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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
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WORKCOVER

Mr VENNING (Schubert) (12:37): I move:

That this house condemns the government for the continuing poor performance of WorkCover, the worst performing workers compensation scheme in Australia.

WorkCover is the regulatory body responsible for the workers compensation scheme here in South Australia and, since 1 January this year, Employers Mutual, along with Gallagher Bassett, have appointments to provide claims management services. Prior to this year, Employers Mutual was a monopoly claims manager for the previous 10 years, and it has been an absolute disaster in terms of the management and performance of the scheme.

Our workers compensation scheme is the worst performing in every aspect. The levy payable by business, the funding rate and the return to work rate are the poorest in the country. South Australia's average WorkCover levy rate remains the highest across the Tasman, according to the Safe Work Australia 'Comparison of workers' compensation arrangements in Australia and New Zealand 2013' report.

WorkCover SA has the worst funding rate of schemes throughout Australia and New Zealand at 67 per cent, compared to the Australian and New Zealand average of 112 per cent—that is an appalling figure. Apart from South Australia, all other jurisdictions are either fully funded or almost fully funded.

I am quite staggered by this. This is not an area of my natural expertise but, to sit on the committee and hear this information coming over, it just floored me. This has been going on for so long. We all know what the problem is, yet we have got to this situation.

The WorkCover unfunded liability has exploded from $56 million in 2001 to $1.4 billion—an increase of 2,380 per cent, and we just do not do anything about it. South Australia's average levy rate is 2.75 per cent, compared to the Australian and New Zealand average of 1.76 per cent. Why should South Australian business suffer the highest WorkCover costs in Australia? How can our businesses be competitive?

The 2008 amendments to the Workers Rehabilitation and Compensation Act 1986 were apparently intended to reduce levy rates, but we have not seen this result. In South Australia the return to work rate has consistently been below the national average and is currently the lowest of any state or territory. The scheme's unfunded liability is the highest in the nation. Additionally, South Australia has a high average claim length, high average claim cost and low stakeholder satisfaction ratings. The return to work rate in South Australia for 2012 was at 80 per cent, 6 per cent lower than the national average of 86.

The scheme was apparently in a healthy position more than a decade ago with respect to both financial stability and reputation for forward thinking, as represented at various seminars and conferences. How times have changed after 11 years of mismanagement by this government. Last year on radio an expert in workers compensation policy said:

WorkCover has been badly managed for a long time. WorkCover has lost control of the return to work process...it's probably going to get a bit worse...the organisation appears to be increasingly rudderless. They've dropped the ball on return to work. We have consistently seen poor results there.

The state government has lost control of WorkCover. There has got to be fundamental changes by the government and WorkCover to stop the ballooning unfunded liability, give business some relief for the highest WorkCover premiums in the country and improve the return to work rates.

The Minister for Industrial Relations, in announcing in early August changes to the WorkCover charter to limit the number of people drawing on the scheme, as was reported in The Advertiser on 9 August 2013, conceded the scheme was being run inefficiently and was not proactive enough in seeking to return people to work.

The arm's-length approach that WorkCover has historically had with claims management is not good enough. There needs to be more intervention and oversight.

We on this side of the house have been arguing this point for a long time. I have been here a long time and it has been an issue almost all of that time, but why did it have to get to this point before something was done? As I said earlier, I am a member of the Parliamentary Committee on Occupational Safety, Rehabilitation and Compensation, ably chaired by my Labor friend, and we published a very good report on 27 November.

An honourable member interjecting:

Mr VENNING: I didn't want to name her; I'm trying to be careful, sir. We published a very good report on 27 November 2012 entitled, 'Inquiry into vocational rehabilitation and return to work practice for injured workers in South Australia.' I wonder how many members have actually read this. If you have not, you should. The report was very comprehensive and contained 23 recommendations aimed at improving the system. A timely return to work following a workplace injury is crucial to reducing the unfunded liability. I ask: how many of these recommendations has the Labor government acted upon to reduce the ever increasing unfunded liability?

