom line of this is that property has risen hugely in value, and in 2016 the median Sydney house price was 14 times the median income[1], but most of this value is in mortgage debt, which our banks have borrowed from foreign banks. So those who have cashed out their capital gains have done so at the expense of those who bought, and as a nation, Australia still carries the debt, requires large interest repayments, creates a national vulnerability to a fall in our dollar and limits Australia’s ability to invest in more productive assets or industries[2]. The national obsession with real estate has been worst in Australia than other countries, and this must surely relate to the negative-gearing tax legislation.

At a practical level, rents have risen as property prices rise and this has been worst in Sydney. People on fixed incomes simply cannot afford shelter, and this is compounded by the almost complete cessation of the building of public housing, which has resulted in housing stock being taken by those on welfare or with age and disability, creating a subculture of welfare dependency with few role models.

It is therefore an oversimplification to see the problems as just one of income. But to address the problem requires pro-active policies in social structures and resources as well as infrastructure and education.

Given that many landlords see their properties as an investment, they are naturally keen to maximise returns. As prices rise the rental returns fall as a percentage of capital invested, even if that capital was not invested by the landlord, but is a function of the overall market price rise. Since house prices are rising much faster than inflation, there is therefore pressure on rents to rise faster than inflation and faster than wages. Unsurprisingly, landlords and agents often encounter resistance from tenants when they try to get rent rises greater than inflation. It is therefore easier simply to terminate the tenancy and start again with ‘market rent’. This leads to tenants being forced to move every year or so, and always having to take the rent rises. This has meant that rents have been an ever-increasing share of incomes particularly in Sydney. The dislocati0on associated with forced moving is an ever-present reminder of the power structures in society and a significant demoralising factor for a considerable segment of the population.

The changes in tax so that housing investment was seen as more long-term might begin to addresses these problems, but it requires some political courage as the idea of negative gearing is embedded in the society. Property investors are aware that they are getting rich by borrowing but less aware that the selling to get rich relies on someone else’s borrowing and cannot be sustained at a nati0onal level.

the labour market, unemployment and under-employment in Australia, including the structural causes of long term unemployment and long term reliance on Newstart;

Governments in Australia need to face the fact that there are not enough jobs for the Australians who need them and that the price structure is moving in a direction that is worsening the situation. There are a number of reasons for this:

The use of automation to replace labour, resulting in the closure of many offices and factories
1. The mobility of information, capital and goods that has allowed competition from cheap labour countries to replace Australian industries with a big competitive advantage in cost structures, so that more goods are imported.
1. The weakening of unions and the rise of labour hire companies that has allowed for increasing sub award wages, cash payments and a reduction of job security.
1. The use of work visas for unskilled labour, creating a sub-class of workers in the agricultural, cleaning services, hospitality and semi-skilled building industry where low wages are paid and Australian residents do not even compete for jobs.

It begs credibility that the Government is unaware of what is happening as they increase the number of unskilled workers to come to Australia on temporary visas, leave the unions emasculated and the Fair Work Tribunal under-resourced for any sort of policing role. The large number of foreign students who are in Australia as paying University fees who also need work and are a significant pool working illegally, again for cash or sub-award wages. Naturally they are in no position to complain, so act to lower real paid wages, even if they have no direct effect on statutory rewards. Australian government must face the reality that Australia’s cost and price structures are such that employers cannot compete on price in many cases and have therefore become importers. Structurally there will a continuing and probably worsening problem that many Australians will be unable to get jobs, and there needs to be a national strategy to create industries that are world competitive in a balance of payments sense and which will create lasting employment. Failing that Australia could take a Middle Eastern or Norwegian solution that charges far more royalties to companies exporting our resources and invests these in long term assets to support our economy. The development of renewable energy has been suggested as an export industry to develop, but it appears that the influence of the coal lobby is undermining innovati0on in this area. Those who chronically cannot find work remain on Newstart and the demeaning effect of continually applying for jobs that do not exist must demoralise even the most resourceful person. The ghettoization of poverty as outlined above compounds this, and it is surprising that there has been so little backlash from employers getting thousands of job application that they have no possible positions for. Presumably such correspondence is easy to ignore and dispose of.

