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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2008-05-01 Daily Xml
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WORKERS REHABILITATION AND COMPENSATION (SCHEME REVIEW) AMENDMENT BILL

Second Reading

Adjourned debate on second reading (resumed on motion).

(Continued from page 2590.)

An honourable member interjecting:

The Hon. SANDRA KANCK (15:23): I am glad they are all sitting here listening, and I hope they will be.

The PRESIDENT: The Hon. Ms Kanck has the call. Honourable members will sit down or leave the chamber.

The Hon. SANDRA KANCK: Mr President, I would expect government members to be sitting here and listening. It is their legislation; they want it through. Today is 1 May, otherwise known as May Day, and it is a day that is recognised by the union movement as a day to celebrate hard-won rights. Some of those hard-won rights include workers compensation. So, it is extremely ironic (I did not choose it) that, on this very day, on May Day, I am speaking about a bill that is aimed at cutting back some of those rights. So, rather than a celebration, it becomes a day of protest and anger. There is an even bigger irony in what is happening in that it is a Labor government that is doing this.

Eight years of a Liberal government never saw such attacks on workers' rights. Most voters have an understanding (and it seems to me that it is now very misconstrued) that the Labor Party is there to represent the workers. Clearly, with the passage of this legislation, that will no longer be the case. It seems to me that the Rann government is taking a calculated risk in introducing this bill. It has enraged many workers, and even some of its own backbenchers in this parliament. But it is doing it two years out from an election, and I guess the bet they are making is that by the time we get to March 2010 the voters will have forgotten and, if they have not, the Premier will be clever enough to come up with some sort of scare campaign or smokescreen to frighten those voters back to the fold.

In approaching this bill I do not come at it from either a pro or anti union base. In fact, my party has a history of holding up workers compensation legislation. Back in 1986 we held up the legislation for about four months (I have forgotten exactly how long). At that stage I was employed by Ian Gilfillan, who had carriage of that legislation for the Democrats, and I took all incoming phone calls about the issue. I can assure members that I was the recipient of much abuse from unionists at the time. It is rather unfortunate that those unionists forgot that I, too, was a worker. I recall that the UTLC, as it was then, had a rally in which it hanged an effigy of Ian Gilfillan. So it got extremely nasty, and I was very unimpressed with the unions' tactics back then in 1986. Having said that, I also indicate that I have been a unionist. When I taught in New South Wales I was my school's representative at district meetings of the New South Wales Teachers Federation, and a couple of times I was the delegate to its annual conference in Sydney.

Before I talk about the legislation itself I want to talk about the processes leading to our debating this bill. The review took place last year, some of it in the lead-up to the federal election when, ironically, one of the campaigns that was being conducted to support the ALP was the Your Rights at Work campaign. But, because the emphasis last year was on the federal election, I do not think a lot of people were aware that the review was even occurring in relation to WorkCover—and I have to say I certainly was unaware of it.

Nevertheless, the Clayton Walsh report was released on 26 February and we almost immediately had a statement from the Premier about how dire things were and how necessary it was to take action. That may be the case, but what was very surprising was that, within two days of the Clayton Walsh report being released, we had this bill being introduced into the House of Assembly. Two days is a very short period of time to draw up a bill of 76 pages in length. It seems to me that the chances are that the bill was drawn up a long time previously, and maybe the Clayton Walsh report was just the excuse to introduce it at that time. I know that members here who have had bills drawn up are aware that they do not happen overnight.

Anyway, in the House of Assembly the government used its numbers to push it through in just nine sitting days, which meant that adequate debate did not take place. I am distressed at the way the government is now treating the members of this chamber as if we have had the Clayton Walsh report for a long time, when in fact we have not, and that we have had a draft copy of this legislation for a long time, when in fact we have not.

I was briefed by Julia Davison, the Chief Executive of WorkCover, for whom I have a great deal of respect. She told me that they have spent the past 12 months looking at it. Well, we have not had the same opportunity to spend the past 12 months looking at it. In fact, the first I knew that we would have legislation coming was with the public resignation of Janet Giles from the WorkCover Board so that she would be free to campaign against this legislation on behalf of SA Unions, but we are being required to process this bill now as if we had been on the case for the past 12 months.

Yesterday afternoon in this chamber we had a bit of a stand-off with the Minister for Urban Development and Planning. The minister did not want the bill to be adjourned. He told me yesterday that he wanted to put this bill into committee today, which disturbed me greatly, because that could well mean that, if he gets his way, it could go into committee before a number of members have had the opportunity to put all their concerns on record and, in that process, to allow the minister and his staffers to look at all those concerns and address them in his summing up.

I want to place on the record that I am making this speech under sufferance. As non-government members, we are being pressured and bullied before we have had adequate time to consult on this legislation, and I resent that very much. I am sure that other members of this chamber who are lone representatives for their parties, such as the Hon. Mark Parnell, and Independents, such as the Hon. Ann Bressington and the Hon. John Darley, are in the same position. I take this opportunity to remind the minister that four of us in this chamber handle all portfolios. We are dealing with all the government bills.

The Hon. P. Holloway interjecting:

The Hon. SANDRA KANCK: We do not have a department to back us, minister. When the minister sends us a note and tells us that the firearms bill is a priority, we drop the research we are doing on something else and do the work on the firearms bill. I also remind the minister that, for nearly four weeks, he has been advising us that the Serious and Organised Crime (Control) Bill has been a priority. I have turned up here, I think for eight sitting days in a row, carrying my folder on that bill, with all the notes that I have prepared ready to do it, and the government does not proceed with it.

Each time the minister has adjourned that bill, despite advising us that the Serious and Organised Crime (Control) Bill is a priority bill—

The Hon. P. Holloway interjecting:

The Hon. SANDRA KANCK: The minister can interject, but the fact is that we are left guessing what he means by 'priority'. If he lists a bill as a priority and he continues to adjourn it day after day, how are we to know what he means by a bill being a priority? He sent us a note last week indicating that he wants this to be a priority bill. What he means by 'priority', I do not know. It simply lists—

The Hon. P. Holloway interjecting:

The Hon. SANDRA KANCK: The minister interjects and says that it was a No. 1 priority.

