VICTORIA

Thirteenth Annual Report

of the

MOTOR ACCIDENTS BOARD

for the

Year ended 30th June 1986

Ordered by the Legislative Assembly to be printed

MELBOURNE F D A TKINSON GOVERNMENT PRINTER - 1985-86

No. 3

.tdsW MOTOR ACCIDENTS BOARD

The Hon. R. A. Jolly, M.P., Treasurer, 1 Treasury Place, MELBOURNE, VIC. 3002

Dear ~1r. Jolly,

35 Spring Street, Melbourne Box 2751 Y, GPO Melbourne 3001 Telephone 653 1111 Telegrams and Cables "Moacbord"

25th November, 1986

In accordance with the prov1s1ons of Section 86 of the Motor Accidents Act 1973, this Thirteenth Annual Report of the Motor Accidents Board is submitted to you for presentation in Parliament.

The Report covers the Board's operations for the year ended 30th June, 1986, and includes audited financial statements for that year.

M. J. Roux Chainnan

A. P. Vulcan Member

A.D. Hughes Member

This financial year has been one of some significance for the Motor Ace idents Board. It has been operating against a backdrop of the Department of Management and Budget Review of Third Party motor accident injury compensation. The Review has culminated in the Government introducing proposals for radical change into Parliament. The proposed reforms are embodied in the Transport Accident Bill which, at the time of writing this Report, awaits debate and enactment.

In brief, the Government's proposals foreshadow

the abolition of the Common law component of the current system and its replacement by a no-fault system of benefits for the long-term seriously injured (these benefits to be based on assessments of levels of impairment);

some restriction of benefits to persons suffering minor injuries, the first $250 of medical and related costs being excluded from benefits provided;

increased emphasis being given to rehabilitative and road safety measures;

extension of coverage to include persons injured in accidents involving trams or trains.

If adopted, the reforms will see the establishment of a Transport Accident Commission to manage the new system. The Commission is scheduled to commence operation on 1st December, 1986 and will take over the administration of relevant functions currently conducted by the Motor Accidents Board and the State Insurance Office.

The Board has been actively engaged in developing the preparedness to enable speedy and efficient implementation of reforms proposed once they are enacted. The Chairman of the Board has been vested with the responsibity for this development and is Chairman of an Implementation Committee comprising representatives of the Board, the Department of Management and Budget, the State Insurance Office, the Ministry of Transport and the Road Traffic Authority.

This preparation for change has been undertaken concurrently with the ongoing business of the Board in providing benefits for accident victims under the current system.

Despite increases of 19% and 25% respectively in the number of new claims received and the cost of benefits payments, the backlog of claims awaiting processing has been reduced to and maintained at minimal levels. In large measure this has been due to the commendable commitment of the Board's claims processing personnel.

As has been reported in the Annual Reports of the Motor Accidents Board in recent years, there continues to be concern at the rate of increase of minor injury claims, particularly the non-demonstrable "whiplash" claims. "Whiplash" claims are difficult to handle and expensive to administer as no clearcut treatment regimes apply. A study into whiplash-related InJuries and treatment regimes continues and an interim report is due for presentation to the Board shortly.

The Board has funded the refurbishment of Ward!S 22/23 at the Alfred Hospital which will provide sixteen "step down" beds for motor accident victims. "Step down" beds provide accommodation for the injured once their conditions have improved to the extent that acute care is no longer necessary. These beds will be provided at significantly lower costs and will free acute beds for those in need of them. This complex, which includes a Research/Review Clinic, is due to commence operating shortly.

In addition 1 plans for a Trauma Centre/Helipad complex at the Alfred Hospital are being pursued but are currently being held up by the Melbourne City Council which has declined to grant the necessary planning permits. An appeal against this decision is pending.

Besides presenting medical and administrative difficulties, whiplash-related and other non-demonstrable injuries are known to provide the vehicles for significant and costly fraudulent claim-making against the Board. In this financial year, specialist fraud personnel have been recruited and extensive work has commenced on the development of computer hardware, software and new procedures to improve the effectiveness and security of claims processing systems.

By instituting a "gatekeeper" approach, suspect claims will be detected and referred for close scrutiny or investigation, allowing speedy processing of claims whose bona fides are established.

