Ministerial Statement

WORKCOVER CORPORATION

The Hon. M.D. RANN (Ramsay—Premier, Minister for Economic Development, Minister for Social Inclusion, Minister for the Arts, Minister for Sustainability and Climate Change) (14:04): I seek leave to make a ministerial statement.

Leave granted.

The Hon. M.D. RANN: In March 2007, the government commissioned leading workers compensation expert Mr Alan Clayton, supported by actuary Mr John Walsh, to conduct an independent review of the workers compensation and rehabilitation system. The independent review was asked to consider proposals by the WorkCover Board, together with alternatives for reform to the scheme to make it fully funded, fair to workers and affordable to business. The review of the scheme was directed towards three objectives: first, a scheme that provides fair support to injured workers, delivered efficiently and enabling the earliest possible return to work; secondly, an average employer levy rate reduced to a range of 2.25 per cent to 2.75 per cent by 1 July 2009; and, thirdly, the scheme should be fully funded by the earliest possible date.

Mr Clayton finalised his report last month and submitted it to the government. The report represents a very comprehensive set of findings and recommendations for changes to the scheme, with the primary focus on improving the rehabilitation and return to work rates of workers and making the system more affordable and efficient. In delivering his report, Mr Clayton advised:

If the full range of recommendations set out in this report were to be implemented, South Australia will retain its position as the fairest workers compensation scheme in the country.

They key purpose of the scheme, when it was established, was to optimise the prospect of a return to work by injured workers. The report finds that, on this key measure, South Australia is falling well behind comparable jurisdictions.

The Clayton review found that, of injured workers still off work after four months, about 80 per cent have still not returned to work two years after their injury. This is more than double the rate of Victoria and New South Wales. In addition, WorkCover's unfunded liabilities now stand at $843.5 million and, at an average 3 per cent, its employer levies are amongst the highest and most uncompetitive in Australia.

Included in the recommendations are proposals to make changes to levels of weekly payments to injured workers. These changes, as proposed by Mr Clayton, will come into effect only for claims arising from injuries incurred following commencement of the proposed new provisions. It should be noted that, in contrast to the WorkCover Board, the report recommends maintaining weekly payments at 100 per cent of pre-injury average weekly earnings with a step down to 80 per cent after 13 weeks.

The report recommends the adoption of a modified work capacity test for injured workers on weekly payments at 2½ years after the injury occurred. The proposal would permit the discontinuation of weekly payments for partially incapacitated workers at 2½ years following injury who are not working to their capacity and where suitable work is identified. Most importantly, for those workers totally incapacitated as a result of the work injury, weekly payments will continue until retirement.

Mr Clayton recommends a significant increase in the maximum in the lump sum payment for non-economic loss for injuries to $400,000, up from $230,000. The same maximum payment of $400,000 is also recommended for death arising from a work injury, and counselling will be available to family members of the deceased.

The report recommends against the WorkCover Board's proposal to stop payment of medical and rehabilitation costs arising from work injuries after 12 months following cessation of weekly payments. Mr Clayton recommends maintaining existing medical and rehabilitation payments indefinitely.

Importantly, the report also recommends the requirement that larger employers appoint accredited rehabilitation and return to work officers, an inspectorate within WorkCover to ensure employers meet their obligations to assist injured workers to return to work, and the establishment of a return to work fund to fund rehabilitation and return to work programs and initiatives. The review report also recommends the establishment of a Code of Workers' Rights and a WorkCover Ombudsman to investigate complaints about the handling of claims.

Also recommended for consideration is the reintroduction of claims for primary psychiatric work injuries, which claims were discontinued some years ago. There are a number of other recommendations relating to the determination of medical disputes, provision for increased legal costs, arbitration arrangements and other matters, all directed towards the efficient handling of claims and resolution of disputes which are dealt with in the report.

The actuary has advised that, if the initiatives in the report are undertaken in accordance with the recommendations, the scheme will be fully funded within five to six years, with the reduction of the average levy rates in the range of 2.25 to 2.75 per cent from 1 July 2009.

The government has given preliminary consideration to the report and will further consider the matter at a meeting of government members tomorrow. In the meantime, the report will be released publicly, and I now table the review of the South Australian Workers Compensation System report, and the report will be available on the internet from later this afternoon. We can give people the relevant IT connection points.