Motor Vehicle Accidents

In reply to Ms REDMOND (Heysen) (28 July 2017). (Estimates Committee B)

The Hon. C.J. PICTON (Kaurna—Minister for Police, Minister for Correctional Services, Minister for Emergency Services, Minister for Road Safety, Minister Assisting the Minister for Health, Minister Assisting the Minister for Mental Health and Substance Abuse): I am advised:

The estimated cost of road crashes is based on an economic model of valuing human life known as 'willingness to pay'.

The National Road Safety Strategy 2011-2020 (page 50) outlines the benefits of the willingness to pay approach and identified a need for Australia to develop and adopt suitable willingness-to-pay estimates.

Investment decisions are informed by the estimated value of expected safety benefits. However, such estimates are influenced by the particular methods used to place an economic value on human life. Best practice in this area favours the use of a valuation method known as the willingness-to-pay approach, which tends to produce higher estimates than other, more traditional, methods such as the human capital method of human life which treats individuals as a productive entity.

Willingness to pay is constructed on an ex-ante basis, or before the fact. Estimates are based on the amounts that individuals are prepared to pay for reduced risk (or to accept in compensation for bearing risk). For a particular type of risk, a value for society is generally calculated by aggregating and averaging values obtained from a representative sample of individuals conducted by New South Wales.

Using the willingness to pay values estimated by New South Wales, the estimated cost of road crash casualties in 2016 was over $1.5 billion in South Australia, with 38 per cent of these costs due to fatalities.