The policy that allows ‘choice’ in schools and subsidises bus fares for children of more upwardly mobile families to attend either private schools or schools in better locations also leads to a residualisation effect where those who have less choice are all together and social disadvantage tends to be concentrated, so that there is less social help available in terms of knowledge and resources in the neighbourhood. Shortage of capital compounds this.

All this means that there are long-term structural problems in the Australian economy, which are compounded by the inequality of opportunity in the education sector. Currently this effects disadvantaged people more, so can be ignored by the more privileged classes if governments choose to ignore the long-term implications for the society as a whole. There are some in government who think that they are only there to get a larger slice of the pie for their own voter segment and that they do not have an overall responsibility for the progress of the nation. This approach must not be allowed to dominate, as a refusal to recognise the above structural issues will simply compound the difficultly as addressing them in the medium term.

Clearly those that are inappropriately trained or those who try to insist on an award wage where this has been allowed to be totally eroded, will be unable to find work and will need NewStart for a long time, particularly if there are not enough jobs.

the changing nature of work and insecure work in Australia

The changing nature of work as noted in b. above means that many jobs are either displaced by technology or ‘offshored’ where wages are cheaper. There are also an increasing number of ‘guest workers’ on 457 Visa who are supposedly skilled and now there are provisions for unskilled workers[3] under designated area migration agreements (DAMAs). These people are supplemented by the large overseas student body who often also need work, but are legally restricted in how much or how long they can work, making them ripe for cash jobs, sub-award wages and exploitation. With foreign workers at least 10% of the workforce, and union membership plummeting, there is very little enforcement of pay and conditions. It also seems that governments want to turn a blind eye to the situation. Employers in the Northern Territory readily concede that DMA mainly are in the hospitality and tourist industries, which could presumably be done by native Australians. If native Australians are only to get ‘better jobs’ then the government which is allowing all these jobs to be taken by temporary workers ought either organise such jobs or stop blaming those in Australia who do not have jobs. It may be that if fruit pickers were paid award wages the Australian fruit could not compete in the market, but with a consumer premium on Australian product and possible action to reinforce this, it is unlikely to be the case if a real effort were made at an all of government level.

As far as the 457 visa are concerned, many of the trades coming to Australia, such as tiling, gyprocking, cement rendering, plumbing and cooking could be done by Australians, but the educational emphasis on universities and training in the medical, legal and financial areas and the deliberate neglect of TAFE, technical skills and apprenticeships has meant that Australia has a huge oversupply of wannabe CEOs and a severe shortage of tradesmen. What training our youth have is not actually appropriate for our long term needs. The two concepts of making education a for-profit exercise and letting ‘the market’ decide as if it has intrinsic wisdom, has made many young people do inappropriate training, before ‘the market’ teaches than the error of their plans. Governments may not be able to predict exact numbers of each occupation needed in the next 20 years, but they should at least make an effort. The absurd mismatch of skills needed and current training practices begs serious attention.

Employers, facing competition from imports with lower wages structures have lessened their cost by making work casual and only paying for workers when they are needed. From an employee’s point of view the casualisation of work means that they do not have stable income, which has both immediate effects and also longer term ones in that they cannot get home loans or even rental properties on that they cannot show that they will be able to meet financial commitments reliably. This further marginalises many workers and adds to social inequality.

the appropriateness of current arrangements for supporting those experiencing insecure employment, inconsistent employment and precarious hours in the workforce

The Author does not fully understand the overall situation with regard to current arrangements but can make some observations and recount anecdotes that relate to experiences as a professional coming into contact with support systems. The author currently works as a doctor treating Workers Compensation and Motor Vehicle accident injuries, so observes the action of insurers who act as private support for these people and also Centrelink in terms of people getting NewStart or the Disability Support Pension.

