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House of Assembly - Fifty-First Parliament, Second Session (51-2)
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WORKERS REHABILITATION AND COMPENSATION (SCHEME REVIEW) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 1 April 2008. Page 2428.)

Mr HANNA (Mitchell) (12:02): I am speaking today in opposition to the Labor government's moves to cut injured workers' benefits through legislation. It is really important to go back to the history behind workers compensation in South Australia. The starting point is to go back to the 1971 act which formalised what was previously a common law response to people being injured at work. The 1971 act left employers to go out into the insurance market and get insurance to pay out injured workers when there was an injury at work. Jumping forward quickly, when it came to the early 1980s, insurance premiums had soared and there were widespread complaints from the business sector.

At the same time, it was recognised that it was something of a lottery for injured workers, some of whom did well out of that scheme and some of whom did very poorly. There was actually interest across the opposing sectors (if I can describe it that way) of workers and employers to reform the system. The Labor government was more than happy to be part of that. When that eventually resulted in legislation, after many years of consultation and negotiation between the parties, the Hon. Frank Blevins, when he introduced the 1986 legislation, reviewed the negotiations to that point.

He paid particular credit to the Hon. Jack Wright, who was a prime mover behind getting agreement on a workers compensation scheme which would be suitable for both workers and employers. Suitable for employers because their premiums vastly reduced once the legislation was introduced—that is to say, their WorkCover levies were substantially less than what they were paying to private insurers across the board—and workers, although they suffered a reduction in their rights due to common law remedies being capped as to the amount of damages they could recover, at least had a set of statutory entitlements which was clear and straightforward. It was also a no fault scheme, so that workers did not have to make out a case for negligence on the part of the employer. That was one of the hit and miss aspects that, on the workers' side, was sought to be remedied by the statutory scheme.

When I talk about insurance premiums coming down, they were coming down in some cases in the order of 20 per cent of payroll in some industries to maybe 6 per cent, or something of that order. For some industries, insurance premiums paid by employers were cut by a third. That says something about the insurance market and the fact that insurance companies will sometimes gouge when they can, but it also says something about the lack of emphasis on rehabilitation and return to work and workplace safety. That, of course, was one of the goals of the 1986 legislation when it was brought in.

The point I make is that employers got a really good deal out of the 1986 legislation. They may not think so now, but at the time there was a lot of employer support for the deal. The legislation itself was massaged through parliament. The Labor government did not have the numbers in the upper house and modifications were made to the original proposal to make it even more palatable to employers including, on the motion of the Democrats at the time, the allowance for big businesses to self-insure.

Moving forward to 1992 when, of course, there was a hung parliament—normally I am in favour of hung parliaments because I think the state is usually better managed when no one party has absolute control of the parliament—one of the consequences was that the Liberal opposition was able, at the behest of employers, to push major changes to the scheme. The most significant change, which got through in 1992 with the support of the speaker, was the abolition of common law rights entirely.

I have sat in this chamber when the Labor leadership—and I refer to Rann, Conlon, Foley and Atkinson—have venomously accused members on this side of the house, including myself, of wanting to bring back common law rights, as if it was some rotten, corrupt thing but, in fact, it is nothing more than allowing workers to sue employers for negligence. In other words, if someone does the wrong thing, I say that we should have recourse in our judicial system somewhere for damages to be paid; for the wrongdoer to be brought to account and pay money to the victim. Common law rights are nothing more nor less than that.

I thought it was a shame that common law rights were taken away from injured workers at that time; however, it is important to note that this had a major effect on the scheme's funding projections because, at that time, common law claims were paid from within the WorkCover fund. So, to cut out those common law claims obviously was going to reduce total outgoings from the fund.

Moving forward to 1995: of course, a Liberal government had been elected in 1993 and a wide range of cuts were made to workers' rights. Perhaps one of the most significant was the introduction of a two year review in relation to a worker's right to income maintenance. Workers with a partial incapacity for work were able to be given a letter which said, effectively, that they could do a certain type of work. That type of work would produce a certain income and, therefore, their income maintenance entitlement was to be cut by the amount of that work.

The Supreme Court ruled that, essentially, the work had to be available. It could not be some hypothetical, fanciful thing—you could not ask someone off the factory floor to get a job as an astronaut; it had to be realistic and it had to be available. The 1995 amendments basically reversed that and allowed the corporation or the claims managers to say to a worker, 'You can do a certain kind of job. It doesn't matter that the job does not exist in South Australia, or there might be one position and 10,000 applicants, you have to do that job and we can reduce your income accordingly.'

