Assuming that the case for at least some change to existing compensation arrangements is made out, the question arises as to what form those changes should take. The issues Paper identifies four main approaches to reform of accident compensation arrangements.

• Modify existing systems of compensation, such as the common law negligence action and the workers' compensation system.
• Introduce a no-fault accident compensation scheme of limited scope (for example, one confined to road accidents) as a supplement to the common law negligence action.
• Introduce a no-fault accident compensation scheme of limited scope to replace the common law negligence action in areas in which the new scheme is to operate.
• Establish a comprehensive no-fault accident compensation scheme covering persons injured or killed in any accident, whatever its cause.

We stress that at this stage we do not favour any one approach over the others. Nor do we suggest that these approaches necessarily exhaust all the options. We also recognise that the most satisfactory course may be to combine two or more of the approaches we have identified.

THE FIRST APPROACH: MODIFICATIONS TO EXISTING SYSTEMS

The Common Law Negligence Action

Assuming the common law negligence action continues (whether or not alongside a new no-fault scheme) a variety of changes could be considered. The possible changes include the following:

• Enable or require courts to award compensation in the form of periodic payments instead of lump sums, whether on a permanent or interim basis.
• Impose a threshold requirement for the award of damages in respect of non-pecuniary loss such as pain and suffering, with a view to confining such awards to serious cases.
• Alter specific common law principles which have contributed to large damages awards, such as the rule entitling the plaintiff to recover the value of nursing services provided gratuitously by relatives or friends.
• Extend compulsory insurance to other areas in which the common law negligence action operates (such as injuries caused by medical misadventure, dangerous premises or defective products).
• Change the procedures employed in common law negligence actions, for example, by deciding the issue of liability separately from the assessment of damages.

Workers' Compensation

A number of changes might be considered in relation to the workers' compensation system:

• Extend the Act to cover self-employed people who suffer work-related injuries or diseases.
• Replace the large number of private insurers conducting workers' compensation with a single government authority responsible for collecting premiums and paying claims.
• Establish administrative procedures for processing claims, as opposed to the adversary court procedures now employed.
• Change the benefits provided under workers' compensation legislation, for example, by increasing the benefits to workers suffering long-term incapacity.
• Curtail or abolish the Workers' Compensation Commission's power to approve lump sum redemption of the employers liability to pay weekly compensation and other benefits to an injured worker.

Criminal Injuries Compensation

Critics of the Criminal Injuries Compensation Scheme in New South Wales have argued that two significant changes are needed:

• Streamline the procedure for making and determining claims, including the establishment of a special Tribunal to make awards.
• Improve the benefits available to victims of violent crime.

THE SECOND APPROACH: NO-FAULT SCHEMES AS SUPPLEMENTS TO THE COMMON LAW

A second approach to reform is to introduce no-fault schemes for accident victims which operate alongside the common law and not in substitution for it. The workers' compensation system is of course an example of this approach, since it provides no-fault benefits but preserves the injured workers entitlement to claim damages from a negligent employer. In recent years, no-fault road accident schemes have been introduced in Victoria and Tasmania to supplement common law remedies. These schemes, which are described in the Issues Paper, provide statutory benefits in respect of death or personal injury without the need for the claimant to establish negligence on the part of some other person. They preserve common law remedies but contain provisions designed to prevent double compensation.

Four main reasons have been given for the introduction of no-fault road accident schemes as supplements to the common law.

• The existing system provides incomplete coverage since compensation under the common law negligence action is available only on proof of fault and, even if fault can be proved, damages are reduced where the plaintiff has contributed to the accident by his or her negligence.
• A substantial proportion of third party premiums is taken up in legal and administrative expenses and a more cost-efficient scheme is required to supplement the common law.
• A no-fault scheme will reduce the number of common law negligence actions in respect of road accidents since many claimants will be satisfied by no-fault benefits.
• Extensive delays in settling common law claims by road accident victims often cause hardship and also result in hospital and medical bills remaining unpaid. A no-fault scheme is designed to provide benefits quickly.