It might be noted that the NSW government has made legislative changes to reduce the time that workers compensation and third party insurance are paid to 5 years and to give insurers more discreti0on to deny payments to injury victims. This was in order to be able to lessen premiums and be able to claim that the State was ‘business friendly’. The premiums have fallen and the private insurers have had a windfall, but this has been at the cost of payment to injured workers, both in terms of treatment denied and in terms of income benefits obtained. The author wrote a detailed submission to the Hayne Royal Commission re this.

The effect of this legislation has been to force people who were on compensation to seek either NewStart of the Disability Support Pension from Centrelink. I might be noted that the Workers Compensation legislation of 2012 gave long-term compensation patients another 5 years of support, but this came to an end in December 2017. Most of these patients had been on compensation for more than 5 years, despite the funded rehabilitation and job training programmes. It might be stated that his gave them a better chance of finding a job than others in the same physical condition who had not been injured at work. Nevertheless Centrelink has resisted putting many of these people on the Disability Support Pension and insists on NewStart for many people. A discontinued survey be SIRA (State Insurance Regulatory Agency of NSW) found that only 29-30% were on some sort of benefit. 8% had been declined by Centrelink, 12% were still being assessed by Centrelink, 18% had too many assets to get a benefit (and leaves 32% not mentioned)[4]. Prime Minister Morrison boasted that fewer people were being put on Disability Support Pensions, but this actually started under the Gillard Government. The author has a patient, a migrant illiterate in English, and probably his own language who was 61 years old, had been on Workers Compensation for a back injury, had Parkinson’s disease and was a carer for his sick wife and was refused a DSP. His chance of getting a job was negligible. When the doctor took some time to write a detailed report to help the man, Centrelink stated that they would not pay more than $150 for the report, which took a couple of hours to do as his medical history was very complicated. He was forced onto NewStart and given a provider and lot of literature on ‘mutual obligations’ that he was not even able to read. Attempts to call Centrelink result in waiting times on the phone of up two hours. A computer eventually answers the call and cuts the person off if they cannot give the number and its suffix (which it may not have) in a very short time. If complaints on the website are not filled in in a certain time, the site simply switches off, losing the draft complaint. The systemic arrogance and indifference shown by Centrelink to its clients has to be experienced to be believed.

The author recommends that all the Committee assessing this issue try to contact Centrelink by phone, attend an office and personally interview a few people in the situation.

the current approach to setting income support payments in Australia

It would appear that the level of benefits is set historically and rises only when political pressure is applied to the system. There does not appear to be any logical formula setting the level of benefits in relation to costs, inflation, rents or the poverty line. If this is indeed so, it is no basis to run the welfare system of a country with systemic unemployment and the need for some degree of equity to maintain social harmony. If Australia has boom times it is fair that the success be shared, if there are bad times, it is fair that the pain also be shared and the effects of downturns not borne disproportionally by the most disadvantaged.

the impact of the current approach to setting income support payments on older unemployed workers, families, single parents, people with disability, jobseekers, students, First Nations peoples, people from culturally and linguistically diverse backgrounds, people living in regional and remote areas, and any others affected by the process;

The author does not have quantitative data on the impact of different groups, but has anecdotal evidence of patients utterly depressed about how they were treated by Centrelink, in despair about their ability to pay their bills and expressing a lack of hope for the future and suicidal ideation. Older workers feel that they have no hope of ever getting a job. Young unemployed complain that they cannot have a life as they have no money to get to job interviews, cannot join their friends for a drink or any social activity such as a coffee or a movie. This is very destructive of their self-esteem.

the impact of geography, age and other characteristics on the number of people receiving payments, long term unemployment and poverty;

The author works in suburban Sydney where the effects are very significant as stated above. Unemployed people have difficultly even getting to a doctor in suburban Sydney due to lack of funds and are frequently changing address as they have to couch-surf as they cannot afford rents.

the adequacy of income support payments in Australia and whether they allow people to maintain an acceptable standard of living in line with community expectations and fulfil job search activities (where relevant) and secure employment and training

