Return to Work (Scheme Sustainability) Amendment Bill

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. K.J. MAHER (Attorney-General, Minister for Aboriginal Affairs, Minister for Industrial Relations and Public Sector) (16:23): I move:

That this bill be now read a second time.

The Return To Work scheme is one of the most important industrial safeguards for South Australian workers. It is designed to ensure that people who are injured in their employment are treated with dignity and respect and receive appropriate support to recover from and return to work. It is essential that the scheme is financially sustainable in the long term so it can continue to support injured workers without imposing an unjustifiable financial burden on South Australian businesses.

A scheme which is not financially sustainable is in nobody's interests, least of all injured workers. One of the goals of the scheme was to end years of turmoil that had affected the former WorkCover system. While WorkCover regularly had an average premium of 2.75 per cent, the Return to Work scheme has a legislative target to achieve an average premium below 2 per cent. It has met that target in every year since the current scheme began.

As many members of this council would be aware, the Summerfield decision has challenged the scheme's capacity to meet this target by allowing more workers to reach the seriously injured threshold and continue to receive income support until retirement age by combining impairments from related injuries together. The former Liberal government had three years to respond to the pressures created by the Summerfield decision after it was first handed down in May 2019.

The former Liberal government made a clear and deliberate policy decision to take no action and instead left South Australian businesses staring down the barrel of a premium rate of 2.2 per cent or more, which would be the highest of any state in Australia. Unlike the former government, we will take action so that these draconian rates are not imposed on South Australian businesses. We will take action to ensure the sustainability of the scheme.

Just as importantly, though, this government recognises that the financial sustainability of the scheme has to be balanced, with injured workers receiving adequate support and compensation. We have listened to concerns from members of the community, including concerns articulated by members of this council, regarding the now-withdrawn Return to Work (Permanent Impairment Assessment) Amendment Bill.

We recognise that workers suffering significant impairment from multiple related injuries should not be disadvantaged compared with other injured workers. Fundamentally, workers with the same level of impairment should be treated in the same way. Following extensive discussion with both businesses and worker representatives, the government has reached broad consensus on a new package of reforms to ensure the scheme is financially sustainable for years to come while also ensuring that seriously injured workers receive the support they need.

Under this bill, the same injury or cause test that formed the basis of the Summerfield decision will remain the test for the combination of impairments under the act. The government does not want to see a situation where two different workers suffering from identical injuries are treated completely differently based on whether those injuries arose from one event or a series of events.

Through the combination of injuries, many workers will be assessed with a higher level of whole person impairment than would have been the case as the scheme operated before the Summerfield decision. This has meant there will need to be an adjustment to the seriously injured threshold to better reflect an appropriate level of impairment beyond which a worker is entitled to income support until retirement age and medical expenses for life.

The option which provides the fairest result is to increase the threshold from 30 to 35 per cent, with a commensurate increase in the economic lump sum payment received by those who would otherwise be taken to be seriously injured. This higher threshold will not apply to psychiatric injuries, which remain excluded from accessing lump sum payments.

The scheme retains protection for workers who do not reach the seriously injured threshold. Those workers will still receive up to two years' income support and up to three years of medical expenses. For those workers with a permanent impairment greater than 5 per cent of whole person impairment, they will receive a lump sum payment for economic loss and a lump sum payment for non-economic loss.

The transition provisions provide that the changes to the seriously injured threshold will only apply to workers who have not had a final examination for the purposes of a whole person impairment assessment before the designated day. It also provides that workers who have been deemed as seriously injured or interim seriously injured before the commencement of the amended act will continue to be regarded as seriously injured or interim seriously injured workers as a result.

Not all seriously injured workers want or need an ongoing attachment to the scheme. Under this bill, seriously injured workers will be given the choice to receive a lump sum payment for economic loss instead of ongoing income support payments. This gives injured workers more options and the freedom to make the best decision for their own health, quality of life and future wellbeing. It is equally important that there are safeguards in place to ensure a worker makes an informed decision in this regard. Before electing to receive this lump sum payment, the worker must first receive professional financial and medical advice.

