WORKERS REHABILITATION AND COMPENSATION (EMPLOYER PAYMENTS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading (resumed on motion).

The Hon. R.I. LUCAS (19:49): The first of the employer associations to raise a series of issues about the bill is the Australian Industry Group. I think they met with the representatives of WorkCover late last week and received various assurances and have asked me to—all right, team, just lower it a bit—

The PRESIDENT: Order!

The Hon. R.I. LUCAS: —just down to a dull roar.

The PRESIDENT: Show your colleague some respect, please.

The Hon. R.I. LUCAS: The Australian Industry Group, I am sure, would like its contribution to be recorded. The first issue it has raised is in relation to transitional arrangements. I read from its letter, which states:

We have closely considered the discussion in respect of Transitional arrangements at Part 3.4 of the Position Paper.

It is apparent from the Corporation's comments that as part of the implementation of Experience Rating, some employers will see an increase in the amount of premium that they pay. It is critical in our view, that these employers are carefully transitioned to the new regime, over a period of time.

We note that the Position Paper envisages transitional arrangements for the first four years of the new approach, and that any increase in an employer's premium rate is to be capped at 125% of the previous year's rate in the period 1 July 2012 and 30 June 2016.

We note that these provisions are not part of the legislation itself and do not feature in the Bill. Our understanding is that they will be part of the next phase of implementation by the Corporation, and critically will be consulted upon with stakeholders.

Ai Group has sought and been provided with assurances from the Corporation to this effect covering both the quantum of the transitional cap and the period of time over which it will operate. We would like to see these assurances read onto the record by the Minister when the issue is considered by the Parliament.

The next issue raised by the Ai Group is, 'Fines and supplementary payments throughout the Bill', as follows:

The Corporation have clarified for us that wherever penalties (as opposed to fines) are proposed, they are to be levied after due process, by an appropriate court. We understand that such penalties are not to be levied by the Corporation and that justice and equity will be afforded as part of the formal court processes.

They seek assurances from the minister in relation to those undertakings. I might interpose that some other stakeholders have also raised that particular issue with the opposition. The Ai Group's next point is the liability to pay premiums. I quote from its letter:

After discussions with the Corporation, we understand that the penalty outlined in this section—

this is section 67—

would be administratively applied by the Corporation. We have clarified with the Corporation that it retains a discretion as to whether it would pursue such a fine and are satisfied that this would only be exercised where warranted, and not on an arbitrary basis.

I seek clarification from the minister as to exactly what assurance the corporation has given the Ai Group in terms of the corporation's interpretation of section 67—Liability to pay premiums? The next point raised by the Ai Group is section 71—Premiums. I quote:

Ai Group has discussed with the Corporation the arrangements around the implementation of the Premium Orders. On this basis, we would not propose any amendment to this section.

That is fine. It continues with section 72—Premium stages. I quote:

Under [section] 72(3) the Corporation may adjust a premium at any time during the relevant period, any amount that becomes due on account of that adjustment. Any sum owing by an employer is then payable by the date specified by the Corporation.

In our view, this discretion of the Corporation needs to be exercised reasonably to provide the certainty that is necessary for employers to properly run their businesses. Ai Group would prefer that any exercise of this discretion be qualified by the words 'for any proper reason' (as proposed in [section] 67(5)).

My questions to the minister are:

1. What assurances has the corporation given groups like Ai Group in relation to section 72?

2. Does the government agree that this is a new power that is being provided to the corporation, and what is the corporation's justification for needing this particular new power?

3. If an amendment was to be moved along the lines that Ai Group has suggested, what would be the government's response to such an amendment being moved to the legislation?

That is one of the amendments that the opposition is considering for the committee discussions next week in this council. I note that this particular issue was also raised with some of the other stakeholders, and when I refer to their submissions there is some consistency on this particular point. The next issue that the Ai Group raises is section 72A—Grouping provisions, and they write:

In relation to Grouping Provisions, we understand that the Amendment Bill largely reflects the existing provisions in the Act. We note that there is presently a power in the Act for the Corporation to implement Grouping Provisions outside of that which exists in the Payroll Tax Act.