2

It needs to be understood that fraud against the Motor Accidents Board is frequently linked to fraud against the State Insurance Office through subsequent Common Law claims. The last year has seen increased co-operation between the two organisations with a view to putting a stop to fraudulent claim-making which, besides being illegal and highly anti-social, places a heavy cost burden on motorists.

The emphasis on fraud prevention and detection, together with developing preparedness to implement the proposed reforms, has given rise to extensive development in the EDP area.

It is noteworthy that this EDP development has highlighted the labour market demand for skilled personnel in this area. It has become apparent that in-house personnel in various agencies have been able to attract higher salaries in Consultancy Bureaux which, frequently, are servicing the needs of the agencies. The Government and its agencies are vulnerable and the establishment of protocols and, perhaps, a Government consultancy service may be meritworthy.

As a result of these activities, the Board is in a sound position to implement the new and modified claims processing systems, its anti-fraud strategy and expanded rehabilitation systems.

Thanks are due to Members of the Board, Staff and others who have made 1985/86 such a productive year.

MICHAEL J. ROUX, CHAIRMAN

1. ADMINISTRATION

Expansion of the scope of the Roard's administrative support services has been necessary during 1985/86 to service 310 staff and a total benefits payment of some $123 million.

Improved efficiency has achieved through several changes to resources and procedures. Major innovations include:

interim arrangements for use of FM-80, a general ledger accountinq package, to supercede the manual accounting system as from 1st July, 1986;

development of a new Chart of Accounts;

computerisation of a Fixed Asset Register to provide monthly update, including calculation of depreciation on the Board's $4.4 million assets;

commencement of development of a computerised Accounts Payable procedure;

development of an in-house, computerised personnel system to capture related data as from July 1986.

F allowing a Person ne 1 Review carried out by the Public Service Roard early in 1986, a number of recommendations will be implemented to provide improved personnel services.

3

2. CLAIMS PROCESSING ACTIVITY

During the year ended 30th June, 1986, a record number of applications for benefits were lodged with the Board - 74,164, an increase of 18.9% or 11,781 applications over the previous year.

As for recent years, the Board again received an increased number of applications relating to non-demonstrable injuries such as whiplash and also for "minor-injuries". These types of claims are often difficult to assess and information relating to "proof" of accident and involvement is often not readily available.

4

These factors have led the Board to establish much more stringent criteria for acceptance of applications and resulted in an increased number of application denials where "proof" is not satisfactory.

A graph showing the growth of applications received by the Board over recent years is shown below:

APPLICATIONS RECEIVED IN FINANCIAL YEARS 80000,---------------------------------------------------------------------.

N u M B E ~oooo

R

0 F

A p 40000 p L I c A T I 0 N s

20000

75-76 76-77

ii!lwoRKRRS COMPENSATION JOURNEY ACC l DENT

In October 1985, the Board received approval for a partial staff re-structure in claims processing areas and further staff resources and improved technical support, including greater system security, were provided during 1986. These factors together have greatly assisted the reduction of claim and payment processing backlogs which had arisen due to staff shortages and increasing numbers of applications lodged over recent years.

OoiRRCT TO MAB

FINANCIAL YEAR

Claims processing staff made payments exceeding $123 million during the year, including an all time high of $15.3 million during May 1986 for hospital and medical expenses and for loss of earning capacity compensation.

During the year, the Motor Accidents Act was amended by the Accident Compensation Act as follows:

refunds for certain expenses were increased from BD?~ to 10m~

of reasonable costs;

the 5 year limitation for medical, hospital and related expenses was removed (non Common Law Claims);

- double liability for Worker's Compensation journey ace idents was removed;

the Board's reimbursement liability to WorkCare was increased to include "Course of Employment" motor vehicle accidents.

The overall effect of these amendments was to increase the number of applications processed and benefits paid by the Board during the year.

5

3. COST OF THE "NO FAULT" SCHEME

The Board's total operating expenditure fqr the year ended 30th June, 1986 was $134,262,087,an increase of 25.1% on the previous year's expenditure. Included in the total expenditure was an amount of $9,569,504 for administrative expenditure and $1,524,877 for expenditure under the rehabilitation provisions of the Motor Accidents Act. The remaining $123,167,706 was expended as benefits for hospital, medical, para-medical and loss of earning capacity compensation.