The ACTING PRESIDENT (Hon. R. Wortley): Order! I make the comment that accusing someone of telling lies is not appropriate.

The Hon. SANDRA KANCK: I did not say that.

The ACTING PRESIDENT: I did not make that comment to the Hon. Ms Kanck. I asked the Hon. Ms Kanck to be quiet while I made the comment that it is not appropriate for anyone to accuse someone of telling lies. Can we please listen to the Hon. Ms Kanck in silence and let her have her say.

The Hon. SANDRA KANCK: The email that came to us gave us three bills on the list that the minister said were priority bills, and that included the firearms bill which we dealt with this morning, and we gave it priority. I indicate to the minister that I have been giving this bill priority, but his idea of what priority means is not understood by us when he indicates a bill is priority and then adjourns it day after day. It seems to me that it is like the old story of the boy crying wolf. We get to a point where we do not know what he means when he says it is a priority.

An honourable member interjecting:

The Hon. SANDRA KANCK: No, it does not mean that at all. The fact is that the government does not want this bill hanging around for too long, because the longer it hangs around the more members of the public and the more former Labor voters get to understand what is happening—and the angrier they get. It is very painful for the government, but it brought it on itself, and I have no sympathy. However, just because it is painful for the government is no good reason for us to rush this through. The government should not be placing pressure on members of this chamber because it wants its dirty work swept under the carpet, and wants it swept under the carpet quickly.

That is my concern about the process, but let us look at the bill itself. My position is that the bill has some good and some bad, and I will be supporting the second reading. However, my support for the third reading of the bill will be dependent upon what amendments are successfully made in this chamber. Bullying us to give our second reading speeches, minister, will not help the position of the government.

There is no doubt that this system needs reform. Our return to work rates are the worst in the country, and it is not good for injured workers if they are unable to get back to work. I guess the question that is crucial to this legislation is how you shorten the tail but still properly compensate the worker, because we know that well-run insurance schemes have short tails.

When the Premier made his ministerial statement on WorkCover on 28 February this year he told us that unfunded liabilities stand at $843.5 million. What are unfunded liabilities—what does that term really mean? It assumes that everyone currently receiving WorkCover benefits will continue to receive them until age 65. That is absolute nonsense. It is a mythical figure. There is an assumption in there that not only will they all have to be paid until they are aged 65 but that there will be a lump sum payment to all those people on WorkCover right now. That is not going to happen, either.

I turn to a paper prepared for SA Unions and written by Dr Kevin Purse entitled 'Getting WorkCover Back on Track: A discussion paper'. Dr Purse explains it well, as follows:

An unfunded liability is the gap between a scheme's estimated liabilities and its assets. As workers compensation is a long-tail form of insurance, where claims liabilities may extend over several decades, it is very difficult to accurately predict these long-term liabilities. For this reason unfunded liability estimates should not be taken at face value.

Of course, our Premier has. The paper continues:

An unfunded liability is not a debt in the conventional sense but rather an estimate of the amount that WorkCover might, or might not, need to...pay out over the next 40 to 50 years for existing claims—depending on how well the scheme is managed over this period. It is not an amount that needs to be paid out at any one point in time. It is also important to note that WorkCover is more than capable of meeting its current obligations to injured workers and service providers as they fall due.

In WorkCover's latest annual report its unfunded liability was reported as $694 million, up $42 million from 2004-05. This headline figure of $694 million has captured the attention of the media, politicians and employer groups; it also forms the basis of demands on the South Australian government to slash entitlements to injured workers. The problem with the unfunded liability concept as a measure of financial performance is that it only looks at one side of the equation. WorkCover's estimated liabilities may have increased, but so too have its assets—from $1.120 billion in 2004-05 to $1.288 billion in 2005-06, an increase of $168 million. As the increase in its assets was greater than the increase in its estimated liabilities, WorkCover's financial position in fact actually improved last financial year. This improvement has largely been ignored though because of the fixation with the headline unfunded liability figure.

A more useful tool to assess WorkCover's financial position is its funding ratio—the value of total assets as a percentage of total estimated liabilities—since this provides a measure of the extent to which the scheme is fully funded. On this basis WorkCover was 65% funded in 2005-06, compared with the 63.4% of the previous year. Although, not a large improvement it was certainly a step in the right direction. This upward trend has continued and as of February 2007 the scheme—with assets of $1.445 billion, estimated liabilities of $2.153 billion and an unfunded liability of $708 million—was 67.1% funded.

I think that puts a very different perspective on what is happening compared to the line that the government is giving. Currently, 80 per cent of pay is paid out for a period of 12 months for injured workers and, with this bill, we would see that reduced to just 13 weeks.

This is basically cost-shifting; it pushes people out of a state-based WorkCover system onto a federally funded social security system. One wonders what the impact of that will be on those people. Whether or not they are part of a state-based system, the fact is that, once you put people on a pension, they tend not to move away from it. From my perspective, it is better that we keep it state based and then we can get people back to work.

There is no doubt that many workers who are injured would accept a payment for the loss and then move on to other things. There are some good things, as I said, about the Clayton-Walsh review, which are contained in the bill. I refer particularly to the maximum lump sum payment for non-economic loss which is to be increased from $230,000 to $400,000.

I think the establishment of a code of workers' rights and a WorkCover ombudsman are both very good ideas, although the LGA has written to us seeking an assurance that it will not duplicate existing roles. When I read that I thought it was a good question to pose to us, because South Australia already has its Employee Ombudsman. Unfortunately, because we are being pressured and rushed, I have not been able to get back to the Employee Ombudsman to find out whether this could be a task that he could perform.

I will also be interested to hear from opposition members in regard to the WorkCover ombudsman whether they will attempt to amend the title, because I remember that we had a bill to set up a health and community complaints ombudsman but the opposition at that time insisted that there really was only one ombudsman, so that legislation was amended because of that philosophical perspective of the opposition.

The bill, in aiming to decrease WorkCover premiums, is asking the workers to pay the bill. The question we need to ask is: are the workers to blame? If the government members have not been receiving emails and letters from workers, I can assure them that a lot of angry workers out there will tell them that it is not the workers who are to blame.

