Volume Seven 2013 focusing on Superannuation and Insurance
Positive superannuation investment returns
NSW Government defined benefits superannuation investments have had positive returns for the last four years. Improved investment performance in the current year was largely driven by strong equity markets in Australia and around the globe.
The value of investments held by the three defined benefit funds increased from $30.7 billion in 2008-09 to $40.2 billion at 30 June 2013.
NSW Government defined benefits superannuation unfunded by $16.9 billion
The total unfunded liability for New South Wales’ three main defined benefits superannuation funds is estimated at $16.9 billion. Approximately 30 per cent of accrued liabilities are unfunded at 30 June 2013.
The Fiscal Responsibility Act 2012 has a target to eliminate New South Wales’s unfunded superannuation liabilities by 2030. Employer contribution rates determined by the Funds’ trustees to meet this target will be impacted by investment returns in future years.
Improved financial position for NSW Workers’ Compensation
The WorkCover Scheme's financial position improved significantly in 2012-13. The Scheme at 30 June 2013 had net assets of $309 million, a $1.8 billion improvement on the same time last year when the Scheme had net liabilities of $1.5 billion. The improvement was due to higher investment returns and lower outstanding claims liabilities resulting from the Workers’ Compensation Reforms.
Successful implementation of Work Capacity Tests could further reduce the outstanding claims liability; including lower weekly and medical claim costs as workers with some work capacity become ineligible for benefits or only eligible for lower partial incapacity benefits.
The Scheme’s funding ratio increased from 89 per cent in 2008-09 to 102 per cent in 2012-13. The ratio in New South Wales remains below that of Victoria and Queensland.
Compulsory Third Party (CTP) green slips affordability
NSW motorists are paying the second highest premiums in the country with the average green slip costing $518.
One of the reasons for the high premium cost in New South Wales is different benefit scales compared to some other Australian jurisdictions. Generally, green slip premiums in New South Wales are expensive compared to other States and Territories.
The NSW Government outlined a plan to reform the NSW CTP Scheme and introduced the Motor Accident Injuries Amendment Bill 2013 into the Parliament on 9 May 2013. The bill was not passed by the Upper House and was withdrawn on 19 August 2013.
With the withdrawal of the reform bill, the Motor Accidents Authority continues to identify and implement improvements to the current CTP Scheme that are within its legislative power.
Performance of key government reform programs
The NSW Government’s Corporate and Shared Services Reform Program spans five years to 2015. The initial business case proposed efficiency savings of $750 million to $895 million.
A review of the program in mid-2012 refined the original scope. The program now focusses on assisting the government’s principal departments to implement their corporate and shared services initiatives.
While the program is now in its third year, the government has not quantified savings to date.
The Auditor-General, Grant Hehir, recommends that the Department of Finance and Services and central agencies develop key performance indicators to measure efficiencies from shared services initiatives.
Similarly, the Department has no definitive method to measure benefits from the NSW Government Information Communications Strategy 2012 which was launched in May 2012. The strategy sets out priority initiatives to improve performance in key service areas such as public transport, health, education and emergency services. The ICT Board, the ICT Leadership Group and the independent ICT Advisory Panel provide ongoing oversight of the State’s $2.0 billion annual ICT expenditure.
The Auditor-General recommends the Department should develop key performance indicators for its Government Information Communications Strategy.
Barry Underwood, Executive Officer, on 9275 7220 or 0403 073 664; email: firstname.lastname@example.org.