Basically, that has been the situation since then. What has happened in the scheme to lead to the drastic and cruel cuts that the Rann government is inflicting on workers at this time?

Well, there are a couple of significant things. I have said that it has been about claims management and it is unfortunate that the financial and insurance emphasis on the approach to managing claims has been at the expense of effective return to work. The claims managers through most of the history of WorkCover have not given enough emphasis to rehabilitation and return to work, thus frustrating the original objectives of the legislation. The Rann government cuts will not make that any better, despite a few million dollars being set aside for retraining and so on.

One significant factor was the political cut to the WorkCover levy prior to the 2002 election. As a gift to employers, the Liberal Party of the time instigated a cut to the levy with employers to pay less to the WorkCover fund and, understandably, the WorkCover fund suffered considerably as a result of the considerably reduced income. Since that time, and after a period when there was no chief executive officer for WorkCover, the WorkCover system financially has been improving. If one looks at the graphs one can see that there is reason to believe that the unfunded liability will gradually reduce over time with appropriate management.

That management needs to include proper use of redemptions, which are payouts. It means that where we have several thousand workers at present who have been on the scheme for more than two years—and in reality very few are likely to return to work—when the actuary looks at the unfunded liability of WorkCover, the actuary looks at paying them out their income maintenance, that is, 80 per cent of their wages approximately up to retirement age.

There are hundreds of workers, if not thousands, I am convinced who would be willing to take a few years' wages and get off the system, not be hassled by claims managers and not be sent for repeat medical examinations that they feel are unnecessary. They would take a few years' wages and get off the system. Actuarially that would mean a dramatic turnaround in the unfunded liability. In 12 months, if you applied redemptions appropriately, you could probably get the scheme back into the black, whereas it is about a billion dollars in the red now. I will not quibble about precise figures as I have only 20 minutes and I am simplifying things to some degree. However, the principle is sound.

There are plenty of people who want to get off the system. Over the past decade they have mostly been offered one or two years wages to get off the system, and people cannot afford that. They cannot afford to pay off their houses, and there is a Centrelink exclusion period, which means they cannot simply go straight onto disability benefits and have to live off any lump sum they get for a while before getting Centrelink benefits and, accordingly, offering one or two years wages has been fairly pointless and has had little effect in reducing the unfunded liability.

We come to perhaps the historic day of 22 February 2008 when the Labor caucus agreed to the package to reduce workers' benefits that we see in this legislation. The most significant aspect unquestionably is a two and a half year review process, which almost certainly will have workers shunted off the system. I have been somewhat charitable, perhaps too generous, in describing this as dumping workers on the dole after two and a half years after they have received payments as a result of being injured. That is perhaps too generous because, for many injured workers, if their spouse works they will not be entitled to Centrelink benefits or social security and effectively will have their income reduced to zero. Potentially this will apply to a couple of thousand workers.

When I have been out doorknocking, as I do regularly, I find that the initial response of many people is that they do not care, because it does not directly affect them, but once I ask people about where their children, husband or wife works, I often find that they start thinking about the sort of activities carried on in that workplace.

For example, even in supermarkets, which might appear quite benign to a lot of us, there are lots of injuries from boxes falling on people and hands being crushed, with people lifting machinery in the dock area, and so on. The point is that any workplace can result in workplace injuries. In fact, many of the areas where jobs are booming are quite dangerous—and mining is probably a good example. It can happen to any worker on any day they go to work. I have found that once people start thinking about that they realise that the cuts being implemented here by the Rann Labor Government are quite cruel.

What has led to them? Ultimately, it comes back to two things. On the part of the employers it is greed. They had a good deal when the 1986 legislation was brought in. They came back for another bite of the cherry in 1992 and common law was taken away from workers, so the worst performing employers, in terms of safety at work, could no longer be sued by the workers. Once the Liberal government came into office at the end of 1993 they came back for another bite of the cherry, and in 1995 changes were brought in to make it easier to take workers off benefits. Employers have come back and, through their political agents, they have been able to subvert the deal that was done in 1986. I stress again that that deal was struck largely as a result of consensus at the time.

