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House of Assembly - Fifty-Third Parliament, First Session (53-1)
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Bills

Return to Work Bill

Second Reading

Adjourned debate on second reading.

(Continued from 6 August 2014.)

Mr MARSHALL (Dunstan—Leader of the Opposition) (11:03): I rise to talk on the Return to Work Bill and indicate that I will be the lead speaker for the opposition. There are other people who will be making contributions in the house today on behalf of the Liberal opposition, but I give my commitment to the Attorney-General and to the government that we will be working as cooperatively as we can to see this legislation go through this assembly in the time frame that has been allocated and agreed with the government. I envisage that this will be through this house by tomorrow night at the latest.

My clear message to the government on WorkCover reform is: get on with it. This is something that the government has been talking about for an extended period of time. They have been presiding over the worst system in its—

Members interjecting:

The SPEAKER: I call the members for Kaurna and Elder to order. The Leader of the Opposition will be heard in silence.

Mr MARSHALL: This government has presided over the worst WorkCover scheme in the country for an extended period of time, and it is now time to get on with it. Let me tell you about a conversation I had after the election.

I rang the Premier and wished him all the very best for this next session of parliament. I said to him that we faced significant challenges in this state. This state has ground to a halt. After 12 years of the Labor government's economic mismanagement in South Australia, we have ground to a halt. There are very few things that we agree on in terms of policies to get this state moving in the one direction, the right direction.

The one area we do agree upon is that the WorkCover scheme in South Australia is completely and utterly broken, and both sides of this parliament need to be working together to make sure that we address this issue. Make no mistake: we are operating in this situation because of 12 years of Labor's mismanagement of this scheme, mismanagement on a day-to-day basis and mismanagement in terms of its legislation. However, we are going to be partners, partners in fixing Labor's mess, and that is why we are here today.

Of course, I was disappointed when I spoke to the Premier and said that this was a priority. I have had numerous meetings with the Deputy Premier, who I know shares my concern that this is a broken system and much in need of repair. We attended all those meetings, and the government promised us that this legislation would be advanced as quickly as possible, and we said that we would not get in the way whatsoever.

The government promised that it was going to be introduced before the end of June. Did the government fulfil that obligation? No, it did not. It said it was going to introduce legislation by the first sitting day after the winter break. That was some time ago now and, again, did it fulfil its obligation? The answer is no. The government said that it was going to be introduced today, and it has been introduced today, but I make this point: we received 13 pages of amendments to its own legislation on Friday night last week. We thought we had better get cracking on this, only to be left with a whole pile of additional amendments on Sunday night and, not to be outdone, more amendments on Monday night. I am not sure what these folders are, but—

Members interjecting:

The SPEAKER Order!

Mr MARSHALL: —they could be more amendments. We are not sure because just before I came down here the Deputy Premier was standing outside Mr Lucas' office like a boy going to see the headmaster. I do not know what he was going to talk about; maybe there are some more amendments that he is going to introduce. We are committed to doing everything we possibly can to improve this broken system in South Australia but, quite frankly, we remain sceptical, and we remain sceptical for a very good reason—because we have heard it all before.

This is a government which set about fixing the broken system back in 2008. It was going to have fantastic reforms and radical reforms to once and for all fix this broken system which Labor has presided over. Let me remind the house of some of the claims made by the Labor government at this time. Here is the first one:

The Government's WorkCover reforms will help us deliver a workers compensation scheme that is fully funded, fair to workers and affordable.

That claim was made by the government in June 2008, but the scheme never became fully funded, it was not fair to workers and it certainly was anything but affordable. In 2008, the government went on to state:

The Government is committed to maintaining the best and fairest worker's compensation scheme in the nation.

Let me tell you that it is the worst. It is the worst scheme in the nation, and it has been the worst scheme in the nation for an extended period of time, all the time being presided over by Labor. Another comment made by the minister at the time was, 'Central to this…will be to find the best way of getting workers back to work.' Again, did the government deliver on this commitment? No. Our scheme in South Australia has the worst return-to-work statistics and the worst return-to-work performance in the entire nation, and it has had that unenviable mantle for an extended period of time. The minister said:

Changes to the WorkCover scheme are aimed specifically at improving the rehabilitation and the return to work rates of injured workers and making the scheme more affordable and efficient.

We have the worst return-to-work statistics, we have the highest costs in the entire nation—and that has been the legacy of the reforms that were introduced in 2008. At the time we were sceptical about elements of those reforms, but we worked with the government. Why? Because we wanted to take that handbrake off the productive component of our economy and get our state moving in the right direction.

Of course, 2008 was not the first attempt the government had to try to reform the WorkCover scheme. Let us look at some of their other failed attempts to reform this system in the past. One of my favourites is the government's decision back in 2006 when they tried to convince the parliament that moving to a monopoly claims agent would drive efficiency and reduce the costs of the scheme. In fact, they went further: they said that within two years this would result in a $100 million per year reduction in unfunded liabilities. It went in exactly the opposite direction!

In 2006 they also said that we were going to have a single legal service for the WorkCover scheme in South Australia. Of course, both of those decisions have been subsequently reviewed by the government. At the time, the Liberal opposition in South Australia cautioned the government regarding these so-called reforms. Did the government listen? No. We ultimately supported those because we wanted to see reform, but these other attempts in the past have not worked.

The government also had their failed attempt at almost eliminating the possibility of redemptions in South Australia—now they are talking about redemptions in South Australia. They have made it harder and harder each and every single year for firms to become self-insured by increasing the exit fees. We have been arguing for years and years that we need to remove hurdles. For people to get off this scheme and to become self-insured the government has taken exactly the opposite stance.

Let us take a look at what the government said with their radical reforms in 2008. They said that what they wanted to have was the earliest possible return to work for the scheme. At the time in 2008, of course, it was the worst in the nation. Fast forward to 2014 after these radical reforms have gone through supported by the parliament, and where do we sit now? I will tell you where we sit, Mr Speaker, in exactly the same position; the worst in the nation. After these radical reforms previously supported by the parliament, we have gone from the worst to the worst. We are still the worst—there is no change there.

The government importantly said they were going to reduce levy rates because at the time, in 2008, the average levy rate in South Australia was 3 per cent and the government, hand on heart, said, 'What we are going to do is reduce that down to 2.25 per cent.' Of course, the business community was ecstatic and said, 'Look, this is fantastic because we are already the highest in the nation and it's a real drain, a real handbrake on the productive component of the economy.' How did they go? Let me tell you how they went. Fast forward six years: our break-even levy rate in South Australia, as most recently reported by WorkCover, is 3.34 per cent. It has gone backwards from where it was since before the last level of reforms.

Of course, my favourite claim made last time by the government when we were reforming the system was that the scheme would become fully funded. At the time there was an unfunded liability of the scheme of $844 million. So, I ask the question: what is it down to after these radical reforms? They did not exactly deliver on the other two metrics, so how did they go with this one? Hold on, let me take a look. Oh no! It is three out of three. They have gone backwards in three out of three. In fact, the unfunded liability most recently reported in December 2013 went up from $844 million before the reforms to $1.23 billion after the reforms. It almost has you saying to the parliament, 'Please, no more reforms.' They seem to be getting worse every time this government tries to look at this scheme.

We now have a situation where we have the highest levy rate in the country, and that is shameful. We have the worst funding ratio in the country, the worst return-to-work rate of any state in the country and the highest number of disputes in the country. Our scheme takes the longest time to resolve those disputes in the country, and we are spending three times the proportional cost on rehabilitation than any other scheme in this country.

Labor's failure to reform WorkCover has been another unnecessary drag on our state's economy at a time when, quite frankly, we are going backwards. Our domestic economy in South Australia is going backwards. While the other reformist Liberal governments around the country are moving their economies forward, South Australia has been stuck dead in the water—absolutely dead in the water. One of the major reasons for this is, of course, the cost structure of operating a business in South Australia. We have to do everything we possibly can to take that handbrake off and WorkCover is certainly a good place to start.

When I look around at the rest of the country, I have to say it is a sobering set of statistics. Our average rate of 2.75 per cent, as I pointed out, only increases the unfunded liability each and every year because the break-even rate is actually 3.34 per cent, so we are just kidding ourselves at the moment. Let us have a look at what exists in other states of Australia. The best performing state in Australia most recently reported last financial year was Victoria and it had a rate of 1.298 per cent. Correct me if I am wrong, but that is less than half the rate that we have in South Australia. New South Wales, 1.55 per cent; Western Australia, 1.66 per cent; and Tasmania even beats us at 2.36 per cent.

I want to really focus a little bit on Queensland. Last financial year the average rate for Queensland was 1.46 per cent, significantly better than South Australia's position of 3.34 per cent break-even point, but guess what the Premier of Queensland, Campbell Newman, did at the most recent budget? He lowered his WorkCover rate again. Their rate in Tasmania with a solid reformist Liberal government implementing solid reformist Liberal policies has delivered the lowest WorkCover rate in the nation—1.2 per cent. Our break-even rate in South Australia is 3.34 per cent. It is absolutely shameful.