The oncome support level is quite inadequate for any sort of quality of life, and there is insufficient money even to carry out job search activities. Young people need computers, printers and stationery to write and send resumes to meet their ‘mutual obligation’ targets, and it is even difficult to get haircuts, reasonable clothes and transport to the interviews if any. The costs of mobile phones are also a significant expense. If they do not have unlimited time on their mobile phone contracts they are likely to run out of credit before Centrelink even answers the phone. If they do not have unlimited time they cannot afford to call Centrelink.

the economic cost of long-term unemployment, underemployment, poverty, inequality and inadequate income support payments;

It is difficult to quantify the long-term costs of unemployment. The loss of self-esteem and the behavioural changes that this may create may be very destructive but are also an opportunity cost; what may have been is lost. The loss of experience means defects in a CV and those who have a current job are usually preferred over those who do not, creating a spiral of long-term unemployment as the longer the unemployment, the more likely it is to be prolonged. Eventually the long term unemployed form a subculture of demoralised and invisible people. It is somewhat surprising that there has not been more street crime with muggings such as happens in the US, when the unemployed lose all faith that society will look after them, see the average person’s indifference and therefore target random employed people. What society decrees as ‘survival of the fittest ‘in the normal economic and social framework may become a far more basic ‘survival of the fittest’ in a back alley, as happens in the USA.

the economic benefits – including job creation, locally and nationally – of increasing and improving income support payments and supports, and decreasing poverty and inequality

It is likely that the fiscal stimulus of an increase in NewStart payments and the DSP are likely to be very beneficial . It must be noted that the governor of the Reserve Bank, Philip Lowe has called on the Federal government to provide fiscal stimulus[5] as the tax cuts and low interest rates have not been enough to increase consumer spending, which is the major engine of economic growth. It is know that poor people spend a much greater percentage of their income, in that they are not able to save. Hence money given as an increase in NewStart or the DSP is likely to have a better economic multiplier to the economy than either tax cuts or infrastructure spending as the tax cuts tends to go proportionally to higher income who have an increased propensity to save, and infrastructure spending also has corporate profits retained. The RBA has noted that long term increases in income lead to a greater propensity to spend than one-off payments[6], an unsurprising conclusion. It has been stated that poorer people spend close to 100% of extra income, and this is certainly likely to NewStart recipients, whereas wealthier people may save up to 30%, having a far lesser multiplier effect in stimulating the economy.

The social effect of raising the income of welfare recipients are likely to be a reversal of the problems detailed above in proportion to the magnitude of the increase. It will reduce inequality, give some hope to those on welfare and as such it is very important to the social cohesion in Australia.

the relationship between income support payment levels, minimum wages and wage stagnation in Australia and other comparable economies

The level of income support needs to approach wage levels to achieve the ability of welfare recipients to have a reasonable life. Some people assume that if the unemployment benefit level approaches that of a low wage that unemployed people will not strive to get work. This assumes that work is only an economic activity. It is far more than this; it is a route to social acceptance and feeling of participation. Those who take this highly economic view of work are usually very dry and have not spoken to those who are unemployed and would benefit from doing so. There is only danger if the loss of transport and health concessions by virtue of being unemployed are lost as soon as work is started and then have a long lead time to be reinstated. One of the more callous ‘reforms’ of the Morrison government was to only pay benefits when they were granted, rather than backdated to when the application was first made. This has doubtlessly saved the government money, but people do not apply for benefit until they can demonstrate a need for them and they are able to demonstrate such need at the time that they apply. Clearly they have difficulty surviving while their claim is processed and there should not be an incentive for Centrelink to delay processing application, which is currently the situation.