Just on that, I interpose: can the minister clarify whether in fact that is actually correct, because a number of other stakeholders have argued the view to the opposition that that is not the case and that this is in fact significantly different to the payroll tax grouping provisions and also different to the existing provisions in the act.

Clearly the corporation, as I understand it, has advised Ai Group that WorkCover believes that the provisions in this bill are largely the same as the existing provisions in the act, so I seek the minister's response and legal advice in relation to that. Ai Group goes on to say:

Our major concern with these provisions is that there is the introduction of a jointly and severally liable reference. Ai Group does not agree with this formulation and would prefer, as outlined in the Position Paper, that 'the costs of claims and remuneration of a group member who closes or does not renew their policy [may] be proportionately allocated among remaining members of the group...'

I seek from the minister a response as to why the government moved from that position as outlined in the position paper to the position outlined in the bill before us and, if an amendment were to be moved to more closely reflect the position paper's stance on this particular issue, what would be the government's response to an amendment along those lines? The next section raised by Ai Group is 72E—Provision of information (initial calculations):

Ai Group has sought clarification from the Corporation to confirm that only information that is required to determine the statutory payment will be demanded of employers and that the requirement for statutory declarations will be exercised reasonably. We have asked the Minister to confirm these assurances on the record when the Bill progresses through the Parliament, or consider that statutory declarations only be required by the Corporation 'for a proper reason'.

Again, I ask the minister to confirm or not the assurances that have been given to Ai Group but also to indicate, if an amendment were to be moved to this particular section to insert the words 'for a proper reason' or some similar amendment, what would be the government's response to such an amendment? The next section raised by Ai Group is section 72F—Provision of information. They say:

We are satisfied with the clarifications that the Corporation has provided us in this respect for this proposal and note that this power will be essential for the operation of hindsight adjustments to employer premiums etc. Again, we have asked that the Minister confirm these assurances on the record when the Bill progresses through the Parliament.

The next section is 72M, relating to review of premiums and the current levy review panel:

Ai Group sought clarification from the Corporation that a body equivalent to the existing Levy Review Panel will continue to perform this important role in regard to this part of the Act. The Corporation have satisfied us in this respect. However, we have asked that the Minister confirm these assurances on the record when the Bill progresses through the Parliament.

They are the essential points that Ai Group have asked me to raise on their behalf and I happily do so. In broad terms, they have indicated their support for experience rating and, in broad terms, with the possibility of some minor amendment, they have indicated that, if the assurances are given, they would be prepared to support the passage of the bill.

The next group that contacted the opposition, which was again late on Friday, was the Housing Industry Association (HIA). They only have two brief issues to raise. One was in relation to section 3(13) which is now clause 4(9) of the proposed bill, and that relates to the deletion of 'minister' and the substitution of 'corporation'.

The question that they want answered is: can the minister outline to the house the reasons why the government has agreed to this particular issue and whether there is any concern of too much power being given to the corporation in this particular section?

The other issue that the HIA has asked me to raise is in relation to section 71 of the proposed bill. Again, this is in relation to the premium provisions of the bill. Their comment to me is that this appears to give very wide powers to the corporation to set premiums for classes of industry with no independent review and not subject to any parliamentary oversight, and also to discriminate against individual employers by premium. I seek the government's response to the concerns that the HIA has raised in relation to section 71 of the bill.

The next group that contacted the opposition is the South Australian Wine Industry Association Incorporated, and I have a letter from Brian Smedley as the chief executive. I refer to their letter to me. The first point they make is in relation to proposed section 72K(1)—Penalty for late payment. Their comment is:

We were of the understanding that the penalty of $10,000 associated with a breach of this section was to be removed. This does not appear to be the case in the Revised Bill.

I seek the minister's response to that. Is this industry group correct in terms of their understanding and, if so, what has been the reason for the government's changed position in relation to the bill?