Further, the small number of seriously injured workers with a whole person impairment of 50 per cent or higher must receive the approval of the South Australian Employment Tribunal that the decision is in their best interests. There will be no option to receive this lump sum entitlement for ongoing medical expenses, a further protection for injured workers.

Should the worker find themselves in the unfortunate circumstance where the lump sum payment has been fully spent, they would still have access to medical entitlements for the remainder of their life. This ensures that the worker still receives treatment and care for their work injury regardless of their personal financial circumstances.

There is no time limit on when the worker could choose to apply for the lump sum payment. They could apply for it as soon as they are deemed seriously injured or some years later. However, there will be no financial advantage for the worker should they make a later decision to elect for a lump sum payment, as the figure will be reduced by the weekly payments that they have received beyond their first 104 weeks.

In this bill, the provisions in relation to interim serious injury are being changed to ensure that there are appropriate processes in place to consider whether an injured worker's injury has been stabilised so that the worker can undergo the whole person impairment assessment. This bill also corrects a drafting error which prevents some workers from receiving supplementary income support following surgery after their entitlement to weekly payments has ended.

This error has given rise to circumstances where injured workers have been without any income support while recovering from surgery during periods when they have no capacity to work. This is clearly an unintended outcome and forces workers to either delay surgery or bring surgery forward inappropriately. This bill seeks to remove the anomaly by minor amendments to section 40(1) of the act.

The government shares the concerns of many doctors, workers and legal professionals about changes made to the second edition of the impairment assessment guidelines under the former government. The impairment assessment guidelines play a crucial role in determining the amount of compensation an injured worker receives. The guidelines should provide an objective, fair and consistent method for assessing permanent impairment arising from work injury.

The government recognises it is appropriate and proper for parliament to have greater oversight of the impairment assessment guidelines. This bill ensures that future editions of the guidelines will be a legislative instrument subject to parliamentary disallowance. Currently, there are multiple editions of the assessment guidelines in operation. This creates administrative difficulties, as well as uncertainty and unnecessary complexity for those who use the guidelines, such as accredited assessors, lawyers and the South Australian Employment Tribunal. The different editions can also result in different outcomes for some workers.

The bill addresses this by providing that the next edition of the impairment assessment guidelines will apply regardless of a worker's injury date. This is so only a single edition of the impairment assessment guidelines will be in operation at any one time. However, when an injured worker has, before the commencement of the new guidelines, given written notice to the corporation that selects a particular accredited practitioner for the purposes of a whole person impairment assessment for their work injury, the new guidelines will not apply and the version of the guidelines that applied immediately before will apply. This is set out in the transitional provisions.

Following the passage of this legislation, the government intends to consult with stakeholders in relation to a new edition of the impairment assessment guidelines with the aim of retaining those improvements made in the second edition while rolling back changes which resulted in arbitrary and unfair outcomes for injured workers. I seek leave to have the explanation of clauses inserted in Hansard without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

The measure will be brought into operation by proclamation.

Part 2—Amendment of Return to Work Act 2014

3—Amendment of section 4—Interpretation

The principal Act draws a distinction between physical injury and psychiatric injury in a number of cases, and this distinction is relevant to some of the amendments being made by this measure. It has therefore been decided to include a definition of 'physical injury' in the Act, which is to be defined as any injury other than psychiatric injury.

Another key concept is the concept of 'stabilised', especially in connection with some of the amendments to be made to the principal Act by this measure. It has been decided to include a definition for this concept and as it connected to the assessment of impairment under the Impairment Assessment Guidelines, it has been decided to adopt the definition used in the guidelines to provide consistency between the Act and the guidelines in their application under the Act.

4—Amendment of section 7—Injury must arise from employment

This is a consequential amendment (relating to the definition of 'physical injury' to be inserted into the Act, and the distinction between psychiatric injuries and other injuries).