The Board's Statement of Accounts for the year ended 30th June, 1986 has been submitted to the Auditor-General, in accordance with Section 64 (2) of the Motor Accidents Act. A copy of the Accounts together with the Notes thereto including a Funds Statement is attached as Appendix 1 •

The distribution of benefits paid during the year by type of benefit is shown below:-

BENEFITS PAID DETAILS - 1985/86

Workers Compensation

Journey Accident Total Direct Recovery Benefits

Type of Benefit Applications Applications Paid

Hospital 33,002,347 3,111,664 36,114,011 Loss of Earning

Capacity 37,284,402 10,108,391 47,392,793 Medical 18,034,265 2,062,038 20,096,303 Ambulance 3,017,384 165,694 3,183,078 Physiotherapy 6,153,881 627' 828 6,781,709 Chiropractic/

Osteopathic 3,333,330 132,148 3,465,478 Other 5,816,945 317,389 6,134,334

Total 1985-86 $106,642,554 $16,525,152 $123,167,706

Since its inception on 12th February, 1974 to 30th June, 1986, the Board has received 563,170 applications for benefits and made payment of $68':>,823,771, including a total of $54,878,616 for administrative expenses. It is estimated that the total number of applications likely to be received in respect of accidents up to the 30th June 1986 is 574,600 and the expected total liability is $847 million. Outstanding liability at 30th June, 1986 in respect of these applications is estimated to total $161 million.

A graph showing movements in benefits paid by type of benefit for each financial year 1977/78 to 1985/86 is shown as Appendix 2.

4. APPEALS

For the year ended 30th 1986, 509 appeals were with the Administrative

June, lodged

Tribunal against Board decisions. This represents an increase of 267 over those for the year ended 30th June, 1985.

The number of appeals lodged related to the assessment of lump sum determinations and periods of incapacity. Specialist staff are involved in the review of these appeals and many cases are now settled before hearing at the Tribunal.

6

The 509 Appeals related tu

Not Arising out of Use of Molar Vehicle 21

Involving Workers Compensation Entitlements 31

Involving loss of Earning ity Exclusions

Assessment of Lump Sum Determinations 430

Payment of Expenses 16

Other 6

TOTAL 709

The results of the Appeals to the Tribunal were :

5.

Number listed (Includes 135 pending as at 1st July, 1985)

RESULTS

Lost Won Withdrawn Settled Pending (at end June) Referred to Supreme Court

AND REHABILITATION

During 1985/86, the Motor Accidents Board continued to promote the early and effective rehabilitation of road accident victims in accordance with its statutory responsibility. Fundamental to this is the early retrieval and assessment of road accident victims together with the development of appropriate individual rehabilitation plans. To this end, the Board has continued previous initiatives for the enhancement of rehabilitation services for road accident victims.

A key component of these initiatives is the rehabilitation team comprising Rehabilitation Co-ordinators, Hospital Liaison Officers and Hospital Liaison Clerks.

The team includes members of the major paramedical and nursing disciplines essential for the assessment of injuries and disabilities and the design of structured and co-ordinated rehabilitation programmes. Early contact is established with road accident victims, soon after admission to an acute hospital, to ensure that they are fully aware of their entitlements.

7

YEAR ENDED 30/6/86

644

5 4

84 373 178

0

1 '501

87 37

326 868 178

5

In consultation with treating staff, the planning for future rehabilitation is commenced around this time. The continued expansion of the Board's one-to­one involvement in rehabilitation is having a marked impact on the lives of severely injured road accident victims in particular. These initiatives are significant steps to the improved quality of life being achieved by so many.

In promoting the development of high level comprehensive rehabilitation services, the Board has held the view that appropriate services commence at the roadside and are a complementary link in the chain of rehabilitation.

This is demonstrated by the Board's continuing support fpr and involvement in the establishment of a Trauma Reception Centre and all-weather helicopter landing facilities at the Alfred Hospital. The concept of creating a specialised centre of excellence for the treatment of critically injured victims is fundamental to the success of rehabilitation by minimising the risk of complications. The Centre will bring together a highly skilled team of medical and nursing staff with extensive experience in the assessment and care of serious injuries.