What has Campbell Newman been able to achieve by focusing on providing incentives and improvements to the productive component of the economy? I will tell you what he has been able to do. He has been able to create last financial year 65,000 new jobs in his economy. We are going backwards in South Australia. We know where he is getting those employees from. They are coming from South Australia. They are going across the border just like our investment dollars are going across the border. They are going into these jurisdictions which have a focus on having the right policy settings to promote economic growth in their state.

I think it is also important when we do a comparison with other states of Australia to have a look at the funding ratios. This is how much of their scheme is funded, or in our situation in South Australia unfunded. It is interesting to take a look because our scheme is not fully funded. In fact, our funding ratio is just 60 per cent, so we have a massive and growing unfunded liability in South Australia, but let us look at the other states, maybe they are just subsidising their rates as well. Let us look at Queensland—no, Queensland is overfunded. They have a 132 per cent funding ratio, so they are actually making a profit out of their scheme each and every year; they are fully funded. In Victoria they are 116 per cent funded. New South Wales is 104 per cent funded. Western Australia is 126 per cent funded. Let us look at Tasmania because usually we are sort of battling it out with Tasmania—no, Tasmania is 111 per cent funded.

The rest of the nation is running fully funded WorkCover schemes, so we are the only state in Australia which has an unfunded scheme. We simultaneously have the worst performance statistics in terms of return to work, so it is not good for our employers, it is not good for our employees either and, of course, we have the highest rate in Australia. We are kidding ourselves. We are completely and utterly kidding ourselves because the real rate, as we know, should be 3.34 per cent.

We also need to somehow chew through this unfunded liability that the government has allowed to grow each and every year. It is not a good situation and, of course, that $1.23 billion unfunded liability does not include the public sector. If you look at the public sector you are talking about another $400 million black hole in South Australia.

What happened when Labor came to power? Where were they actually sitting? I took a look at those because I think it is always important to make comparisons with other states. I have just provided that to the house. I think that it is also important to make comparisons with the previous government. In the full financial year before they came to power, the unfunded liability in South Australia sat at just $56 million. There is a big difference, is there not, between $56 million and $1.23 billion, plus the public sector figures? It is a massive increase.

Pitcher Partners do a state tax review, which is often referenced by this government, and I want to go through what people would be paying if they had their businesses interstate. I am not encouraging people to do this, but here is the danger that, if we do not get these things right, people are going to be leaving with even greater velocity than they have been leaving in the past. Pitcher Partners breaks it down into some streams. With the first stream, if you have a wages bill of $1.178 million, in South Australia you would be paying a whopping $32,407 per year in WorkCover premiums, and if you were in Victoria, you would be paying just $15,000. That is less than half the rate if these firms—

Members interjecting:

The DEPUTY SPEAKER: Can I remind members that it is unparliamentary to interject. There seems to be some sort of echo behind you, leader. It would be good to hear you just speak on your own.

Mr MARSHALL: I think that the thing about this debate, Deputy Speaker, is that people are very concerned about WorkCover rates.

Honourable members: Hear, hear!

The DEPUTY SPEAKER: I ask members not to interject. I hope that you will agree with and support me in my asking for that, sir.

Mr MARSHALL: In the Pitcher Partners' survey of five states in Australia, we are ranked fifth in terms of cost for a firm with that remuneration. They have the next remuneration level up as $5.8 million per year (this would be a mid-sized firm), and we are still ranked fifth out of five states in their survey. In this situation, with a $5.8 million wages bill, that firm in South Australia would be paying $160,000 per year in WorkCover premiums and in Victoria just $75,00 per year. That is the order of magnitude: an $85,000 impost each and every single year because of the ineptitude of this government to fix its own mess after 12 years.

It is interesting that when Arnott's, which had been manufacturing biscuits in South Australia for generations, made a decision to reluctantly move their manufacturing capability interstate, they did it because of costs. They said that it would be far cheaper for them to be manufacturing those biscuits interstate. I know that the Deputy Speaker is very upset about this. I am sure that she is a big fan of the Monte Carlo, the Iced VoVo and of course—

The DEPUTY SPEAKER: I can honestly say that I have never eaten an Iced VoVo. Back to task.

Mr MARSHALL: You haven't lived. Anyway, I digress. I make the point that we are now seeing this flood of businesses, which, quite frankly, do not want to leave this state—they have had a very proud tradition of operating in this state, manufacturing, etc.—but they are leaving because they have to. The costs of operating after 12 years of the wrong policy settings, the wrong economic settings, by this government are hurting, and we are all suffering the consequences.

The government often says (and the Deputy Premier has made this point to me on many occasions) that the problem with the existing scheme is the legislation. I put it to you that it is a combination of two things: the management of the scheme and the need to constantly look at updating our legislation. Let's take a look at the management of the scheme which has been presided over by this government for 12½ years and, by way of comparison, I want to reference what the local government does in this area.

Back in 1986, the Local Government Association set up its own workers compensation scheme, and they immediately created an environment within that sector of improving safety and return-to-work outcomes for local government staff across this state. It is a very interesting tale of two outcomes. You have the state government scheme, and if those local governments were on the state government scheme, their rate would be double what it is on their scheme. They would be doubling the contribution and it would be a burden on every single council and ultimately every single ratepayer in South Australia. They made the decision to get out of the scheme; I wish we all could. They made the decision to get out of the scheme, and let's just see how much better off they are, on half the rate.

Their annual report from last year showed a surplus. They actually operated a surplus of $28.5 million last year, with a rate at half what it would be if they were on the scheme in South Australia. Not only that, they had a distribution back to their member councils of profit that year. It is an incredible situation that the local government sector, using exactly the same legislative framework, can have a rate which is half what it would be if they were on the scheme, return a surplus during that year and have a distribution to their member councils lowering councils' rates to people doing it tough in South Australia.

Let's have a look at their funding ratio. Maybe they have been doing what we have been doing; maybe they have been having a bit of a subsidy by an increase in unfunded liability. No; I took a look at what their unfunded liability was. It is actually a funding surplus, and they are fully funded to 244 per cent. It begs the question: why is it that the local government sector can run a scheme with the same legislation for their member councils that the government has no hope of getting anywhere near? As I said, the Deputy Premier has put it to me on many occasions that the problem with our scheme is the legislation. I put it to the Deputy Premier that it is a combination of the two.

I am grateful. I think it is time that we had some honesty in this debate. The government has acknowledged that it has not been run well for an extended period of time. In fact, they are out there now saying that we can actually save the business community $180 million each and every year. We welcome that, but it begs the question: if they can save the $180 million a year going forward, they have had a $180 million a year handbrake on the productive component of the economy going backwards. If you logically extrapolate that for the term of this government, we are talking about more than $2 billion—a $2 billion burden on the 49,000 businesses in South Australia and consequently the more than 800,000 workers in South Australia that this government's mismanagement of the scheme has provided.

I will say to the government that we will be supporting the passage of this legislation through this house this week. We cannot arrive at a final position on a range of amendments, mainly due to the fact that many of them have only come through in recent days and there could be more today. We have no idea of what the government is actually going to provide us with. Many of the stakeholders that we have been dealing with have made it quite clear that they are supportive of trying to fix this broken system in South Australia. We are supportive of trying to fix this broken system in South Australia, but many of the stakeholders, like the opposition, have not been able to form their final opinion regarding some of the amendments that have been put forward, and so we will reserve our right in the other place to negotiate with the government on some of the amendments that they have been discussing.

I think it is fair to say that we would like—and I think the business sector shares this with the Liberal Party—to see this scheme start as early as possible and we would like ask the government to consider bringing the start date of this new scheme forward. If the government says that it can save $180 million by implementing these reforms, let's start it on 1 January. Let's save the business community $90 million as soon as possible. We have a business community in South Australia which needs some relief. It needs as much relief as it can possibly get at the moment, and we will work with the government, if the government believes that there is an opportunity, to start these reforms on 1 January, because we think it is so important to provide that relief to the business community.

We have some concerns, and some stakeholder groups have said that they have some concerns, regarding the removal of the industry cap at 7.5 per cent. Members may be aware that there is an upper limit of 7.5 per cent at the cap and there are some firms above that. I have received a position this morning from the AI Group which is looking for assurances that the changes relating to secondaries and the dilution of the industry classification caps will not have an immediate effect on any individual companies whereby their business operations are at risk, and I think that is a reasonable concern that the AI Group has.

If this guarantee cannot be given, there needs to be some consideration of a transition phase, and we look forward to discussing that with the government. I know that the government does not want to see harm to firms that find themselves in this situation. We have already had some preliminary discussions regarding this.

I think it is also fair to say that, when we first started negotiating the reforms, there were considerable concerns within the business community about the reintroduction of common law in South Australia. The government has negotiated with those industry groups and it is fair to say that they have been able to assure some of those stakeholder groups that their 30 per cent threshold will be acceptable. We are pleased that the stakeholder groups have been negotiating with the government, and the new threshold is acceptable to the employer groups.