It is unlikely that the level of welfare affects the level of wages. What is more important is that those who only have welfare are able to have a decent life. There are too many policy makers who mix up their private moral prejudices with evidence-based policy. This leads to assumptions that those without jobs do not want them and they must be punished for not having a job. A more cynical view is that blaming the victims encourages people not to look at the inadequacy of the elite who unable to govern for the whole of society, unable to provide enough jobs for those who need them, or even to have an honest examination of the problems in society that cause these problems. As one humane person commented, ‘There is not a shortage of jobs. Anyone could give you a laundry list of things that need to be done. There is lack of structure that will pay the people who do not have jobs to do things that need to be done’. A job as currently defined is a task that either makes a profit for the employer or the government is willing to subsidise with taxpayers funds. With government shrinking, and international and technological competition restricting industry, and government following an ideology that it must become smaller, most industries are shedding labour, even when it would be better to have it, for both the workers and the society.

the interactions with other payments and services, including the loss of any increased payments through higher rents and costs

The cost of providing people with a basic income should not be surrounded by a paranoia that other costs may rise. It is certainly possible that a rent subsidy as an isolated measure may raise rents if it increases the resources of the renters without changing the quantity of rental stock. Presumably the only thing that would keep rents down is vacancy and people unable to pay the asking rent. So if the amount people can pay rises these properties will rise in rent. But to simply subsidise rent without a policy to provide affordable housing will inevitably have this effect. The problem is not the rent subsidy; it is the lack of provision of affordable housing.

the cost and fiscal sustainability of any changes

The cost of increasing Newstart can be calculated. The fact that this is of comparable magnitude and is almost discussed as an option illustrates how little care the government has for the welfare of people that they are unable to provide jobs for. The price is the price of having a fair society. If this requires a bit more tax this should be raised. The permanent cutting of taxes when there is a temporary boom in commodity prices is extremely irresponsible policy, and it may have to be reversed. The achievement of a surplus at the expanse of giving poorer people the means to live says a lot about the priorities of government, the commodification of people, and how out of touch our leaders are with quite a large segment of society. If they wish to take a moral stand, one might remind them that a society should be judged by how it treats its weakest members. Pious people shod remember the story of the Good Samaritan and the questions asked, ‘Who was this man’s neighbour?’

the relative merits of alternative investments in health, education, housing and other programs to improve outcomes;

One of the key needs is affordable housing. Without housing it is very difficult to organise a life. Currently unemployed people in Sydney have great difficulty finding accommodation and rely on friends or relatives, sharing rooms, couch surfing and moving relatively frequently. Money put into affordable housing would be money well spent, and is frankly a disgrace that housing has become an asset class for investors who build for the aspiring middle class rather than affordable housing and the government seems content merely to watch as inappropriate housing is built for much of the need. Indeed government housing is now largely confined to more and more disadvantaged groups, creating ghettos of social problems. The provision of affordable social housing should be a major priority as shelter is a major human right.

The provision of access to health is also a human right. The word ‘health’ has been appropriated and now in common political parlance refers to ‘access to insurance to pay for treatment of sickness.’ Health is actually the absence of sickness and it is far cheaper and better to maintain it than to merely pay for treatment of those already sick. Access to good food and housing are far more cost-effective than medical programmes, particularly private health insurance, which has an increasingly elective nature in terms of what is done, and the degree of luxury in which it is done. A retiring US Surgeon-General was asked ‘what was the greatest medical advance in your time?’ and to the surprise of the questioner replied, ‘The introduction of Food Stamps’. He recognised the importance of nutrition in the maintenance of health. In the US, with its niggardly attitude to welfare there are increasing problems with nutrition for r poor people and controversy over the payment for this such that there is a discussion of the need for better nutrition[7]. Australia with its poor levels of NewStart and its controversy over the cashless welfare card probably has a similar problem which is as yet not recognised. It might be noted that there was free milk at schools in former times in Australia, and more recently there is a ‘National School Lunch Program’ in the US for children in lower socioeconomic areas[8] as they recognised that students were undernourished and this was affecting their education. In terms of alternatives to raising NewStart, Australia may want to consider such programmes as it may increase equality of opportunity and school attendance in disadvantaged communities. New Zealand makes use a school nurses with a wide range of functions[9]. This may a better way of delivering welfare to areas of disadvantage, especially if parents are dysfunctional.

In terms of preventive health, as opposed to treatment programmes such as school-based dental care, vaccination, or learn to swim classes may help improve health and save lives in disadvantaged communities and improve equality of opportunity.

