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Up to 1000 victims of historic abuse could be offered "wellness payments" to settle their claims, MPs were told yesterday.
Ministers were given confidential advice before Christmas about how to settle a wide range of long-running claims of abuse in psychiatric hospitals, welfare homes and other institutions, Crown Health Finance Agency officials told the health select committee.
Agency property manager Lynn Martin told MPs there was a large number of claims against a range of government entities.
"The recommendation was that we might look at offering a wellness payment, and it's pretty confidential at the moment," Ms Martin said.
"There are a number of government agencies that have historic abuse claims, and we are dealing with them on a whole-of-government approach and just prior to Christmas we put up a recommendation to ministers and also a report on how we are going with managing those claims."
Attorney-General Chris Finlayson is co-ordinating the Government's policy response to the historic abuse claims, and his spokesman confirmed the agency was one of those giving advice.
No decisions had been taken and ministers were set to consider the issue in March.
In May 2007, the Queensland Government set up a A$100 million ($129 million) redress fund in response to an inquiry into the abuse of children in Queensland institutions. The scheme provided for payments ranging between A$7000 and A$40,000 to people who experienced abuse and neglect.
More than 10,200 applications were received by the closing date in 2008, with more than 7400 applications being paid.
In New Zealand figures differ on how many people might be eligible for payments. The Attorney-General's office said 527 claims were before the High Court, but no consideration had been given to how much could be offered to settle the claims.
It was recently reported that more than $11 million of state-funded legal aid had been approved or already paid to pursue hundreds of historic abuse compensation claims. Few of the claims have been heard despite some being filed almost 10 years ago.
The Dominion Post reported that the Legal Services Agency, which administers legal aid, said more than 900 people had asked for legal aid to sue for the damage they said decades-old psychological, physical and sexual abuse caused them. Claims were still being filed.
Legal aid for about 50 people was refused at the outset and about 300 more had either dropped their claims or had legal aid withdrawn after it was initially granted, the agency told the newspaper.
It began reconsidering funding in the wake of the first few claims failing. When legal aid was withdrawn for some claimants, the withdrawal decisions were taken to a review panel and then on appeal to the High Court.
The United Nations Committee Against Torture has asked the Government what it is doing to ensure the allegations are investigated, perpetrators prosecuted and victims compensated and rehabilitated.