WORKERS REHABILITATION AND COMPENSATION (SCHEME REVIEW) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 30 April 2008. Page 2525.)

The Hon. S.G. WADE (12:05): Today is a very appropriate day for this council to be meeting to discuss the Workers Rehabilitation and Compensation (Scheme Review) Amendment Bill. Today is May Day and the 119^th anniversary of its commemoration as an element of the labour market tradition. International Workers' Day (used interchangeably with May Day) is said to be a celebration of the social and economic achievements of the international labour movement. It arose from a campaign for the eight-hour day in the United States in the late 1800s.

In 1884, a conference of United States and Canadian trade unions decided to launch an intensive campaign for the eight-hour day to culminate on 1 May 1888. The campaign led to a bitter struggle and, on 1 May 1886, at one of the strikes, police attacked striking workers from the McCormack Harvester Company in Chicago. Six people were left dead. On 4 May, at a demonstration to protest the police action, a bomb exploded in the middle of a crowd of police, killing eight of them. Four workers were tried and executed for the incident.

In Paris in 1889, the International Working Men's Association (the First International) declared 1 May an international working class holiday in commemoration of what is now known as the Haymarket Martyrs.

Last year in Australia, a large May Day meeting was held in Melbourne, chaired by a Labor Party pioneer, Dr Maloney, who had been elected the previous year as a representative of the Workingmen's Political League. He went on to serve as a Labor Party MP for 51 years in both state and federal parliaments. I mention those facts because it highlights that the May Day tradition is intertwined with the heritage of the Australian Labor Party.

At about the same time as the May Day commemorations were commencing in this country, the Labor Party was being formed out of a series of political elements that were fostered by the trade union movement. The Labor Party is the political expression of the industrial wing of the Labor movement. May Day is an appropriate day to reflect on the success or otherwise of the political Labor movement in their raison d'être of progressing the interests of working people through the governments and parliaments of Australia.

One indicator is what those workers are saying in their May Day marches. In Sydney this year the May Day March is a rally against the New South Wales Labor government's electricity privatisation. It might be comforting for Labor members to know that the South Australian Labor government is not the only Labor government breaking its commitment not to privatise. In Adelaide the May Day rally is a campaign against the legislation before this council: against legislation introduced by a Labor government to reduce workers' entitlements.

The very party created to defend workers' rights is being attacked by the movement that spawned it. The industrial labour movement is attacking the political Labor movement on the basis that it is betraying its mandate. It is undermining the interests of workers when it was actually put in parliament to promote them.

I note that most of the Labor members of this council are former members of the industrial labour movement. They owe their careers to the union movement. They owe their parliamentary seats to the union movement. They are in this place to give voice to the interests of the worker. What do they say about this reduction in workers' entitlements? Silence. In the other place only three government members spoke on the bill: the minister, the Treasurer and one other. I wonder, as we start the bill in this council, how many government members we will hear from in this place.

As Sir Thomas More said, when he was under attack, silence means consent. Even if there is not one division (but I suspect there will be a few), the silence of Labor members on this bill will shout their complicity. The Premier did not feel the need to speak on this bill in the other place, but he did try to defend it at a recent state Labor meeting. What was the key point that he made there? It was not that workers' entitlements were too generous and not that there was abuse of the scheme: no; he made it perfectly clear to the delegates present that what was at stake was the government's AAA credit rating.

Labor has form here is: Labor's State Bank disaster destroyed our credit rating. The Liberal Party's careful management over a decade led to its restoration. Now, yet again, our credit rating is threatened through another bout of Labor mismanagement. I fear that it will fall to a future Liberal government to restore the finances of this state.

Let us pause and understand what we are seeing here. A so-called Labor premier, head of a government sponsored by the industrial labour movement to promote workers' conditions, is telling us that his top priority is the promotion of the AAA credit rating. I can almost hear Dr Maloney and other Labor Party pioneers turning in their graves. The capitalists have hijacked the party. They have the priorities of a capitalist but none of the skills. Their lack of skill has created the crisis that they now need to deal with.