The other aspect to this move to cut injured workers' benefits is what I would call a lust for power. Why would people such as Rann, Foley, Atkinson and Conlon agree to cutting workers' benefits? The Labor Party for over 100 years has stood for protecting the rights of working people—people who cannot necessarily speak up for themselves, people who are at their most vulnerable if they have been injured in the workplace. The Labor Party has traditionally stood up for these people.

It is an historic turnaround to have a Labor government introducing quite savage cuts to workers' benefits. I can only explain this in terms of the egos of those gentlemen about whom I have spoken and their desire to stay in power no matter what. How does that add up? Well, they are clearly currying favour with big business in this town and they are hoping that corporate donations will flow their way if these cuts are implemented—because there is a big financial gain for businesses in terms of reduced levies. It is not about unfunded liabilities. Quite clearly, it has been stated that these cuts will allow a reduction in levies. As I have said, the unfunded liability is turning around—and can be turned around—without cutting workers' benefits.

I want to bring a human element to my claim that workers will be cruelly afflicted by these cuts. One person I have in mind is Ian, who has a bad back from a lifting and twisting injury in the factory in which he worked. It was not due to his fault: he was simply carrying out his duties. But after repetitive strain his back gave in. Ian is a battler and he went back to work. He wanted to work and was given light duties, and he was working almost full time. He has been on income maintenance to top up to his pre-injury earnings (or 80 per cent of them) for a bit over 2½ years. He will be one of the first affected by this legislation if it passes, because it is retrospective. It will affect people such as Ian who have been injured for more than 2½ years. It means that at any time a review can take place to say that he is capable of some work; and he admits that he is capable of work. In fact, he wants to work. Therefore, he can have his income maintenance cut off.

The tragedy for Ian is that he works at Mitsubishi and shortly he will be out of that job—through absolutely no fault of his own. He has been a loyal employee for many years and he has been injured for more than 2½ years. At about the age of 50 he will not get another job anywhere. He does have a partial capacity for work and he can have his income maintenance cut under this cruel legislation. He does not know how he will pay the mortgage. That is just one example.

Another example involves a young man who was an apprentice to a butcher. For reasons of making a slicing machine easier to work and, hopefully, more efficient so that things could be done more quickly and, I suppose, with more productivity in the workplace and more profits ultimately for the employer, the guard was removed from that machine and the young man's hand was sliced off when he went to operate it. It does not really matter whose fault it is: what matters is that we have a young man without a great education who is minus one hand. The chances of his being gainfully employed are limited. But does he have a partial capacity for work? Of course he has. Under the cruel legislation the Labor government is bringing in, he will potentially—and, in fact, probably—have his income maintenance stopped 2½ years after the injury.

There are other cruel cuts in this legislation, such as cuts to the lump sum that workers get for pain and suffering under section 43 of the legislation. For example, if someone loses a finger it does not matter if they need that finger because they are a typist, musician or keen sportsperson. They can receive nothing because a threshold is being introduced, and if people are not seriously enough injured they will get nothing. I will bring in a host of amendments to try to bring some more balance to this legislation. Clearly, that has not been the approach taken by the government.

I want to finish with a quote from one of our most powerful, persuasive and tactically brilliant members of parliament. He said:

We will see injured workers threatened and harassed. We will see a government that will actively reduce benefits and work against the proper return-to-work arrangements that are essential if we are really committed to rehabilitation. We will see legislative and administrative action aimed at forcing workers onto social security, out of compensation, out of rehabilitation, out into the streets and onto social security. Instead of rehabilitation and support we will see this government enter into an adversarial approach to injured workers. It will cause massive financial hardship to many genuinely injured South Australian workers. It will cause stress to families and it will undermine personal dignity.

That is what this government is about, make no mistake about it. This bill is not innocuous: it is about a change in power. It is about an end to consensus, and it is about the end of industrial relations, commonsense and consultation in this state. This is a day not of historic reform but of shame. It is about turning the clocks back by decades, and members opposite know it.

That was said by the Hon. Mike Rann in 1995.

Time expired.

Mr RAU (Enfield) (12:22): I want to say a few words about this legislation, because it is quite important. It is important, obviously, for the individuals and the families of the individuals who are affected by this legislation; it is important for the people of South Australia because the legislation and its performance in terms of the fiscal performance of the WorkCover Corporation has an impact on all of us as taxpayers; and it is important because the legislation involves, really, a philosophical point of view which found favour in the 1980s in South Australia and was embodied in this legislation and has been with us ever since.