There are many simply solutions outlined in this report that could be implemented to improve return to work rates and reduce the unfunded liability. Considering the makeup of this committee, the way it was chaired, the information that came to us and the access to information that we had, I just cannot believe that we have not seen some more action on this. The points were:

A review of the 2008 legislative changes be conducted so we can see if the step-down payment scheme is making any difference to our currently worst return to work rate in Australia.

An alternative remuneration arrangement for rehabilitation providers incorporating a fee for outcome component from WorkCover that is carefully monitored.

I note that Janet Giles provided evidence to the committee which demonstrates the need for alternative remuneration arrangements for rehab providers to be implemented, and I quote:

I have been in the position of having an injured worker at my own organisation where somebody rang me up every Monday and it wasn't until I saw the schedule of fees that I worked out why they were ringing me every Monday. There is no need to ring me every Monday. We were managing it quite well. She didn't even need a rehab provider. She was back at work. She had an injury in her hand. All she wanted was her medical bills paid for, but they would have billed WorkCover for every call.

That was from the Hansard of Janet Giles's evidence to the committee meeting of 3 August 2011. The next points were:

WorkCover review and report on all aspects of self-insured schemes. Self-insured schemes can work extremely well, we found out. Local government is but one example. Their self-insured scheme results in a 96 per cent return to work rate. More self-insurance schemes would reduce reliance on the WorkCover scheme.

WorkCover implement a method of monitoring rehabilitation provider performance.

Case managers make referrals to the providers who demonstrate better return to work outcomes. This really is a no-brainer.

Finally, can I urge the house to assess this motion and support it because I found on the committee there was a lot of goodwill and a lot of common sense, but we do not seem to be able to move anywhere on it because we are all going to be paying a price that is huge. We know what the problems are and we do not seem to be able to address them.

It is ridiculous to notice the monopoly power that some of the providers had in this and nobody was asked in the scheme. The assessment was done by themselves, so the thing was flawed from the start, but now I think is the time to say, 'There is the report.' On an apolitical basis we should say, 'Okay, we'll implement this. We must bring this to heel.'

I commend the chair for the way she has chaired this. I think it was a little bit difficult for her sometimes and in some places, but all I can say is, all power to you. You had the courage of your convictions and it is certainly noted and appreciated by me.

Dr McFETRIDGE (Morphett) (12:46): I rise to support this motion brought forward by the member for Schubert that this house condemn the government for the continuing poor performance of WorkCover, the worst performing workers' compensation scheme in Australia. I remember a few years ago when I was a shadow minister for industrial relations, there were some significant changes being proposed for the WorkCover scheme by the government. There was some significant angst amongst members of the government who were very concerned that the changes that were being introduced were going to severely disadvantage workers.

The sad fact is that WorkCover was in a very good state when the Liberal Party was last in charge in this place with a total unfunded liability of about $60 million. I think it was $61 million or $62 million, that's all. I understand that the unfunded liability now is well over a billion dollars—$1,000 million—and for the state of WorkCover to be as it is is just an absolute disgrace. It is an appalling disgrace, as the member Schubert says.

What we are seeing, though, is workers being disadvantaged by the current scheme. We are seeing protracted legal argument. We are seeing a system in complete disarray, but the big thing that we are really noting is that the unfunded liability is compounded by the highest WorkCover rates in Australia. I talk to businesspeople every day in my electorate of Morphett and around this state who complain about the conditions of doing business in South Australia and, without fail, each and every one of them talks about the issues with WorkCover.

It is a significant disincentive to doing business in this state when you are having to pay the premiums that people are paying for WorkCover. Work safety and occupational health are significant issues and very important issues, so we all do not want to shirk our responsibilities in those areas. However, when it comes to paying an insurance premium—which WorkCover levies are—to cover injured workers, that premium should not only be a fair levy but also be competitive with what might have been charged by private organisations.