The Liberal Party condemns this bill, not because it is not necessary but because it should not have become necessary. At the end of the last government a Liberal government was managing the WorkCover scheme and this legislation well. The unfunded liability was coming down. The Clayton report stated:

...the WorkCover scheme was reasonably stable during the late 1990s with the availability of redemptions successfully extinguishing significant amounts of tail liability. At the same time reported claim numbers continued to reduce. During the same period claim payments were well controlled, reducing in real terms throughout the five-year period. The average levy rate stayed at 2.86 per cent of wages, allowing the gradual erosion of the deficit such that the scheme achieved a high point funding ratio of 97 per cent as at June 2000. The scheme began the 2000s in an apparently healthy position with respect to both financial stability and reputation for forward thinking.

The last Liberal government left WorkCover in good shape. The market fundamentals have not changed under this government. As testament to this fact, self-insurers continue to maintain viable schemes under the current legislation.

Nationally, in the same macroeconomic environment, other jurisdictions have been able to reduce levies and increase entitlements. However, this so-called Labor government, under an inept and incompetent minister, has failed to deal with challenges faced by WorkCover, and their inaction has so weakened the scheme that entitlements are now being wound back.

This government is condemned for it is inaction on WorkCover. Ever since the government came to office in 2002, the situation at WorkCover has been known to it and yet has been steadily allowed to deteriorate. The government recognised years ago that WorkCover was under stress yet, rather than taking action, it chose to try to spin, to try to shift the blame on to the previous government. It chose to do nothing.

Labor has never been a good manager. Less than a decade after the State Bank collapse, Treasurer Foley and minister Wright have allowed the WorkCover liability to blow out. The Labor political movement needs to realise that government is not meant to be fun; it is the low-key, out-of-sight, boring elements which are the bread and butter of good government. Government is, first and foremost, about the day-to-day, craftsman-like management of the machinery of government: making sure you keep the costs down and collect revenues so that you can deliver services to people without leaving a debt for the future.

No; the government instead has focused on spin and allowed the WorkCover scheme to deteriorate. What is the result? The bill before the council today. As a result of its own incompetence, Labor is forced to downgrade workers' entitlements. In the corridors of this place, Labor members whisper blame to the board: 'The board is responsible for the situation at WorkCover.' This, of course, was exactly the same tactic that was used in relation to the last Labor Party disaster: the collapse of the State Bank.

What are the facts? The board was selected and appointed by the government. The Under Treasurer has been appointed as an observer at board meetings. The annual report shows that either he or his deputy attended all board meetings of WorkCover. The board is also subject to ministerial direction. Notably, one of Labor's complaints in relation to the State Bank was the lack of power of direction. There is no such excuse on this occasion. Labor was fully informed about the situation at WorkCover. Labor was fully empowered to act. Labor chose not to act. It stands condemned.

The government has an overall political responsibility to ensure that all organisations and organs of government are efficiently and effectively conducted If it does not, this parliament holds it accountable. But no member of this government has taken responsibility. Given that it is formed by members elected to promote the political interests of the labour movement, surely they would resign out of shame even if not parliamentary responsibility.

The government has decided that the people who will pay the price for its incompetence are not the minister, not the government or the members opposite, who owe their careers or their parliamentary seats to the labour movement. No; the government has decided that it is those very workers who have put them there who will bear the brunt of its mismanagement. If the government had acted promptly when it became aware of the deteriorating situation (action that patently needed to be taken as early as 2003), this bill would not be necessary. The workers of this state are paying the price for the maladministration of this government.

It is easy to talk in general terms about the workers, but I would like to highlight the impact on some of the workers in my portfolios. Emergency services workers are acutely aware of the risk of workplace injury and death. In November last year, four firefighters lost their life fighting a warehouse fire in Atherstone on Stour in Warwickshire in the United Kingdom. Only last month, in New Zealand a firefighter lost his life when an explosion engulfed a commercial building while he was investigating a gas leak.

Talking to firefighters, I know how acutely they feel these losses. They are part of a worldwide family and the grief is shared. They have a great sense of duty and service, and that sense of duty embraces their family and those they care for. Whilst they always know that their vocation may cost them their life or wellbeing, they are deeply concerned to ensure that their loved ones are looked after in the event of death or injury.

