WORKERS REHABILITATION AND COMPENSATION (SCHEME REVIEW) AMENDMENT BILL

Committee Stage

In committee.

(Continued from 8 April 2008. Page 2672.)

Clause 23.

Mr HANNA: I just ask the minister to briefly explain the effect of deleting division 4B.

The Hon. M.J. WRIGHT: This is to do away with the loss of earning capacity. It is basically not used anymore. There are approximately 40 people who are still on the scheme, and they will stay on it. As the member would be aware, the way it operates is with an assessment at the start of the year and the injured worker gets paid a lump sum. It was used for a brief time some time ago, but it has not been used for quite some time and we are simply recommending that we delete division 4B.

Clause passed.

Clause 24.

Mr HANNA: I move:

Page 27, line 13—Delete 'Schedule 3' and substitute: Schedule 2A

This is something of a test case for the calculation of lump sum payments to workers with permanent disabilities arising from their work injury. The provision that has become well-known for lump sum payments in lieu of what used to be common law damages for pain and suffering is section 43. When it was first introduced, it was a bit less scientific than it is now in its amended form. When it first came in, the impact upon a worker's lifestyle was taken into account. Perhaps that is something like the narrative test that they have in Victoria, although I am not completely familiar with that.

However, amendments were made along the way because of the extensive evidence that was required to give a fair assessment of the appropriate degree of lump sum compensation, and what we have now is a fairly scientific approach to assessing the lump sum compensation. Under the current legislation, it is done by reference to what is known as the third schedule to the act. It is, essentially, a maims table, which lists the various body parts and body functions and ascribes a percentage of the prescribed sum payable for an injury to that part of the body or a loss of function, to an extent.

One of the important things to note about the current schedule 3 is that, after the list of various body parts and functional losses, there is a catch-all provision to ensure that things which are serious injuries but which are not listed on the table will, nonetheless, be the basis for lump sum compensation—because, after all, the original purpose was to replace the common law pain and suffering damages with a statutory amount of compensation. However, it was meant to be comprehensive.

Before I go to my amendment, I turn to the bill, where the government is scrapping the existing schedule and replacing it. Importantly, it is not including in its maims table a list of items that can be assessed, even though they are not listed in the table. So, there will be things that are covered at the moment that, as I see it, will not be covered under the government proposal.

For example, if people lose part of the function of their digestive system, perhaps because they ingested something in the course of their work duties, it seems to me that they will not receive anything by way of lump sum compensation, if the government has its way. If a firefighter is burnt and suffers nerve damage, that is something that is not listed in the table. So, if the Rann government has its way, the firefighter would not receive anything for that nerve damage, and so on. Another very common injury in noisy manufacturing or mining work sites is tinnitus, affecting the hearing. It seems that that will no longer be covered. There is only a reference to hearing loss, not to hearing interference caused by tinnitus.

The Rann government's proposal will cause a lot of injustice. People will miss out totally for a range of work injuries, in terms of lump sum compensation. However, I was inspired by the government's provision, which states that there will be no disadvantage to workers through using the new means of calculating lump sum compensation. It seems to me that the only true way of ensuring that there is no disadvantage for workers under the current legislation as compared to the old legislation is to have both tables included in the legislation; two schedules—two maims tables—covering this. I am suggesting that we should work out the lump sum compensation on each and that the worker should receive the higher of the two results.

If the government is genuinely committed to there being no disadvantage to workers, that would be an appropriate way to ensure that, in fact, there will be no disadvantage by bringing in the government measure. I have not referred to the threshold test that the government seeks to apply. I will come to that shortly.

The amendment which I am now moving and which inserts new schedule 2A is linked to my amendment No. 88. It can be seen that that amendment is the more substantial one, in a sense. The scheme I am putting forward then is that there would be the government's existing schedule 3 (if the bill goes ahead as it wishes), but if my amendment is successful, then workers will have a choice between two possible schedules. For ease of reference, my amendments Nos 40 and 88 basically set up that scheme, and there are a few other consequential amendments. It really is a matter of holding the government true to its word. If it wants a no disadvantage clause here, then let it be truly no disadvantage to injured workers.