I would like to briefly start by saying what this debate, to the extent that we are going to be having a debate, is not about, and the debate is not about whether the unfunded liability of WorkCover is a problem. Everyone agrees on that. The debate is about what should be done in order to control the unfunded liability and bring it down. So, the parameters of the debate are, relatively speaking, quite clear.

In my opinion (and this is an opinion that I doubt would be shared by everyone in this chamber or, indeed, many people), the initial concept of WorkCover was flawed. It is obviously 20 years down the track now and to debate that is, to say the least, shutting the gate after the horse has bolted, but there are a couple of reasons why I think the initial concept of WorkCover was flawed.

The first reason is that it represented, in effect, a cost shift to the state, at the state's own behest, of expenditures that would otherwise be incurred by the commonwealth through the commonwealth social security network. Unfortunately, in Australia it is not possible for an individual to receive commonwealth benefits as a disability pension, as it is now called, and also receive an effective top-up from a state-based scheme such as WorkCover.

So what happened was that all the individuals who were injured and who would otherwise have been entitled, perhaps, to qualify for a Department of Social Security TPI pension, or whatever it might have been at the relevant time, became clients of WorkCover; and, to the extent that they became clients of WorkCover, the cost of maintaining those individuals was shifted from the commonwealth to the state—on an open-ended basis in the case of severely permanently injured individuals.

Secondly, the scheme contains no concept of fault, and I understand that there needs to be a safety net not based on fault. However, I do not believe that most people believe that an employer who does the wrong thing habitually by employees should not suffer a consequence as a result of their habitual failure to behave in a responsible manner for the people they employ.

The third problem with the scheme from its inception is that it never really offered individuals an opportunity to get on with their life; and, as a person who has practised extensively in this area as a legal practitioner, I can tell members that most people who have been involved in the WorkCover scheme for a period of time want nothing more than to get off the scheme—just get out of it. It creates a culture for people who find themselves required to reinforce their illness in order to maintain their income. This has got nothing to do with what is going on today, last week, last year, five years ago or 10 years ago, and it has everything to do with the initial concept, which, okay, with the benefit of hindsight, I stand here 20 years later and say, 'It was flawed.'

But the fact is that this is the scheme we have got. That is where the ball is, if you want to use the golfing analogy, and we have to play it from where it is. So, what do we do? Well, a number of suggestions have been made by different commentators, members of the opposition and the member for Mitchell about areas where, again, looking back through the rear-vision mirror, the WorkCover Corporation could have done better, and I agree that there are areas where it could have done better. I think that the WorkCover Corporation historically has not managed the fund as well as it might have; and if one needs proof of that one can look at the performance of the exempt employers by way of comparison.

I think, as the member for Mitchell does, that the attitude of the corporation historically to redemptions has meant that more people have been continuing to be engaged with the scheme than would be healthy for those individuals as individual human beings and healthy for the scheme. I think that the recoveries policies of WorkCover have been foolish, because unless they can get the full pound they do not take a penny and sometimes miss out altogether. I think that the rehabilitation focus—whilst historically again is the centrepiece of the WorkCover scheme—has not in fact delivered the rehabilitation services as and when required, which is in the first six to eight weeks following the injury.

The figures are clear. The evidence is clear. If you get a person rehabilitated intensively within that initial period after the injury their chance of successfully reintegrating into the workforce is very good. If you do not succeed within that period, rehabilitation is often little more than harassment and a benefit to the rehabilitation provider and no benefit to the individual concerned. Of course, again, talking historically, the scheme has eliminated the role of private sector risk management. You do not have the insurance officer coming around from insurance company X, saying to the negligent employer, 'Oh, goodness me, Mr Bloggs, you've had another 20 injuries here. Your premiums will go up.'

Of course, the scheme historically has provided for levy variations, which are meant to do the same thing, and it is a debate that people could or might have as to whether that has occurred. The fact is that all of that is now in the past. We now have a state of affairs which involves an existing scheme which, in as much as that scheme is administered by WorkCover, is performing poorly, to put it mildly, and something has to be done about it. The minister and the government have taken a good look at this and have come up with recommendations to deal with the problem, and the problem is the unfunded liability.

I can tell members here that the minister does not find the solutions palatable. Nobody in the government finds these solutions palatable. None of us find the solutions palatable and, I can say, some of us might suggest others, but the fact is that we have to come up with a solution, and the government has come up with a solution.