In terms of the cost-effectiveness of education spending, two features stand out. The first is that Australia is falling down the league tables of world school education at a serious rate and a serious level[10]. The second is that the Gonski Model of education funding has not occurred and there continues to be very high levels of subsidy to the private sector, with corresponding neglect of public school education[11]. Education is like health in that it is more important that those at the bottom get a reasonable basic standard than that those at the top get everything that can be offered. Yet the political imperatives work the other way. ‘Choice’ in education has a very detrimental effect in that subsidies, such as free travel and private school subsidies allow more privileged children to move to be with similar privileged children. There is then residualisation. All those with disadvantage are congregated together with lesser resources and a lack of role models. Clearly the poor results achieved in this situation drag Australia’s average down, as well as condemning children from disadvantaged areas to perpetuate their parents’ disadvantaged situation. Funding equality of opportunity would give these children a better start in terms of education, hopes, and employment, and as such would be an investment in reducing longer term unemployment.

It might be noted that universal health insurance is also very important. Medicare is being undermined in that the Medicare rebate to doctors, which was set at 85% of the AMA fee in order to get doctor support for the concept, has been totally undermined. The government has not raised the rebate with inflation for over 30 years, so that the real value of the Medicare rebate has declined form 85% of the AMA rate to 46%. This s an almost 50% cut from a doctor’s point of view and is a demonstration of very bad faith by successive governments. Treatment of Medicare patients has thus returned to the status of ‘charity’ in the minds of many doctors. Almost all specialists and many GPs will not take Medicare without a co-payment, so the ‘bulk-billing’ rates as trumpeted by the government are based on the GP habits, where quicker and more consultations have been used to make up the income deficit. But these bulk-billing figures also neglect to mention the fact that a co-payment exists for many services in addition to the Medicare bulk-bill. Many patients go to the Emergency Departments (EDs), rather than a GP because these are free. This tends to be discouraged by the EDs so patient present later and sicker. ED visits are far more expensive than GPs, so it is false economy to save money on GPs and to push patients to EDs. It is also a cost transfer from Federal to State payments system and the overall cost to Government is greater.

other countries’ approaches to setting income support payments, minimum wages and awards

The level of payments depends to a considerable extent on the supply of shared or public resources. If there was universal access to affordable housing, free education, free health care and cheap public transport, income support needed would be less. Similarly if there is poor public transport, car dependency, privatised toll roads, education and health with many co-payments for doctors’ visits, school excursions and sports, more money is needed in welfare payments if there is to be any hope of equality of opportunity for children and a reasonable life for welfare-dependent adults. Yet usually these aspects of social policy are seen in isolation. Though the private sector is assumed to be highly efficient, the countries with the highest standard of living such as Denmark and Sweden often have very large public sectors. The point is that natural monopolies can deliver goods more cheaply than private organisations as they do not have to factor profits into their operations, so if both private and public systems were run with the same efficiency, the public one would be cheaper because of the lack of need to generate a profit. The need for public good also needs to be calculated. A public transport system that loses money might have huge benefits that could be costed, such as the savings o roads and parking, better air quality and making central city jobs available to people from the outer suburbs. Parents in inner city locations are familiar with problems such as difficultly staffing their child care centres as the lowly-paid staff cannot afford transport costs from the outer suburbs and either seek jobs closer to home, or do not work. Making each element in society pay its own way without looking at an overall picture of spending and benefits amounts to having policy options confined by a very simplistic accounting system.

other bodies that set payments, minimum wages and awards in Australia

The setting of award wages in Australia has been traditionally done in the Courts which has in theory prevented political interference, but the destruction of unions by both changes in the concentration of workers and by deliberate political action has allowed the forces of both a global market and a large ununionised and unsupervised pool of temporary visa workers and students needing income has allowed the eroding of wages, particularly in the lower socioeconomic groups. This has allowed the growth of an increasing ‘cash economy’. This has created a US-style ‘working poor and underemployment, who may not be actually unemployed, but have the same problems as if they were, at times exacerbated by the lack of benefits such as a Health Care card or transport concessions that may be available to those officially on welfare. In the mid-1980s the Australian Bureau of Statistics defined ‘unemployment’ as having less than 25 hours per week of work. The US definition was that anyone with regular work, even an hour a week was ‘employed’. Commentators such as Maximilian Walsh even compared the US rate to Australia’s, concluding that Australia was doing very poorly! Political pressure soon made Australia adopt the ‘international definition’ and our unemployment rate plummeted. The calculation of index had been consistent, but the number has been relatively meaningless ever since.