One woman who contacted me told me that she thought the doctors were to blame. She got, for a workplace injury, $16,000 for pain and suffering. She has been out of the workforce now for 2½ years and has had to see a variety of doctors in that time.

However, she says that during that period of time the health practitioners that she has seen have been paid something like $2.6 million. Recently, she arrived 10 minutes late for an appointment. She was too late to see the doctor but the doctor put in a claim to WorkCover for that missed appointment for $270.

I have no doubt that some workers exploit the system. The employers say that it could be as high as 5 per cent. If it is that high, then there is 95 per cent who are not exploiting the system. It is a very blunt instrument to cut the benefits of injured workers because of that 5 per cent. It is the same as when I was at school and teachers kept the whole class in because one child had misbehaved. It is called collective punishment and it is something we should not tolerate.

There is a question about how our rehabilitation scheme is working. I will look at that a little later. If that is the part that is not working then perhaps that is the part that we should be addressing. Robin Shaw, from the Self Insurers of South Australia Association, had a very apt comment in respect of what this legislation is all about. He said, 'It's social legislation measured in terms of financial outcomes.' I do not believe that WorkCover should be fulfilling that particular role.

The SA Union submission to the review had the following response to the board's recommendations:

The board recommendations are focused almost solely on reducing the entitlements of injured workers. There are no recommendations about changes in legislation that relate to the agent, employers or other players in the scheme. There are no recommendations to look closely at the management of injured workers, the practice of claims managers, or the operation of the agent and key professionals, such as rehabilitation providers and medical practitioners. Workers compensation is a complex matter. It is well known and acknowledged that there needs to be a focus on all elements and participants of the scheme in order to ensure that it operates effectively. Just focusing on financial viability and employee entitlements gives a warped view of the issues and the solutions. We also need to look at employer behaviour and agent behaviour in managing claims, and the role of rehabilitation and medical treatment.

I think that this bill fails on that. Let me say that, first of all, we do need a scheme which gets everyone to the table quickly. I think everyone acknowledges that. We need a scheme that avoids red tape and we need a scheme that is cost-effective. There are some of those hallmarks in this legislation but still, ultimately, it is making the injured worker pay the cost.

One of the positives is the introduction of provisional liability so that when a claim is lodged the rehabilitation providers should be providing rehabilitation within two weeks of the claim being lodged. This follows the New South Wales and Tasmanian legislation. That is a positive. However, the LGA, in one of its letters to members, indicated a concern about this. Its concern is that if the case is not upheld then the wages that have been paid in that time period will be virtually unrecoverable. I would have liked to explore this a little further before I made my speech but, unfortunately, government pressure is not allowing us the time to do that.

The bill is going to close down redemptions. There is no doubt that some workers prefer redemptions rather than fighting the system. It is interesting that, back in 2003, Clayton said that the use of redemptions was good. However, since that time, the Mountford review has recommended getting rid of redemptions. The LGA uses redemptions in its self-insured workers compensation scheme. It says in a letter to members:

We support the involvement of unions and employee representatives in negotiations and, as such, believe that there are ample safeguards to ensure a reasoned and successful use of this provision on a sparing basis.

The LGA indicated to us that it wanted an amendment that would allow it to continue to use redemptions. In its submission to us, the Law Society also argues in favour of redemptions. It states:

The Law Society believes that redemption by agreement should remain in the legislation. The society does not agree with the view that the existence of redemptions and the ability to redeem creates a compensation culture. The ability to finalise liability is important in appropriate cases. Indeed the proposed section 42(2)(e)(iii) acknowledges this. Moreover redemption was not introduced into the act until amendments in 1995. Despite that there were frequent media reports of a so-called compensation culture in the late 1980s and early 1990s well therefore redemption was introduced into the legislation.

The Australian Lawyers Alliance has also written to MPs, and I will read what it has to say about redemptions, as follows:

At present a long-term injured worker may have future weekly payments and medical expenses redeemed by payment of a capital sum. This recognises the fact that many long-term injured workers may be able to use such capital sums to further rehabilitate themselves or even to set up a small business, for instance, and get on with their life.

The new proposed redemption provisions provide that such capital sums will only be paid where either the rate of weekly payments does not exceed $30 or the worker has attained the age of 55 years or more, or where the tribunal determines, on the basis of a joint application by the worker and WorkCover, that the continuation of weekly payments is contrary to the best interests of the worker and as such a capital sum should therefore be paid.

In practice this will severely reduce the discretion of the parties to settle upon a redemption payment...It should be noted that many exempt employers make such payments in excess of the usual payments made by WorkCover. Such employers have no 'unfunded liability'.

It seems to me that, if injured workers are able to take a lump sum in this way and get out of the system, and get out of the system quickly, it means that going to court, and all the things that happen in this process, will be very quickly terminated, resulting in one fewer person for the government to worry about in terms of its unfunded liability.

Medical panels are the next issue I want to look at, and it is a contentious issue. We know that they were envisaged in the drafting of the 1986 act, so it is an idea that has been around for a while. However, the complaints that have come to me suggest that it will be a kangaroo court held in secret; it will lack accountability; transcripts will not be available; there will be no right to legal representation; there will be no say in the composition of the panel; and there will be no rights of appeal, other than an application to the court for a judicial review, which is expensive and complicated.

I have been told in lobbying that the requirements in this bill are foreign to the way that doctors are training. The point has been made to me that the current tribunal does a good job. There is no backlog, and there is a concern that, with the new medical panels, a logjam will be created, and that would be very unfortunate if there is none at the present time.

Julia Davison, the Chief Executive of WorkCover, told me that the current situation encourages doctor shopping, and she talked to me about a case with 27 different doctors involved. On the weekend in a social context I was talking to somebody who is in a senior management position with one of the self insured companies, and he raised with me his concerns about how some workers with an injury will be back at work in a very short space of time and others with a similar injury hang around for a long time not getting better. His view was that the doctors were complicit with those particular workers, and for someone like that he sees the medical panels as a way forward.