I should mention here that, for the self-insurers such as the big companies like Holden and some of the big mining companies and indeed the government, their comparable levies are far less than the WorkCover scheme levies. They are able to manage their claims much better, much more efficiently and much more fairly than we see under WorkCover. There are many examples of workers being dragged through the mill through the WorkCover scheme.

We have seen the single case manager now go out to two. We see the legal management of WorkCover cases being handled by a major firm, which I do not think is the best way of managing WorkCover.

I spoke to private insurers when I was looking at policy for WorkCover, way back in 2008-09, and people said to me they could take over the WorkCover scheme; they were happy to take on the unfunded liability and they could reduce premiums without reducing workers' entitlements. To me, that was more than enlightening, it was startling—that they could say to me that they could do that.

The sad fact is that the government is hanging onto this scheme. It is determined to try and tough it out. We are seeing the $1 billion unfunded liability continuing to increase and, in the meantime, we are seeing levies rising. With my new portfolios of disability, social inclusion, volunteers and a few others, I am talking to groups that are paying WorkCover levies which are, as I said before, a huge impost on them doing their work, doing their business in South Australia. Whether it is the local crash repairer or other businesses or whether it is the NGOs, WorkCover really needs to be reviewed, reworked and the levies reduced if we possibly can.

I will just give you an example of some of the increases in WorkCover levies that have been imposed on some of the NGOs who are working in the disability sector. These people are trying to do their very best to help some of the most disadvantaged people in South Australia—and there is a list of them here. The most significant increase in the past 12 months was 116.75 per cent. The WorkCover levy of this particular business has gone up 116 per cent in the past 12 months. There are other businesses here where premiums have increased by over 20 per cent and the comment here is:

This will affect bottom line and overall competitiveness; trying to get it reduced slightly; looking at claims that may be recoded as secondary.

'Reviewing industry classifications' is another comment made there. There is another NGO here whose comment about WorkCover is, 'WorkCover is intending to double our levies to over $1 million by 2016.' They are seeking legal avenues and discussing it with the media to try to put pressure on the government to reform the WorkCover system and reduce the imposts. Another comment was that the WorkCover levy had gone from $125,000 to $165,000. They said:

Will be reviewing over the next 6 months whether organisation will be providing services in the future.

This organisation is considering closing because of the increases in WorkCover. We certainly know that business costs in South Australia, besides WorkCover, are very high. WorkCover is, in this case, the straw that is going to break the camel's back.

Another comment from another business is that their WorkCover levy has gone up 38 per cent to $44,000 and they are unable to find the extra $35,300. They just do not have it in their coffers to pay the extra levy so they are going to have to talk to WorkCover about how they are going to be able to pay their levies. This scheme is really damaging people, both the people they are supposed to be helping through injured workers but also the companies and businesses who are trying to provide employment and growth here in South Australia.

Another comment stated that they were notified of new systems and new schemes back in mid-2012 but the rate has gone up significantly. They said that their previous rate was $160,000 a year (or a little bit over) and their current rate is $241,000 (or just a little bit over) now, so it has gone up significantly. The comment they have here is that they may need to make staff redundant to pay for this. So, we have businesses threatening to close down or being forced to close down and we have businesses that are considering staff redundancies, plus a 116 per cent increase in levies.

This is a system that is not working. It is not working for the workers and it is not working for the businesses. Surely you would sit down and look at what is going on. We know that there are reviews going on now and let us hope that any reviews that are going on are going to come up with some sensible outcomes because this is not a fair system for anybody.

I know there are members on the other side who are really torn between supporting the Labor Party and supporting the aims of the WorkCover scheme. My heart goes out to those people because I know what a bind they are in. They are in a no-win situation. However, we have an opportunity now to revisit this. There are some reviews that are being undertaken at the moment and I just hope, for everybody's sake, that we get some commonsense, because we cannot continue to allow the scheme to be imploding the way it is.

Debate adjourned on motion of Mrs Geraghty.


[Sitting suspended from 12:57 to 14:00]


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