The Alfred Hospital project is further complemented by the provision of "step down" beds. These are beds to which patients are moved in their progression from critical management to a maintenance level of care prior to discharge to a rehabilitation facility. These beds attract a lower daily fee whilst re leasing high cost beds for those in need.

The third of the Alfred development is a clinical outpatient and research centre which is designed to provide prompt assessment and advice to road accident victims, particularly those with whiplash injuries. There will also be an emphasis on education and the promotion of consistent advice to whiplash injury victims.

In recognising the importance of safety and education, the Board is developing a community education and awareness programme designed to inform the community on rehabilitation and to address specific problem areas such as whiplash injuries.

8 '

NON-DEMONSTRABLE NECK INJURIES

The Project Team which was established in 1984 has continued to investigate the basic mechanism of whiplash lnJuries and to evaluate treatment methods used in managing these injuries. A major objective is to identify factors associated with the development of long-term disability. Following the completion of a Pilot Study, a full review incorporating a large number of cases commenced towards the end of 1985.

The Project Team, headed by Or. John Balls, M.A., M.B. B.S., F.R.C.P.E., F.R.A.C.P., is preparing an interim report on the project.

6. FRAUD AND EXAGGERATION

In recognition of the growing problem of fraudulent applications and exaggerated claims, a number of initiatives were undertaken during the yeat.

They included:

a restructuring and strengthening of the Investigations staff;

establishment of an investigations EDP support systems unit, including the appointment of an Investigative Systems Analyst;

development of a wide range of investigatory EDP programs for use by the Investigations staff;

establishment of a working party consisting of representatives from the Road Traffic Authority, the Victoria Pal ice, the State Insurance Office, the Accident Compensation Commission and the Motor Accidents Board, to improve the access to and currency of accident data collected by the Police.

The work carried out during the year was assisted by the rich databank of information on the Board's computer which enabled the development of techniques to handle various types of fraud. The end result of research conducted was the establishment and introduction, late in 1985/86, of an anti-fraud strategy based on "prevention". The aim of the strategy is to establish a "gatekeeper" approach which will enable the identification of suspect claims at initial processing while at the same time expediting the bona fide claims through the system.

9

Any suspect claims will be subjected to further fraud assessment techniques and will be the subject of investigation by a highly skilled investigations and prosecutions team. It is anticipated the strategy will be in place by late 1986.

It is difficult to determine the leve 1 of fraud perpetrated against the Motor Accidents Board, but evidence arising through investigations indicates the scale of fraud is potentially high. A major role of the anti-fraud strategy will be to document the extent of the problem.

During the year, many cases investigated were referred to the Police for action and prosecutions have been achieved in a number of these cases.

7. EDP SERVICES

At the commencement of the financial year, all EDP Services activity was undertaken for the Board by the Local Authorities Superannuation Board. This arrangement had existed since the Board's inception in 197 4. Following a detailed review of the economics of this arrangement and its responsiveness to the Board's computing requirements, a Board decision was taken to discontinue this arrangement and appoint its own EDP Services personnel.

Following approval of this proposal by the Treasurer in October 1985, recruitment of staff commenced. Due to the very tight market for skilled systems professionals, the EDP Staff unit did not reach full strength until close to the end of the financial year.

Extensive staff training and development activities have been undertaken with a view to building a team of systems professionals with the necessary skills to undertake activities necessary to further develop Board systems and to support the implementation of the proposed Transport Accident Commission legislation.

Major EDP initiatives undertaken during the year included:

acquisition and pilot use of the METHOD systems development methodology which will in future enhance the quality of system documentation and provide a higher quality of project control and operational systems;

an increase in the number of computer operators to provide a wider band of operational hours as dictated by the worklo~d;

commencement of a Disaster Recovery Planning project to analyse the risks associated with a major computer system failure and the appropriate office backup required to support the most critical production systems;

establishment of specialist Technical Services staff to concentrate greater attention on system security and upgrading of computer support to the Board's operations;

completion of capacity plan develpment needs.

a computer for future

10

8. STATISTICS

The Board's Eighth Statistical Bulletin covering the year ended 30th June, 1985, was issued on 16th December, 1985. The fifteen cross-tabulations in the Bulletin provided validated summary information about injuries sustained by claimants involved in motor vehicle accidents, together with personal, vehicle and accident particulars and details of payments made. Graphs were also included in the Bulletin to supplement the information presented in the tables. Two of these graphs are reproduced here.

