The UK government has this week announced the new personal injury discount rate of 0.5% (i.e. half of 1%). This was the result of extensive analysis and consideration.
This was in line with a regime which provides that the UK discount needs to be reviewed every five years in line with a careful and detailed process involving weighing up the facts and figures and considering the risks and consequences of over and under compensation.
Meanwhile, here in Australia there has been no such government consideration (or care) for 40 years. Forty years!
In 1984 the government in NSW legislated to increase the discount rate applicable to motor vehicle compensation to 5%.
This had the impact of immediately reducing compensation for thousands of injured people, with the worst consequences to be faced by the most seriously injured.
At that time in the early 1980s inflation had reached 11-13% and interest rates 17%.
On 10 May 1984 the relevant Minister stated that provision had been made in the legislation to amend the rate by regulation “In this way the government will be able to ensure that the discount rate maintains a direct relevance with the circumstances of the day”.
This unfair and unreasonably high rate was rapidly adopted in most jurisdictions and for most types of accident compensation around the country and has never been thoroughly reviewed, nor its damaging consequences examined since.
Credit to the Australian Lawyers Alliance whose members have continuously sought to raise this issue with state and territory governments as they have come and gone over the last 40 years.
The injustice remains and is stark, especially when we see first-hand the predicament of Australians injured at home compared with those similarly injured when in the UK.
See: Personal Injury Discount Rate - England and Wales - GOV.UK
See: My 2023 article Ending the discount rate disgrace