WORKCOVER

The Hon. I.F. EVANS (Davenport) (14:59): My question is to the Treasurer. Does the Treasurer accept that the government's 2008 legislative reform package to WorkCover has been a failure and, if not, why not?

The Hon. J.J. Snelling interjecting:

The SPEAKER: Order! I can't hear.

The Hon. I.F. EVANS: Oh, didn't you write this one?

The Hon. J.J. Snelling: Sometimes I think I have.

The Hon. I.F. EVANS: My question to the Treasurer is: does the Treasurer accept that the government's 2008 legislative reform package to WorkCover has been a failure and, if not, why not? WorkCover's unfunded liability has increased to $1.4 billion. It has the worst return-to-work rate in Australia and the highest premium rate in Australia.

The Hon. P.F. CONLON: Before the Treasurer, who is very keen to answer this, does so, standing order 97: it is an argument to ask if you accept something is a failure. It is just an argument, it is against standing order 97, and I would suggest it gives the Treasurer some significant leeway.

The SPEAKER: I will uphold that point of order. There was a lot of argument in that question. Treasurer, do you wish to respond to it?

The Hon. J.J. SNELLING (Playford—Treasurer, Minister for Workers Rehabilitation, Minister for Defence Industries, Minister for Veterans' Affairs) (15:00): Very gladly, ma'am. WorkCover's financial performance for the year ended 30 June 2012, as has been reported yesterday in the Auditor-General's Report, resulted in an overall loss of $437 million, with WorkCover's unfunded liability rising to $1.389 billion as at June 2012. But, despite this, strong operational cash flows were maintained with a positive cash flow result of $229 million for the year, building on the $151 million generated in 2010-11. So, if you look at the operational cash flows of the WorkCover Corporation, we have seen significant—

The Hon. I.F. Evans interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: —improvement. Now, it is the case that the unfunded liability has increased, and there have been two factors that have resulted in that, the first being, of course, the change to the discount rate. The change to the discount rate has had a similar impact on our unfunded superannuation liabilities. Our unfunded superannuation liabilities, from memory, have moved from $8 billion to roughly $11 billion on the basis of a 1 per cent change in the discount rate. Changes to the discount rate can have massive impacts, actuarial impacts, on the unfunded liability. The other factor is, of course, that there have been reduced earnings on the assets that WorkCover has invested—

Mrs Redmond interjecting:

The SPEAKER: Order! Leader of the Opposition, order!

The Hon. J.J. SNELLING: —from memory, just under $2 billion in assets that WorkCover has invested to pay for its ongoing and future liabilities. Of course, when the share market is doing badly, as it has, then of course the earnings on those assets are going to be a lot less, and that is going to have an impact on the unfunded liability.

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: The simple fact is that the best measure of the impact of the 2008 reforms, built upon by the reforms that I introduced into the parliament last year—reforms that were supported in a bipartisan way by the opposition—and I would like to acknowledge the bipartisan support from the opposition on those reforms—

The Hon. P.F. Conlon: Except for one.

The Hon. J.J. SNELLING: No. No, the member for Davenport got up during—

Members interjecting:

The SPEAKER: Order!

The Hon. J.J. SNELLING: —that debate and said that those reforms had the opposition's full support, and I appreciate that. So, those reforms, building on the 2008 reforms, have in fact seen a massive turnaround in the ongoing operational performance of WorkCover and, as I say, a $229 million positive result for the financial year ending 30 June—something that I am very proud of.

Members interjecting:

The SPEAKER: Order! Member for Davenport and the member for MacKillop, behave!