I was waiting; I was thinking that the opposition has some terribly bright people over there. They are going to think about this. They are going to spend time in their think tank to work it through, and they will come out and devastate the government with some very clever amendments. Or perhaps they will even take the principled stand, which one would have thought was consistent with their publicly expressed views to the effect that the government solution was a disaster, that it has nothing to do with changing benefits and that all we need to do is basically belt up the management of WorkCover—a position not one that they alone hold, I might say; it is a very broadly held view.

I was waiting to hear what was going to come from the opposition, because we all know that even though it does not necessarily control things in here, a combination of the opposition and a miscellaneous collection of folks somewhere else is capable of making changes should it choose to do so—at least changes that we would then have to reconsider.

After the big drum roll yesterday, the opposition's position was stated. In spite of all of its complaints, the fact is that this debate will probably go on for a long time and keep these poor people from WorkCover sitting here listening to us. This debate will go on and on and on, yet the opposition's position, which was stated quite eloquently yesterday by the Leader of the Opposition, is simply this: one, it has no ideas; two, it offers no options; three, it offers no solutions; and four, it agrees with the government.

Given that that is the position of the opposition, and the most constructive engagement that the opposition can make on this topic is to effectively say, 'Okay; we agree with you,' I do not know why we are still debating this. I do not know why the member for Morphett does not jump up at the end of my speech and say, 'Let's just dispense with the committee stage and the rest of the second reading, and let's put this thing through so that our colleagues in the upper house can do the same thing, and so that we can all vote for it and move on with other business.' The member for Schubert has hundreds of private members' matters that we could deal with instead of this.

Members of the opposition have complained about this and have made much merriment at the obvious discomfort of the government—and none of us here are running away from the discomfort we feel about this legislation. None of us are running away from the fact that the members of the trade unions are upset about this. Of course that is something which causes discomfort to members of the government; nobody is running away from that, but the point of the matter is that the government has put up the proposal. I thought that members of the opposition would find the chance of making mischief so irresistible that they would propose irresponsible amendments—and perhaps the occasional good one—to this legislation in order to curry favour with our colleagues who were demonstrating on the steps of Parliament House the other day.

I was waiting to see this odd coalition build-up between the folks who were on the front steps yesterday and those who sit opposite us here today. I was imagining the big group photograph, with the Leader of the Opposition, Janet Giles and all these other people with their arms locked, smiling under the big banners about 'Save WorkCover'. I was wondering when that was going to happen and, of course, it is not going to happen, because members of the opposition have actually decided that they are going to completely abdicate any responsibility for even proposing an idea.

Is that the best that Her Majesty's loyal opposition in this chamber can do on a provision such as this, which one would have thought, from their point of view, is manna from heaven, because it gives them an opportunity, one would have thought, to try to discomfort the government and press it where it has got the big bruise? Members opposite have decided, collectively, or individually—I do not know because I am not party to their caucus room—that what they are going to do is basically fall in line, but whinge anyway.

Members opposite cannot have it both ways: they cannot have their cake and eat it too. The opposition is either voting with the government on this, in which case it should wish this legislation a speedy passage so that the unfunded liability problem is dealt with, or it should come up with an idea, an option, a solution, or just cop it. It seems to me that it has excluded the first three of those options; they are not available to it, so why not go for the fourth, and we might even be able to go home at 6 o'clock!

Mrs REDMOND (Heysen) (12:37): It is my pleasure to follow the member for Enfield after that spirited contribution in which he accused us of having no ideas, no options, no solutions and we should agree with the government. There has never been a better statement of the position of everyone on the Labor backbench than that statement. They are simply getting up and making a noise because they would like us to solve their problem, their mess, and we are not going to do it for you, member for Enfield.

I am just stunned that you would get up and make a contribution like that and accuse us, when in fact you are not going to move any amendments, you are not going to come up with any ideas, you are not going to present any options and you are going to agree with the government.