Let us not forget that the government's proposal is retrospective, in the sense that a work injury that took place some time ago, if it has not yet been the subject of a section 43 lump sum calculation, can be worked out under the new section. In that sense, it is retrospective and it is just bad luck for the worker if the claims manager has stuffed around, dragged things out and is waiting for new provisions to come into effect. Unless the worker can get an expedited decision from the tribunal, the worker may well be left with the government's new version of lump sum compensation and be worse off. I do appreciate that the prescribed sum is increased: I do not have any quarrel with that. This amendment will ensure that the lump sum compensation for workers, whether they are to be injured in the future or have been injured in the past but not yet had a section 43 payment made, will truly not be disadvantaged.

The Hon. M.J. WRIGHT: The government does not support the amendment. The proposed amendment negates the effect of the government's proposal which aims to streamline the process for calculating lump sum compensation. In effect, it is proposing that there be two different ways of calculating section 43 entitlements and that they run concurrently. We do not think that is a sensible alternative. Effectively, this would undo the government's proposal. Regarding examples provided by the member for Mitchell, it is my understanding that it would be likely that they would be covered through the WorkCover guides, which are based on the AMA guides.

Mr HANNA: One thing that is clear is that we do not yet have the guidelines to which the minister has referred. As far as I am aware, they are not published. Unfortunately, members are being asked to write a blank cheque. Members are being asked to vote on a system of providing compensation which has not yet even been specified. That is a grave disservice to this parliament as it seeks to do the right thing in providing injured workers with lump sum compensation.

The Hon. S.W. KEY: Having listened to what the member for Mitchell has said, it is certainly my understanding that the whole of person impairment will be measured according to WorkCover guidelines, and there is some suspicion that they will likely be based on the American Medical Association guides. What is the member for Mitchell's interpretation of the following example if this legislation is enacted? When I was a workers compensation officer for the Transport Workers Union, one of our members was hit in the face with a tarp and, as members would know, quite often tarps have metal buckles on them.

As a result, not only did he suffer quite serious facial injuries, including a broken nose, but he also lost his sense of smell. This was a problem for him because, as a dangerous goods licensed driver, in addition to all the driving qualifications and understanding of the loads that you are carting, one of the things you have to have is a sense of smell.

It is an unusual provision. Taking into account that this driver went from being a dangerous goods driver to an ordinary driver (in fact, he could not drive at all for quite sometime as a result of his head injuries), and following on from what he has already said, how would the member for Mitchell interpret that under the guidelines proposed by the government?

Mr HANNA: I acknowledge that the loss of sense of smell is covered not only in the existing legislation (which I seek to replicate) but also in the maims table, which is being put forward by the government. So, that in itself would be covered except that there is a different calculation to be made. Under the existing legislation it is very straightforward. If there is a total loss of sense of smell, 25 per cent of the prescribed sum is payable to the worker by way of lump sum compensation. If the worker has lost 20 per cent of his sense of smell, one would expect the worker to be paid 5 per cent of the prescribed sum payable.

If we are now going to calculate that loss according to whole body impairment, we need a whole new language to describe what has happened to the worker, because the maims table itself, which we have been using for 20 years, does not connect to whole body impairment in any meaningful way. There is nothing that says that a sense of smell is a certain proportion of the whole of the body, or that an arm is a certain proportion of the whole of the body. That is why there will be guidelines, and, as I say, they have not been published yet. How extraordinary that the legislation would be brought before parliament without the means to make an elementary calculation to implement the legislative proposal!

