Return to Work Corporation of South Australia (Crown Claims Management) Amendment Bill

Second Reading

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (16:45): I move:

That this bill be now read a second time.

I seek leave to have the second reading speech and explanation of clauses inserted in Hansard without my reading it.

Leave granted.

Today I am introducing a Bill to make amendments to the Return to Work Corporation of South Australia Act 1994 to allow for the management of new work injury claims of employees of the Government to be administered by ReturnToWorkSA.

Throughout the reform of workers compensation in this State, the Government's focus for South Australia has been on improving health outcomes for people injured at work. The Government has had the opportunity to observe the journey that ReturnToWorkSA has taken in improving the quality and consistency of its claims management services to over 50,000 registered employers and their workers in South Australia.

In the unfortunate event of a workplace injury, all South Australian employees should expect to receive the same level of support in order to facilitate their return to work, no matter where they work. The Government's aim is to ensure a consistent approach across the State.

The current arrangements with Crown agencies do not support this consistency, and unless we change the status of the Government's injury management services to align with our private sector employers, this inconsistency will remain.

In overseeing the public sector, this Government has also considered whether there were opportunities for improvement for the Crown, as the employer of around 12% of the South Australian workforce. Employing over 100,000 South Australians, our public sector is a significant employer in this State.

The changes proposed in this Bill will bring the public service in line with the rest of the State with regard to return-to-work outcomes and services, resulting in greater consistency and transparency. The Government is focused on ensuring injured workers are supported with the very best services to optimise their recovery and return to work.

I want to make it clear that the Government's decision to move the management of work injuries to ReturnToWorkSA is not about getting a cheaper service – it is about getting a consistent and high quality service focused on recovery and return to work for all of our employees who are injured at work. We also want to take advantage of the good work that ReturnToWorkSA has done in improving the service standard provided to injured workers and their employers.

In reviewing the various approaches taken by different Government agencies, it's clear that it would be difficult for the Crown to emulate the same level of consistency and quality of approach to claims management that ReturnToWorkSA has been able to deliver across the registered scheme; noting that work injury insurance is ReturnToWorkSA's core business.

Currently within the Crown there are 12 separate operating units undertaking injury management functions for their agencies. These injury management units include management and administration structures which vary from agency to agency.

With 12 separate Units working in silos, there is inconsistency in the way claims are managed. For example, depending on the agency you are in, you may have in-house rehabilitation or outsourced rehabilitation, you may have different approaches in early intervention, or you may have centralised or decentralised claims management. These differing arrangements also mean that best practice cannot be easily measured, acted on, or implemented across the Crown.

This variability is particularly notable for workers with a serious injury claim. Currently all Crown agencies have small numbers of this type of claim and there is no overarching structured approach on how these workers are supported. Due to these small numbers, agencies have not developed the same level specialist expertise in supporting workers with significant injuries as that of ReturnToWorkSA. The Government feels that transferring these claims to ReturnToWorkSA will bolster the support provided to these injured workers.

ReturnToWorkSA has a well-established and specialised unit that supports workers with the most serious injuries, for example workers with a traumatic brain injury or limb amputation, whose lives have been significantly impacted by their injury. These staff deal exclusively with significant injury claims giving them the expertise and ability to support these injured workers.

It is important to acknowledge the focus of the Return to Work Scheme on recovery and return to work, as well as the health benefits of work. A consistent focus on recovery and return to work is something that the Government believes the Crown's employees can benefit from. This is another reason why the Government has made the decision to insure with ReturnToWorkSA.

In addition, ReturnToWorkSA has sophisticated data analytics capability, which is used as a risk management tool. This capability would be of major benefit for the Crown and would be a cost effective strategy in the risk management of current and future claims. Improved reporting and benchmarking of workers compensation performance in Crown would be beneficial to identify the injury risk across the sector and compare results across the agencies. This level of data capability and analysis will allow for return to work policy development, which also encompasses the public sector. It will also make it easier to gather evidence on public sector wide trends, enabling greater benchmarking.

Injured employees legislated entitlements will not be impacted by this Bill. Worker entitlements are governed by the Return to Work Act 2014 and these entitlements will not change. ReturnToWorkSA has already established systems and structures that currently do not exist within the Crown that assist in improving service delivery. This includes access to phone reporting without the need to fill in paper based claims forms. This is generally not the case across government agencies, with most claim notification being done via a paper form, which can lead to delays for the worker. In addition, ReturnToWorkSA has Mobile Claims Managers who are out on the road visiting injured workers and employers in order to provide face-to-face and personalised service aimed at supporting workers to remain or return to work.

The Government believes this decision will be good for our employees, good for the Crown and good for the State.

In terms of the costs, Government agencies have already fully budgeted for future costs associated with workers compensation claims. The proposed arrangements will result in no net expenditure increase, but rather a change in the nature of expenditure over time from the direct costs of workers compensation, to a payment to ReturnToWorkSA.

