The government could save $8.5 billion by partly privatising disability insurance, a new report commissioned by the Financial Services Council (FSC) has revealed.
Amid speculation that the Treasurer will announce changes to the disability support pension in order to manage the escalating costs associated with Australia’s ageing population, the FSC is calling on the Government to take a closer look at the life insurance sector.
“Disability welfare has a significant impact on the budget as many of those with insufficient insurance draw on the government through various welfare payments,” FSC CEO, John Brogden, said.
“We are recommending the government considers leveraging the life insurance sector to meet the ballooning costs of disability welfare in Australia to reduce the increasing pressure on the Federal Budget.”
Life insurance can be the private sector solution to the increasing budget costs of welfare.
Mr Brogden cited figures in the newly produced report, by Deloitte Access Economics, that show the government could generate a net saving of $8.5 billion if it treated private disability insurance in a similar way to private health insurance.
“Life insurance can be the private sector solution to the increasing budget costs of welfare just as superannuation is the private sector solution to the costs of an ageing population and private health insurance is a private sector solution to managing health care costs.
“We are calling on the government to consider the role of private insurance in reducing the cost of disability welfare on the public purse,” he said.
Mr Brogden’s comments follow the release of an independent review of the National Disability Insurance Scheme (NDIS), which described the agency responsible for implementing the scheme as ‘a plane that took off before it had been fully built and is being completed while it is in the air’.
Discussing the NDIS and the impact funding for the scheme could have on the 2014/15 Federal Budget, Treasurer Joe Hockey told the ABC’s Chris Ulhmann that further investigation was required.
“…in relation to the National Disability Insurance Scheme, there’s been a report out recently; an independent report, which likened the National Disability Insurance Scheme to a plane that had taken off that is still being built in the air, which indicates that potentially, if we don’t get on top of the
proper management of the National Disability Insurance Scheme, not only would it not be sustainable, but it could end up as big a farce as the pink batts program or the $900 cheque program,” Mr Hockey said.
Mr Brogden said it was now timely for the Government to consider whether the costs of the Disability Support Pension and NDIS could be partially defrayed through personal disability insurance.
“The costs of the NDIS and Disability Support Pension must be sustainable and should not be solely funded by federal and state governments,” Mr Brogden said.
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