The second point they have raised with me is proposed section 76(3)—Certificates of registration. Again they say:

We were of the understanding that the penalty of $1,000 associated with a breach of this section was to be removed. This does not appear to be the case in the Revised Bill.

Again I seek from the minister the government's response to the South Australian wine industry's understanding of the penalty being removed, and any reason why the government has changed its position in the revised bill. The third point they have raised is:

Both the initial Bill and the Revised Bill have removed the current Section 66(8), which provides guidelines or principles for the Corporation where it is fixing the percentage applicable to a particular class of industry (either pursuant to Sections 66(7) or 66(9) of the Act). We believe these 'guidelines or principles' should be retained otherwise they could much more easily be changed or removed once they are contained within the regulations, as is proposed under the Revised Bill.

I seek the government's response to that particular concern raised by the South Australian wine industry and what the government's response would be if the current section 66(8) was to be retained in the legislation in the way the South Australian wine industry has suggested. We ask what the government's response is to what the problem would be with that.

The final point that the South Australian wine industry has raised is in relation to section 70(5):

…lastly, we noted the wording in this sub-clause was slightly different from what currently appears in the Act at Section 66(9). The same provision in the Act currently reads as follows:

'The corporation may fix a percentage in excess of 7.5 per cent in relation to a particular class of industry if in each of two consecutive years the Corporation's estimate of the aggregate cost of claims in respect of disabilities attributable to traumas occurring in the year in the relevant class exceeds 30 per cent of the aggregate leviable remuneration paid to workers in that class.'

In the Revised Bill (and the initial Bill) the wording is exactly the same except for the omission of the 'leviable'. The effect of this is to change the test and make the threshold amount more achievable for the Corporation.

I seek the government's response to that particular concern expressed by the South Australian wine industry. Can the government outline whether they accept that this is a significant change—the omission of the word leviable—and does the government agree with the South Australian wine industry's interpretation that this makes the threshold amount more achievable for the corporation? They were the concerns raised by the South Australian wine industry.

The Motor Trade Association also contacted the opposition late on Friday afternoon as well. There was a lot of activity late on Friday afternoon. To be fair to the Motor Trade Association, they say:

As a general proposition MTA is supportive of a cost neutral employer payments scheme which rewards employers for effective injury prevention, management and return to work.

But then they go on to say:

Notwithstanding these positive concessions our broad concerns with the remainder of the proposed changes can be summarized as follows:

1. The capacity of the Corporation to impose additional fines in a range of provisions where there is already provision to impose additional levies (premium adjustments) and supplementary payments;

2. The unfettered discretion sought by the Corporation to group businesses upon any basis left to be determined for liability purposes even where the risks, business activities, management or operations are separate and distinct;

3. The introduction of joint and several liability provisions for payment of premiums within a group of related employers at the absolute discretion of the corporation;

4. The ability of the Corporation to fix premiums at any time during a period;

5. The ability of the Corporation to impose additional cost recoveries on a broad range of business transfers without reference to the particular circumstances of the respective businesses.

I am sure that for all those very attentive members of the Legislative Council they will notice that some of those concerns raised by the Motor Trade Association reflect some of the concerns raised by some of the other industry groups I quoted earlier.

I want to refer to a couple of the Motor Trade Association's concerns to seek further specific responses. At the outset, I asked the minister to respond to each of the concerns that the Motor Trade Association has listed and what the government's response is. These are some of the issues on which the opposition will consider the possibility of further amendment between now and the committee stage next week, dependent on the minister's replies to the concerns that have been raised by these employer groups.

The second issue that the Motor Trade Association has raised is in essence about the grouping provisions which relate to the amendment of section 72A—Grouping provisions 1(b), 2(b) and (c). I quote some further comment from them:

This matter in being drawn to our attention, gives rise to concern over the broad discretion. It is suggested the provision be debated, to justify why it is needed in this form. If too broad, it should be narrowed to address the key concern/s. For example, employer claims experience in one site or industry sector should not be unilaterally applied across the Group without good and cogent reason

I raise the detail of that particular concern and give some examples. There are a number of companies, for example, that buy diversified businesses. I know the company has now changed but I am familiar with the operations of Orica, for example. Orica has manufacturing plants in terms of chemicals, obviously, and now explosives, but at one stage they also owned Dulux paint stores, distribution outlets and a variety of things like that.

