Parliamentary Committees

STATUTORY AUTHORITIES REVIEW COMMITTEE: ANNUAL REPORT

Adjourned debate on motion of Hon. Carmel Zollo:

That the report of the committee, 2009-10, be noted.

(Continued from 27 October 2010.)

The Hon. R.I. LUCAS (16:52): I rise briefly to speak on the noting of the annual report of the Statutory Authorities Review Committee. The Hon. Mrs Zollo outlined broadly the work of the committee over the last 12 months. I join with her in thanking the other members of the committee and the staff who provided service to the committee during the 12-month period. Clearly the work of the committee is evidenced by the reports it produces, in particular the WorkCover report and its current term of reference in relation to the Teachers Registration Board.

On the WorkCover Corporation reference, the Hon. Mrs Zollo made some comments in relation to the committee's recommendations and the government and WorkCover's response. I will make two brief comments. The Hon. Mrs Zollo referred to the recommendation of the majority of the committee, which argued that the monopoly position of Employers Mutual in relation to claims management services should be changed at the earliest opportunity by the introduction of competition.

It was the view of the majority of the committee that, when there was the next opportunity to go out to tender, the decision should be taken to have two or three claims managers competing to try to improve the level of service provided. I hasten to say that under any system there will continue to be criticism of claims managers. There was criticism when we had four or five some years ago and there is criticism now when there is a monopoly provider. If we are to move to a position of two or three, I am sure there will continue to be criticism.

One of the problems with the current arrangement, as with any monopoly position when it does not need to be there, is that there is not the incentive to benchmark and improve, for WorkCover to be able to compare the performance of one manager against another and for there to be some competitive tension in terms of the provision of services.

I note a slight change in the colour of the water, if I can use a colloquial expression. I cannot remember who the government members were at that particular time, because they have changed. Certainly the Hon. Mr Hunter was one of the members, and it might have been the Hon. Mr Finnigan or the Hon. Mrs Zollo. However, the government members representing the government's position were trenchantly opposed to the notion of moving to a competitive environment for claims management. They were very comfortable with the old view of the world: the monopoly provider was the best way of handling it.

As I said, I have detected a slight change in the colour of the water. It would appear from the statements made by the Hon. Mrs Zollo, and even the statements being made now by the minister, that the government's position for trenchant opposition to the Liberal Party recommendation appears—

The Hon. B.V. Finnigan: I think we favoured honouring a contract entered into in good faith.

The Hon. R.I. LUCAS: Well, no; they have actually extended the contract; it wasn't honouring a contract. The recommendation from Liberal members was not to break the contract: it was that, when the contract next went out to tender, there be an element of competition introduced. That was the recommendation that government members opposed.

It would now appear that the door is somewhat ajar and that government members are perhaps seeing the good sense in the recommendation that had been made by Liberal members, or the non-government majority on the committee, and at least some consideration is being given to opening this up to competition.

The WorkCover board has extended Employers Mutual's monopoly contract position by a further 18 months. It has extended the contract from the current expiry date of 1 July next year until 31 December 2012. I guess only time will tell during this next two-year period, basically, whether the WorkCover board will contemplate moving to a system where we have greater competition in terms of claims management.

We should note that the total fees paid to Employers Mutual have almost doubled. It was being paid about $25 million a year when it got the contract. The year before last, it actually earned $49 million and, in this most recent year, it has come back to $44 million. This is at a time when the parliament—and we have just heard the speech of the Hon. Ms Bressington—actually has made the task of claims managers, obviously in terms of managing liabilities, much easier because it has changed significantly workers compensation legislation in South Australia.

I note in the Auditor-General's Report that there was an increase in 2008-09 in terms of its total payments to $49 million, and one of the reasons given was its better performance in terms of increasing the number of people who left the scheme through redemptions and reducing the number of people still on income maintenance. Of course, that was significantly assisted by the knowledge that employees (or workers) had, namely, that, come July this year, redemptions were going to be largely removed as an option from the system.

So, the parliament has actually made the task more manageable for the claims manager, but the claims manager, somehow under the existing monopoly contract, seems to be the one who has received the massive increase—as I said, from $25 million to $49 million in the space of two or three years in terms of claims fees. Sadly, this is the sort of financial management that the WorkCover Corporation and the current Rann government approves of. It is certainly one that we have raised concerns about, and continue to raise concerns about.

The final point made by the Hon. Ms Zollo refers to the fact that the government decided not to adopt the recommendation from the committee that WorkCover annually report the level of claims savings in legal costs under its sole provider contract, as extensive information is already provided. That statement by the Hon. Ms Zollo is an absolute joke. The reason the government would not adopt the recommendation is that WorkCover cannot demonstrate the claimed savings from its monopoly legal contract—because, again, it went to a monopoly legal contract with one legal firm in South Australia. It claimed massive millions of dollars a year in savings from that contract but, when it was asked, through the committee, to demonstrate that it had actually made those savings, it could not.

We recommended that in its report it should be required to report what the legal fees and costs are and how much it saves under the monopoly contract it has moved to. Of course, WorkCover did not want to do that and the government does not want to force it to, so the government says, 'Well, we didn't agree with that, because extensive information is already provided.' I do not know what extensive information the government and the Hon. Ms Zollo are talking about, but it certainly has nothing to do with the actual level of savings in legal fees, which was the claim made by the minister and by WorkCover Corporation when it moved to the monopoly legal services contract. With those comments in relation to the WorkCover report of the committee, I support the motion.

The Hon. CARMEL ZOLLO (17:01): As has already been placed on the record by minister Paul Holloway, there has been an extension of the contract with Employers Mutual which will run from the current expiry date of 2011 until 31 December 2012. The minister has placed on record that at the current time the scheme is experiencing significant change in the areas of work capacity reviews, medical panels, the cessation of redemptions and the introduction of new technology. As is on the books, a statutory review of the scheme is due to begin early next year.

It was the board's decision to extend EML's contract to reflect a desire to maintain certainty in service delivery during this period of change. The board will continue, as the minister has already placed on record, to monitor Employers Mutual's performance and will reassess its position in 2012. I place some of those comments on the record because, as I mentioned, the chamber did not have the opportunity to debate that review into WorkCover. Again, I thank the honourable members who served on the committee, and the committee staff.

Motion carried.