One other angle is important which arises from the honourable member's question, and that is in relation to disfigurement. The example was given of a worker who was hit in the face by a tarpaulin. It must have been a pretty severe whack to the face to have an impact on the sense of smell—and, presumably, there was a degree of scarring or disfigurement. The existing table quite clearly spells out a basis for payment of a percentage of the prescribed sum, not exceeding 70 per cent, for disfigurement based on the extent, severity and likely duration of the disfigurement. I stress that that is not repeated in the government proposal. It seems that there is absolutely no basis for paying a lump sum for scarring. It does not matter whether you are a beauty queen; there is no reference to—

The Hon. S.W. Key interjecting:

Mr HANNA: At least some of the organisers! There is nothing there referring to disfigurement. That is another loss to injured workers if we are left with just the Rann government's new schedule.

The Hon. S.W. KEY: I also notice that the government amendments to the bill provide that an entitlement does not arise under the section in relation to a psychiatric impairment. My understanding of the entitlement under what was the bill is that psychiatric impairment would be compensated in the case that I have just cited of the driver who was hit in the face with a tarpaulin. As a result of losing his dangerous goods licence—and this is quite a few months later—he also suffered loss of prestige in his workplace, because, as I mentioned earlier, this was a very high level of driving. It also paid in excess of what an ordinary driver would be paid. My understanding of the amendments—and presumably they will be successful—is that this area is also under question now.

Mr HANNA: That is right. One of the injustices of the Rann government proposal is spelt out by that example. There was lump sum compensation for psychiatric injury up until 1992. In that raft of amendments the ability to award lump sum compensation was taken away; or one could say the right to lump sum compensation for permanent psychiatric disability was taken away. The government in its bill sought to reintroduce lump sum payment for that type of injury, and we will come shortly to the government amendment, which I presume the minister will be moving and which will delete that proposed reinstatement of lump sum payment for psychiatric impairment. The member for Ashford is right: it is in the bill but, if the government has its way, it will not be in the bill for much longer.

Dr McFETRIDGE: In relation to the injuries and amputations listed in the comprehensive list of maims, I see nothing in this list or the honourable member's amendment—perhaps the minister can take this on board, as well; and an example the member for Ashford talked about was nerve damage—in relation to chronic pain. There is nothing more debilitating than chronic pain. It is as serious as any other injury on the long list of permanent injuries. Certainly, chronic pain of its nature is of a semi-permanent nature, if not a permanent nature in some cases. Should that be included in this list?

Mr HANNA: Previously, that would have been covered under a psychiatric disability. If there was something disabling about the level of pain in itself and it was permanent, the government gave consideration to reintroducing lump sum payment for an injury of that nature; but it is withdrawing that proposal.

A couple of the questions highlight another means by which the government is stripping away lump sum payments. Again, I refer to that descriptive list after the table of maims itself in the current legislation. It makes it clear that if a worker loses part of a body part or a body function then they are entitled to lump sum compensation in proportion to the total amount that would have been payable if they had lost all that body part or function.

I pick up the earlier point made by the member for Ashford. If a worker lost part of their sense of smell, you would work out a proportion and then relate it to the prescribed lump sum. If you do not have the explanation, which applies a proportion of the loss and translates it to a percentage of the prescribed sum—and we do not have that in the government proposal—then the implication is that you have to lose the entirety of that body part or function to get any lump sum compensation for that loss. This is another tricky means of cutting out lump sum compensation to a wide range of cases.

The committee divided on the amendment:

AYES (3)

NOES (42)

Majority of 39 for the noes.

Amendment thus negatived.

The Hon. M.J. WRIGHT: I move:

Page 27, lines 16 to 21—Delete subsection (4) and substitute:

(4) An entitlement does not arise under this section if the worker's degree of permanent impairment is less than 5 per cent.

(4a) An entitlement does not arise under this section in relation to a psychiatric impairment.

What was asserted by the member for Ashford in regard to the lump sum for psychiatric disabilities is correct, that it was in the original bill, but the government comes forward with an amendment to remove it. Why are we doing that? Well, as we have done with other amendments, we had a consultation phase and there was very little support for this. It was removed, I think, in 1992, and the general view of stakeholders was that it was a step in the wrong direction. Although it was a recommendation of the Clayton Walsh report the government, on balance, has decided to come forward with an amendment to remove that component from the original bill.