SA Unions, in its submission to the review of the scheme, said, 'South Australia has had the medical panel concept in place previously under the current scheme. It was abolished for good reasons and should not be reintroduced for the same good reasons'. There are then six dot points, stating:

traditionally treating practitioners have been reluctant to participate in medical panels in other jurisdictions;

the constitution and process of medical panels moves away from the strong regard held for an injured workers' treating practitioners;

there is no appeal process;

there is no accountability of the sitting members giving their medical opinion (no cross-examination);

there will be little scope to bring medical disorders and injuries to the panel for a test that falls on the fringes of traditional injuries; and

in other common law jurisdictions the judiciary is charged with determining questions of a medical nature.

Most members have been provided with a paper entitled 'Assault on Injured Workers', presented to the Australian Lawyers Alliance seminar on 13 March this year by Graham Harbord of the law firm Johnston Withers. Some of the things he mentions give me cause for concern, as follows:

The proposed panels appear to have much wider powers than was ever envisaged in the past. Section 98E describes 17 different so-called medical questions, which the medical panel may consider. In addition, any other prescribed matter may be added to this list.

That is very concerning. He continues:

The list includes issues as to causation, questions as to incapacity for work, questions as to whether a disability is permanent and questions concerning rehabilitation and return-to-work plans. It is hard to envisage what significant issues under the act may not be considered by such a medical panel. It is clear that these panels will in fact be considering not only medical issues but legal issues, which are involved in determining causation, incapacity, suitable employment and reasonableness of rehabilitation provisions—issues on which the courts and tribunal have set down guiding legal principles over many years. The legal issues in relation to these matters are beyond the scope of a medical practitioner's expertise.

From my perspective, having been pressured to make a speech, I am still unclear on this issue and I want to explore it more. It is unfortunate that we are being bullied into progressing the legislation without looking at all of the issues.

Dispute resolution is another issue. I am told at the moment (and the government may present me with evidence to the contrary) that conciliators have good settlement rates. Those that are not resolved by conciliation go to judicial determination, and the arbitration proposed is unnecessary and a costly step in this process. Again, I refer to the paper by Graham Harbord, which states:

Currently under Section 92D of the Act where the parties have not reached an agreement at conciliation then proceedings must either be referred for arbitration before a Conciliation Arbitration Officer or for judicial determination before a Deputy President. A new Section 92D provides that all matters must now first be referred to arbitration. The matter may only be referred to judicial determination once arbitration has been completed. This will inevitably lead to further delays to resolving disputes and added costs to all parties and to the WorkCover system.

If it is going to add to the costs and we are trying in this legislation to cut back the costs, why are we going down this path? Mr Harbord further stated:

There is no reason why the current system should be changed. The Clayton Report at least recommended that the amount of legal costs at arbitration should be increased to recognise the proposed greater emphasis on arbitration. Whether or not this recommendation will be picked up in the regulations is yet to be seen.

I invite some comment from the minister when he sums up as to whether or not that is the case. I think one of the other things that we need to look at is how effective our scheme is. According to the Labor Lawyers, on average, across Australia, Australian workers get 51.8 per cent back into their pockets. South Australian workers are getting better than that average, with 62.9 per cent, and Queensland is the best at 65.6 per cent. So, from that perspective, one would have to say that the South Australian scheme is not doing too badly.

Dr Kevin Purse, who I have already quoted, in terms of the discussion paper that he prepared for SA Unions, was also published in the UniSA Education News of 18 February. In that article, Dr Purse suggested that the outsourcing of claims management has created one of the key financial problems in the scheme. The article states:

According to Dr Purse the cost of administering the WorkCover scheme in 1994, before outsourcing began, was $49.7 million. 'The move to outsourcing was supposed to deliver cost savings of up to 15 per cent a year' he said. 'Not only was the target never met—there were never actually any cost savings at all, even though the number of WorkCover claims fell dramatically from the 39,500 in 1995 to 22,020 in 2007. Instead there was a blow-out in scheme administration costs and by 2007 after adjusting for inflation, South Australian employers had paid an extra $75 million in administration—in effect, an "outsourcing loading" of more than 10 per cent a year.'

So, why is it that we are blaming the workers? The number of claims managers has been progressively reduced since then, so we are now down to one claims manager, and that claims manager has a five-year contract beginning in 2006. However, despite that contract requiring the single agent, EML, to reduce the WorkCover liability by up to $100 million in the first two years, the figures are tending upwards and, according to Dr Kevin Purse, liability has instead increased by $300 million in that time. So, what is it that the people in WorkCover are doing?

Members have received lots of emails from injured workers, and I could go on for the rest of the afternoon, I suppose, just reading them.

The Hon. M. Parnell: The government needs to hear them.

The Hon. SANDRA KANCK: Yes. An email came from someone called Fi, and she said:

To punish injured workers by cutting their entitlements is downright cruel. The injured workers in no way asked to be put in the position that they find themselves. I have a partner who has been in the WorkCover system for almost 2½ years. He is currently receiving full income support from EML. Kicking him off the system would, for us, mean losing two-thirds of our weekly income. An income that we are struggling to survive on as it is. And we are not alone in that scenario.

My partner's experience in his dealings with EML and WorkCover have not been positive. The stress of dealing with the system has caused him to suffer from depression. There have been times when I [have] been waiting for a phone call or a knock at the door to inform me that he has killed himself.

Yes, there are huge problems with the system that we have now, no-one would argue otherwise. However, the problems lie in the management not with the injured workers.

During my partner's 2½ years he has not been offered any retraining, nor has any of the retraining suggestions he's made himself been approved or even looked into. In fact only a couple of weeks ago he was told that they are not interested in any retraining that will take longer than a couple of weeks, but no suggestions of what training he could have for those couple of weeks.

He found himself a commission only paying sales job. With this job he was paid monthly in arrears. When he phoned his case manager to inform them of what he earned for the previous month (less than $200) it caused his payments to be messed for about four weeks. He had to phone up several times each of those four weeks to chase his payments up. For those four weeks his payments were a week behind. In the end his case manager told him to quit the job as it was too hard to sort out.

So much for rehabilitation! Fi continues:

Does this sound like a system that is trying to get injured workers back to work?