I would imagine that the potential occupational health and safety issues and workers compensation claims experience in a range of retail distribution outlets is potentially significantly different to that of an explosives manufacturing plant, for example, yet there is the one company which owns, in essence, diversified businesses.

I think we have to get beyond the mindset that one company does one thing and that is it; there have always been, and continue to be, some businesses that own a range of diversified business which do different things and will have different exposures to occupational health and safety issues, and workers compensation and claims experience.

It would appear that the issue that is being raised here by the Motor Trade Association and other employer groups that have also raised this with me is this issue that, in essence, these grouping provisions will be averaged right across the board. The question that I put to the minister is what is the thinking of the corporation with a diversified group like that in my example, where the claims experience for the explosives factory would be worked out in terms of the premium paid on the work that is undertaken in the explosives factory? Also, if you have a completely different industry grouping within the same company structure (for example, a paint distribution outlet) which is mainly retail, why could the premiums not be levied in accordance with the general premium outcomes, or the average premium outcomes, for that type of industry?

I have only used Orica as an example; I think all of us could think of other businesses that have diversified operations from manufacturing through to a distribution or retail outlet, and perhaps a range of experiences or operations in between. There are a number of other businesses which have agriculture and mining, but also might have investments in manufacturing businesses as well, each with their own different compensation profile, one would imagine, in terms of experience.

I give those as examples as to why I think the motor traders and some other stakeholders have raised this particular issue and have raised concerns regarding particular provisions in the bill. My question goes back to whether these interpretations and decisions are any different to the existing arrangements in the current legislation. Some employer groups believe that it is significantly different. That is the first question I think the minister and the government need to answer. I have only raised that as one example; there are the other four broad questions that the Motor Trade Association has raised, and I ask for the minister's response to each of those as well.

The opposition received some considerable input from the Self Insurers of South Australia (SISA), and we are grateful for that, but essentially, in the end, their grievances, as I indicated before dinner, have been resolved, and there are no significant issues from their viewpoint as it relates to the operations of self-insurers that remain to be resolved.

As I indicated before the dinner break, the opposition has still not received a submission from the government's employer association of choice, Business SA. The government has put on the record that they believe Business SA is the true representative of all employers in South Australia. That is not a proposition the Liberal Party adopts or supports, but we at least note the government's view in relation to Business SA and as I said, at this stage we have not received their submission.

We are aware that they, as all other stakeholders, broadly support bonus penalty-type schemes, so I am sure that will be the case, but I am not in a position to inform either the government or the chamber as to whether they have any further issues or concerns they want us to raise. When we get to the committee stage next week, hopefully we will have received their submission and if there is anything that necessitates a potential amendment then we will need to explore those issues during the committee stage of the debate.

With that, I indicate the Liberal Party's support for the second reading of the bill. I indicate that we are not yet in a position to determine a view about the amendment that has been flagged by the Hon. Mr Hood. We will discuss that at our joint party meeting on Monday. We flag the possibility that, subject to the response we receive from the minister tomorrow, we may or may not move amendments in the committee stage of the bill next week to reflect some of the concerns that have been raised with us by some industry stakeholders.

The Hon. A. BRESSINGTON (20:15): I rise to indicate my support for the second reading of the Workers Rehabilitation and Compensation (Employer Payments) Amendment Bill. Having heard the concerns expressed by self-insurers, I had initially prepared myself for yet another fight in this place on behalf of those companies. As we all know, self-insurers are seemingly targeted by this government despite achieving far better outcomes for return-to-work figures and for injured workers in general than WorkCover and EML. The Hon. Mr Lucas, in his contribution, referred to that as an almost pathological hatred of the self-insured industry. I have to say that has pretty much been my interpretation of this government's attitude as well.