I would also like to say that we are talking to employee groups and unions but, again, many of them have said, 'We are still negotiating with the government.' I met with one significant group yesterday that could not give us their final position because they are still negotiating with the government. I think, unfortunately, much of the debate on this bill—the two bills, in fact, that form part of this overall reform—will take place in another place where neither the Deputy Premier nor I can participate in those negotiations.

We are also considering the other piece of legislation which the government is putting forward at the moment, the South Australian Employment Tribunal Bill, and we would highlight to the government that we consider that it would be advantageous to move this tribunal to the new SACAT framework the government has established—with our support. It is long overdue, a bit like these WorkCover reforms. The SACAT reforms are extraordinarily long overdue and we would ask the government to give some consideration to moving the tribunal that they are currently advocating for into the new SACAT arrangements.

At the moment, we have an extraordinary situation where the government is trying to get rid of government boards but, on the other hand, they are in this parliament introducing another one. It flies in the face of common sense to be getting rid of a whole pile of boards and creating them simultaneously. I think it is important that we place on the record in this debate that we would like to see the government give some consideration to using the new framework of the SACAT for the tribunal.

In summary, we are supportive of these reforms promoted by the government and we are committed to working with the Deputy Premier and the entire government to improve the outcomes in South Australia for both employers and employees. But, make no mistake: what we are doing in this parliament at the moment is fixing the mess that has been both presided over and reinforced by this government over 12½ years in office.

All previous attempts by this Labor government in South Australia have failed, and it is important to reflect on that. On many, we have stood in this place and raised concerns but the government has pushed ahead with them and, two years later, we found out it was not the panacea and the government has removed those reforms. We want these reforms to work. We need these reforms to work. There is no doubt that our state is falling further and further behind the other Liberal reformist governments in Australia, and I give my commitment that we will work as diligently as we can with the government to make sure this happens.

WorkCover reform is also no panacea for the problems that we have in South Australia. We need a government in South Australia that is going to get our WorkCover scheme right, but it needs to immediately turn its attention to getting tax reform into this state, and that needs to happen as a matter of urgency. At the moment, the government is out there increasing taxes, increasing the burden on the productive component of the economy. It wants to take a $180 million burden from the productive component of the economy in South Australia and it wants to jack up the taxes in each and every other area across the state. It is incredibly disappointing at the moment.

When the budget was handed down, when we already had the highest taxes in the nation, the highest business taxes in the nation, taxation revenue for this current financial year went up further, by another 10 per cent. That is the last thing businesses need. We need more than WorkCover reform: we need tax reform. Importantly, we also need regulatory reform.

If the government thinks that cutting a few boards is regulatory reform, it needs to think again. Nice try. It is not going to work. Cutting a couple of boards that hardly even met because of the government's ineptitude is not regulatory reform. We need a decent attempt at reducing the regulatory burden on each and every business here in South Australia and, of course, we need public sector renewal.

It is fair to say that our public sector is extraordinarily demotivated after 12½ years of Labor government mismanagement. It is the largest asset in this state. Any business person will tell you that the largest asset in a business is the people who work for it, and the biggest asset for this government is the public sector, and it is demoralised, completely and utterly demoralised. The government needs to hasten the public sector renewal program in South Australia to make sure that our biggest asset is working for the overall recalibration of our state.

We will be working diligently over the next two days. I am looking forward to the contribution of many people in my team who share my thoughts, and that is that we have got to work very hard to push through these reforms to provide much needed relief to businesses in South Australia.

Ms CHAPMAN (Bragg—Deputy Leader of the Opposition) (11:36): I speak on the Return to Work Bill 2014 introduced by the Attorney-General on 6 August 2014. First, I indicate my concern that we are back here again for all the reasons that the leader (our lead speaker) has outlined: the desperate circumstances of our workers compensation in South Australia because of the government's mismanagement of this area of responsibility. It has been repeated, it has consistently failed and reforms that the government proposed to introduce to remedy this are now on the chopping block for review again.

As indicated, we will continue to support anything that will help our desperate business sector in South Australia to ensure that we restore some productivity for this state and have a future for our children. However, it does concern me that, because of the government's ineptitude and failure to understand that it is their own failings that have left us in this position—and clearly they are not prepared to remedy that—the opposition is left in a situation where, if we are to provide any hope for the independent sector, which earns the money for our state, we have to accept the government's answer, and that is to blame someone else for their own incompetence.

To do that, to achieve what they now promise—that is, an average levy rate of 2 per cent, substantial savings, they claim, of some $180 million a year to employers and the like—they are effectively reducing both the access to and the amount of support and, indeed, the period during which support for someone who is injured in the workplace will have some benefit.

For the sector representing those in the workplace who sustain injury, who look to some support under this insurance scheme, the government has proposed a supplementary common-law arrangement. I will go into the detail of how these changes have some effect at the committee stage, but I will say at the outset that the government's proposal will essentially cut benefits to the injured and provide them with an opportunity for a common law claim that is so inaccessible to almost all those who are injured in the workplace that I think it will be relegated to being just a shallow promise that will give no real benefit to those who are injured.

To give an example of that, I recall from the briefings we had that the injured party would have to be very seriously injured to be able to even access the opportunity to have a common law claim, and, of course, in doing so they preclude themselves from other entitlements. There is a threat that if you go down the common law claim line you become disqualified from other benefits. To give members some understanding of the disability required, there would have to be multiple limbs lost, there would have to be paraplegic or quadriplegic or spinal injuries, there would have to be an acquired brain injury of a serious nature. These are very significant injuries for someone to even be able to have the right to consider making an application under common law.

Whilst there has been some debate, in the discussion on these reforms, as to how that may impact on the levy rate for employers—that is, introducing a common law relief—I have recently re-read the contributions made by the Hon. Trevor Griffin when he fought valiantly to protect against the abolition of common law claims in 1989. It does concern me that, whilst this is back on the table, it is really just a shallow and, I think, insincere proposal by the government in an attempt to placate those who are representing the injured. The capacity for only the few to have access to that is, obviously, very limited.

In the introduction of this bill the government announced that it had also reformed the board; indeed, by an announcement from the Premier in, I think, August last year that they would have a new, commercially-focused board. This is after 12 years of a government that has operated with various boards, all of which it has introduced and changed around over a period of time. It has clearly not adequately managed the performance and delivered on the performance of this board—increased debt, increased levy, etc.—for all the reasons set out by the leader.

What I find curious is that the Attorney stated, in his contribution on the announcement of this commercially-focused board, 'As a result, WorkCover's financial position improved by $96 million for the six months to 31 December 2013.' I found that rather curious, given that the new board announced by the government did not actually commence operation until 1 November 2013. Assuming that it did not work through Christmas Day, it would have had less than two months to be effective in the turnaround of the saving of $96 million.

The Attorney went on to say that the unfunded liability had dropped to $1.23 billion from $1.37 billion as at June 2013, providing a significant improvement. As has been pointed out by the leader, six months into this year we are now into a further deteriorated state. It does concern me. We are always promised this panacea of relief and reform which will produce results for the benefit of all, and they are evaporating.

I raise two matters I am concerned about. One is that the government has not, I suggest, been full and frank in its disclosure to the people of South Australia about what the modelling and calculations are in respect of the alleged financial benefit of this scheme. Why would the government keep this secret? The obvious answer, of course, is that it does not want stakeholders to be aware of what the modelling is in case there is some criticism of it or there is some alternate work done. The way to keep people who are against a certain position silent is to keep them isolated from information so they cannot do their own work to challenge and/or confirm the material that has been provided.

The government asserts that this legislation will provide a saving of some $180 million a year. Not surprisingly that dazzles the business industry and the representatives of those industries, who would, of course, welcome those opportunities, whether they are self-funded or whether they are the Local Government Association (which is obviously performing very well in that category), or whether they are in the WorkCover fund arrangement, which is where most small and medium businesses are in South Australia. Obviously, their eyes light up at the prospect of having the saving, but the government says, 'Well, we will only give you some brief information about what is provided to us.'

On our understanding, on a confidential basis only, the cover sheet, the letter that goes with the information that is being prepared for the government, and this is by the actuarial firm Finity, has been disclosed. So, we are not even allowed to look at the information that asserts the alleged benefit to the industry. I am also not certain as to whether the $180 million is for everybody; that is, including the government as an employer that provides its own funding arrangements and that does not, of course, contribute; it has its own WorkCover scheme as such. It is a self-funded arrangement and so all of our police, nurses, teachers and so on rely on the government. But be under no illusion, the reforms in this legislation, which seek to diminish the entitlement and opportunity for injured workers to seek recovery and support, will of course apply to those in the Public Service, where there are over 100,000 people.

I did ask about what the situation would be for the government. I have received some information back from those who provided the briefing. It appears that, under his management, Mr McCarthy, the chief executive, who I think has now spent one year as the chief executive of WorkCover, has had some wins. He provided in a briefing to me and in subsequent information that the cost impact on the public sector, which is a government saving, is expected to be up to $219 million and that is to do with the potential saving to the public sector in income maintenance and medical liability by limiting the current number of claims continuing beyond two years.

