Federal Government Misses Social and Economic Opportunity
The Australian Medical Association said today that the Federal Government's failure to include in the Budget an amendment to the Income Tax Act which would have confirmed that structured settlement payments (or periodic payments of common law compensation) not be subject to income tax, was a lose/lose situation for injured persons and the Federal Government.
AMA Federal Vice President, Dr Sandra Hacker, said the Federal Government missed an important opportunity to make good social and economic policy that would have benefited injured persons and the Federal Government.
"Governments in the US, UK and Canada have acted to modernise and improve compensation systems in which large sums of compensation are paid in a lump sum and are meant to last a plaintiff's lifetime," Dr Hacker said.
"Very often lump sums are exhausted prematurely and the recipients are then left with nothing to help them cope financially and thus forcing them to rely on welfare.
"Structured settlements would have ensured that large compensation payments could be paid periodically. A simple amendment to the Income Tax Act was all that was needed to ensure such periodic payments were not taxed.
"The Federal Government could have conservatively saved $6.5 - $13m a year in welfare and community services which is provided to people with disabilities after their lump sum awards have been exhausted.
"Structured settlements would have also helped to slow down the increasing cost of medical professional indemnity insurance. These costs are forcing some doctors, particularly those in rural areas, to abandon certain services including anaesthetics and obstetrics.
"This will lead to restrictions on choice of private medical services which in turn will reduce the uptake of private health insurance.
"The Federal Government has failed to see the economic and social logic of this amendment and all Australians will now pay the price for ignoring the necessity of structured settlements.