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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2007-10-17 Daily Xml
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WORKCOVER CORPORATION

The Hon. D.W. RIDGWAY (Leader of the Opposition) (16:37): I move:

1. That pursuant to section 16(1)(a) of the Parliamentary Committees Act 1991, the Statutory Authorities Review Committee inquire into and report on the WorkCover Corporation of South Australia (WorkCover), having regard to the extraordinary blow-out in the unfunded liability of WorkCover from $86 million in 2002 to $843 million in 2007, the failure of the Government to properly and adequately monitor and manage the unfunded liability of WorkCover, and the claim by WorkCover in January 2006 that the sole claims manager would achieve necessary liability reduction to deliver a fully funded scheme by 2012-13, with particular regard to—-

(a) the deteriorating financial position of WorkCover;

(b) the effectiveness of outsourcing the claims management to a sole claims manager;

(c) the tender process and the probity of that process, leading to the appointment of the sole claims manager;

(d) the exposure of WorkCover to the subprime financial market;

(e) the 2007 actuarial report submitted to the WorkCover Board in September 2007; and

(f) any other matters.

2. And that WorkCover provides copies of the following documents by 21 November 2007:

(a) any material provided to WorkCover by WorkCover’s Claims Management Agent of—

i. organisational charts;

ii. resources of the agent which are applied in the performance of the agent’s functions, including employee resource plans;

iii. resources provided by any other organisation or entity to the agent in or in connection with the performance of the agent’s functions; and

iv. commercial arrangements for the supply of the resources referred to in (ii) including details of any charges which the agent is obliged to pay in respect of the supply of those resources, as required by clause 4.5 of the Claims Management Agreement (the Agreement), dated 26 February 2007;

(b) organisational charts provided to WorkCover of all significant positions within the Claims Management Agent’s personnel, as required by clause 4.6 of the Agreement;

(c) any documents and correspondence relating to WorkCover’s approval of persons to occupy the positions to be designated to be held by key agent personnel, as required by clause 4.6 of the Agreement;

(d) the Agent Performance Evaluation Program and any documents promulgated pursuant to clause 7.1 of WorkCover’s Claims Management Agreement;

(e) any reports provided to WorkCover by the Claims Management Agent, outlining the outcomes of its internal audit and quality assurance programs, as required by clause 7.4 of the Agreement;

(f) any reports relating to general or selective audits of the Claims Management Agent, undertaken by WorkCover, as required by clause 7.5 of the Agreement;

(g) a list of all unauthorised payments or any documents evidencing unauthorised payments made by the Claims Management Agent, as required by clause 9.3 of the Agreement;

(h) the ‘Certificate of Readiness’ of the Claims Management Agent, as required by clause 13.2 of the Agreement;

(i) the transition-in plan of the Claims Management Agent, as required by clause 13.3 of the Agreement;

(j) a copy of the complete and current WorkCover Claims Management Agreement, including all schedules annexed thereto;

(k) all tender documents relating to the outsourcing of WorkCover SA’s claims management, for the period 28 February 2005 to 30 February 2006;

(l) all recommendations made to the WorkCover Board, concerning assessment of all tenders for the outsourcing of the WorkCover claims management;

(m) the WorkCover actuarial report for the financial year ending 30 June 2006;

(n) the WorkCover actuarial report for the financial year ending 30 June 2007; and

(o) correspondence (including emails) between the WorkCover actuary and the WorkCover Board, for the period 30 June 2006 to 30 June 2007.

I rise to speak to my notice of motion in relation to the referral of an inquiry to the Statutory Authorities Review Committee and, in particular, the aspects I want to cover today in urging honourable members to support this motion. By way of introduction, and as a matter of urgency, I will request that this motion be voted upon on the next Wednesday of sitting. Some members may laugh, but this is a particularly important matter for the future of South Australia.

The Hon. Carmel Zollo interjecting:

The Hon. D.W. RIDGWAY: The minister interjects that she is not laughing.

The Hon. Carmel Zollo interjecting:

The Hon. D.W. RIDGWAY: 'Many may laugh.' Hopefully, when members consider the implications of the seriousness of some of the issues faced by WorkCover, they will support this motion next week. In particular, we want the Statutory Authorities Review Committee to inquire into: the WorkCover Corporation of South Australia having regard to the extraordinary blow-out of the unfunded liability from $86 million in 2002 to some $843 million, as announced just a couple of weeks ago by the board and by the minister; the failure of the government to properly and adequately monitor and manage the unfunded liability of WorkCover; and the claim by WorkCover in January 2006 (almost two years ago) that the sole claims manager would achieve the necessary liability reduction to deliver a fully funded scheme by 2012-13.

