WORKERS REHABILITATION AND COMPENSATION (SCHEME REVIEW) AMENDMENT BILL

Second Reading

Adjourned debate on second reading (resumed on motion).

(Continued from page 2451.)

The Hon. I.F. EVANS (Davenport) (16:02): I wish to make some comments in relation to workers compensation in my contribution to the debate on the government's proposed reform to WorkCover. So that the Labor Party cannot characterise my comments as representing Liberal Party policy I would like to clarify that the following comments are not Liberal Party policy. However, I will take up the challenge issued by the member for Enfield and throw out some ideas about workers compensation so that when this matter is revisited over the next few years (as I am sure it will be) those ideas can be considered and worked up by either side as part of their policy considerations.

Before I do that I would like to put a case as to why we are here. The member for Enfield and others have said that it is about the unfunded liability and, while that is true in part, I have a slightly different view—that is, the real reason we are here debating WorkCover is because it is a government-run scheme. It is my view that over the next few years it is time the concept of government-run workers compensation be reconsidered. Given the improvements in corporate reporting requirements now on insurance companies and the like, I think there is an opportunity to revisit whether government-run workers compensation is actually good for the worker.

I say that in the sense that I see an opportunity to run workers compensation similar to industrial relations—that is, legislate for the required minimums that employers must provide for protection for the worker (protection of the worker is what we all want), but then allow businesses to buy that insurance from any insurance company that offers the service. Proper protection would need to be in place, of course, for market failure, but there has been significant reform in this area with governments stepping in, and I give the example of the federal government now stepping in when there is market failure on employees' entitlements when businesses go broke. That is a recent reform.

The reason we are talking about workers compensation reform today is that we have a political problem because the workers compensation scheme is government run. Because it is government run we have a minister who is responsible, and because we have a minister who is responsible the opposition will, quite rightly, hold the government and the minister to account for that scheme. If it was outside of government, and the worker was protected through legislation (just as they are in IR), would we be asking the minister questions about unfunded liability in the workers compensation scheme? I suggest not. That unfunded liability would be spread across eight, 10 or 15 insurance companies with $70 million or $80 million each, and would we be asking questions on that? Probably not. Would the minister be going through the pain he is now going through? Probably not.

The reason we are here is that 20 or 30 years ago (or whatever it was) parliament decided to centralise workers compensation, make it government run and have a minister accountable for it. That is why we are debating this bill today. I stress that is not the Liberal Party's position nor its policy, but it is an observation I make as someone who opposed the formation of WorkCover. I was running a business at the time, and it denied me the right, as a businessman, to go out and buy my insurance from any insurance company I wished as long as I met a guaranteed minimum entitlement for the worker. As long as you have a guaranteed minimum entitlement for the worker I do not believe it really matters whether it is publicly or privately run; as long as the worker is protected through proper entitlements in the legislation.

It is a very similar principle to industrial relations, where the worker is protected through legislated minimums. I hold the view that in the next five or 10 years, whenever this matter comes up again (and it certainly will not be part of this debate because the two sides have agreed on a position, so this bill will go through as it is), with the reforms to corporate reporting, the increased powers of ASIC, and all the measures taken federally, there are enough protections in place to prevent market failure in that sense.

The member for Enfield asks whether we have any ideas. I have an idea for the member for Enfield, and that is that he should be minister and this minister should have resigned. If ever a minister should have resigned, it is this minister over the handling of WorkCover. There is no other portfolio that has had the disaster of the management that this portfolio has, and it is everyone else's fault, according to the government, other than the minister's. They put in a new board about five or six years ago; they put in a new CEO; they put in a new chair; and the scheme itself is basically untouched. The legislation is basically untouched from when we were last in government.

The minister sat there over the top of the scheme and saw the unfunded liability blowing out quarter after quarter for six years—24 quarters—and, in my view for crass political purposes, did nothing until after the federal election. They delayed the introduction of this bill until after the federal election so that Kevin Rudd was not faced with the dilemma that he was running an argument that Howard was going to cut workers' entitlements and benefits but that the South Australian government wanted to do it as well. So, for crass political purposes, they delayed the introduction of this legislation until after the federal election. It is my view that this minister should have resigned over the handling of workers compensation.

There are other issues that could have been considered as part of the reform. Section 54 of the bill, which allows WorkCover to claim back against employers the cost of claims when they are at fault, that even though they may be only 1 per cent at fault they can claim back 100 per cent of the costs, is wrong in principle. The Liberal Party has previously moved amendments to correct that issue.

To explain it to the house, if WorkCover pays money to a worker under the act, WorkCover can sue to recover the whole amount paid from a third party that might have been negligent and caused the damage. The whole amount is payable to WorkCover even if the third party was only 1 per cent responsible for the injuries arising from the incident. This is particularly relevant in the case of two scenarios: group training schemes and labour hire arrangements.

I have rung the business groups concerned, and they still have major concerns with that particular section of the act, and there is no change to it being proposed in this legislation. I can tell the minister—this is not news to the minister; the minister knows this—there are insurers out there saying to people, 'Don't employ under those circumstances because you will be liable for the costs.' So, employers are saying, 'I won't take on apprentices and trainees' because of the advice of their insurance companies.