One firefighter who spoke to me about this bill put it this way: undermining firefighters' entitlements undermines their service. You do not want firefighters going into a fire situation with any nagging doubt that their family will be looked after in the event of their injury or death. Any element of constraint could cost lives.

The United Firefighters Union expressed its concern about this legislation in a press release dated 5 March 2008. Mr Joe Szakacs, the union's industrial officer, states:

As we were painfully reminded through the tragedy of 9/11, firefighters are the workers who run into burning buildings, crawl through collapsed structures and rescue people from vehicle collisions and other catastrophes.

Firefighters do not complain about their job, they understand and assume the level of responsibility that couples their profession. All that firefighters ask is that if they are injured in the line of duty, the Workers Compensation scheme protects them just as they have protected the public.

Under the changes proposed by Premier Rann, injured firefighters will be financially penalised for putting themselves at risk to serve and protect the public.

Just as the Howard Government sought to marginalise workers through WorkChoices, Premier Rann is further penalising and marginalising injured workers through his proposed changes. He has lost touch with the workers of this state. Firefighters of this state will not accept nor will they tolerate the Rann attacks on the workers of this state.

Firefighters have experienced Labor's mismanagement at agency level, too. According to the 2006-07 MFS annual report, the MFS aims to reduce WorkCover claims by 20 per cent; in fact, it experienced a 4 per cent increase. I understand that earlier this year the MFS was issued with 18 non-compliance items following a WorkCover review.

The government not only cannot manage the WorkCover scheme but it cannot manage WorkCover issues within its agencies. In addition, under this act, CFS volunteers are protected. It is very timely that we should be considering these issues because this is the month the CFS Foundation and the CFS Volunteers Association have set aside to remember and collect funds to support Jeff Byrens.

In November 2006, the life of Mount Bryan CFS brigade firefighter Jeff Byrens changed for ever. Jeff was responding to a fire when a truck he was driving rolled over on a steep hillside. It happened in just a few seconds, but he is now quadriplegic and requires daily therapy and support. Likewise, the CFS family came together on 16 February this year to honour fallen volunteer firefighters of the CFS. This was held on the same day as the 25th anniversary of the Ash Wednesday bushfires, which of course claimed the lives of a number of CFS personnel and which inflicted a number of injuries.

I mention the experience of both the CFS and the MFS because its members feel acutely the fact that they are protected under the WorkCover legislation. They are subject to the risk of death and injury, and both the UFU and the CFSVA have expressed their concern about the legislation.

In relation to another of my portfolio responsibilities, Correctional Services, I refer to the 2006-07 WorkCover annual report. On page 26 of the report, the corporation gives us an indication of South Australia's highest cost industries. I find it noteworthy that the only public sector class of employees in that list is Correctional Services personnel. Of course, the opposition pays tribute to those personnel who run the risk of injury every day as they fulfil their very important duty for the people of this state.

In the three-year period from 2003 to 2006 inclusive, 852 WorkCover claims were made by Correctional Services personnel, with a total claim expenditure of $12.409 million and a total claim expenditure on remuneration of 4.2 per cent, which makes it one of the highest cost industries in this state.

These workers, paid and volunteer, are paying for Labor's mismanagement; had it managed WorkCover properly, this bill would not be necessary and there would be no necessity to wind back workers' entitlements. This has been a difficult issue for the Liberal Party because we have many serious reservations about many elements in the bill.

We accept that the scheme has been put forward by the government, it is Labor's bill; we accept it as a package. The government is responsible for the mismanagement of the scheme. This bill is a government strategy to overcome its own mismanagement. Labor should be ashamed that through this bill its response to its own mismanagement is to ask injured workers to pay the price. It is Labor's mismanagement; it is Labor's so-called solution; it is Labor's shame.

The Hon. J.M.A. LENSINK (12:23): I am pleased to follow that passionate contribution by my colleague the Hon. Stephen Wade. When elected to parliament in 2003, one of the issues I raised and was told I was a bit odd for raising as a serious issue that we needed to be addressing was the issue of the WorkCover Corporation. As members would be aware, my background immediately before coming to parliament was working for the aged care sector, which has a significant number of injuries, so it was an area very much in the forefront of my mind as I entered this place.