That said, let me say, first of all, that it is my pleasure to be speaking on this bill and to announce to the house that I am not the lead speaker so I do not have to speak for hours. Unfortunately, I actually know a bit about this topic and it will be hard for me to cover it all in 20 minutes, because it is a very serious problem and it is a problem of this government's and this minister's making. We now have an unfunded liability of $843.5 million as at 30 June last year, let alone what it might be at by now, plus the extra money of—

Mr Venning interjecting:

Mrs REDMOND: It is $1.3 billion, in fact, when you think about the money of the government's own scheme, which also has significant debts. We had the unfunded liability down to something in the order of $67 million, and they have managed to blow it out to $1.3 billion in total over both the WorkCover scheme and the government's own departmental scheme. So, they have multiplied twentyfold what the unfunded liability was.

All the time we have kept asking questions, year after year, saying, 'What is the unfunded liability? It is going up. It's a problem. What are you doing about it?' and time and time again this minister got up and said, 'We've fixed this. We've appointed a new board. We've got these things in place.' Now we find that their final solution to the problem is actually to decimate the entitlements of the workers, and then the weak-willed people on the other side want to turn around and say that it is somehow up to us to fix it for them. Well, no; it is the government's problem, it is the government's solution and they can wear it.

We had an excellent record in running the system. As I said, we had it down to $67 million, or thereabouts, in unfunded liability and we did it without trashing workers' rights. This Labor government deserves to be hung, drawn and quartered by the Labor union movement for what they are doing to workers over this, especially when you look at the case of the self-insureds who, of course, use exactly the same legislation and manage perfectly well.

One would have thought that, if someone else is able to manage the same legislation and do the whole system and make it work with the same legislation, then it would have been an idea for the government to simply take some lessons from the self-insured group and say, 'What can we learn from them? How can we do it better within the structure that we have?' but, no, it did not do that.

Furthermore, they kept all these problems under wraps until after the federal election last year, and I remember the minister getting up time and again rabbiting on in this chamber about WorkChoices and how terrible WorkChoices was for the workers of Australia, knowing all along that as soon as this parliament resumed this year, he was going to introduce this legislation which is so appalling in the way it treats the workers.

As part of my answer to the member for Enfield's question, 'Why aren't we fixing it?', I will tell you why I do not want to fix it personally: I do not consider that there is any benefit for me in fixing the workers' rights when the Labor Party will not. I heard Janet Giles from Unions SA on Radio 891, just as I am sure nearly everyone in this chamber did, when she was asked a question about whether at the end of the day SA Unions would still fund the Labor Party at the next election and her answer was yes.

That is the case and that is the reality of the union movement, that no matter what the Labor Party does, Unions SA is still going to fund it at the next election, and therefore what motive would I have for trying to fix something for the workers? It is up to the workers, I think, to go to their unions and say, 'What on earth are you doing as our union when your leader, Janet Giles, gets on the radio and tells me via the radio that, no matter how badly this government behaves towards the workers of this state, we will still fund them at the next election; we will still give them money.

Members interjecting:

Mrs REDMOND: SA Unions does fund the Labor Party through its various proprietary limited companies. It does fund them; it does support them; it will do whatever it has to do to make sure that a Labor government is returned, and Janet Giles made that perfectly clear in her statement on 891. In my view, it is up to the Labor members of this parliament to get up and say what they really think about this legislation and move the appropriate amendments to fix the workers' rights.

Let us look at what this is setting about doing. The key elements of the original bill—and I am not talking yet about the amended bill—had various propositions, and I will just name what I consider to be the five most important.

First, the amount of time for which workers would be able to remain on 100 per cent of their normal weekly earnings was to be reduced from 26 weeks to 13 weeks. Then, they were to be basically cut off the system after two and a half years. There were to be no redemptions. There was to be a change in the maximum levy rate payable from 7½ per cent to 15 per cent and there was to be a change to payment of levies from an arrears system to a prospective system and therefore a doubling-up in one year from one change to the other.

One of the things that surprised me in the various discussions I had in relation to this bill was finding out what business wanted, and we spent some considerable time talking to various representative groups of employers around the place who were singing the praises of this legislation, notwithstanding that two of these things seemed to me to be rather fundamentally problematic for business.

One was the fact that the levy rate maximum was going to be doubled from 7½ to 15 per cent and therefore if you had penalties of 50 per cent you could get up to a levy rate of 22½ per cent, and the other was the fact that there was going to be this whammy year where you had a change from the arrears payment to the prospective payment of levies, and small business would be expected to just come up with that extra money.

I also think that the fact that there were to be no redemptions was somewhat problematic but it surprised me, when I was talking to the various business groups, that each of them said in essence, 'We give this 6½ out of 10; we give this seven out of 10'—that was the range within which they assessed it—but to a person, all these groups came to us and said, 'We want you to pass this legislation unamended as quickly as possible.'