The first graph shows clearly the different patterns of injury sustained by various claimant types. The dominant injury for vehicle occupants is sprains and strains, while the dominant injury for all other claimant types is fractured limbs. The incidence of head injuries is also high for both pedestrians and pedal cyclists.

35 p E R c 30 E N T 25

0 F

T 20

0 T A 15 L

1 N I 0 J u R 1 E s

N u M B E R

0 F

p E R s 0 N s

11

GRAPH 1

PATTERN OF INJURIES BY TYPE OF CLAIMANT

MOTOR CYCLIST

6000

50 0 0

4000

3000

2000

I 0 0 0

1978 79

VEHICLE OCCUPANT

D FRACTURED LIMBS

PEDESTRIAN

GRAPH2

PEDAL CYCLIST

CLAIMANT TYPE

PERSONS WITH WHIPLASH INJURY

1979 80 1980-81 1981-82 1982-83 1983-84 1984-85

ACCIDENT YEAR D MALES D FEMALES

The second graph shows that the number of claimants recorded as sustaining a "whiplash" injury (sprain or strain of the neck) has dramatically increased over the last seven years, the average annual growth rate being 25. 9?~. The number of persons sustaining a sprain or strain of the neck as a percentage of the Board's total "major-injury" claimants has increased from 18?.; in 1979/80 to 37% in 1984/85. This increase is of major concern to the Board.

The growth in the number of whiplash claims and their significant cost has led the Board to establish two studies investigating the incidence of whiplash. In addition to the study headed by Dr. J. Balla described in Section 5 of this Report, a retrospective study is being undertaken using historical data from the Board's database. The aim of both studies is to better understand the accident and other circumstances associated with the incidence and outcome of whiplash. These studies were major areas of the Board's statistical anal and research activities during the year.

The Board has also co-operated closely with accident research organisations, such as the Road Traffic Authority, by providing detailed statistical information to assist in various road safety research projects and initiatives. These activities are additional to answering many requests received from external organisations, doctors and the general public for simple statistics not normally published by the Board.

12

13

TEUPHOtJE 651911;

VICTORIA

APPENDIX 1

1 MACARTHUR STREET

MELBOURNE. VIC 3002

AUDITOR-GENERAL'S REPORT

The accompanying financial statements comprising a balance sheet,

income and expenditure statement, statement of sources and

applications of funds and notes to the financial statements of

the Motor Accidents Board have been audited as required by the

Motor Accidents Act 1973 and in accordance with Australian

Auditing Standards.

In my opinion, the financial statements present fairly the

financial position of the Motor Accitients Board as at 30 June

1986 and the results of its operations for the year ended on that

date in accordance with Australian Accounting Standards.

MELBOURNE R.G. HUMPHRY Auditor-General

30/6/85 $

9,519,991 635,465

3,377,962 13,533,418

300 15,860

17,400,000 944,488

18,360,648

4,593,444 2,212,488

243,470 170,000 122,950

7,342,352

11,018,296

2,183,361

1,031,833 206,400 825,433

14,027,090

236,696

14

MOTOR ACCIDENTS BOARD BALANCE SHEET AS AT 30TH JUNE, 1986

FUNDS HELD BY THE BOARD General Account Special Account Rehabilitation Account

Represented by: CURRENT ASSETS Cash on Hand 500 Prepayments 39,550 Calls-Authorised Insurers 11,000,000 Short Term Deposits 12,600,000 Sundry Debtors 563,640 Total Current Assets

LESS CURRENT LIABILITIES AND PROVISIONS Sundry Creditors and Accruals (Note 5) 6,562,412 Bank Overdraft 4,461,081 Long Service Leave (Note 1 c) 259,989 Annual Leave 220,000 Retained Determinations (Note 1 d) 237,726

Net Current Assets

FIXED ASSETS (Note 6)