5—Amendment of section 21—Seriously injured workers

The principal Act is to be amended so that a seriously injured worker will now be, in the case of a worker whose work injury is a physical injury, a worker whose work injury has resulted in permanent impairment with a degree of whole person impairment assessed to be 35% or more. (For a psychiatric injury, the percentage is to remain at 30% or more).

Amendments are also to be made so that an interim decision that a worker may be taken to be a seriously injured worker will initially have effect for a period of 52 weeks (unless brought to an end sooner). The Corporation will then be able to extend this period if the Corporation is satisfied that the work injury to which the interim decision relates has not stabilised. More than one extension will be possible.

6—Amendment of section 22—Assessment of permanent impairment

It is proposed to change section 22 as it relates to the commencement and application of amendments to the Impairment Assessment Guidelines, or to the substitution of new guidelines. An amendment or substitution of the guidelines will apply in relation to an injury regardless of whether the injury occurred before or on or after the commencement of the amendment or substitution.

Proposed subsection (19) provides for the guidelines to be disallowable.

The opportunity is also being taken to provide for greater consistency between the wording in subsection (8) and (10), by replacing the word 'trauma' in subsection (10) with the word 'cause'.

7—Amendment of section 33—Medical expenses

This is a consequential amendment relating to new section 56A.

8—Amendment of section 40—Supplementary income support for incapacity resulting from surgery

This clause amends section 40 of the principal Act to delete 'under section 33(21)(b)' from subsection (1). This will remove the limited application of the provision, which currently only applies to surgery approved by the Corporation under section 33(21)(b).

9—Amendment of section 53—Redemptions—liabilities associated with weekly payments

Section 53 of the principal Act is to be amended to provide that before a worker enters into an agreement for the redemption of a liability to make weekly payments under Part 4 Division 4 of the Act, the worker must receive financial advice from a qualified financial adviser about the investment or use of money to be received on the redemption. Currently, the worker only needs to receive 'competent financial advice' (which may not necessarily be provided by a qualified person).

In connection with new section 56A, if a seriously injured worker has made an election under that section, the worker will not be able to apply for the redemption of a liability under section 53 for the injury or injuries for which the election was made.

10—Amendment of section 56—Lump sum payments—economic loss

These amendments are being made in conjunction with new section 56A, so that a seriously injured worker will be able to elect under that section to receive a payment under section 56 (subject to the scheme to apply under these new provisions).

(Section 56 provides lump sum compensation for loss of future earning capacity for a worker who has been assessed to have suffered permanent impairment as a result of a work injury. Currently, seriously injured workers are not able to receive an entitlement under section 56 on account of other entitlements provided to them under the principal Act.)

As part of these reforms, the maximum amount of a payment will be the prescribed sum applicable for 34% of whole person impairment, and the total payment that a worker will be entitled to receive under the section will be $434 863 (indexed).

11—Insertion of section 56A

This clause inserts new section 56A.

56A—Seriously injured worker—election to receive lump sum payment

This new section is the provision that will allow a seriously injured worker to elect to receive a lump sum payment under section 56 (subject to the new provisions contained in the scheme). However, the scheme will not apply in relation to a psychiatric injury or consequential mental harm, or in relation to noise induced hearing loss.

An election will be able to be made once the worker has been assessed and determined to be a seriously injured worker as contemplated by the principal Act. An election will not be able to be made by a worker who is subject to an interim decision under section 21(3) of the Act pending an assessment of permanent impairment under Part 2 Division 5 of the principal Act.

A seriously injured worker who has made an election will cease to be entitled to recovery/return to work services within the meaning of section 24(1) for the relevant work injury, and will cease to be entitled to weekly payments under section 41 of the Act for the relevant work injury.

An election will take effect from the day on which the election is received by the Corporation (unless the matter is the subject of an application to the Tribunal, in which case the election will take effect from the day on which the election is approved by the Tribunal (if so approved)).