That struck me as odd because it seemed to me that, if I were in small business (as I was immediately before I came into this place, running my own legal practice and having to abide by the normal requirements of any small business) I would find it difficult to accept an increase in the cap on the levy payments and that doubling up where you change from arrears to the prospective system. It would seem to me that the removal of any prospect of redemptions was also going to be problematic.

So, I am not convinced that the people from Business SA and so on were really representing the interests of small business. But, nevertheless, they are officially the representatives of small business, and they came in here (and they met us at other places) and told us that that is what they wanted, that is, to have this legislation passed unamended as quickly as possible, notwithstanding any of these things I saw as problems.

It seems to me that the vast majority of business owners would be appalled if they knew what their representatives were telling us about this. Especially, it seems to me, to be a problem that this bill contains no guarantee of a reduction in the levy rate. What it does is lay a platform, and I refer to a document prepared by Zoë Gill from the Parliamentary Library as to the position on this legislation. She talks about the independent costing by John Walsh and Samantha Fuller of PricewaterhouseCoopers. She says:

...it was found that if the recommendations were fully implemented they would allow for a reduction in levy rates to the range of 2.25 per cent to 2.75 per cent from 1 July 2009 and an extinguishing of the unfunded liability over five to six years.

So, there is nothing in this bill that guarantees that any of that is going to happen. Furthermore, the merest benefit is not likely to appear until 1 July 2009. All this does, theoretically, is set the platform for what can happen if all of this occurs.

Furthermore, if you look at the report by Alan Clayton, at the very end of it, he talks about the fact that, unless his recommendations are implemented fully and without any alteration, he will not guarantee that the outcome will be as he suggests it should be. As I have said, it surprises me that business came to the conclusion that we should pass this legislation without any changes—and pass it as quickly as possible.

So, that is what business said it wanted in relation to this. We know that the union wants us to change it. But, as I have said, given the position of Janet Giles from Unions SA, it seems to me a big ask for the unions to suddenly come crawling to the opposition and say, 'Well, we would like you to do our bidding because we can't get the Labor Party to do our bidding.' We know that what business said it wanted seems a bit odd. I certainly know what the Labor Party wants: it wants us to solve the problem, because it has created its mess and the Labor Party is hoping we will fix it for them.

What does the WorkCover Board want? This was the great saviour, of course. The minister came in here time and time again and told us that this was the great saviour. Our newly appointed WorkCover Board and the things that it had put in place is what was going to save this desperate situation from reaching the chaotic situation it is has got to now.

The government told us that its new board had the answers and that the board was going to fix everything. What a crock that turned out to be. For a start, no-one seemed to even think about potential conflicts of interest (or perhaps better named conflicts of duty) for people like Peter Vaughan from Business SA or Janet Giles from SA Unions being on that board and being involved in the decision-making process. At the end of the day, it is my view that they were not necessarily the appropriate people to appoint. Nevertheless, the government appointed them, and they then decided that they could fix it all and put certain things in place.

Through all of this, no-one seems to have addressed the issue of rehabilitation and return to work. If you read through the papers on this (and I have been aware since the act was originally passed way back in 1986), the act was for a very specific reason given the name 'Workers Rehabilitation and Compensation Act'. It was because, theoretically, the emphasis was always going to be on rehabilitation.

That turned out to be problematic as well, and I have said many times that rehabilitation under WorkCover became the goose that laid the golden egg. What happened with rehabilitation was that people were enabled to put up a shingle and call themselves rehabilitation providers, and thus a whole new industry was born which bore no relationship to people getting back to work. All it did was create a new system for people to make money out of the WorkCover system because they could be paid for providing so-called rehabilitation. I know for a fact that a lot of these people had no qualifications, no experience and no ability in the area of rehabilitation.

My experience, having dealt with hundreds of WorkCover claims in my practising life, was that people who were injured and generally genuinely tried to get back to work, and those who were genuinely trying to get back to work rehabilitated themselves to the maximum of their capacity. As to those who were not really looking to get back to work, it did not matter what the rehabilitation providers, doctors, WorkCover or anyone else did, because there was no way you were going to get them back to work because they had the injury that they needed to have for other reasons in their life, whether it be for marital reasons or just disenchantment with the way their life was going or some sort of midlife crisis or whatever.