INTANGIBLE ASSETS E.D.P. Development Expenses (Note 1 e) 1,031,833 Less Accumulated Depreciation 412,800 Net Intangible Assets

Total Net Assets

LESS NON CURRENT LIABILITIES Long Service Leave (Note 1 c) 312,231 Retained Determinations (Note 1 d) 300,110

TOTAL FUNDS HELD BY THE BOARD

$ 12,125,017

726,886 1

24,203,690

11,741,208

12,462,482

2,600,025

619,033

15,681,540

612,341

15,069,199

The Balance Sheet, Income and Expenditure Statement, Sources and Applications of Funds Statement and Notes to the Accounts are, to the best of our knowledge, in accordance with the records of the Board and are drawn up to present fairly the Board's results for the twelve months ended 30th June, 1986 and the financial position of the Board as at that date.

Dated at Melbourne this 1Oth day of September, 1986

M.J. ROUX CHAIRMAN

A. SYNHUR PRINCIPAL ACCOUNTING OFFICER

15

MOTOR ACCIDENTS BOARD INCOME AND EXPENDITURE STATEMENT FOR TWELVE MONTHS

ENDED 30TH JUNE, 1986

30/6/85 $

101,000,000 520,710

1,566,317 1 03,087,027

98,284,441 7,863,941

1 06,148,382

(3,061 ,355)

12,581,346 9,519,991

54,279

54,279 581,186

635,465

367,621

367,621

1 '191 ,912 (824,291)

4,202,253 3,377,962

13,533,418

GENERAL ACCOUNT

Calls on Authorised Insurers Drivers' Licence Surcharges Interest Earned on Short Term Deposits

Less Benefits Paid (Note 2) 123,167,706 Administrative Expenses (Note 3)

Surplus (Deficit) for Period Transfer to Rehabilitation Account Surplus Brought Forward

Surplus at 30th June, 1986

SPECIAL ACCOUNT Interest Earned on Short Term Deposits

Less Benefits Paid Administrative Expenses

Surplus for Period Surplus Brought Forward

Surplus at 30th June, 1986

REHABILITATION ACCOUNT Transfer from General Account Interest Earned on Short Term Deposits

Less

9,569,504

Payments For Services under Part VA (Note 4) Deficit for Period Surplus Brought Forward Surplus at 30th June, 1986

1 33,000,000 391,200

1,951,036

135,342,236

132,737,210

2,605,026

9,519,991

91,421

91,421 635,465

364,211 364,211

1,524,877 (1 ,160,666) 3,377,962

TOTAL FUNDS HELD BY THE BOARD AS PER BALANCE SHEET

$

12,125,017

726,886

2,217,296

15,069,199

THE ACCOMPANYING NOTES FORM PART OF THESE FINANCIAL STATEMENTS.

1985

16

MOTOR ACCIDENTS BOARD STATEMENT OF SOURCES AND APPLICATIONS OF FUNDS

YEAR ENDED 30TH JUNE, 1986

$ SOURCEOFFUNDS

Funds From Operations

1986 $

103,218,333 Inflow of Funds from Operations 106,155,409 Less Outflow of Funds from Operations

135,877,605 133,328,603

(2,937,076) 16,242 Proceeds from Sale of Non-Current Assets

Reduction In Current Assets 1,600,000 Short Term Deposits

81 Sundry Debtors

2,415,332

657,447 353,371 122,950

1,133,768

256,976 885,242

8,160

8,160

530,383 346,699

885,242

Increases in Current Liabilities Bank Overdraft Sundry Creditors Retained Determinations

Increase in Non-Current Liabilities Retained Determinations

TOTAL SOURCES OF FUNDS

APPLICATION OF FUNDS Increase in Current Assets

Cash Prepayments Calls on Authorised Insurers

E.D.P. Development Expenditure Non-Current Assets Acquired

TOTAL APPliCATIONS OF FUNDS

4,800,000 380,848

2,248,593 1,968,968

114,776

200 23,690

11,000,000

RECONCILIATION OF INFLOWS AND OUTFLOWS FROM OPERATIONS TO NET SURPLUS FOR YEAR ENDED 30TH JUNE, 1986

1985

(2,937,076) Funds from Operations 1 Add Profit on Sale on Non-Current Assets

(2,935,783)

Less Non Cash Items 549,824 Depreciation 676,126 206,400 Amortisation of Development Exp. 206.400 139,360 Movement in Employee Provisions 142,054

895,584 (3,831 ,367) NET SURPLUS (DEFICIT)

2,549,002 33,759

5,180,848

4,332,337

43,134 12,139,080

11,023,890

1,115,190

12,139,080

1986

2,549,002 11

2,560,361

1,024,580 1,535,781

THE ACCOMPANYING NOTES FORM PART OF THESE FINANCIAL STATEMENTS.