I pointed out at the time that the liability rate when the Liberal Party left office was only some $56 million and, at that stage, 1 July 2003, it had blown out to $400 million. If that was not a warning to the government to fix things, when we are looking at close to $850 million as at 30 June last year, I do not know what is. This is chapter and verse a story of the fact that nobody, including Labor's own constituency, can trust Labor with governance where money is concerned. It is reprehensible of people who have been supported and elected to this parliament by working people and the unions to be sacrificing their own and will not even fix the problem, as the Hon. Robert Lawson pointed out in his contribution. It will not fix the problem but will just save this government from some embarrassment. I am so tired of ministers both in this place and another place, because lock, stock and barrel they are incompetent and you would not get them to organise a children's birthday party.

In an interjection yesterday I made a point to the Leader of the Government here that the scheme was in fairly good shape when we left office, and he pointed out that we dropped the average rate. In a presentation provided to the Liberal Party, we indeed dropped the rate and it has remained static at 3 per cent. However, in comparable states—Victoria, New South Wales and Queensland—the rate is lower and in each consecutive year from 2004-05 those rates have been dropped. In New South Wales in 2004-05 the rate was 2.57 per cent and was dropped 12 months later to 2.44 per cent, then 2.06 per cent and 1.77 per cent. Victoria has the same story: 2 per cent in 2004-05; the following year, 1.8 per cent; the year after that, 1.62 per cent; and the year after that, 1.46 per cent. In Queensland in 2004-05 it was 1.55 per cent (half South Australia's rate at that point), and it dropped to 1.43 per cent and subsequently was 1.2 per cent and then 1.15 per cent.

Our system is clearly non-competitive with comparisons interstate, and the fact that other states were able to reduce their rates over those years should have been a signal to this government that it has not been achieving its goals with a scheme of so many millions of dollars. There should have been early warning signs and other action should have been taken.

We have also fallen well short of our strategic plan targets for injury reduction, so presumably, as in other areas of State Strategic Plan targets that have not been met, as the Leader of the Government in this place has referred to on previous occasions as stretched targets (a bit like non-core promises), one assumes that they will be adjusted so the Premier will be able to make a positive announcement at some point in future. This comes at a time when we have had a 50 per cent increase in the number of workplace safety inspectors, so one must question the value of that strategy on behalf of the government.

The primary objects of the WorkCover Corporation Act are:

(a) To reduce the incidence and severity of work related injuries;

(b) To ensure as far as practical the prompt and effective rehabilitation of workers who suffer work-related injuries;

(c) To provide fair compensation for work-related injuries; and

(d) To keep employers' costs to the minimum that is consistent with attainment of the objects mentioned above.

I read those objects in September 2003 and, as far as I can comment, objects (b) and (d) have not been met. Much has been said about the need for early intervention, and people I know who work in the industry in assessments and so forth say it is fairly obvious.

In residential aged care the actuarial calculations show that injuries to workers that cause the worker to spend more two weeks away from work result in more than 85 per cent of claims costs. Obviously, some people would need to spend more time off for whatever reason in relation to their injuries. This has been identified time and again over the years. It is fairly obvious that we ought to be looking at the longer term injuries and trying to get people back to work as quickly as possible. The way the scheme has been operating, it is so bureaucratic that injured workers can have trouble getting hold of their case manager. They are told constantly to make an appointment, and so on. It is not always easy to get appointments with particular specialists.

A case that I have been made aware of involves a lady who had to make a stress claim, which could not be accepted without a psychiatrist's report. She had to make several phone calls in order to obtain one and was not successful. When she finally got hold of her case worker, she was told that she absolutely had to have this report. She was not able to obtain any Centrelink income and she ended up having to flat with a friend, because she had no source of income at all.

I question whether those sorts of situations give any evidence that this government believes in social justice, which is an area that I have complained about before. Quite frankly, there is more protecting of minister's backsides in relation to particular strategies that are taken by this government than caring for people with genuine needs in our community.

I think the issue of the disability payments for equipment highlights that fact. When I was first elected to this place, the government was not even going to match the commonwealth contribution to the Home and Community Care program. In mental health, and in a whole range of areas, this government does not look after the vulnerable; it looks after itself.