If one looks at that statement alone, one sees a scheme operating with $843 million of unfunded liability. We are all aware of a report that has been commissioned and will be tabled some time after the federal election, I suspect. Some legislative changes will be proposed, but I still find it very hard to believe that we will see a turnaround of nearly $1 billion in the figures we are being presented with merely because of some legislative changes without a significant—and I mean significant—impact on the workers of South Australia and certainly their entitlements. I also want to cover a number of points, including the deterioration of the financial position of WorkCover and the effectiveness of the outsourcing of the claims management to a sole claims manager. This is very much a privatisation of significant magnitude; there is actually no public accountability and audit function being performed as, of course, the Auditor-General does not have any role to play in WorkCover. As to the tender process, and the probity of that process leading to the appointment of a single claims manager, a lot of evidence and leaks are coming from within the organisation relating to a range of issues that question the probity of that process.

In relation to the exposure of WorkCover to the sub-prime financial market, we know that WorkCover has a number of overseas investments and quite a large investment portfolio. I believe that it is certainly appropriate for the WorkCover Corporation to address that question. Of course, the community does not get to see any of the detail of the actuarial report submitted to the WorkCover Board in 2007. As I will explain shortly, there are a whole range of audit risks that the Auditor-General outlined some two years ago; in fact, I think the report that outlined this was tabled exactly two years ago today. In my motion I have listed a number of documents that the Legislative Council will request be made available to the Statutory Authorities Review Committee by 21 November 2007. That is why, in fairness to the organisation, I would like members to vote on this motion next week, as it will give WorkCover roughly a month to deliver those documents to the committee.

On 27 September 2007, WorkCover confirmed that its unfunded liability was now $843 million. WorkCover's financial position deteriorated by some $149 million in the last financial period, yet we heard WorkCover's claim that, by having a single claims manager, it would deliver a fully funded scheme by 2012-13; however, we are now seeing the scheme deteriorate even further. On that day, by way of ministerial statement, minister Wright stated that an independent review into the scheme was likely to be reported on by November this year, with the necessary legislative changes to be implemented by July 2008. Action taken in response to the review may include cuts to workers' entitlements. It would be a tragedy to think that, after five years of a Labor government, the only solution was to attack workers' entitlements. It seems like the easy option.

On coming to government, the minister criticised the former minister and the former government. He criticised the board, and a new board was appointed. It was then the claims manager's fault, so a single claims manager was appointed. Now, of course, the unfunded liability is still blowing out, so it appears that we have to blame the workers of South Australia and attack their entitlements. It is clear that WorkCover cannot maintain a healthy annual surplus, or even any surplus, at the same time as reducing the unfunded liability. Of course, we know the projected cost of claims measured actuarially over the next 40-odd years. The government has constantly criticised the Liberal Party for lowering the WorkCover levy rate during its last couple of years in office. It claimed that the unfunded liability would diminish if levy rates were higher.

However, with Labor's increase of levy rates (within a year or so of coming to office, it increased the levy rates) the argument has fallen flat as the liability continues to soar. I think there are some policy issues here that, if the Labor government had revised its policy on redemptions earlier on, it may have been possible to overcome the unfunded liability (which, at the time, was only around some $50 million) and avoid the cash flow problems which then forced it to minimise its redemptions. We see now that, of course, with some $843 million of unfunded liability, it raises a number of questions about the financial security of WorkCover, the financial security of South Australia and, in fact, the audit process itself. I refer to the Auditor-General's Report, which I indicated was tabled here two years ago this very day. Page 22 of Part A of the audit overview states:

In May 2003 the minister tabled a Statutes Amendment WorkCover Governance Reform Bill. Included in that bill was a provision that would have resulted in the Auditor-General having an ongoing role in reviewing WorkCover, as opposed to the existing audit arrangements that provided that the corporation must, within three months of each financial year, appoint two or more auditors of the corporation for the financial year.

It goes on:

As the parliament will record, this arrangement is similar to that which applied with respect to the former State Bank of South Australia. As Auditor-General I advised the then Public Accounts Committee of my concern that the State Bank was not subject to audit by the Auditor-General and I hold a similar view with respect to WorkCover. In my opinion, the legislation removed the audit responsibility of WorkCover from the legislative audit mandate and created an audit risk that, in the light of the former State Bank of South Australia experience, it should not continue.