The way I read that, it would wipe up to $219 million off the balance sheet for the government exposure and the liability for its workforce. There is no provision of information as to what the annual saving is expected to be for the government as a funder of compensation to its employees. Again, I think the denial of access to that information not only raises the pessimism that I have but I think all stakeholders have in not having access to this information.

The government provided information when it wanted to say to us, 'We can't afford the CFS insurance opportunities for cover for CFS officers in certain cancer categories,' and to reverse the onus of proof. They bundled out the material on that to try to convince us that this would be a financially oppressive outcome and that it could not be justified. When it suits them they give us the information, when it does not suit them they keep it concealed and it suffocates the opportunity of full and frank debate in relation to this matter, so I raise that as a concern.

The other matter I note in this bill, which has not had much attention, is the government's decision to make a provision in the bill for a refund of any surplus. Under the current act we have a scheme which provides for a bonus. Under this bill, essentially, it is proposed that there will be a scheme adjustment or review upon certain thresholds being achieved. So, on the basis that certain criteria are going to be met there will be a refund back to the industry, those who are paying into this scheme, either by a refund or a relaxation or reduction of rate in future years

It is a bit like the promises that the now Minister for Health made when there was going to be all the reforms in the Motor Accident Commission—that with all the government's proposed amendments there would be an opportunity to reduce the registration fees for motorists. We all know what happened with that, of course, and how motorists have been skun by that deal.

This new scheme seeks to provide that the corporation achieves a 'funding level of at least 100 per cent at a probability of sufficiency of 75 per cent', and certain other formulae apply, and the government have provided information as to how they are to work. It essentially means that if for two years in a row the fund gets back into surplus, so to speak, there is an opportunity for a refund of those funds.

The proposal under this bill is to ensure that one half of those moneys is to be available back to those who make a contribution to the fund—that is, those who pay the levies—and one half of it is to go into a rehabilitation scheme, and that money is then paid to various parties to support the rehabilitation of workers. I do not have it at the moment, but I will refer to it during our debate in committee, but the proposal is that half of the levy will go back to those who pay into the fund and the other half of the fund, which currently exists and which receives other moneys, will be for employee education.

Looking at the government website on this issue, it appears that very significant moneys have been paid to universities. Money has been paid to SA Unions to provide reports, reviews, assessments and education, to assist in the education of a safer workplace and the like, for the benefit of people in the workplace. I am not here to criticise the merits of actually having some funding from government to ensure that they support the educative role in a better and safer workplace. I would like to see some of that funding that currently goes to SafeWork SA, which I think has some limitations, ensuring that this is an ongoing provision.

What I do not agree to, and what I am advised is unique in Australia, is that when and if this fund ever reaches a surplus (and that might be complete fantasyland) is this being imposed on those who contribute; that is, half their money is going to be sent off to some other party. If it ever does reach a surplus, then I consider that that scheme bonus arrangement should be fully refunded to those who make the contribution.

When I questioned this, it seems to be generally that 'the scheme is there for the benefit of the workers and the workplace and therefore this is a good idea'. If there is too much money paid into a fund, or it is not necessary for the purpose for which it was set up, quite frankly I think the government are being inconsistent and insincere if they do not agree to that being refunded.

Perhaps they have gone to the unions and said, 'I know we are taking a bit away from the workers under the amendments we propose with this new scheme, so we will give you a bundle of money at the other end.' I do not know the answer to that, but I do know that it may be unique in Australia but that, in my view, it is inconsistent with the government's mantra that they care about the productivity, viability and future of the business sector.

On assessment to date, I think this is a bill that is going to have a significant saving of cost to the government, and that in itself is not a bad thing, but they are completely unwilling to provide information on what their annual saving is going to be. It has been asked for plenty of times, but it has not been forthcoming. Secondly, in the embarrassing situation of this corporation haemorrhaging into complete dysfunction and further negative outcomes for South Australians, in their desperate attempt to turn this around and save their own face the government are not taking responsibility personally. They are blaming and making the cost of this rest with the injured and not giving credit back to those who make a contribution.

I conclude in this debate by saying that there are many cases already in workplace circumstances where there has not been, I think, adequate provision for those who are injured. I cite one case which to my knowledge has now been going on for nearly 10 years under the life of this government. It arose out of the tragic death of Jack Salvemini, who was a fisherman who was caught up in a net on a fishing boat. There was substantial prosecution of this matter against the fishing company, and it ended up in the Full Industrial Court.

There have been further inquiries by the government. There have been indications by the Premier and the Attorney-General that some provision would be made for the family in this regard, yet still, nearly 10 years later, we have no resolution of this matter. We have had endless reports. We have had promises that the Victims of Crime Fund would be looked at, but there is still not a dollar for this family from what was a dangerous workplace accident.

Time expired.

Mr KNOLL (Schubert) (11:57): I rise to say that we will be supporting this bill in the house, but for me this bill is a little bit personal. In a previous life, I have had a lot to do with WorkCover and it has, over my lifetime, become one of the banes of my existence, such is the impact of this scheme.

I have seen this scheme fail both employers and employees. I have seen a system that is more focused on the process than about achieving an outcome. I have seen a system where the financial incentives motivate people within the system to keep people on the system, as opposed to getting them back to work as quickly as possible.

I have seen a system where dispute resolution processes are drawn out to benefit lawyers, where justice is delayed for employees and higher cost is passed on to employers. I have seen a system that selectively interprets the current legislation with an eye based on the whims of management, as opposed to looking at the long-term viability of the scheme.

I have seen instances where the cost to business of the WorkCover scheme is seven times the cost of income maintenance and medical payments. I have seen instances where seven people from the WorkCover Corporation have come to one meeting about a business's premiums. Keeping in mind the fact that there is no negotiation on the premiums of a business, I have seen seven people sit in the room with one employer and discuss the forthcoming premiums of that business for a year.

I have seen an instance where an employee was able to make a claim 12 months after the injury was suspected to have happened, six months after that worker was no longer working for the business, and I have subsequently seen that claim take two years to go through a dispute resolution process. In the end, the process was engineered in order for there to be an outcome in which the employee was given a sum of money to go away. I have seen this system fail on so many different accounts, on both sides of the aisle—for employees and employers—that I see that these reforms are the most important that we will undertake in this parliament over the next four years.

I would also like to say that these reforms should help those industries that are doing it toughest, those industries that are in higher-risk areas, those industries that at the moment are suffering under a heavy burden of high tax from this government under uncompetitive regulation regimes and are suffering from drops in business confidence and consumer confidence around this state. These are the businesses that I hope will be able to see an improvement in their day-to-day circumstances out of these reforms.

This government has not elected to look at any area of reform in this term of parliament. We see nothing in the agenda about tax reform except to increase taxes, especially in regard to the ESL. This government has not been willing to look at any public sector reform except to increase the size and scope of the public sector but, at this point, on the WorkCover system, I applaud the government for bringing these reforms forward. Can I quietly congratulate the Deputy Premier, who in this term of parliament is turning out to be the quiet reformer, and this will be the jewel in his crown.

At my tender young age of 31, I should not be so cynical but unfortunately I am, and this is because we have heard this all before. Can I refer back to the Hon. Kevin Foley—the great Kevin Foley—who in his time wore the mantle of reformer that the Deputy Premier is now taking on. He said in 2008 of the reforms that were made at that time that the unfunded liability will be extinguished within a reasonable time. Unfortunately for Kevin, that is not the case.

What Kevin also said at that time was that this will bring our scheme into line with that of the other states, and I point out, as the Leader of the Opposition pointed out, that we have the highest average WorkCover rate in the country at 2.75 per cent. We are well above anywhere else. My figures may not be as up-to-date as the opposition leader's figures, but New South Wales and Queensland are sitting at about 1.4 or 1.5 per cent, Victoria is down to 1.27 and Queensland and Tasmania similarly are below South Australia. Unfortunately, that did not come true for Kevin. The other thing Kevin said of these reforms, and the Deputy Premier should again take note, is:

I have never been more proud of the Labor Party than I have been today. [The Labor Party] has shown that it is the natural party of government because it is prepared to take the hard decisions.

We have heard this all before and we are hearing it again now, and those among us who are cynical are hoping beyond hope that these are the reforms that will help us to deliver the change. On those efforts, we are with the Deputy Premier all the way.

I would like to congratulate the current CEO of WorkCover, Greg McCarthy, and the work he has done to date. I look forward, as I know the members for Ashford and Reynell and others do, to him fronting the occupational safety, rehabilitation and compensation committee to discuss the work he has done to date, but I have seen for the first time a genuine willingness to engage in early intervention strategies. I have seen a genuine willingness to actually use the legislation for what it was intended for, especially when it comes to the automatic acceptance of stress claims.