I saw people who had drastic, terrible injuries. I remember one client of mine who had had half a tonne of wall fall on him. Clearly, he could not go back to the physical sort of work that he used to do but, within a year, he had rehabilitated himself to the maximum capacity he had, he had undertaken study and then gone back into a new field. To be fair to the workers, that is what most workers actually do. Most workers do not want to stay on the system; most workers want to continue work, because people get a lot of satisfaction out of work, and that is what people expect to do in their lives. But there are people who, as I said, have an injury that they need to have for other reasons.

So, we have this problem of rehabilitation and getting people back to work. What did the government do? The government decided that it could fix this up by providing a single claims manager in EML and that it could have a single legal provider. I do not think either of those have been good choices by the WorkCover board; in fact, I think they have been abject failures. Indeed, the member for MacKillop mentioned last night in his speech on this topic that one of the key problems has been that there has been an unwillingness by the claims managers and the legal providers to take on some of these two-year reviews under the legislation, under what is called section 35, the idea being that at two years basically you have to be able to show that you are not capable of going back to work. The failure to undertake those two-year reviews led to a feeling within the whole of the WorkCover sector that they just did not exist.

I have heard of a young new practitioner, working at the firm that I previously worked at before I came in here, who had been working at the firm for three years and who saw recently for the first time ever a two-year review application. That speaks volumes about what had happened to two-year reviews: they had fallen off the agenda. My view is that it was because of the nature of the contract with EML and the nature of the contract with the legal providers that neither of those organisations was actually prepared to invest, and they might not have won the first one or the second one, but in my view they should have been taking on some of these two-year reviews until they did start to win some. Basically, they were non-existent, and that was one of the problems. We are not getting people back to work. We cannot then blame the workers for being upset when the new solution is: 'Oh well, we are just going to kick them off after 2½ years' instead of actually using the processes that we have in place under the existing legislation.

Another thing that I want to mention quickly before I get onto the amendments or I will run out of time on this is that not only was there a failure to undertake two-year reviews—and, as I said, I think that is because of the nature of the contract with the single legal provider and the single claims manager, because the single legal provider basically has a fixed-price contract and is not going to spend its money or use its most senior staff in providing the services that they are contracted to provide when it could well cost them a lot more than that actually to undertake the work that they really needed to be doing.

The other thing is this idea of redemptions. I have lived through WorkCover legislation for long enough to know that there have been huge variations in the instructions regarding redemptions. However, it is a nonsense to suggest that someone who was on WorkCover and receiving $50,000, for instance, should accept $50,000 as a payout figure. Yet, that was the philosophy for a long time, and that was the instruction given out to some of the earlier claims managers.

The new system is based on the concept that we will not have any redemptions and yet, in talking to the self-insureds, they made it clear that the appropriate use of redemptions is a very useful tool to enable people to get off the system. I have no objection to the idea of people actually going on to a lower amount of pay after a while. I used to always explain it to clients on the basis that it is costing them a lot less to stay at home than it does to go to work. So, as a matter of pure theory, there is no reason why it should not drop straightaway, because once you are at home on WorkCover you are financially better off (being at home on WorkCover) than going back to work. There is a cost involved in going to work, whether that be public transport fares or lunches and coffees, or whatever it might be—there is always some cost in going to work.

The judicious use of redemptions would have solved a lot of the problems. In fact, I think the member for Mitchell mentioned this morning that he thought that we could get rid of a vast sector of the unfunded liability if a sensible approach to redemptions was taken. No-one wants to suggest that redemptions need to be on the basis that people just wait for a redemption, but there are certainly circumstances where it is clear that people will not be able to go back to work, or not go back for a very long time, and redemptions would have been appropriate.

In closing, I reiterate the fundamental thrust of what I want to say: first, this mess is the government's fault; secondly, there is no guarantee of there being lower levy rates for employers and, in my view, there is very little likelihood of an improvement in the unfunded liability under this new scheme; and, thirdly, the problem I see is that it does not actually address the real issue of rehabilitation and return to work.

At the end of the day, legislation is not the best way to address return-to-work rates. Legislation, as I said, has been perfectly adequate for the self-insureds so why should it not work for the WorkCover Board and the rest of the public sector? I do not see why we should be faced with this solution to that particular problem.

Debate adjourned.


[Sitting suspended from 12:58 to 14:00]


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