17

MOTOR ACCIDENTS BOARD NOTES TO AND FORMING PART OF THE ACCOUNTS

FOR THE YEAR ENDED 30TH JUNE 1986

1. Accounting Policy Bases

These accounts are based on historical costs. The accounting policies adopted are consistent with those of the prior year.

(a)

(b)

(C)

(d)

(e)

(f)

Income and Expenditure in respect of Administrative Expenses are brought to account on an accrual basis. Income and Expenditure relating to Benefits include only amounts payable within the year.

Fixed Assets are shown at cost less depreciation which is calculated at rates appropriate to their estimated useful life.

Long Service Leave. Provision is made for all employees from commencement of service. Accumulated leave in excess of ten years service has been shown as a current liability.

Retained Determinations accrual of $537,836 (1985 $379,926) represents benefit determinations retained by the Board on behalf of beneficiaries. Amounts payable in the ensuing financial year are shown as a current liability.

E.D.P. Development Expenses. Consistent with depreciation policy in Note 1 b, these expenses are written off over the same period as other E.D.P. Office Equipment.

Leases. The Board is a lessee of office space and a lessor of certain office equipment. Operating lease payments, where the lessor effectively retains substantially all of the risks and benefits of ownership of the leased items, are included in the determination of the operating surplus in equal instalments over the lease term.

Where the Board is a lessor of certain office equipment, lease payments have been received in advance equal to the cost of the asset and have been disclosed as a deduction from fixed assets.

2. Benefits Paid (Net) $123,167,706.

(a) Payments

The Board provides assistance to claimants by payments in respect of:

(1) Compensation for deprivation or impairment of earning capacity, as per Sections 25-28.

(2) Payment in respect of expenses other than loss of earning capacity including a wide range of hospital, medical and para-medical services as well as funeral benefits, as per Section 30.

(3) In addition the Board subject to the provision of Section 8 of Workers Compensation Act reimburses insurers in respect of payments made to workers injured in motor vehicle accident whilst on a journey to or from employment.

UnderWork Care legislation from 31/8/1985, both Agents and Employers have a right of recovery from the Board for all workers injured in motor vehicle accidents during course of employment and journey cases.

18

(b) Recoveries

Under the recoveries provisions(Sections 54-57) of the Motor Accidents Act No. 8429 of 1973 The Motor Accidents Board has recovery rights when any applicants sue under Common Law against persons not in agreement with the Board. This applies in such circumstances as the following:-

(1) Involvement of interstate registered vehicles. (2) Commonwealth vehicles. (3) State Transport Authority and Metropolitan Transit Authority.

The Board has recovery rights against parties not paying current Victorian compulsory 3rd party premiums, and is subject to liability being proven against such organisations in cam m on law actions. Recoveries in the year ended 30/6/86 were $1,590,300 (1985 $977,400), which have been deducted to obtain net benefits paid as above.

3. Administrative Expenses

Totalling $9,569,504 (1985 $7,863,941) were comprised of the following major categories:

1986 1985 Salaries and related costs 6,206,746 4,707,457 Computer Operations 1,418,700 1,872,376 Premises and Equipment 630,132 500,291 OtherOverheads 1,313,926 783,817

9,569,504 7,863,941

Depreciation (included above) 676,126 549,824

4. Rehabilitation- Payment For Services Under Part VA

These payments are made under Section 57 A which states "it shall be the duty of the Board to design and promote, as far as possible, a programme designed to secure early and effective medical and vocational rehabilitation of persons injured as a result of accidents to whom or on behalf of whom the Board is or may become liable to make any payment under this Act".

