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Presentation to Parliamentary Portfolio Committee on Transport 3 February 2010

Proposals for the No- Fault Road Accident Benefit Scheme as part of the Comprehensive Social Security System

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Purpose

To brief the Parliamentary Portfolio Committee on the draft policy as approved by Cabinet for purposes of public consultation and comments on the Restructuring of the Road Accident Fund Compensation System on a No-fault basis and as part of the Comprehensive Social Security System

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Current Function

• The function of the RAF. Injury or death. • “The object of the Fund shall be the payment of compensation in accordance with this Act for loss or damage wrongfully caused by the driving of motor vehicles.” Funding : 64.5 cents per litre of fuel sold.• Insurance. Not aligned to principles of Social Security.

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CurrentCompensation

• Past and future hospital, medical and related expenses. (tariff)• Funeral expenses. (actual necessary)• Past and future loss of support. (capped)• Past and future loss of earnings. (capped)• General damages for pain and suffering, loss of amenities of life, disfigurement. (for serious injury only)• Lump sums - undesirable.

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CurrentProblems

• Treatment and payment delayed.• Complexity. • Subjectivity.• Inequities. • Affordability.• Cost of administration.• Abuse of the system.• Perverse incentives.

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PastInterventions

• 7 Commissions of Enquiry since 1942.• Road Accident Fund Amendment Act of 2005 is a fundamental interim solution:

Claims for income or support capped at initial maximum of R160 000.

General Damages only for serious injury.Passenger discrimination removed. Common law claim removed for balance of claim

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History of Process change

• White papers 1995 to 1998.• Road Accident Fund Commission. (1999 to 2002) • Taylor Committee on Comprehensive Social Security System for SA. (2002)• Cabinet accepted RAFC proposals in principle. (2003)• “Strategy document on Restructuring of the RAF as part of the Comprehensive Social Security Scheme .“(2006)

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New RABSAPolicy proposals

• Change to no-fault benefits with social policy exclusions. Social security principles.• Access to medical care in SA; not cash• Recognise earners and non-earners. • Benefits with thresholds & ceilings.• Defined rules (waiting period 3 months) & periodic payments – not lump sums.• Flat-rate funeral benefit.

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New RABSAPolicy proposals

• Entitlement linked to review and participation in rehabilitation & vocational programmes to encourage return to work.• Deductions for collateral benefits received from other state-funded social security schemes, e.g. UIF, COID, disability grants.• Fully funded: assets available to pay claims when liability arises.

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HealthcareImplications

• Earmark funds for pre- hospital, trauma, rehabilitation & life care.• Deliver care against minimum standards.• Quality monitoring & case management by RABSA.• Classify injuries, record treatment & report electronically to RABSA.• Conduct blood alcohol tests & report results to RABSA. (drivers)

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Stakeholder Consultation

Departments of Health; Social Development; Labour (COID and UIF); Tourism ;National Treasury; Road Accident Fund; Interdepartmental Task Team on Social Security and Retirement Reform ; Social Protection and Community Development Cluster and ANC. (Social Transformation Committee)

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Financial Implications

In 2009 monetary terms. Calculation allows for 10% administration costs. Depends on volume of fuel sales. Basis 1 assumes that 1c per litre of the fuel levy will amount to R230 million. Basis 2 assumes that 1c per litre of the fuel levy will amount to R200 million. Basis 1 is 59,2 cents per litre.Basis 2 is 68,2 cents per litre.

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Conclusion

To request the Parliamentary Portfolio Committee to note the publication of the draft policy as approved by Cabinet for purposes of public consultation and comments