We have seen next to no effort in trying to get him re-employable. Surely if the effort was put into training then that in itself would get many people off of the system and back into the workforce.

Look at the other states. What are they doing to get their injured workers back to work? How does South Australia's return to work rate compare?

How many of you have had contact with someone that has been on WorkCover long-term? What did they tell you about how the system is treating them? What does this tell you about how the system is managed?

Can you honestly say that the management of our system is working 100 per cent as it should? Shouldn't we get this right before anything else?

Yes please fix WorkCover, but please treat the cause, not the symptom of a system that doesn't work.

Levies are an issue that we are dealing with in this bill. We are told that the issue is a levy of state competitiveness, and the argument is that if the return to work rate is improved the levy will drop. I return to Dr Kevin Purse's report for SA Unions, 'Getting WorkCover back on track'. I want to address this issue of retraining, which is an essential part of return to work. What we just heard in that email from Fi shows that WorkCover is not doing particularly well at getting people back to work. Dr Purse says:

The reluctance by WorkCover to embrace retraining as an integral part of its return to work philosophy is a major barrier to improved scheme performance. At present, retraining occurs rarely and only where an application made by an injured worker's rehabilitation provider is approved.

What is needed is a systematic approach to retraining—one which provides tangible benefits for both the scheme and injured workers. Candidates for retraining would need to be carefully selected against a set of criteria designed to maximise return to work outcomes.

He goes on to say:

The selection...should be carried out within a broader framework that looks at the 'streaming' of long-term claimants. This should involve a redefinition of what constitutes a long-term claimant, as the current definitions based on 1-3 years' duration reflect a passive approach to rehabilitation rather than the proactive approach necessary to improve the scheme's return to work rates.

It seems to me that one should expect that retraining would be part of return to work if the injury is such that the employee can no longer do the job they were doing prior to the injury, yet retraining is not guaranteed in this bill. It seems to me that that is a major deficiency if we are to have reforms. Implicit in so much of this is that, if we can get workers off WorkCover one way or another, the employers' premiums will drop and then everyone will be happy.

Again, I return to this document from Dr Kevin Purse. At page 10, under the heading 'Summary points—competitive premiums', his paper states:

It is frequently suggested that WorkCover premiums need to be 'competitive' with premiums in other states; otherwise there will be an exodus of firms from South Australia and an associated loss of jobs.

Before I continue reading all those points made by Dr Purse, in a sense we have a race to the bottom, with each state arguing that 'ours is higher and therefore we need to get lower'; and, if we keep on lowering the premiums, of course, we will not have any money in the scheme to be able to pay injured workers. I think that what Dr Purse does is to expose some of the arguments about the competitiveness. His paper further states:

Though superficially attractive, this claim is not supported by the evidence.

Investment, and business relocation, decisions are made on the basis of a mix of financial and strategic considerations, not marginal differences in average WorkCover premiums of 1 per cent-1.5 per cent of payroll.

In terms of overall business competitiveness Adelaide outperforms Sydney, Melbourne and Brisbane.

Adelaide is also highly competitive internationally and was rated among the top three of 99 cities—from the Asia Pacific region, Europe and North America—in a survey conducted by KPMG in 2006.

Reductions in employer premiums should only be supported on the basis of better workplace health and safety performance and improved return-to-work outcomes [and I do not think the legislation address that].

Artificial reductions in premiums by cuts to workers' entitlements is an approach described by the Industry Commission as a form of 'invidious competition'.

I have one concern about the legislation that probably comes out on the side of the employees, that is, the return to work coordinator (new section 28D). I am surprised, in fact, that I have not heard from employers about this. The employer must appoint a rehabilitation and return to work coordinator. The first thing that comes to my mind is that it seems that, on occasion, there would be a conflict between rehabilitation and return to work.

I think that you must get these in the right order, and returning to work without rehabilitation having occurred may be, shall we say, medically contrary indicated. New section 28D provides that this coordinator must be an employee in that business, firm or company. I was thinking of a husband and wife deli where they might have one employee, and I can think of one in particular. If that employee was injured, certainly you could not make the injured employee take on the role of a coordinator. Even if a second shop assistant worked in the deli, it would take a lot away from the business for the second employee to be filling this role for the injured employee.

The government says that it is trying to make things better for an employer, but, certainly, this would not do that, because it takes away labour that could actually be doing something in that business.

The Hon. R.D. Lawson interjecting:

The Hon. SANDRA KANCK: The legislation does not say that. I want to address that, because new section 28D(7) provides that the regulations can exempt a certain class of employee—and, presumably, that would be based on size. Even with 30 employees, it is still an impost on the business to have to put someone on the payroll to take on this role. In addition to that, before they even put them there, they will have to pay out to ensure that that coordinator has adequate training to allow them to undertake the role. As I said, I have not heard anything from employers about this, and I expect that is because the legislation is being dealt with way too fast.

The Hon. Mr Lawson interjected a short time ago and said that it is only for those with 30 employees or more. However, if that is the case why is it being left up to the regulations? Why is it not being put into the bill?

As I said at the outset, I think the Premier and his ministers are taking a calculated gamble: first, that rusted-on Labor voters will continue to vote for them no matter what they do in this parliament, and, second, that those voters who are very cheesed off by what is happening at the moment will, come the election in March 2010, return to the fold when Mike Rann puts up some sort of scare tactics about what the opposition might do.

I support the second reading, knowing that there are some good reforms of the system in the bill but also knowing that the bill has some considerable weaknesses. I expect to be supporting a lot of amendments, and I note that the opposition failed to support the amendments of the member for Mitchell in the House of Assembly. I hope that was purely for convenience, and that the opposition will reconsider its position when we deal with the committee stage of the bill in this place.