Once an election is made, the worker will remain entitled to receive weekly payments under section 41 until the lump sum payment is made under section 56, or the period of 28 days expires (whichever first occurs).

The amount paid under section 56 will be reduced by the amount of any weekly payments received by the worker under section 41, or as a result of an interim decision of the Corporation made under section 21(3).

A worker will not be able to make an election unless the worker has received advice from specified classes of experts, consistent with the approach in section 53 for redemptions.

An election made by a seriously injured worker whose degree of whole person impairment has been assessed to be 50% or more has no effect unless approved by the Tribunal.

A worker who has been assessed as being a seriously injured worker will only be able to make one election under this section.

A worker who has entered into an agreement for the redemption of a liability under section 53 of the principal Act will not be able to make an election under this section that relates to the same work injury or injuries.

12—Amendment of section 72—No damages unless whole person impairment of at least 30%

These are consequential amendments.

13—Amendment of section 73—Seriously injured workers—special provisions

These are consequential amendments.

14—Amendment of section 97—Reviewable decisions

This amendment is related to new subsections that are to be inserted into section 21 of the Act relating to the period or periods for which an interim decision that a worker may be taken to be regarded as a seriously injured worker will have effect. A decision not to extend the period of operation of an interim decision will be a reviewable decision under the principal Act.

15—Amendment of section 134—Delegation to self-insured employers

This is a consequential amendment.

16—Amendment of Schedule 7—Prescribed sum—economic loss

This amendment will add extra items to the table that applies for the purposes of section 56, so that the amounts applying as a prescribed sum will include items for whole person impairment from 30% upwards.

17—Amendment of Schedule 9—Repeal and transitional provisions

It will now be possible for the Governor to make transitional provisions, or additional transitional provisions, associated with an amendment of the principal Act by another Act.

Schedule 1—Transitional provisions

1—Interpretation

This clause includes a definition of designated day, which will mean a day appointed by proclamation as the designated day for the purposes of the provision in which the term is used.

Various terms used in the Schedule have meanings consistent with meanings they have in the principal Act.

2—Application of amendments—seriously injured workers threshold

These provisions relate to the change to the threshold for a worker who has suffered a work injury that has resulted in permanent impairment to be regarded as a seriously injured worker under the principal Act.

3—General provision—seriously injured workers

Subject to the Schedule and to the other provisions of the principal Act, a person who has already been determined to be a seriously injured worker under the current threshold (being a worker who has been assessed and determined to be a seriously injured worker under Part 2 Division 5 of the Act before the relevant designated day) will continue to be regarded as a seriously injured worker.

A similar provision is included for a worker who is taken to be a seriously injured worker under section 21(3) of the principal Act immediately before the relevant designated day under an interim decision of the Corporation.

4—Elections—seriously injured workers

A worker who has been assessed to be a seriously injured worker under the current scheme will be able to make an election under new section 56A, subject to the provisions set out in this clause. In the case of a worker subject to an interim decision under section 21(3) immediately before the designated day, the worker will only be able to make an election if they are subsequently determined to be a seriously injured worker other than as a result of an interim decision.

5—Interim decisions under section 21(3) of Act

This clause provides for the application of the new provisions relating to interim decisions under section 21(3) of the Act to existing circumstances.

6—Amendment or substitution of Impairment Assessment Guidelines

This clause makes provision for the application of the amendments relating to when an amendment or substitution of the Impairment Assessment Guidelines takes effect.

7—Impairment Assessment Guidelines

This clause expressly provides that the existing Impairment Assessment Guidelines are not subject to the disallowance scheme to be introduced by this measure. However, the new provisions will apply in relation to any amendment or substitution of those guidelines that takes effect on or after the designated day.

8—Supplementary income support

The amendment made to section 40 of the principal Act will apply in relation to surgery approved by the Corporation on or after the designated day.

Debate adjourned on motion of Hon. H.M. Girolamo.