We have seen a man who has been able to show the government, which has said it is the legislation's fault, that indeed it is not the legislation's fault. At a briefing a couple of weeks ago—correct me if I am wrong, Deputy Premier—Greg McCarthy did say that he would, over time, be able to bring the scheme back to the 2.75 per cent that it costs employers, that indeed we could get to a scheme that is 100 per cent funded. Having said that, in order to go that further distance, we need reform and we are here to support the government on that.

What I would like to do in my remaining time is to highlight some of the major changes to this bill. For those who are not intimately involved with WorkCover, a lot of the terms that come out in this can be quite complex and confusing. Indeed, I spent 15 years dealing with this system and there are things that even I still do not understand. I will also say that we have reserved our rights on any specific proposal within these bills.

I did note that we got more amendments this morning, although I think we got more amendments just as parliament opened. I think we went from five pages to seven pages, but we are diligently working through them. Can I say—and we will talk about this later—that I do not know what the Deputy Premier has against prescribed legislation, but it seems to be a dirty word in relation to the Return to Work Bill. That is something that we will find out in committee, I am sure.

The first major change in the bill is with regard to income maintenance. Previously there have been a number of step downs from zero to 13 weeks, after 13 weeks down to 90 per cent and after 26 weeks down to 80 per cent. We are now seeking to change a system that has 100 per cent of average weekly earnings paid to a worker for the first year, and then for the second year it is stepped down to 80 per cent. What I think that will change is that those who exist between the 13 to 52-week period will no longer be disadvantaged, and those who have genuine medium-term claims, where, for instance, they break a bone that takes over three months to heal or they have to have surgery on a shoulder or something that takes longer to heal, will have the ability to maintain 100 per cent of payments as opposed to taking the step down.

The negative side of that is that the incentive to get back to work is lessened. There are financial incentives based on schemes in other states with this step-down process that currently exists to encourage people to get back to work by way of a financial penalty. There are questions, though, around income maintenance. If I talk about the fact that after 104 weeks there ceases to be, unless you have over 30 per cent whole person impairment, any funding under this scheme, and people's income maintenance payments stop. Certainly, from what I read of this bill, WorkCover then absolves itself of responsibility in regard to income maintenance payments at 104 weeks.

What is a little unclear is whether or not that same absolution applies to employers, and there does seem to be confusion around whether or not the suitable alternative duty provisions, that an employer must provide to an employee who is injured, continue beyond 104 weeks. So, there is a loophole within the system, where this scheme is now designed to cut off people at 104 weeks, in that there may be continuing obligations on employers to continue beyond that, and that is something I would like to explore in committee.

The second major change I would like to highlight is the loss of provisional liability. Currently, if you lodge a claim, it is provisionally approved until it is unapproved. Even if people put in a vexatious or less meritorious claim, it is automatically approved and you have to go through a process of unapproval. In the draft legislation there is no provisional liability and instead the corporation has 10 days to make a determination, after which time interim benefits must be offered.

I am in two minds about this, but (not wishing to make comment) it will encourage employees to lodge their claims quickly and will encourage employers to lodge the claim quickly, because it becomes a very murky area, where employees will need to use up sick leave or annual leave before a determination is made.

The third area that I would like to highlight is the reintroduction of common law. Common law existed before the no-fault scheme, where if an employee was injured the ability existed to have a core process to attribute fault or blame with regard to the cause of an injury. When we put in the no-fault scheme, that ability was taken away and we now have a system where (and not wishing to labour a point) it is essentially an employer-fault scheme, where the employer takes on 100 per cent of the financial responsibility (the employee obviously has their return-to-work obligations), but essentially the cost is then borne by the employer.

We have a situation where we are returning to a level of common law for those who are judged to have a whole person impairment or a permanent injury according to the scale that exists beyond 30 per cent whole person impairment. It is quite odd, because in the lead-up to the tabling of this legislation I understood that we were looking at a different scheme. Essentially this means that, if you are judged to be injured more than the 30 per cent threshold, you have access to a common law process to seek damages, and you can elect to do that or elect to stay on the scheme even beyond the two-year process.

I would not pass judgement on that except to say that, in a room full of lawyers, I am not sure that the lawyers are necessarily in favour of this one and perhaps they would like greater access to common law. If they would like to argue that case, I would like to see a rationale beyond 'We want more work for lawyers.' The fourth change that I think is quite important in this legislation is the change to rehabilitation services. There have always been provisions within the current act to be able to institute early intervention, but unfortunately under previous management of this scheme that has not been the case.

What we have seen again from the new CEO, Greg McCarthy, is a greater emphasis on early intervention, and the current act allows for that, but what we are seeing in changes to this legislation is that that is being enshrined and probably given more emphasis so that, instead of return-to-work plans needing to be put in place at 13 weeks, they can be put in place at four weeks. I think that is a very positive step in trying to increase the return-to-work rates and in trying to actively manage claims so that people can get back to work. It is something that the self-insurance industry does very well, because there are financial incentives for them to do that, and it is good to see that this legislation is trying to emulate the same.

The next thing I would like to highlight is the removal of industry caps. This is something that I think is quite vexed and something that I think we are going to explore quite deeply. There is currently $1.6 billion worth of wages that are subject to this 7.5 per cent cap, so it is a significant figure. What happens is that, when this cap is removed, it is likely that those who are at the cap are going to see their industry premium rates increase. Having said that, that could be offset by the overall reduction in premiums and the changes to the experience rating system. It is a little bit up in the air at the moment, but there is uncertainty around that and there is genuine concern about what that means.

What I would like to do is to highlight the types of industries that would be affected by this, and they fall into four broad categories. The first is agriculture, forestry and fishing, so things like pig farming would be very important to South Australia—tobacco and cotton farming maybe not so important—as well as shearing services and petroleum exploration. The biggest area by far, though, that is impacted is manufacturing in the form of construction or earth-moving machinery, cutlery and hand tool manufacturing and metal container manufacturing through to food manufacturers such as sugar; tobacco product; starch gluten; starch sugars; livestock; bacon, ham and smallgoods manufacturing (maybe a little bit closer to my heart); and meat processing. There are a number of manufacturing industries that could be quite detrimentally impacted by the removal of industry caps.

The construction industry—carpentry services, roofing services and concreting services—all sit at the 7.5 per cent cap at the moment, and they could be negatively impacted. The fourth is transport and storage in road freight transport and in cold storage. They are four sectors of our local economy that are not doing well. As the Liberal leader pointed out earlier, we have seen job losses from Arnott's, we have seen proposed job losses at Huon Aquaculture, and we have seen the closure of the Aldinga Turkeys factory. There is a litany of food manufacturing business that have shed jobs.

We have also seen broader losses in the manufacturing industry around the automotive industry and other areas, and certainly in my local area I have seen job losses in the area of road transport. What I would say is that these reforms are designed to improve the financial viability of companies. What I would hate for these reforms to do is actually end up punishing those who need the help the most. I think that is something we need to reflect on and, again, if there is the ability to offset average premium rates then we may be able to avoid that, but I think that there is a significant risk in that part of the legislation.

The next point I would like to explore is the average premium rate. This legislation has set a commitment to reducing from 2.75 to 2 per cent or below the average industry premium rate or the average rate, although we have seen with the latest amendment a couple of little words, 'seek to', have been inserted before 'achieve'. I am not sure whether or not that is a watering down of the 2 per cent commitment, and I would hate for that to be the case. Again, this is something that we are going to explore, but what before was a very firm target within the legislation now seems to be a very firm aspirational target within the legislation. If we are going to undertake these reforms, then we need to do it properly, and we need to do it in a way that gives commitment to the industry and gives confidence to the industry so we can start to see the improvement in investment that we would like to see.

There is also, around premium rates, the loss of primary and secondary classifications. A primary injury is one where you are injured at work and you engage directly with your employer, and it is an accident that happened at an employer's premises and you go through the normal return-to-work procedure. What happens, for instance, if you leave that job and go to a second job and you either carry the existing injury or you have a reaggravation of that injury, is it gets classified as secondary and the cost is not borne by that subsequent employer.

We have seen that pulled back and taken away, and the rationale given in the briefing was that secondary classification injuries cost twice as much as primaries. I would like to explore further whether or not it is the nature of secondary injuries, that is, that they are longer or more serious injuries and that we are comparing apples with apples to say that it does cost twice as much.

I fear that this will disadvantage employees who have been seriously injured before and that this will discourage employers from taking on employees who have had significant prior injuries, and I would hate to see prior history vicariously or overtly used as a reason for not employing someone. I fear that this could be a negative consequence of this legislation, and I understand that taking that out would bring more cost to the scheme, but I am reluctant and hesitant about this measure because I fear that it could lead to unintended consequences.

Another change to this legislation is that we have gone from a situation where, in 2008 when people went through a dispute resolution process, if they were ultimately not awarded compensation, any compensation that they had received in excess they would have to pay back. That has now been pulled back to 'may be recovered'. This is a situation that existed prior to 2008 and WorkCover did not recover that money.