The Hon. R.D. Lawson interjecting:

The Hon. SANDRA KANCK: Yes; you have a chance for redemption, Mr Lawson. This is an opportunity for members of the Legislative Council to show the people of South Australia what a valuable role we perform and show how effective we are. Members of parliament, with very little warning, have had to get their heads around the Clayton Walsh report, the Mountford—

An honourable member interjecting:

The Hon. SANDRA KANCK: It was only on 28 February that you introduced this legislation. In that time, as well as dealing with other government legislation, we have had to get our head around the Clayton Walsh report, the Mountford review, the 2004 Infinity Consulting report, a PricewaterhouseCoopers assessment, submissions from and/or meetings with the Law Society, SA Unions, the Local Government Association, the Australian Lawyers Alliance, Group Training Australia, the Self Insurers of South Australia and, of course, WorkCover.

When we hear a claim from one group we have to go chasing back to another group to ask for their perspective on that particular claim, and so on. So, we should not be rushing this through, as the government is trying to make us do. We are still trying to consult and others are still trying to consult with us. The LGA, for instance, in its fax to us on 3 April, said that it was providing us with some initial comments but that it was still consulting with its member councils—and it needs to do that before it can get back to us with further feedback.

This bill is being pushed through solely at, and for, the government's convenience without full input from the community. The Legislative Council can provide the accountability that the government is failing to provide, and I look forward to a much more forensic and less hurried examination of the bill than the government would allow in the lower house. In the process I hope that we in the Legislative Council can make this a better bill.

Honourable members: Hear, hear!

The Hon. D.W. RIDGWAY (Leader of the Opposition) (16:19): I rise to speak to the second reading debate on the bill, the correct title of which is the Workers Rehabilitation and Compensation (Scheme Review) Amendment Bill. I was pleased to hear the minister interject some little while ago to say that the government has to have this through by the end of the financial year so that the changes could take effect. That gives me some comfort, because we have a little longer to deal with this than we were, perhaps, first led to believe.

The Hon. Sandra Kanck: It has to be through before August for the Labor state convention.

The PRESIDENT: Order!

Members interjecting:

The Hon. D.W. RIDGWAY: Would you like to speak Bernie?

Members interjecting:

The PRESIDENT: Order! The Hon. Mr Ridgway will cease to respond to out of order interjections.

The Hon. D.W. RIDGWAY: Thank you, Mr President. I would like to make a few comments. The Hon. Robert Lawson is the opposition's lead speaker and he has put forward our position. He was, of course, the minister responsible for WorkCover in the former Liberal government—

The Hon. B.V. Finnigan: For about a month.

The Hon. D.W. RIDGWAY: Well, I suspect that is a month longer than you will ever be minister, so I would be quiet if I were you.

The PRESIDENT: Order! The Hon. Mr Ridgway will cease responding to out of order interjections.

The Hon. D.W. RIDGWAY: If they were sensible interjections I probably would not respond, Mr President. I would like to take members back to the formation of the Rann government in 2002, and the appointment of the Minister for Industrial Relations back at the start. Of course, it was the Hon. Michael Wright—who, incidentally, is the son of the father of WorkCover, and it is a shame that some of his father's qualities are not apparent in the minister. I remind people—

The PRESIDENT: Order! It is derogative to say that the son does not have the qualities of his father. The honourable member will not personalise his statements but just get on with his speech.

The Hon. D.W. RIDGWAY: Thank you, Mr President. Perhaps I will just highlight the qualities of his father and let those who read Hansard make their own judgment. I quote:

In a 2004 speech to Australian Workers' Union delegates, state secretary [and, I think, friend of the President] Wayne Hanson called Jack Wright 'the conciliator, the dealmaker, the fixer and the architect of the workers compensation legislation that was friendly to injured workers.' In a sentence he said, 'Jack Wright was the workers champion.' The same union is certain to be at the forefront of the labour movement's campaign against the government—

That is, when it comes to its opposition to this particular legislation. So, I draw the comparison between the minister and his father and leave people to make their own judgment.

I think one of the things of which the Hon. Michael Wright should be extremely proud during his time on Yorke Peninsula is that he actually won three Mail medals. That is for the best and fairest player in the football league, and I am sure he was a brilliant footballer in his day. It is a shame that in his next role as a minister he does not have the people in the pack working hard and getting the ball for him, and delivering, so that he can work his magic on the football field—or as Minister for Industrial Relations. Clearly, he has been asleep at the wheel with this particular responsibility.

The Hon. R.D. Lawson interjecting:

The Hon. D.W. RIDGWAY: The Hon. Robert Lawson interjects that his lawns are looking very nice. So they should, because they are being constantly watered.

It is interesting to look at some of the things that have happened under the stewardship of the minister. We had a new board, a new CEO and a whole range of changes to the administration of WorkCover, yet the deterioration in the unfunded liability is the key reason why the government is bringing in this legislation.

The Premier recently said that, if the legislation was not passed unamended, we would be facing the potential catastrophe of another State Bank. The Hon. Angus Redford, before he departed this place, some other colleagues and I often talked about how if this were not addressed, we would end up with another State Bank. We were laughed at by the government and assured that this would never end up as another State Bank, yet the Premier is now saying to his own caucus, so we are told, that if they did not support the proposed changes and the proposed legislation, then we would be facing another financial crisis. It is just a bit cute that the Premier is able, on the one hand, to have his team laugh at us when we proposed some years ago that this could develop into a real financial crisis for the state, and now that is one of the reasons we have to deal with this legislation at present.

It is interesting to consider that, after the new board was appointed, on Friday 14 March, the WorkCover Board Chairman, Mr Bruce Carter, said in a radio interview that he knew WorkCover had significant problems within a month of becoming chairman. He has been the chairman for some years now, and we had a briefing with Mr Carter, the CEO of WorkCover, and other representatives from WorkCover and the minister's office last Tuesday evening.

I would like to describe from a farmer's perspective how I think they should have managed WorkCover, and I will use the analogy of rolling a large tractor tyre down the road, and I am talking about one that is 6 or 8 feet high. That is a pretty easy job to do while it is balanced but, as soon as it gets out of balance, you have to get it straight back up again, because once it gets further over you cannot hold it and it becomes extremely heavy; in fact, you usually end up with it lying flat on the ground.