However, prior to its introduction in this place, the bill has been significantly amended by the Treasurer and the Minister for Workers Rehabilitation to remove all of the contentious provisions. While this is welcomed, I take the opportunity to convey that I would have supported the proposed amendments to death benefits in which a lump sum payment would be made to the estate of an employee with no dependents who is tragically killed whilst at work. While such a payment is routine to dependents, currently, if the employee does not have children or a spouse then the scheme has no liability to their estate. This is shameful and I look forward to it being rectified in the next amendment bill that no doubt will be before us before my time in here is done.

As I understand it, the bill before us proposes to reform the existing employer levy which is currently set across industry types into a premium structure more closely resembling traditional insurance, termed 'experience rating system', in which an employer's premium will be determined on the number of claims by their workers and the cost of those claims. This will be mandatory for all medium to large businesses and it is intended to provide an incentive to employers to improve their claims history, especially by returning an injured worker to work, either in their former position on modified duties or a different role in the company and, importantly, reducing the number of claims by improving work safety and injury prevention.

I believe the proposed amendments have broad support from stakeholders, and this is understandably so. Employers will no doubt welcome the opportunity to directly influence their own levy, which will now be termed a 'premium' rather than be tied to the industry average. Unions and injured worker advocacy groups will recognise that any reduction to a business's premium will be as a result of improved outcomes for injured workers and employees, or at least that is the intention.

This is a reform that should have been put forward by the government three years ago when we were debating the Workers Rehabilitation and Compensation (Scheme Review) Amendment Act, instead of the provisions that further scaled back injured workers' entitlements which have been universally denounced as draconian. Creating an incentive for employers to work with a claims agent to reduce the cost of claims and, importantly, reduce the number of claims by improving occupational health and safety is just common sense and is far more likely to achieve the desired outcome than the stick approach that was at the core of the 2008 act. This is particularly true given that that stick was used to beat injured workers, rather than being directed at employers who were in a position to influence outcomes.

The bill also proposes to rename a workplace injury from 'disability' to 'injury' to better reflect the fact that people can and do recover. As I said as an interjection to the Hon. Rob Lucas, we only have to listen to the advertisements on FIVEaa to know that injured workers, as far as WorkCover is concerned, only really have to learn to use a saw again before they are back off to work and all is well and good.

Whilst I do not fully subscribe to the notion that barriers to injured workers' return to work is solely psychological, given the failings of rehabilitation services and the like, I can see how viewing yourself as disabled rather than injured could hinder your recovery. In recognising that many injured workers do recover and return to work, the act will subsequently cease to acknowledge that many injured workers do not.

Whilst I know it is only semantics, it will mean a great deal to permanently disabled workers, such as Mr Alex Mericka. From memory, he raised in the Workers Compensation Tribunal the issue of him being called an 'injured worker', which to his mind implies that he could recover. Despite wanting nothing more than to go back to work, Mr Mericka has come to accept that he is permanently disabled, has sought recognition of this, and to be addressed as such in the tribunal. Recognition will now only come when permanently-disabled workers are pushed off the scheme onto the disability pension, as so often occurs.

I use this opportunity to once again congratulate Mr Mericka on his recent victory in the Workers Compensation Tribunal, a judgement I would encourage all members to read. I express my disappointment at the WorkCover Corporation's decision to appeal this, after a decade. I believe it has been announced today that Mr Mericka has gained legal representation for his appeal by Mr Rino Zollo from Coates Lawyers in Port Lincoln. I am hopeful that Mr Zollo will rekindle Mr Mericka's confidence in the legal profession, which sorely let him down in the past. This is something that our Premier could perhaps review.

I am aware that the Liberal Party intends to put questions to the minister relating to assurances that different employer groups have received from the government, and will consider amendments if answers are not forthcoming. I indicate that I am happy to accommodate this and will look closely at any amendments that they move. If the government can give a key stakeholder an assurance on a particular issue in a back room, then it is only right that that assurance is made known to the parliament and to the public. With that said, I support the second reading and very much look forward to the committee stage.