What happened post 2008 is that less meritorious claims did not come to dispute resolution, and that was a good thing. The last thing that I would like to highlight is that the annual leave provisions that existed in the current legislation and this proposed legislation still allow a worker to be able to receive income maintenance and take annual leave and be essentially paid twice over the same period of time.

The Hon. S.W. KEY (Ashford) (12:17): My contribution today is mainly based on the bill and my look at the first set of amendments which I believe were generated on Thursday and which were tabled at that time. I have not had an opportunity to look at the further amendments that have been circulating.

In an earlier contribution to workers compensation policy on 20 May 2014, I indicated that there was no doubt that the WorkCover scheme was in need of comprehensive reform. This assessment was based on my position as the chair of the Parliamentary Committee on Occupational Safety, Compensation and Rehabilitation, my past involvement as a workers compensation advocate, and my ongoing experience as a Labor member of parliament in providing assistance and support for constituents of Ashford and other electorates who have had the misfortune of being caught up, often I believe, in antiworker bureaucratic machinations of WorkCover and its claims agents.

In the May 2014 contribution I also argued that injured workers and their families should not be penalised for the mismanagement of the scheme. After all, it has been poor management by WorkCover and its agents, along with the failure of a relatively small but significant proportion of employers which have failed to provide workers with suitable employment following their recovery from injury that have been the main reasons, in my view, for the scheme's poor performance.

Since then, I have not come across any evidence from any quarter that would suggest that this conclusion is not accurate. On the contrary, there have been numerous acknowledgements, including within the government, that the mismanagement by WorkCover and the claims agents have been chronic. These have also increased widespread recognition that the previous WorkCover boards have failed to provide the requisite oversight required for the scheme's successful operation.

The Attorney-General has been particularly frank and forthcoming in acknowledging these past shortcomings. However, the issue remains that, notwithstanding a number of positive provisions contained in this bill, its overall trajectory is based on reducing or slashing key entitlements for injured workers. This is especially evident from the inclusion in the bill of a number of provisions cherrypicked from the harsh antiworker legislation enacted in New South Wales by the Liberal/National government in 2012.

Whether they are building workers, nurses, assembly line workers, firefighters, cleaners, police officers, truck drivers, teachers, Correctional Services officers, aged-care workers—whoever—injured workers should not have to pay the price for the incompetence of those entrusted with the responsibility for and oversight of WorkCover. I believe that we need to adopt a more progressive and considered approach to the reform of workers compensation in South Australia, and in my view, certainly in the labour movement, we owe this to our supporters and we owe it to the community.

Labor has prided itself on providing a beacon of hope for the working people in the state. Historically, Labor's track record in workers compensation has been second to none. The accomplishment of the Walsh government in the 1960s, the role of the Dunstan government leading the nation on workers compensation reform in the 1970s, and the pivotal achievement of the Bannon government in establishing the WorkCover scheme in the mid-1980s, despite the tremendous opposition from vested interests, are all testimony to the record of delivering a better deal for South Australia's working men and women.

This tradition should be cherished, not thrown overboard, yet it is precisely what occurred, in my view, in 2008 when a Labor government—our Labor government, my Labor government—with the full backing of our political opponents passed arguably the most draconian piece of legislation in workers compensation that South Australia has ever seen. This created a great deal of angst amongst the ALP, the labour movement (that includes the trade union movement), and the broader community. Although the circumstances of the current bill differ significantly from some aspects of the 2008 bill, I believe the bottom line is similar. The bill, as was the case in 2008, is designed to reduce employer premiums at the expense of injured workers and their entitlements rather than to achieve genuine improvements in the scheme.

I turn now to the issues of the bill. In doing so, I would like to acknowledge the contributions of SA Unions, the Law Society of South Australia and JohnstonWithers in their submissions to the Attorney-General. The bill provides that there will be a new restriction of payment of medical expenses, including the cut-off, after a maximum of three years, with exceptions for some therapeutic goods and operations, using the wording 'reasonable' and 'necessary' and 'reasonably incurred' by the worker in consequence of having suffered a work injury.

The Law Society has suggested that the word 'necessary' be deleted, believing that disputes will increase as the bill does not include what necessary means. Although there have been some changes in this section since the first draft of the bill, it is not clear, for example, whether workers would be covered for ambulance services, medications associated with the treatment of their injuries, or personal care if required.

The corporation claims agents are still able to delay decisions until after the expiry date. Further operations and medical treatment offered after the expiry date are also up in the air. Rather than penalise the sick or injured worker, why does the bill not emphasise the need for administrators of the scheme to ensure services and support are provided more quickly and efficiently? There needs to be a real emphasis on return to work.

Clause 33(10) of the bill provides that the minister will publish a treatment protocol or framework for the provision of services. I am keen to see these protocols. They may be in circulation, but I have not personally seen them. I am also interested to hear the minister explain more fully clause 33 and outline injured or ill workers' entitlements. I am especially keen to find out how a worker's need for surgery and any medical, nursing or medical rehabilitation services will be handled and determined.

I note that the WorkCover Ombudsman's role has been deleted, and I have raised this with the minister. The minister's amendments, from what I can see, do enhance this right by allowing a complaint to be lodged with the state Ombudsman (part 3—Complaints about breaches of standards). I can only hope that this means that this amendment will extend and enlarge the powers for participants in the new system.

My reading of the bill points to a stricter qualifying criteria for compensation on an across-the-board basis. An injury other than a psychological injury must arise out of the course of employment and the employment must be a significant contributing cause of the injury. I have not been able to find a definition—and this may be my oversight—of what a 'significant contributing cause' means. There is no explanation in the amendments that I have seen from the minister either.

In the case of psychological/psychiatric injury, the injury must arise out of or in the course of employment and the employment must be a significant contributing cause of the injury. That will be an interesting way of determining that issue and, again, there is no definition of what a significant contributing cause is. I also looked at the minister's policy statement document to try to find out what this meant, and it is clear that the main point being made in that document is that access to workers compensation will have tighter eligibility criteria. I believe these tighter provisions will make it more difficult to access workers compensation resulting in more disputes and a lower return-to-work rate through delays and refusals. The current act provides that an injury must arise out of or in the course of employment.

One of the most significant changes in the bill is that a worker, unless seriously injured, will only be able to receive an income of weekly earnings within a period of 52 weeks. If the incapacity continues, the second cap of 52 weeks will be afforded to the worker at 80 per cent of the difference between the worker's notional weekly earnings and the designated weekly earnings. Although there is an amendment proposed by the minister to clause 39, the two-year cut-off seems to be based on cost saving as opposed to the needs of the individual injured or ill worker.

Another concerning measure in the bill is that the whole person impairment (WPI) rate is to be used to decide if a worker is seriously injured and eligible to have continued support after two years. The WPI rate proposed is 30 per cent. When we look at WorkCover statistics—and I am referring to those in 2011—they list that 1,070 workers had injuries that resulted in a permanent impairment and only 17 of those workers would have received a whole person impairment rate of 30 per cent or more.

On the 2011 figures, only 2 per cent of incapacitated workers would be considered eligible for ongoing weekly payments after two years. This, to me, is a harsh position for the government to take. If Viscount Admiral Lord Nelson had been a claimant in 2015, I wonder how he would fare. When he lost his right eye in a battle in 1794, one could argue he was working for England. He lost his right arm in 1797 and had a severe head wound in 1798. He got on with the job but it really makes you wonder how he would have fared under what I consider to be our draconian new legislation. Earlier in his career he contracted malaria, I have read, and frequently suffered from recurrent attacks of that disease. I guess it is lucky that he was a tactician, not a physical fighter in his later life, for the cause.

I note that clause 3 in the Return to Work Bill, which concerns the objects of the act, states in subclause (2)(a):

to ensure that workers who suffer injuries at work receive high-quality service, are treated with dignity, and are supported financially;

The provisions of subclauses (2)(d) and (e) are to support activities that are aimed at reducing the incidence of work injuries to the state and to the community. Both are admirable and important objectives that I totally support, but (f) states:

to reduce disputation when workers are injured at work by improving the quality of decision making and by reducing adversarial contests to the greatest possible extent.

On my reading of the bill and, as I said, the 81 amendments thus far, I do not think point to that being a successful objective in this scheme.

There are many other areas that I would like to have further information about but I will wait until we get to the committee stage and ask questions as we go through the varying amendments that we are going to have to deal with and seek further information at that time.

Dr McFETRIDGE (Morphett) (12:30): It is really good to follow the member for Ashford who is one of the members in this place who has the courage of her convictions and speaks out. To describe the legislation as harsh and draconian, I think, is very honest and very courageous for a member of the Labor Party.

I will remind the house of some of the things that were said in 2008 when I was the lead speaker then for the debate. I spoke for 3½ hours but I will not speak for anywhere near that long because I am restricted to 20 minutes today and I may not even take all of that. I want to remind the house that I have only been here for 13 years, a short time in the space of this house, and nothing like the former member for Stuart (nearly 40 years) and other members in other places. However, I have seen this sort of legislation come and go and be talked about and it goes around and around and where it stops nobody knows.