So, it surprises me that the chairman of WorkCover, Mr Carter, said that within a month of becoming chairman he knew we had significant problems yet, years later, we are now faced with a situation where we have nearly $1 billion of unfunded liability and we now have to get to the point where, unfortunately, it is the injured workers of this state who will have to do the heavy lifting to lift the great big tyre of WorkCover back up again. So, you had a board, a chairman and a minister. I will ask this question of the minister sitting opposite, although I am sure he would will not answer it because he will say anything that is discussed in cabinet is confidential. Surely, from the moment that the chairman said he discovered there was a problem (within a month of becoming chairman), he would have reported to the minister that we have a problem, and surely the minister would have gone to cabinet and said, 'Comrades, we have a problem. We have to do something'.

Years later we are now faced with this problem, and clearly it is that the minister has been asleep at the wheel for the entire time he has been Minister for Industrial Relations. This should not have happened; it should never have been left to get to this point. There were indicators. As I said, members of the opposition in both houses have been pursuing the government over WorkCover for the past six years because we could see this deteriorating trend. Clearly, it is the minister and the other ministers in the cabinet, because I am sure he was reporting to them regularly, who have sat there and done nothing.

Two Independent members have joined this government in the Minister for Water Security and the Minister for Agriculture, Food and Fisheries. They have been part of the whole government. The Minister for Agriculture, Food and Fisheries has been part of the government for about 5½ years now and the Minister for Water Security has been part of the government for about four years or more. They have been there for that length of time and, if the reports have been coming through, which we would hope a minister of the Crown would do and that he would be speaking to his colleagues in cabinet to let them know what the problems are, they have all sat on their hands asleep at the wheel. At the end of the day, people need to remember that this is a situation we should never have got ourselves into.

Mr President, I will not actually name anybody because I think that would be inappropriate and I am sure you would call me to order, but also there have been significant conflicts within the board and some of the services that some board members offer to WorkCover. The board made a recommendation well over 12 months ago to the minister that he reject the set of proposed changes to fix the problem—and I assume that included cabinet, the ministers opposite and ministers McEwen and Maywald—and I cannot understand why the board did not resign.

At the end of the day, the board is appointed, in conjunction with the CEO and the minister, to manage and provide advice on the WorkCover Corporation. Their advice was not accepted. I cannot for the life of me understand why they did not resign on the spot, yet they all continued. I know they get paid, and it is probably not an insignificant amount of money that they are paid. It is interesting to look at the boards of public companies. If they fail to deliver a good return to their shareholders, they usually get sacked at the next AGM. What I cannot understand is that this board is still in place and the minister is still in place, yet the return to the shareholders (the injured workers) is that they have gone broke.

There is nothing left for the workers; they have lost it. All of their life savings that they have put into a workers compensation scheme, if you like, have gone. These are the entitlements for the workers for whom you, Mr President, in your former life, and most of your colleagues in the Labor Party have fought long and hard and whom you have proudly defended in true tradition prior to becoming President here. On a number of occasions I have heard you speak about it. Now those people are paying the price of poor management.

I made a number of lengthy contributions on WorkCover in relation to the Statutory Authorities Review Committee inquiry, and I would like to refer back to a couple of parts of that and, particularly—

The PRESIDENT: Is this the inquiry that finished in 2005 or is it the current one?

The Hon. D.W. RIDGWAY: It is the current one, but I do not want to refer to the evidence, nor do I want to refer to anybody who is coming to speak to it, just in particular—

The PRESIDENT: I remind the honourable member to be careful.

The Hon. D.W. RIDGWAY: Thank you for reminding me to be careful, Mr President. I was interested in the appointment of a single claims manager. Members may know that that was something that interested me, particularly with reference to the Statutory Authorities Committee. In the past six or seven months the opposition has became aware that, during the tendering process where Employers Mutual were awarded the tender to be the single claims manager there were a number of other companies that tendered at the same time, one of which was QBE.

Fortunately, under freedom of information, I have been able to obtain QBE's tender documents. It intrigues me that, buried deep within their documents, all the tenderers were asked by WorkCover to provide innovative solutions for managing the unfunded liability. One of the innovative solutions offered by QBE was to take the unfunded liability which, at the time, was $500 million or $600 million. Effectively, it would have taken the unfunded liability and the scheme would have been fully funded, because it would have managed it and, I suspect, probably made a profit out of it because it managed it better.

The opposition prepared a press release and asked why that had not been investigated or pursued. At the time Treasurer Foley said it could not be done because it was illegal and it would require legislative change. What are we doing here today? We are dealing with legislative change to fix the WorkCover scheme, yet we had a private insurance company that wanted to do it for us. Close to two years ago we had this offer on the table, but it was too difficult—and perhaps it was not even looked at. It is question that I will ask the minister to advise us about, but he will probably hide behind cabinet confidentiality. Was it ever discussed at a cabinet meeting that there was an opportunity to put the unfunded liability in the hands of a private insurance company and let them manage it so that there was a fully funded scheme? That was an option that was on the table which could possibly have saved injured workers from having to bear the brunt of the reforms we are dealing with now.

I am particularly interested in that, because it frustrates and surprises me that we are here today dealing with legislative change and the minister is a bit stressed at how quickly we are going to deal with it. We are going to process it in an appropriate time. There was an opportunity for some potential legislative change to provide an outcome that may have been much simpler and much less painful for injured workers in South Australia and yet it never saw the light of day until we picked it up through the tendering process of a single claims manager.

Last Tuesday week the opposition had discussions with representatives from WorkCover who indicated that there needs to be some cultural change within WorkCover. It was not just the legislative change that was going to bring about the solution: there was also a need for some structural change within WorkCover itself. Forgive me for being a little sceptical but, given how the position has deteriorated under the stewardship of the minister and all those involved in the organisation in the past six years, it is a bit rich for them to come now, at the eleventh hour, and say, 'We need this legislative change and, by the way, we're going to change our practices as well because we realise that we haven't been doing it properly.'

In fact, when I asked the question: 'How did the tractor tyre get out of balance and tip over so far?' the response given to me by the senior people there was, 'Well, nobody saw it coming.' Goodness me! There are some people on the board and in senior positions at WorkCover who are probably paid more than the minister, I suspect. They are very highly paid people within our public sector and I am sure they are very skilful people and yet they sat there and told us that nobody saw it coming.