The Hon. J.S.L. DAWKINS (12:31): In rising to speak to this bill, I want to commend the comments of my colleagues: first, the Hon. Robert Lawson, as the lead speaker for the opposition in this council. I think a number of us were pleased that, while he covered the legislation significantly, he did not go on for as long as perhaps some people in another place did. However, certainly, he covered the bill very adequately.

I also congratulate my colleagues the Hons Stephen Wade and Michelle Lensink for their contributions. I also want to put on the record my gratitude for the efforts of the member for Morphett (Dr Duncan McFetridge) in another place in his role as the shadow minister. He took over the portfolio only recently, and I think he has handled a very complex issue very well.

The Liberal opposition has been extremely vocal about the ongoing increases in the Labor government's WorkCover black hole over the past six years. In addition, I have become particularly aware of the over-bureaucratic manner in which WorkCover deals with both injured workers and their employers, on which I will elaborate later in this contribution.

It is the opinion of the Liberal opposition that Labor's industrial relations minister, Michael Wright, and his hands-off approach to his portfolio has resulted in the extraordinary blow-out in the unfunded liability of WorkCover. I also wish to put on the record that this government has known about the terrible problems with WorkCover for a long time but deliberately delayed doing anything about it until after the federal election—and that has only exacerbated the problem.

In June 2001, under the former Liberal government, WorkCover's unfunded liability was only $55.6 million and the scheme was 93.5 per cent funded, that is, it was almost fully funded and able to cover nearly all its outstanding liabilities. After six years of a Rann Labor government, the unfunded liability is now almost $1 billion and rapidly increasing.

Due to Labor's poor management of WorkCover, injured workers are now expected to bear the pain of being injured at work and suffer the additional pain of Labor's cuts to their entitlements. In stark contrast to the government's handling of WorkCover, the self-insured or exempt employers, including some government departments, have been able to manage their workers compensation obligations without incurring huge unfunded liabilities.

In comparison to other schemes, South Australia's scheme has been fair but now will not be anywhere nearly as equitable as others such as ComCare, the commonwealth workers compensation scheme. This legislation will also mean that self-insurers and WorkCover will no longer be able to negotiate redemptions or payouts for long-term injured workers who want to get on with their lives.

The Liberal opposition will examine the effects of that legislation closely and will develop, prior to the next election, an alternative, separate set of proposals to unravel the mess that is WorkCover in South Australia. During that process, I will be urging strong scrutiny of the current over-bureaucratic system that both injured workers and employers have to endure when dealing with WorkCover, and I will exemplify one or two things. In my work I have come across a range of examples of both injured workers and employers who have had to deal with inordinate delays in dealing with the matters at hand. Along with other reasons for delay, that certainly adds to a situation where many of the injured workers have a problem with their own esteem. They feel bad because their situation is not being dealt with in a timely fashion.

There is another aspect and that is, despite the large number of personnel working in WorkCover, it seems that the management does not have the ability to assign people consistently to deal with the same injured worker, and also with employers. So, in many cases the injured worker, or the person acting on behalf of the employer, has to go back and deal with different personnel in WorkCover repeatedly, which I think most of us would understand is a most frustrating exercise when you have to go back over the same information many times over.

I also am aware of particular cases of injured workers who have been very frustrated by constant changes of direction by WorkCover in relation to the treatment that they are supposed to have, in relation to the attitude about them returning to work (whether it be in a part-time or full-time capacity), in relation to what sort of duties they could be taking up, and also in relation to retraining. As we move forward with WorkCover I think we need to tighten this up, because it is something that I have become more and more aware of over the last several years; and, as I say, I have had representations from injured workers and employers in relation to this.

In closing, I think we must obviously keep foremost in our minds the people who have been injured at work, and we should be trying to do the best we can for them. However, we also need to ensure that we have a body in WorkCover that does not have its unfunded liability continuing to blow out. I remind the council of the position of WorkCover prior to this government's coming to power. I will, as I said earlier, be very vigilant in putting forward what I think the Liberal Party needs in its policy to bring WorkCover back to a situation where it should play the role it was designed to play.

Debate adjourned on motion of Hon. J. Gazzola.

[Sitting suspended from 12:40 to 14:15]