For the last 13 years this government has raised expectations and talked about aspirations but has been consistently inconsistent in delivering and giving South Australian taxpayers and South Australian workers what they should be getting under a so-called Labor government. This is another repair job, it is another patch up and I will be very surprised if it actually delivers on what we are being told it will do. We were told that last time; we were told in 2008. We have been told so many times before in this place what this legislation is: it is required, it is necessary, it is tough; and the government has to make tough decisions—but what happens in the end? We see taxpayers being slugged again, being tortured again by a government that has raised expectations but failed to deliver.

Having said that, South Australia has a long and proud history of workers compensation, way back to 1900. In fact, South Australia was the first Australian state to introduce workers compensation legislation back in 1900. Since that initial bill in 1900 there have been a number of changes, such as the Workmen's Compensation Act 1911, the Workmen's Compensation Act 1932, the Workmen's Compensation Act 1971 and the Workers Rehabilitation and Compensation Act 1986.

In 1978 the then Labor government established a tripartite committee. Wouldn't that be nice, to have a tripartite or bipartisan committee on WorkCover? This tripartite committee was commonly known as the Byrne Committee. The committee received over 60 submissions and submitted, in its report in 1980, recommendations that included a wideranging overhaul of the workers compensation scheme, a replacement of the predominantly lump-sum based system with one based on income support, introducing rehabilitation back to work and the removal of common law actions. These recommendations were not accepted by the government.

Once again we are seeing from the history of the recommendations that experts had been called in and recommendations made which were based on sound evidence (and which should have been considered more positively in my opinion) being rejected back then. It is interesting, though, that between 1980 and 1985, with costs continuing to rise and premiums increasing at an average of 22 per cent per annum, the government looked at it again. In 1984 the government established a joint committee on workers compensation comprising the United Trades & Labor Council, the Chamber of Commerce and Industry and the Metal Industries Association.

The committee was established to investigate those areas where employers and the unions were in agreement or disagreement with respect to changing the workers compensation scheme. In essence, the joint committee reviewed the Byrne Committee recommendations to determine which of them should be implemented. So they are revisiting the past and what could have been. They are raising expectations but not delivering.

In this case, though, we saw a joint agreement being reached which led to new legislation being introduced and considered by parliament in 1986 and the establishment of WorkCover in 1987. That is when we really get to the guts of things with WorkCover established in 1987.

Taking a leap forward to my time in this place: I was elected in 2002, and in June 2002 the then minister for industrial relations, Michael Wright, announced a review into the workers compensation occupational health and safety system, known as the Stanley report, as it was then. The house needs to be reminded, though, that at the time—if I have the figure quite right, and if I do not I will be corrected—when we lost government in 2001, and Labor came in 2002, the unfunded liability was about $50 million or $60 million, something like that. It was a very manageable amount. But just ask what it is now; I think it is still over $1 billion.

Ms Redmond: $1.23 billion.

Dr McFETRIDGE: $1.23 billion, the member for Heysen reminds me. That is a pretty good thing to do; to decimate WorkCover the way this government has in 13 years—from $60-odd million to $1.2 billion. It is not something I would be proud of, and that is why we see this government back here trying to fix up their mess again, and I will talk about fixing up messes in 2008 in a few moments.

In June 2002 we had the Stanley report and in May 2003 the SafeWork SA bill was first read in the House of Assembly, but parliament was prorogued. Then in September 2004 the SafeWork bill was reintroduced. The sad history was that the SafeWork bill was read for a third time and passed in the Legislative Council in 2005 to come down to this place in 2006 with some significant amendments, but it still did not fix the problem. That is the really sad part about this patch-up job that the government attempted in 2004.

Things were going from bad to worse—remember there was the $60 million in 2001-02 which increased to $1.23 billion. So, the next step that the government took back in 2007 was that minister Wright, the then minister for industrial relations, announced the Clayton Walsh review into WorkCover to again try to fix up their mess. In 2008 the Labor government tabled the Clayton report and the new bill was drafted and that is where I came into it back then.

Just to remind people what was happening with the bill back then in its initial form—and I do not know what it was thinking at the time—but under Mike Rann the government considered increasing the base industry WorkCover levy from 7.5 per cent to 15 per cent—15 per cent. Not 1.5 per cent, but 15 per cent. They were going to double it; the maximum industry levy could be 15 per cent. Employers would have to appoint a rehabilitation and return-to-work coordinator within the workplace. They could not contract it out; they had to put another employee in place. It was unbelievable how they could have been thinking like that.

The return-to-work inspectors were going to come in to workplaces and help oversee injured workers returning to work. The lump-sum redemption payments were going to be banned under exceptional circumstances, although we did see some of those continuing on. Certainly, redemptions were a serious issue as were exit fees. I have not looked at the current legislation that is before us now, but I will be interested to see how they are talking about redemptions and particularly exit fees so that people can become self-insured.

Back in 2008 the Rann Labor government's bill stated that, 'Income maintenance payments to injured workers will be cut from 100 per cent to 80 per cent after 13 weeks.' There was a lot of discussion about that, and we know the unions were very, very angry about that. Injured workers were also required to undertake a work capacity review after 130 weeks. The interesting part was at that stage there was no guarantee, with the way the government was going to change the legislation, that claims would be managed in any different way.

There was no guarantee the unfunded liability would be reduced or eliminated within six years, as they had talked about. There was certainly no guarantee that the state average WorkCover premium was going to be reduced. There were lots of aspirations and a lot of expectations; some of them, to use the words of the member for Ashford, were 'absolutely harsh and draconian'.

How any business was supposed to exist paying a 15 per cent WorkCover levy is beyond me. We know that the WorkCover levies are a significant burden on small businesses in South Australia. South Australia is the small business state, but at the rate this government is imposing taxes, levies and charges on them, and increasing the red tape, we wonder how long those businesses will continue to suffer before they pack their bags and go interstate.

I do have some hope that there will be some sense talked into the government on that side by the former leader of the Liberal Party, Martin Hamilton-Smith, the member for Waite, who was the leader of the Liberal Party when I was the shadow minister for industrial relations back in 2008. Certainly at that stage, the member for Waite, now Minister for Defence Industries, was very concerned about the legislation that was being put in place. In fact, in a press release issued in April 2008, the then leader of the opposition, Martin Hamilton-Smith, said:

Labor's Bill is so fundamentally flawed it is useless to attempt any substantial amendments to it…This is Labor's solution to Labor's mess.

His press release continued:

It's essential that the voters and taxpayers of this State understand that this is Labor's problem and Labor's so-called solution…Labor should be held responsible for the economic and social disaster that it has delivered to South Australians.

I hope that the now minister is able to continue to have the courage of his convictions of those words back then because the mess is still there and the mess is bigger. On 23 June 2008, on Mix and Cruise radio the member for Waite said:

Small businesses around the State will wake up this morning to find they're up for thousands more. They were told their WorkCover rates would drop. Before the ink was barely dry the Government's now announced a raft of increases…the government has misled small businesses owners about the impact that the changes to WorkCover would have...

The member for Waite continued:

Some of these small businesses will be facing increases of between 20%…to 33%...This will push some small businesses to the wall.

On ABC radio, being interviewed by David Bevan, the member for Waite continued along those same lines. Let's hope that the member for Waite does have some influence in the cabinet and let's hope that he does have some contribution to the house on this bill. I look forward to his contribution—and I am not trying to embarrass him or belittle him, far from it—because he has business experience, he knows what it is like, and he knows how tough it is to run a business. Let's see the courage of his convictions. Let's see the courage of the convictions of other members of this place, as we have seen from the member for Ashford this morning.

Let's go back and see what some of the members of the Labor Party said in 2008. I do not follow the factions in the Labor Party that closely; in fact, I hardly follow them at all, but I think I could give you a bit of an idea of who is in the left, who is in the right and who has changed sides. The now President of the other place, the Hon. Russell Wortley—

Members interjecting:

The DEPUTY SPEAKER: Order! I would like you to return to the task, member for Morphett.

Dr McFETRIDGE: In May 2008, the Hon. Russell Wortley was being interviewed on the ABC about the changes in his support for WorkCover between 1995 and 2008. He explained that he was an official with the gas employees industrial union in 1995. David Bevan said:

…how do you go from protesting against changes to WorkCover 15 years ago and now supporting those changes…some people say they are more draconian [than] changes [introduced] in State parliament's...

Mr Wortley said:

Yes, it's not an easy transition. I have lost a lot of nights sleep over these amendments...

Mr Wortley went on to say:

…this legislation is hard, it's very hard and I know that many members of the caucus have struggled with the whole concept of what we're doing…if we don't get it under control, there will be a lot more pain in the future…

Well, it did not get it under control, did it? It did not get it under control. There were other members on the other side who did show the courage of their convictions. I wonder how the current member for Giles is going to go. I am looking forward to his contribution on this because one of the members of the government who did show the courage of their convictions and who got up and spoke in this place was my good friend Lyn Breuer when she was the member for Giles. Lyn said in this place:

It is certainly no secret that it has caused some division among us in the Labor Party, and it is no secret that it has caused a division within the unions.