Mr HANNA: Members will note that I have an amendment on file which deletes this subsection entirely, but I appreciate that we are dealing with the government amendment first. I will still need to proceed with my amendment after this if the government carries this amendment, because I do not believe there should be any threshold at all. In terms of the government amendment, one question I have concerns how it came to be that permanent psychiatric impairment lump sum compensation was put back in the bill and then taken out. What were the submissions to government that led it to go in and then, suddenly, to go out?

The Hon. M.J. WRIGHT: I tried to address that when I moved the amendment. Basically, what happened is that it was recommended by Clayton. When we went through the consultation it was recommended that it should be taken out.

Amendment carried.

Mr HANNA: I move:

Page 27, lines 16 to 21—Delete subsection (4)

This is an important amendment. The government seeks to introduce a threshold for payments. Even though the threshold is stated to be—now that we have passed that government amendment—5 per cent, there are actually some minor but significant injuries which would fall between 0 and 5 per cent.

I think the classic example is the loss of part of a finger, which may be less than 5 per cent when one calculates the percentage; particularly if you are talking about whole body impairment, it may not seem very much to lose half a finger, but if you are a butcher you are going to have difficulty in your cutting and slicing work.

If you are a typist and you lose part of a finger, you may be able to type with a bit of retraining but you may not be able to type at anywhere near the speed that you used to, and that is going to cut you out of a lot of work. It is also going to mean the everyday inconvenience of maybe having difficulty when you go to the toilet and are wiping yourself; difficulty in preparing food; difficulty in using a mobile phone—difficulty with a whole range of things that can flow from losing half a finger.

The common law treated this by looking at the actual impact on the person and said, 'If you are a concert pianist and you lose half a finger, and you cannot play like you used to, you get a considerable sum of compensation.' Yet, if you are a politician who does not need all of your fingers, it may not matter as much to your lifestyle or to your work, and you would not get as much under common law. The statutory approach is one size fits all, so it takes no account of the impact on a person's lifestyle or work, but I am suggesting that minor but significant injuries, like the loss of half a finger, will not be compensated under Rann's new scheme of compensation for workers. I think that is appalling.

I think that the amount of savings, if the minister was to tell us, would actually be minuscule compared with what the government is trying to achieve in terms of the unfunded liability issue. Compared with cutting workers off income maintenance after 2½ years, this is peanuts, and yet there will be dozens, if not hundreds, of workers each year who may miss out entirely because their injuries are minor, even though they are going to be very significant to them. It is not a nice thing to lose half a finger.

The Hon. M.J. WRIGHT: The member for Mitchell was wanting to remove thresholds altogether; we do not support that there be no thresholds. Clayton recommended that there be thresholds and, of course, it is common to have thresholds in other jurisdictions.

The CHAIR: The member for Mitchell, I am not sure that you moved your amendment, and perhaps you could clarify that you want the amended clause deleted.

Mr HANNA: Yes, I make it clear that I moved the amendment in my name, and I seek that the amended clause be deleted, since the government has successfully passed its amendment. One of the distressing things about the approach as we go through the bill is that we are chopping off bits of workers' entitlements here and there regarding income, lump sum, the right to this and the right to that, and the costing actually has not been presented to the parliament. Nobody has actually come forward and said that we will save X million dollars a year from this, X million dollars a year from that, and so it all adds up.

The Clayton report is not explicit in those terms and, at the very least, the minister should be coming to the parliament with those figures, if we are being asked to support these cuts. I reiterate that the amount we are talking about in terms of scheme savings here is peanuts compared with the distress we are going to give to people who have minor but significant injuries and who are going to get absolutely nothing apart from their income and medical expenses paid.

The committee divided on the amendment:

AYES (2)

NOES (42)

Majority of 40 for the noes.

Amendment thus negatived.

Progress reported; committee to sit again.

[Sitting suspended from 13:00 to 14:00]