The Hon. T.A. FRANKS (20:22): I rise on behalf of the Greens to support the second reading of this bill. In summary, this bill seeks to enable a new approach to employer payments in the South Australian workers compensation scheme and seeks to provide a financial incentive to employers to achieve better occupational health and safety practices, and hopefully fewer workplace injuries.

As it stands currently, employers pay a levy based on their industry classification and the amount of remuneration paid to employees. The total amount collected from those registered employers is about 2.75 per cent of the total remuneration paid to employees by registered employers. The average levy rate is set by the WorkCover board each year on actuarial evaluations.

This bill that has been introduced by the minister and current Treasurer is certainly a change in approach. As the Hon. Ann Bressington mentioned, it is a welcome approach to see a carrot rather than a stick being used when it comes to issues of WorkCover. The changes seek to influence employer behaviour by rewarding good performers (those with low injury rates) and by penalising poor performers (those with high injury rates). It is a design that is based on similar systems in New South Wales, Victoria and Queensland.

I understand, from the briefings given to us, that the bill has been well consulted. I would like to pay particular attention to the fact that the minister afforded us not just one but two briefings on this bill, and I do thank the minister for that. I particularly thank minister Jack Snelling, the Minister for Workers Rehabilitation, not only for making the information of the stakeholder consultations available in verbal form but also for giving us the written documentation that supported the presentation that we were given by government.

I would also like to thank the ministerial adviser to Hon. Jack Snelling, Joshua Rayner, the WorkCover CEO, Rob Thompson, and Emma Siami, director of policy at WorkCover, for their briefings. I say that because it has actually been a pleasure to work with a minister who has provided information whenever we have asked for it and gone out of his way to be, I think, reasonably transparent about how this bill comes before us and what the information is that supports this bill.

One essential amendment in this bill is that, where a worker dies as a result of a compensable injury, the act makes provision for compensation in the form of weekly payments to a dependent partner or child. The act will provide a lump sum payment to a dependent child, and I note that, currently, where a worker does not leave a financial dependant, neither the lump sum nor the weekly payments are made.

I understand it is fixing an error of drafting that has previously existed, and it is a technical amendment but I think an important one to fix a 2008 drafting error. I understand that WorkCover currently does not necessarily discriminate in the way that this drafting error is sought to be fixed, but certainly it is good to have the surety that this will clear up that matter. I also note that this, of course, is separate from any penalty that might apply resulting from an investigation by SafeWork SA.

I note that this bill before us could open up opportunities to address the WorkCover scheme in this state and, certainly, it is tempting to use it as an opportunity to raise the raft of issues that could be raised when it comes to WorkCover in this state. This is a scheme which does not currently serve injured workers, and it is certainly not serving the South Australian people. However, I am assured that the government under the new regime is aware of the many flaws of the current WorkCover scheme, and I remain hopeful that we will see a further bill before us which is far more comprehensive and certainly affords an opportunity to improve this very flawed system. That said, if the government does not put one up, I am sure opposition members and, certainly, the Greens will do so in the new year.

The importance of passing this bill before the end of the year is understood by the Greens. There is a need for the timely introduction of the new employer payments approach, and that is why this bill has come to us in a scaled-down form from the format in which it was originally tabled in the House of Assembly the first time round. As I say, this is a bill which has been consulted on by all stakeholders, and it is the agreed bill; and the Greens certainly note that, while it does not have everything that everyone might have wanted, it does have the things that everybody agreed to.

I note that, while some things are yet to reach that agreement and this is a very streamlined bill, it does need to be passed by the end of this year to allow for the proper establishment of the new arrangements for the employer payments scheme. This will allow for both industry and employers to be properly prepared and put their systems in place to take effect in the 2012-13 financial year. Certainly, from the Greens' perspective, we will not be using it as an opportunity to move substantial amendments to the scheme overall but, with that warning to government that should they not look at reviewing and reforming the WorkCover scheme, certainly the Greens will be taking that up in the new year. I commend the bill at its second reading stage.

Debate adjourned on motion of Hon. J.S.L. Dawkins.