The then member for Giles then said:

I came into this place to represent my constituents in the seat of Giles…and many of them will be affected in one way or another by this bill, but I also came in as a member of the Labor Party and I would not be here without the party. Consequently, I signed an agreement to abide by caucus decisions, and I will continue to do so.

So, it was said with a heavy heart, as was the case for many members on that side of the chamber. I know what they were thinking, I know what they said in their second reading speech, and I know what they were saying privately, but then they had signed that agreement, they had locked their vote away. It was a shame that they could not do what they really wanted to do for South Australia, and I suspect that it would be a much better place had they done that. Not to embarrass you, Deputy Speaker, but you also made some similar comments to those made by the member for Giles. In fact, on—

The DEPUTY SPEAKER: It is such a big quote that he's lost it.

Dr McFETRIDGE: It is a big quote.

The DEPUTY SPEAKER: I'm devastated! Carry on.

Dr McFETRIDGE: I won't quote you, Deputy Speaker, but I can say that you were sincerely concerned for your constituents about the effect of the changes, as was the then ACTU president, Sharan Burrow, who added her voice to the opposition to proposed WorkCover changes, claiming that 'working women will be amongst the biggest losers'. So, even the ACTU was not happy at all.

The members on the other side need to realise that it is not the executive that runs this place; it is the parliament. Remember what the former governor said about the state of Australian governments: the executive ignores the parliament, there is no ministerial accountability, and the Public Service has been highly politicised. For a governor to say that is absolutely damning. I implore the backbenchers to gang up on the minister, gang up on the ministry. Tell them what you think. Tell them what your constituents want, what they deserve and what they need and what you have been elected for.

In conclusion, let me remind the house what my good friend Michael Wright, a good constituent of mine (he lives in Glenelg East) said as the minister. I know that he was torn, with his father, Jack Wright, having been one of the champions of workers compensation in this state. He was torn having to deliver this legislation in this place. In his third reading speech summing up, the then minister for industrial relations, minister for finance, minister for government enterprises, minister for recreation, sport and racing, Michael Wright, said:

…this legislation does not have the support of the unions…We are not doing something here we want to do.

He said that the stark reality of the unfunded liability was that it was at $911 million, that the average levy rate was 3 per cent and that we were not good at getting people back to work. Minister Wright knew it then. To sum it up, at the very end of his speech minister Wright said:

…the average levy rate and poor return-to-work rate in South Australia [reflects badly]…South Australia is way behind what is happening…[around]…Australia and the time to act is now.

Everybody in this place needs to make sure that this legislation is not going to just raise aspiration, raise expectations and promise a nirvana. We need to make sure that it is sound, that it is solid and that it is going to deliver long-term solutions for long-term problems, not the short-term solutions for long-term problems that we have seen for many years in this place. With those words, I say that I hope that this house, that members of the government, do consider their principles and do vote with their principles.

Ms REDMOND (Heysen) (12:49): I was not actually going to speak on this bill originally, but the more I listened, the more I decided I had to make a contribution, particularly when I saw the Deputy Premier's disquiet at the idea that so many of us do want to speak on this very important piece of legislation.

Like the Deputy Leader of the Opposition and the member for Morphett, I have been here now for 12½ years, so this is by no means the first time we have dealt with significant changes to the WorkCover legislation. Unlike the member for Morphett, I did come into this place with a reasonably sound knowledge of WorkCover legislation, because I had spent some years working with the legislation. I would have to say that, at its heart, I think everybody would agree that the idea of having WorkCover is basically a good idea. Workers who are injured deserve to have that injury met, in terms of payment for their medical expenses, payment for their time off work and so on. I do not think it is a bad thing that we have until now, over a period of years, had a without-fault scheme, so that workers do not have to prove that someone was in the wrong for them to get that entitlement.

Indeed, I would say that over the period of time and the significant number of years that I was involved in a lot of WorkCover claims, my experience was largely that those who had an injury at work and who genuinely wanted to recover and get back to work, did so to the maximum extent which their injuries would allow. That was true both in the work I did at Duncan Hannan (as it then was) and in my own practice up in the Hills, when most of the other practitioners in the Hills used to refer their WorkCover work to me.

There are a couple of things to note. One is that on the one hand the system could be over-generous. For instance, I remember one involving a teacher who had a stress claim because at the end of the teaching year the headmaster had told her that next year she would be occupying a different room in the school. She went off on a stress claim. That was just preposterous. On the other hand, we had situations where my observation of how WorkCover was being managed in terms of its administration was that there was no doubt the cure was by far worse than the disease. We had a situation where people were caught up in a system that just ate them up and spat them out, and they actually ended up worse off than they would have been if there had been no WorkCover system in the first place.

As I mentioned, I have seen several tranches of reform, some of them said to be the most magnificent reforms that were going to fix the system. We know, as the leader said in his address, that management of the system has been the problem. How do we know that? We know that because, when we look at the experience interstate, when we look at the experience of the self-insureds and particularly incidences like local government, we can see that it is not the legislation that is the problem. Indeed, the legislation proposed in this chamber at the present time does not go any way to addressing how they are going to actually solve the problem.

The many speakers before me have already pointed out that in this state we have by far the highest WorkCover levies—2.75 per cent on average, by far the highest and more than double what applies in a number of other states, the progressive Liberal-run states. We have by far the worst return to work, we have by far the worst unfunded liability and we have the most expensive rehabilitation. It is about that that I want to make a few comments in particular.

In addition to other issues in terms of the management of WorkCover over a period of years, I think one of the blatant things that this government has failed to address has been conflict of interest. My experience of this Labor government is that it would not recognise a conflict of interest if it stood up and slapped it in the face. One of the conflicts of interest is that we had a member of the government—now a minister of the Crown—whose partner was appointed to the board of WorkCover. As if that is not a conflict of interest of itself, not only was Ms De Poi appointed to the board of WorkCover, but the more massive conflict of interest flowing on from that was that this person actually got most of the rehabilitation provider money. She is a big rehabilitation provider in this state.

I have always said of WorkCover that rehabilitation was the goose that laid the golden egg. As I said, and it started my remarks, those people who were injured at work who wanted to get better actually got better to the maximum extent that their injuries would allow. I know people who have had masses of plasterboard fall on them, half a tonne. They were lucky to survive. They could not go back to what they were doing in a very physical environment before and ended up, instead, going into training and other courses but actually maximising their opportunities to get back to work.

Rehabilitation has been one of the fundamental problems with WorkCover in this state. It has been the goose that laid the golden egg. It has spent massive amounts of money for very little return and we still have the lowest rate of return to work coupled with the highest levies and a very poor performance on return to work.

What do we have here? We have a member of the government's partner appointed to the board and not only is she appointed to the board but she gets most of the rehabilitation pie that is spent by WorkCover. If that is not a conflict of interest, I do not know what is, yet no-one in this government, over a period of years while that person was on the board, was prepared to do anything to address that particular issue.

This workers compensation scheme that we have had in this state now for a number of years is absolutely broke. That is the point that the Deputy Premier made when he brought this legislation to the attention of the parliament on its most recent tranche, but there is nothing in the bill that indicates to me how they are actually going to solve it. As the member for Schubert pointed out, they have gone from guaranteeing a reduction of their 2.75 per cent levy rate to seeking to achieve a better levy rate. Seeking to achieve—it is an aspirational target. This government throughout its 12½ years has been entirely focused on big statements about aspirations followed by very little in terms of actual results.

Madam Deputy Speaker, you may recall—I have no doubt you do because of the comments you made at the time—the discussion that was had in this parliament during the 2008 reforms. These reforms, which diminished the rights of the workers, being introduced by a Labor government, were spoken about unfavourably by a number of members on the other side who, nevertheless, did not have the courage of their convictions to come over to this side of the house and vote according to what they believed. They did not vote against it. No, they did not do that. They spoke about it but they voted in favour of it.

As a result of that, the member for Mitchell at the time (Mr Kris Hanna), who had left the Labor Party because he felt that it was going in the wrong direction, actually decided to vote against it. The Liberal Party had decided we were going to support the bill because we believed that, for the sake of business in this state, we needed to get some reform happening in WorkCover but one member (the member for MacKillop) voted over on this side.

He was much ridiculed for doing it but of course, the reasoning was that, if the member for Mitchell voted alone on the divisions, it would not be recorded but, if the member for MacKillop joined him, it would be recorded; and we thus have on the record all those people on the other side, all those Labor government members who spoke so strongly against this bill in 2008 yet voted in favour on every single amendment that was put. They voted in favour of going along with the government line.

The DEPUTY SPEAKER: The member may wish to seek leave to continue her remarks.

Ms REDMOND: I would love to seek leave to continue my remarks.

Leave granted; debate adjourned.

Sitting suspended from 12:58 to 14:00.

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