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Presentation to the Select Committee on Public Services National Council of Provinces

14 September 2010

Proposals for the No-Fault Road Accident Benefit Scheme [RABS]

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Introduction

To brief the Select Committee on Public Services on the draft policy on the Restructuring of the Road Accident Fund Compensation System on a No- fault basis which was published for public consultation and comments in the Government Gazette on 12 February 2010.

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Policy Context 1

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 : 72 cents per litre of fuel sold Insurance: Not aligned to principles of Social Security

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Policy Context 2

Past and future hospital, medical and related expenses (tariffs); 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); and Lump sums (undesirable).

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Policy Context 3

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

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Policy Context 4

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 R180, 750 (31 July 2010);

General Damages only for serious injury;Passenger discrimination removed; andCommon Law Claim removed for balance of claim.

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History of policy 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); and “Strategy document on Restructuring of the RAF as part of the Comprehensive Social Security Scheme” (2006).

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Strategic Imperatives

To transform the current fault based motor vehicle accident compensation system operated by the Road Accident Fund (RAF) to a no-fault system of benefits operated by the Road Accident Benefit Scheme (RABS) as part of the Comprehensive Social Security System (CSSS).

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New RABSAPolicy proposals

Change to no-fault benefits with social policy exclusions (Social security principles); Coverage: all categories of road users for injury or

death; 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; and 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; and 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; and Conduct blood alcohol tests & report results to RABSA. (drivers)

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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; and Basis 2 is 68,2 cents per litre.

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Stakeholder Consultation

Departments of Health; Social Development; Labour (COID and UIF); Tourism; National Treasury; Road Accident Fund;

Interdepartmental Task Team (IDTT) on Social Security and Retirement Reform;

Social Protection and Community Development Cluster; Invitation to ANC (Social Transformation Committee); National Economic Development and Labour Council (Nedlac); South African Allied Workers Union (SATAWU); and Parliamentary Portfolio Committee.

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Conclusion

We thank you for the invitation and request the Select Committee on Public Services to take note of the draft policy on the Restructuring of the Road Accident Fund Compensation System on a No-Fault basis which was published for public consultation and comments.