But this government, after six years—and this would have been in the first day briefs—will not deal with that issue. Why should somebody be 100 per cent liable if they are only 1 per cent responsible? Where is the fairness in that principle? Section 54 could have been addressed as part of this; hopefully, it will be addressed at some stage in the future when this particular matter comes up before the house again.

There are other positive things that could have been done within the legislation. Other states exempt WorkCover levies on apprentices (I think it is Victoria and New South Wales, for those staffers who want to check it). Victoria and New South Wales exempt for a period of time or for the term of their apprenticeship (I am not sure of the exact detail) the WorkCover levies on apprentices to try to get people to employ more apprentices.

I think we could go one step further. As a policy, whoever is administering the scheme could look at, for example, exempting the WorkCover levy if employers employ people from a disabled pension on a part-time or full-time basis, as a way of getting people off the disability pension and into the workforce. The scheme could incorporate that cost and not charge it, as a direct incentive, if you like, and a positive measure in the community to drag people back into the workforce, to provide the opportunity for people to come back into the workforce. I think that that possibly would have been a good measure to have within this sort of legislation.

The other issue is the way WorkCover charges its levy on what it defines as wages. My understanding of it is that WorkCover still defines superannuation as part of the wage, but when a person gets injured no superannuation component is paid. How is that fair and reasonable? How is it fair and reasonable that the employer gets charged on the superannuation component of the salary, because that is what the legislation provides, and then when the worker gets injured the superannuation is not paid? That, to me, in principle is not right. And there is an opportunity now and in the future possibly to deal with that particular issue.

The other point I wish to raise about the whole concept of the scheme, which I raised earlier, is about legislating for defined benefits to protect the workers, and then who runs it after that is not such an issue, to my mind. The reason I argue that is: look at the self-insureds. They clean up WorkCover on every measure available between the two systems. Pick any comparative measure, and the self-insureds clean up WorkCover lock, stock and barrel. Why then are we saying that there should not be more self-insureds? What we are actually leaving in the legislation is the employee number level, which I think from memory is 200. You have to have 200 employees before you can apply to be self insured. What has the number of employees got to do with it? Absolutely nothing. It is about your capacity to manage the rehabilitation of the injured worker. So, more people should be encouraged to become self-insured, because the government-run system has become a very congested and bureaucratic organisation.

Members should read the member for Enfield's contribution, and read between the lines. I think it is pretty obvious that the member for Enfield has some question marks about the benefit of a government-run scheme. I accept the member for Enfield's argument that the community was better off when the private insurers had their own inspectors running around educating employers and saying, 'You don't fix that and your insurance premium is going up.' It was a better system to protect the worker than how it is currently being done by SafeWork SA or, indeed, WorkCover.

The last issue that I wish to float for future policy development is this principle. I have worked on building sites (I am a project manager by trade), and the issue of drug and alcohol use in the workforce has always concerned me. This place has decided that, when people reach a certain alcohol or drug content limit, they should not be driving a car, and they suffer big penalties. So, I wonder whether, down the track, some policy should be considered and at least investigated to see whether there would be any benefit at all, in cases where workers were hospitalised—so, not every worker, but those who are seriously enough injured to be hospitalised—for them to be drug and alcohol tested and, if they reach the same prescribed level as the drivers, a penalty is involved—not with respect to their medical expenses, but on their wage claim, if you like.

The reason I argue that is not to hurt the worker at all. I would give two or three years' notice before that sort of policy was introduced. The reason I raise it is that it would send a very strong message to the workforce that alcohol and drug use in the workforce will not be tolerated, just as it is not tolerated when driving a vehicle, and that individuals are responsible for their own actions. A worker who is affected by drugs or alcohol is a big risk to their fellow worker, particularly on building sites and in heavy manufacturing areas where there is complex equipment. The member for Enfield, in his contribution (which I thought was one of the better contributions on this topic), raised the challenge of some ideas on workers compensation. I hope that he reads Hansard and enjoys the various ideas that I have put forward about what we might be able to do with respect to workers compensation.

However, I come back to the central point. My view is that you can argue about the board, you can argue about the chairman and you can argue about how well the claims manager is working. However, at the end of the day, my view is that the minister should have resigned, because the unfunded liability has blown out over a six-year period, and if the minister does not resign over this sort of performance of WorkCover, the minister has not really—

The Hon. K.O. Foley: It's a legislative problem; you know that, Iain.

The Hon. I.F. EVANS: Kevin, it is not a legislative problem.

The Hon. K.O. Foley: Why didn't you change it yourself, then?

The Hon. I.F. EVANS: We did change WorkCover. I can remember sitting here—

The Hon. K.O. Foley: Not enough.

The Hon. I.F. EVANS: Oh, not enough? Where were your amendments? My view is that, at the end of the day, the minister should have resigned. This is a problem of the minister and, unfortunately, what will happen is that the workers will pay the penalty as a result.

Debate adjourned on motion of Mrs Geraghty.