Why on earth do we pay people to manage schemes and to be in charge of important organisations like WorkCover? It is simply not a good enough excuse to say that they did not see it coming; that nobody saw it coming. I have little faith in the minister and anybody else who has been involved, but particularly the minister because the buck stops with him in our Westminster system, if there are problems. I am sure if the Hon. Paul Holloway had any problems of a similar magnitude in any of his areas the buck would stop with him and we would make his life very unpleasant in this place. Thankfully, he has not had a disaster like WorkCover under his watch in his portfolios—although I will ask him some questions about some unfunded liabilities within SAPOL shortly.

The buck has to stop with the minister and yet we have seen no indication from anybody—it is almost like Teflon: it is not his problem. There was a slight indication that the government had lost some faith in him, because the Hon. Patrick Conlon was the one negotiating with the unions and heavying some of the members of the caucus because Minister Wright just did not have, shall we say, the grunt required to get compliance from members of the caucus and some members of the union movement.

That is what frustrates me immensely with this legislation. We are now facing a situation that should never have happened. This is negligence of the greatest magnitude in the six years of this government. We see a minister and (I assume) a cabinet that was well informed, including the Treasurer, the Premier and all the rest who are there as part of this as government, assuming that it was somebody else's problem and not theirs, and that somebody else was going to keep an eye on it. Clearly, they have not. Perhaps that is why we have 10,000 extra public servants in South Australia over and above what was budgeted for. Perhaps they were hoping somebody else was keeping an eye on it—or maybe they did not see that coming, either.

I would like to ask the minister a few other questions. In particular, they relate to the liabilities of government departments.

The Hon. R.D. Lawson interjecting:

The Hon. D.W. RIDGWAY: The Hon. Robert Lawson interjects that we want Russell Wortley to speak.

The ACTING PRESIDENT (Hon. J.S.L. Dawkins): The Hon. Russell Wortley.

The Hon. D.W. RIDGWAY: Yes; the Hon. Russell Wortley. I would like to know when the backbenchers of the government will speak, because this is an important piece of legislation. It would be like the Hon. Caroline Schaefer sitting quietly on the bench and not speaking on a bill that affected farming and rural people in South Australia. I remember that her very first contribution in her parliamentary career was on daylight saving; in fact, she crossed the floor. It is a shame that backbenchers opposite do not have the same sort of courage.

The Hon. R.D. Lawson: And John.

The Hon. D.W. RIDGWAY: Yes. I apologise; I was distracted by the Hon. Russell Wortley.

The ACTING PRESIDENT: Ignore those distractions.

The Hon. D.W. RIDGWAY: I would be interested to find out this from the minister, and I ask for a response in his second reading speech or at clause 1. It now appears that the unfunded liability of the public sector used to be put together in one lump, and it once appeared in the annual reports of the Office of the Commissioner for Public Employment. However, this agency no longer presents its own reports and has amalgamated with the Department of the Premier and Cabinet.

It appears to me that each government department presents its own unfunded workers compensation liability. In question time a few weeks ago I asked the minister for a report on the unfunded liability of the South Australian police force and what impact these legislative changes would have on that liability.

I would also like to know about other key government departments, such as environment and heritage, health, and education, that is, some of the big employers in government. I would like to know their unfunded liability as individual departments, because we do not seem to have those figures. I am told that some are quite excessive and that, in fact, the education department's could be as high as $300 million. I do not know whether this is accurate, but I think the government has an obligation to provide the chamber with some figures that will either support those claims or show that they are inaccurate.

Clearly, we are now in a situation we should never be in. I will conclude my remarks very shortly, but I am interested that members opposite are sitting quietly. We understand that they are not happy and that they have been gagged, if you like. I am delighted that a number of them are here because it is always inappropriate and unparliamentary to refer to members when they are not in the chamber.

It interests me that at the moment the Labor Party in New South Wales is going through a difficult time. It is talking about privatising its electricity assets, yet the president of the party in New South Wales says that he will protect any member who crosses the floor and votes against the privatisation of the electricity assets. I note that none of that goodwill has been shown towards any of the members opposite. They sit silently.

I know from some of the comments you have made in the six years I have been here, Mr President, that it must be tearing you apart inside to know what is happening to and gone on inside the WorkCover scheme. Perhaps had you been the minister it would not have happened. You should not laugh, Mr President, because you do not realise the magnitude of the poor performance of this minister that has allowed this to happen. It is a disgrace to think that the unfunded liability has gone from $86 million to $911 million. That was the figure as at 31 December, so I suspect that we are now getting close to $1 billion. In anybody's estimation, that is an awful lot of money.

I do not want to prolong my contribution (and I know that members opposite will be happy if I do not carry on), but I wish to make one last comment. An advertisement in The Advertiser today urges the Legislative Council to vote now. It states, 'Time is up.' I make the comment that, of all the organisations listed across the bottom of the advertisement, all but one have come to see me as Leader of the Opposition in the Legislative Council.

The only one that has not is Business SA, and I am a little surprised that it has not called. I am sure that it has spoken to Duncan McFetridge as shadow minister, and it may have spoken to the Hon. Robert Lawson. However, Business SA has not contacted me personally, made an appointment to see me or invited me to visit.

I find it a little baffling that Business SA is happy to put this advertisement in the paper and spend a lot of money—I believe that a full-page advertisement costs $20,000. Most of these organisations have been to see me, and we have spoken about this issue, but Business SA has not. I thank you for your protection and indulgence, Mr President, and I conclude my remarks.

The Hon. M. PARNELL (16:44): I move:

That the debate be adjourned.

The council divided on the motion:

AYES (13)

Bressington, A. Darley, J.A. Dawkins, J.S.L.
Evans, A.L. Hood, D.G.E. Kanck, S.M.
Lawson, R.D. Lensink, J.M.A. Parnell, M. (teller)
Ridgway, D.W. Schaefer, C.V. Stephens, T.J.
Wade, S.G.

NOES (6)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Wortley, R.P. Zollo, C.

PAIRS (2)

Lucas, R.I. Gago, G.E.


Majority of 7 for the ayes.

Motion thus carried.

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