Key policy considerations for the 2022/23 Federal Budget

With the Federal Budget to be handed down on the evening of Tuesday 29 March, we highlight key policy considerations around insurance, climate change and disaster resilience, aged care and health which we provided to Treasury in January’s Pre-Budget consultation. The Institute’s Pre-Budget submission each year highlights key policy initiatives for the Federal Government to consider in its annual budget process.

A volunteer working group will review the Federal Budget documents and provide a member update late that night, highlighting key changes to policy and Federal Government spending on those items relevant to actuaries, and a general economic overview. A media release will also be distributed to our external audience highlighting the Institute’s position on key announcements.

The following are specific proposals outlined in our Pre-Budget submission for 2022/23.

Climate Change and Natural Disaster Resilience

A major focus for this year’s Pre-Budget submission was climate change and the importance of increasing property resilience in the face of shifting and more frequent extreme weather events. Data from the Australian Actuaries Climate Index has shown Australia is experiencing a strong trend of more extreme weather, especially with regard to temperature. Recent extreme flooding events in NSW and Queensland have highlighted an ever-greater need for action in this area.

The Institute has called for increased resilience in the climate and natural disaster space and welcomes the Government’s establishment of the National Recovery and Resilience Agency (NRRA).

We strongly encourage the Government to continue to gather data on the impacts of the changing climate on natural disasters, heat stress and actions of the sea. Better data can inform effective sizing and prioritisation of adaptation investment to sustain economic growth and development through climate changes.

The Institute’s submission highlights the important role the National Construction Code plays in improving resilience and we have called for an expansion of the Australian Building Codes Board (ABCB) to include property protection, community resilience, and consideration of future climate risk.

Life Insurance – Product Rationalisation and Supporting Disability Income Claimants

The Institute strongly supports the development of a life insurance product rationalisation framework. But for the framework to be useful, it will need to be compulsory and will need to allow genuine rationalisation of product features. The Institute encourages consideration to be given to life insurers to support rehabilitation efforts which could significantly improve outcomes for disability claimants.

AASB 17 and Insurance

We encourage the Australian Taxation Office to release proposed tax treatments to insurance contracts as soon as possible. This will support insurers in planning for the transition on 1 January 2023 and to understand the tax treatment of the change.

Superannuation and Retirement Incomes

The Institute is hopeful member attention can focus on the implementation of the many reforms already legislated, including for introduction of the Retirement Income Covenant, rather than new reforms being announced. The Institute is committed to the priorities set out in the Public Policy Statement and Supporting Document on Securing Adequate Retirement Incomes for an Ageing Australia.

Aged Care

Using findings from our Green Paper, Aged Care Funding: Assessing the Options and Implications, we highlight why current policy settings in aged care are likely to result in significant pressures on the Commonwealth budget over time.

The aged care sector’s current funding accounts for 1.6% of GDP (or around $32 billion per annum). But over the next 20 years as Baby Boomers age and need access to more services, the figure will rise to 2.9% of GDP, potentially making aged care the fastest growing line item in the Federal Budget and even stronger than projected in Treasury’s Intergenerational Report.

Private Health Insurance and Health Data

We encourage the Government to continue exploring options and reforms to support the affordability of private health insurance.

We also encourage an increased effort in the use of data in health. As health data becomes more widespread, investments in the national ecosystem of health data would enable Australia’s policy agenda to be better calibrated with health outcome objectives.

Read our full 2022/23 Pre-Budget submission to Treasury to learn more about what we believe needs to be addressed in this year’s Federal Budget…and stay tuned for our 2022/23 Federal Budget member update and media release.

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