5. Sundry Creditors and Accruals

6.

These include $5,661 ,668 (1 985 $3,936,503) being June benefits payable, paid in July.

Fixed Assets & Accumulated Depreciation

1986 Cost Dep'n

Office Partitions 270,168 163,819 Furniture & Fittings 168,911 77,076 Motor Vehicles 105,286 21,208 Office Equipment 3,895,928 1,242,705

4,440,293 1,504,808

Less - Lease Payments in Advance (Note 1 f) 335,460

4,104,833 Less Accumulated Dep'n 1,504,808

Net Fixed Assets $2,600,025 -

1985 Cost

230,337 104,209

97,651 2,618,773

3,050,970

867,609

$2,183,361

Dep'n

140,636 67,288 16,590

643,095

867,609

19

7. Contractual Liability

At balance date the Board had a contractual liability of $1 ,060,000 (1985 $942,000) for alterations at Alfred Hospital to Road Trauma Wards, Police helicopter conversion for emergency patient conveyance and sundry equipment, payable within the ensuing twelve months.

8. Outstanding Liability

The liability for future payments in respect of accidents occurring up to and including 30th June 1986, was determined from an examination of the payment run-off of benefits since inception and has been estimated to be:

General Account Special Account

$161 ,222,000 (1985 $135, 112,000) $ 172,000 (1985 $ 191 ,000)

The capacity to cover these estimated liabilities is provided under Section 65(1) in which the Board is empowered to make calls on an authorised insurer for periods up to 12 months to meet its actual liabilities as they fall due for payment.

9. Tenancy Lease Commitment

At balance date, the Board was contracted to a tenancy agreement at $491, 537 per annum for twelve months, terminating 30th June, 1987. An extension of this agreement commits the Board for a further term of three years at a rate to be negotiated but not less than current value.

20

APPENDIX 2

PAYMENTS IN FINANCIAL YEARS BY TYPE OF PAYMENT AMOUNT ($) ••••• + .......... + ••••••••• + .......... + .......... +. ~ ........ + •• * •••••• + ••••••••• +~ * ••••••• +. ~ •••

125,000,000+

7o,ooo .. ooo+

35,000,000+

20,000,000+

to .. ooo .. ooo+

6,000,000+

3 .. soo,ooo+

2 .. 000,000+

L· ooo, 000+

550,000+

300,000"t-

150.000+

90 .. 000+

so, 000+

35,000+

1' LOGARITHMIC

SCALE

"'

Tot a: l

Loss Of Earning Capacity

Physiotherapy

A111bulanee + Chiropractic/ Osteopathic

C.P.L Melbourne

•• ~ •• + •• ~ •• 0 •• • +. 0 0 •••••• +. 0 ••• 0 ••• + ••• 0 ••••• + ••••• - ••• + •••.••• - .+ .•• - .••.• + ••••••••• + •••••

i

I

1977-78 i.97B-·79 1979-80 1980-81

T V ? E 0 ' ? A y ~ E N T

HOSPITAL LOSS OF EARNING CAPACITY MEDICAL A~B;;LANCE

PHYS!OTPERAPY C~~~OPRACTIC/OSTEOPATHIC

TOTAL C.P.L (ALL GROUPS MELBOJRNE)

1981-62 1982-83 1983-84

AVERAGE AN~UAL

1977-76 TO 1985-86

14.4% 26.2X 25.8% 14~4~

44.1%

21.9% B. 7X

1984-85 1985-86 FI~ANCIAL YEAR

GROWTH RATE

1982-83 TO 1985-86

11.5% 15.5% 25.9X 14.2% 54.9% 94. 3X 18.5%

6.8%

Note A log~r1thmie v&rtic.al se~~• 1s used to facllit~te comparison of trends.

ACKNOWLEDGEMENT

The Motor Accidents Board gratefully acknowledges the photographic contribution of Miss Sally Newell who currently is a second year photography student at the Royal Melbourne Institute of Technology.

After a serious car accident, Sally commenced training as a commercial photographer. This training is part of her rehabilitation program which is jointly sponsored by the Motor Accidents Board and COONAC Commonwealth Rehabilitation Service.

F D Atkinson Government Printer Melbourne