A key point is that the arrangements for Government agencies will operate separately from the current registered Scheme. There will be no effect on the premium for the current registered Scheme for private employers as a result of the proposed reforms. ReturnToWorkSA will recover the costs of the Government's workers compensation claims, and its own administration costs in managing those claims. It will generate no profit (or loss), nor will it improve (or deteriorate) its net asset position as a result of the reforms. The broad intent is to transfer the management of the Government's workers compensation claims to ReturnToWorkSA and achieve a neutral financial outcome for both RTWSA and Government agencies. As is the case now, the factor that will dictate financial outcomes for the Government is the incidence of workplace injury and the effectiveness of claims management and the achievement of return to work outcomes.

It is expected that over time the consistent expert administration and management of claims, as well as the experience and advice to agencies from RTWSA, will result in lower costs, which will flow through as a benefit to Government agencies. As claims build up over time, ReturnToWorkSA, based on actuarial advice, will base its premium each year on the payments it projects it will incur in managing agency claims, plus administration costs. No more, no less.

Each Government department, and statutory corporation (except for SA Water) will be levied a separate premium, based on estimated individual experience in the coming year. The premium will be levied at the departmental level; there will be no further delineation of charge based on divisions or worksites (for example, individual schools or hospitals). The premium will of course be based on the aggregate expected incidence of workplace injury over an entire department's activities. As is the case currently however, agencies will retain complete flexibility in how it devolves its charges and budgets over its divisions and worksites.

The 2017-18 premium will be set at approximately $26 million in total for the Government, again reflecting the expected cost of new claims next year, plus administration costs for ReturnToWorkSA. This will be broken up based on the expected cost for each agency. ReturnToWorkSA will invoice agencies twice yearly in equal instalments.

As self-insurers, Government agencies already pay ReturnToWorkSA a self-insurer levy, which in total adds to approximately $5 million each year. This is estimated to be sufficient to cover the initial administration costs to be incurred by ReturnToWorkSA in 2017-18 in managing the Government's claims. For continuity, agency premiums will include a continuation of this equivalent charge next year.

Moving forward, as the number of claims build up in ReturnToWorkSA, so too equally will ReturnToWorkSA 's administration costs. As the task of managing the Government's residual (pre 1 July 2017) claims reduces, so too will its administrative costs. All functions that ReturnToWorkSA takes on will no longer be performed individually by Government agencies.

The transition will be such that at some point, agencies will no longer be managing or incurring costs directly for residual claims, and all expenditure incurred in regards to workers compensation will be via premium payments to ReturnToWorkSA. In other words, the build-up of an annual premium will be complete.

Agencies have overwhelmingly expressed a desire under the new arrangements to continue to have a direct linkage of their financial charge to their own individual experience in regard to workers compensation claims.

The principles underpinning the premium framework therefore will remain consistent over time, even in a full scheme scenario. Agency charges will continue to be directly linked to their estimated claims costs, which will continue to be informed by actuarial projections. ReturnToWorkSA will not generate profit from the arrangements, and agencies will only pay based on their own experience.

These gains are consistent with the Government's economic priorities for South Australia, as outlined in the state's Strategic Plan, promoting our state as the best place to do business, and enabling innovation through improved data collection and analysis.

The Government's intention is that the transfer of the injury management of all new Crown employee claims to ReturnToWorkSA takes place on 1 July 2017. However, the Bill provides flexibility with regard to certain agencies and instrumentalities of the Crown. SA Water, Minda, the Royal District Nursing Society and the Royal Society for the Blind require particular attention and are likely to have need of a later date of transfer in order to ease their transition. ReturnToWorkSA is providing support to these entities to explore the most appropriate option for them.

The Government's aim is to provide a streamlined service which will ensure all South Australian employees achieve their return-to-work outcomes in a consistent and timely manner. This is not only good for workers, but also benefits the economic and social stability of our state. This approach will help to achieve the goal of a more consistent and transparent return-to-work system throughout South Australia.

In summary, this Bill makes changes to the Return to Work Corporation of South Australia Act 1994 to facilitate the administration of all new work injury claims to ReturnToWorkSA, promoting consistency, efficiency and equity in the Scheme.

I commend the Bill to members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Return to Work Corporation of South Australia Act 1994

4—Insertion of Part 5A

This clause inserts proposed sections 24A and 24B.

Part 5A—Crown employment

24A—Cessation of registration of Crown as self-insured employer

The proposed section operates to cease the operation of the deemed registration of a Crown entity as a self-insured employer under section 130 of the Return to Work Act 2014 either on the commencement day (in the case of a Crown entity that is not a designated Crown entity) or on a day specified by the Minister in the case of a designated Crown entity.

A delegation of powers and discretions of the Corporation under section 134 of the Return to Work Act 2014 may continue in relation to injuries occurring before the day on which the relevant deemed registration ceases until a specified day.

Proposed subsection (3) sets out the power of the Minister to specify different days in relation to different entities for the purposes of subsection (1)(b) and subsection (2).

Proposed subsection (4) defines certain terms for the purposes of the measure.

24B—Transitional Regulations

The proposed section inserts a power to make regulations of a saving or transitional nature. Regulations may be made to make provision in relation to when injuries are to be taken to have occurred for the purposes of section 24A(2).

Debate adjourned on motion of Hon. S.G. Wade.