the role of independent and expert decision–making in setting payments

The principle that wage setting must be kept separate from government should be extended to unemployment relief. The politicisation of welfare, the moral judgements that go with it and the relative political powerlessness of those on welfare means that a neutral and evidence-based approach to welfare needs to be established. This may appear a radical proposition given the relatively large cost of welfare. But the danger of political interference has been recognised in having the Reserve Bank as an independent entity, and this principle is endorsed by all leading economies. The Boilermaker’s principle in law upheld the need for an independent wage arbiter. There are also pricing tribunals that set electricity prices. While it is true that a higher welfare payout may cause government inconvenience in that thy will have to budget for this, the current practice to grant tax cuts which are electorally popular, favour wealthy people and are granted when the economy is enjoying high commodity prices for exports also makes for budget pressures later[12]. It is an irony that governments concerned about the effect of welfare expenditures are the same ones that grant tax cuts, and are keen on privatisation deliberately undermining long term government revenue. An independently-determined, reasonable level of welfare would create a cost obligation that would have to be managed by future governments, but this might make them less cavalier about giving away their revenue sources and make them recognise that they must manage the country for all Australians, not merely the demographic that voted for them.

www.news.com.au/finance/economy/australian-economy/viral-graph-shows-house-price-danger/news-story/8ef84bdc2aaa5bb589aa77da5522d45b

Murphy, Jason, ‘Viral Graph shows House Price Danger’ 16 November 2018 www.news.com.au/finance/economy/australian-economy/viral-graph-shows-house-price-danger/news-story/8ef84bdc2aaa5bb5

[1] www.buildsydney.com/australian-housing-bubble/

[2] Walters, Stephen ‘The Risks in Rising Australian Household Debt’ 1 August 2018 http://aicd.companydirectors.com.au/membership/company-director-magazine/2018-back-editions/august/economist

[3] www.abc.net.au/news/2018-12-10/immigration-australia-skill-english-salary-concessions-regions/10355054

[4] NSW Parliamentary Estimate Portfolio Committee 6 Transcript of hearing 12/9/19 p 35 www.parliament.nsw.gov.au/lcdocs/transcripts/2240/Transcript – 12 September 19 – UNCORRECTED – PC 6 – Customer Service – Dominello.pdf

[5] www.afr.com/policy/economy/can-t-rely-on-monetary-policy-alone-20190702-p5239x

[6] www.rba.gov.au/publications/rdp/2009/pdf/rdp2009-07.pdf

[7] www.huffpost.com/entry/food-stamp-myths_b_1334924

[8] www.fns.usda.gov/nslp

[9] /www.nzschoolnurses.org.nz

[10] www.smh.com.au/education/un-agency-ranks-australia-39-out-of-41-countries-for-quality-education-20170615-gwrt9u.html

[11] https://insidestory.org.au/what-gonski-really-meant-and-how-thats-been-forgotten-almost-everywhere/

[12] Seccombe Mike, ‘How John Howard’s Tax Cuts undid his protégé, Tony Abbott’ The Saturday Paper 20/12/14

[i]Pash, Chris ‘Here’s a look at the widening gap between wages and house prices’ 6 March 2018 www.businessinsider.com Image result for Sydney Rents v median income graph .au/chart-australian-wages-house-prices-2018-3

https://edge.alluremedia.com.au/uploads/businessinsider/2018/03/grattan-house-prices-Vs-wages.jpg

[ii] www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp0809/09rp30#_Toc228933532

Kryger, Tony ‘Australia s foreign debt data and trends’ Research Paper no. 30 2008–09, 7 May 2009

Note that this graph only goes to 2011