Minister for Revenue and Assistant Treasurer Helen Coonan said today that the Howard Government would introduce reforms to the Parliament in the winter session to encourage the use of structured settlements in personal injury claims.
The reforms were one of the key steps agreed to by a Ministerial Meeting hosted by Senator Coonan in Canberra yesterday, which brought together all levels of Government to discuss the pressing problem of public liability insurance.
"Consultations on the detail of the structured settlements legislation are well under way," Senator Coonan said.
"It is important that the Government makes sure these changes to the way structured settlements are treated under the tax system mean there will be no disincentive for catastrophically injured people who take a structured settlement rather than a one-off lump sum.
"The ongoing income provided by structured settlements give injured people greater security about their future income, and particularly their capacity to meet ongoing medical expenses.
"These settlements also encourage compensation awards which are about meeting legitimate care costs and reducing the call on the public health system.
"Structured settlements can assist in reducing insurance costs by more closely aligning the damages awarded with a person's actual needs.
Senator Coonan said under the current system there were cases of windfall payouts which were much larger than necessary because of the uncertainty surrounding a claimant's future medical needs.
"There are also cases where the lump sum is all spent and is not adequate for the long term care of the injured person," Senator Coonan said.
"Structured settlements provide a win-win for both claimants and insurers."
At yesterday's meeting States and Territories agreed to make such legislative changes as were necessary to remove the barriers to structured settlements as an alternative to lump sum payments.
"Giving the courts the freedom to make a structured settlements order will better meet the needs of catastrophically injured people," Senator Coonan said.