Vanessa Beenders and Clare Hughes, of the Actuaries Institute’s Public Policy & Professionalism Team, recap the strong output of high-quality Thought Leadership content and the achievements of the Institute’s Practice Committees in 2021.
It was yet another busy year with the impacts of COVID-19 continuing to require careful actuarial analysis, various government and regulator reforms out for consultation and the Institute keen to move forward with its ambitious program of papers. We are pleased that volunteers from across practice areas contributed to the Institute’s Thought Leadership platform, adding the Institute’s voice to important policy conversations contributing to the health and wellbeing of all Australians.
During the year, more than 130 committee and working group meetings took place, continuing to drive public policy, promote our industry’s expertise, and influence actuaries in practice. We are grateful to all the members who volunteered throughout 2021 and shared their expertise with colleagues, professional peers and external stakeholders. Our committees are a vital source of information for actuaries in practice, and we encourage all members to consider volunteering on a practice committee, working group or a smaller limited contribution to the Institute’s practice excellence and public policy efforts.
The Institute is recognised as a source of authoritative, professional and independent comment on critical issues. In 2021, the Institute received widespread media coverage on its major thought leadership pieces and was a source of comment for major policy reforms including superannuation and retirement income, aged care and climate change. We received nearly 250 media mentions of our thought leadership publications over the year and continue to receive positive feedback from both Government and Regulators on the Institute’s public policy work.
The Australian Actuaries Intergenerational Equity Index, first launched in 2020, was updated in May 2021 and shows the first impacts of COVID-19 across six domains including economic, housing, social, health and disability, education, and the environment. The index, which tracks changes since 2000 in equity between three age groups at key life stages, revealed the intergenerational equity gap has narrowed slightly from the peak in 2018. However, this is at least partly due to some temporary spikes. The Update also revealed evidence
December 2021 – Aged Care Funding: Assessing the Options and Implications
Aged Care Funding: Assessing the Options and Implications Green Paper found that funding for aged care will be a significant challenge for the Commonwealth budget based on current policy settings. Changing demographics, social and health trends mean that current Commonwealth projections will be insufficient to support Baby Boomers as they reach extreme old age. The Green Paper adds to the national conversation around aged care and highlights how regulation can establish greater trust in the system that there will be continuity of the essential service of care and reduce the risk of taxpayers rescuing failed aged care service providers.
Public Policy Statements
Having a robust and effective retirement income system is crucial for the wellbeing of retirees. While the current retirement income system is sound and broadly sustainable, it is widely recognised there is scope for reform to improve retiree outcomes. This Statement highlights a baker’s dozen of policy positions to improve the system, from setting an objective for the system, simplifying it, improving its efficiency (through a range of supply-side and demand-led interventions), to ensuring adequacy is delivered and improving equity.
December 2021 – Mastering Mathematics for Australia’s Future
Effective mathematics education is vital for young Australians to help them confidently apply mathematics to everyday tasks and to create high-level capabilities to support the growth of science, technology, engineering and mathematics (STEM) industries in Australia. This Public Policy Statement makes six policy recommendations to improve Australian students’ participation and performance in mathematics, vital for the ongoing success of Australia’s actuarial profession.
Individual Disability Income Insurance (IDII) in Australia
The Institute released the Disability Insurance Taskforce’s final reports into individual disability income insurance to help forge a sustainable path forward for all stakeholders. IDII is critical for those Australians who have lost income to injury or illness and provides important peace of mind for those who do not need to claim. It must be accessible for consumers and sustainable for insurers. The Taskforce will continue to work with policymakers, regulators, industry and consumer groups to improve outcomes for these products and is now also extending its focus to include group insurance and TPD/Trauma.
Barry Rafe, former Institute President and governance expert, identified serious flaws in Board governance practices in large complex organisations. This Dialogue reviewed evidence from the Hayne Royal Commission and found that while Boards appear to act ethically, routine actions of CEOs and other executives do not reflect their organisation’s espoused values. Boards need to espouse values that can be operationalised and appropriately monitored so they are aware of the values-in-use of their senior executive teams. Individual executives also need to actively assess their values-in-use; professional codes of conduct are a useful tool for this.
October 2021 – The Special Needs of Financial Services Boards
In this second Dialogue in the governance series, Barry Rafe and Ian Laughlin found that financial services organisations have unique features that require important consideration when reviewing Board composition. The paper includes a Financial Services Board Assessment Aid intended to enable a stronger, broader and more effective skills matrix for director appointment and board assessment. Because strong boards evolve over time, this Aid can help the long term planning required.
A small working group have developed a model to analyse Australian Bureau of Statistics (ABS) mortality data, releasing their findings monthly and commenting on actual versus expected deaths adjusted for population changes and trends in mortality improvement. This important analysis has been particularly useful to show the true impact of COVID-19 on mortality and the impact of public health measures on deaths from non-COVID-19 causes.
Australian Actuaries Climate Index
The Winter 2021 release of the Institute’s Australian Actuaries Climate Index (AACI) marked the three-year anniversary of this Index. The Winter update shows 42 of the last 43 seasons since the end of the reference (baseline) period have recorded extremes.
The Institute made 17 submissions (as of early December) across a wide range of topics and practice areas, including household resilience to natural perils, the proposed reinsurance pool and climate risk-related issues; superannuation and retirement income reforms; life insurance reforms, including occupational exclusions in default insurance and offshore reinsurance; the Consumer Data Right; work injury schemes; AASB17; and the Commonwealth Budget.
The Institute’s practice committees continue to drive professional development, education and policy reform across traditional and new actuarial practices. We thank all those volunteers for their commitment to the monthly meetings, the development work in between, and sharing of their expertise at meetings, insight sessions and Institute events.
Public Policy continues in 2022
The Public Policy and Professionalism Team has several projects underway for 2022 delivery. Work has commenced on a Green Paper on Cyber Risk and Public Policy Council Committee is planning several thought leadership pieces in the lead up to ICA2023 to showcase the Institute’s expertise and contribution to economic and social equality.
Thank you to the Public Policy Council Committee for its oversight and all the Actuaries for their contributions to the public policy work in 2021.
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