THE THIRD APPROACH: NO-FAULT SCHEMES WHICH REPLACE THE COMMON LAW

The third approach is to introduce a no-fault scheme which replaces the common law negligence action in the area in which the scheme operates. This approach has been followed in the Northern Territory, where a no-fault scheme for road accident victims has almost entirely replaced the common law negligence action in that area. This scheme is described briefly in the Issues Paper.

Some argue that replacing the common law eliminates the costs and delays associated with negligence actions. They contend, therefore, that this course of action is more cost-efficient than retaining the common law alongside any new no- fault scheme. It can also be argued that if all available funds are channelled into a no-fault scheme, they can be distributed more fairly among all accident victims, according to the severity of their injuries and the extent of their losses. If the common law is preserved, most resources are devoted to providing "full" compensation to those accident victims able to prove fault, with relatively little left to assist other victims on a no-fault basis.

THE FOURTH APPROACH: COMPREHENSIVE NO-FAULT ACCIDENT COMPENSATION SCHEMES

The most sweeping approach to change is to establish a comprehensive no-fault accident compensation scheme. While such a scheme might take different forms, it would be comprehensive in the sense of providing compensation to all accident victims, regardless of the cause of their injuries. A scheme of this kind began functioning in New Zealand in 1974, following the recommendations of a Royal Commission chaired by Mr. Justice A.O. Woodhouse, which reported in 1967. A similar scheme, but also encompassing incapacity through illness, was recommended in Australia in 1974 by the National Committee of Inquiry into Compensation and Rehabilitation, also chaired by Mr. Justice Woodhouse. In practice these schemes require elimination of the common law negligence action and the workers' compensation system.

The Woodhouse Proposals

The key proposals of the Woodhouse Committee in Australia were these:

• The scheme was to be "universal and comprehensive", providing coverage to all members of the community at all times, regardless of the cause of incapacity or disability. It was to cover both injury and illness.
• The universal scheme was to replace both the common law negligence action and the workers' compensation system. It was also to eliminate the need for compulsory insurance. Private insurers were to have no part to play in the new scheme.
• Benefits were intended not simply to alleviate poverty, but to enable people suffering from incapacity to maintain their living standards. Compensation was to be paid at the level of 85% of gross earnings (subject to a maximum, in 1974 dollars, of $500 per week). Benefits were to be taxable.
• Benefits in general were to be paid on a periodic basis and were to be adjusted for inflation.
• Death benefits were to be paid to surviving dependent relatives.
• The scheme was to be handled as a social service and administered by the Department of Social Security.
• Medical and hospital expenses were to be covered by the National Health Scheme which the then Commonwealth Government intended to introduce.

The Feasibility of a Comprehensive No-Fault Scheme

A critical question is whether a comprehensive no-fault scheme, whatever form it may take, is feasible in New South Wales given the limited financial resources available to the State. Of course, the fact that a scheme may be financially feasible does not necessarily mean that it should be established. There is, however, little point in discussing a comprehensive no-fault scheme if the resources are not available.

The Woodhouse Committee estimated in 1974 that the total premium income flowing through the compulsory third party and workers' compensation systems was more than enough to pay for a comprehensive no-fault scheme covering all accident victims and providing the benefits which the Committee recommended. The costing of any scheme at State level involves questions very different from those considered by the Woodhouse Committee. A State scheme, for example, would presumably need to meet most hospital and medical expenses incurred by accident victims, a problem not faced by the Woodhouse Committee which assumed the existence of a universal health scheme. The Issues Paper contains some preliminary and necessarily incomplete calculations as to the financial feasibility of a comprehensive no-fault accident compensation scheme in New South Wales. These calculations take account of the fact that amounts paid under, and the management expenses of, the New South Wales compulsory third party motor vehicle and workers' compensation systems in 1980-1981 were estimated to amount to approximately $712 million.