He then states in this same report that he received advice from the Under Treasurer. It is following advice dated 5 August 2005 to the Auditor-General from the Under Treasurer, Department of Treasury and Finance, it should be noted. He states in one part:

The new board has recognised there is a major issue for WorkCover in its claims management in implementing a range of measures designed to improve the corporation's performance in this area.

This is over two years ago. Again, we have seen WorkCover's insistence on having a single claims manager and yet this unfunded liability continues to balloon out of control. In one of his final comments he states:

The experience of the State Bank has indicated the necessity, in public interest terms, that there be adequate audit powers to ensure the integrity of all information associated with the liability position of WorkCover.

It is interesting that the Auditor-General at the time raised those very important concerns about a number of audit risks within WorkCover. I am sure you are aware of this and the comments made in evidence to the Statutory Authorities Review Committee at the time that you chaired it, Mr President. I will quote from this particular segment of the report, as follows:

WorkCover is not required, from a regulatory perspective, to comply with APRA guidelines as it is solely an accident compensation authority. In fact, conforming to APRA guidelines would render WorkCover currently insolvent, as it does not meet the capital adequacy requirements. If WorkCover decided or was compelled to comply with the full set of APRA guidelines, a significant injection of capital would be required.

In the same inquiry the Under Treasurer (Jim Wright) gave evidence to the committee that the Department of Treasury and Finance was not happy with the lack of prudential aspects that were being applied to WorkCover's outstanding claims estimates. He goes on to say:

I think it is worth adding that also the estimates of solvency that they were calculating were not ones that we would have been happy with in a prudential sense because it did not have any prudential margin in it. They were using a central estimate and, because of the nature of the liabilities you have got out there, a central estimate is a risky estimate to use. So one of our recommendations was to build in a prudential margin.

He goes on to say:

The other issue that we were concerned about was the discount rate used to value liabilities. Logically, it should have been a risk-free discount rate but it was not at that stage required by accounting rules to be a risk-free discount rate and now they are moving to make it obligatory. But good prudential management would have required the use of a risk-free discount rate and a prudential margin when they calculate those funding ratios. So the ones that they were operating on were very generous.

I will now quote from WorkCover's actuarial certificate where it talks about discount rates and some of the discounts mentioned by the Under Treasurer (Mr Wright) in the Statutory Authorities Committee, and the basis of the actuarial estimates as of 30 June last year. It states:

We have made a central estimate of outstanding claims liabilities, meaning that our assumptions have been selected to yield estimates which are not knowingly above or below the ultimate liabilities.

We do not know what the liability is: it could be higher; it could be lower—I suspect that it is probably higher. It goes on:

Our estimates are discounted—i.e., they would allow for future income investment, they include allowance for future expenses incurred in the management of outstanding claims, and they are net of expected recoveries in relation to outstanding claims.

In particular, in the same actuarial report, it goes on to talk about some uncertainty aspects in respect of the report. It states:

In particular, our valuations of liabilities anticipates improvements in the discontinuance of the tail of claims compared with the recent scheme experience as a result of initiatives being developed by the corporation to reduce the cost of long-terms claims, with a reduced emphasis on redemptions. Should the improved discontinuance not eventuate the scheme liability will increase substantially from our current valuation estimate.

One might read into that that the actuary has taken into consideration the initiatives being developed by the corporation to reduce the number of long-term claims, etc. As the corporation has publicly detailed all the likely legislative changes on its website, what we could actually see is the actuary taking into account those particular legislative changes in estimating the $843 million of unfunded liability without actually having those legislative changes in place. So, the unfunded liability position could be significantly worse than has been published.

I will move on to the effectiveness of the outsourcing of the claims management to a sole claims manager. As part of a freedom of information application, I received a copy of the claims management agreement. Page seven of that agreement states that WorkCover is responsible for the efficient and economic operation of the WorkCover workers rehabilitation and compensation scheme. It will be interesting to hear the minister define what is efficient and economic in terms of the unfunded liability and the proposed legislative changes.

It is interesting to look at this matter in purely a numbers sense. If it is a contract for five years with the right of another five years, and if it is a $10 million a year expense, that is a $100 million privatisation or outsourcing of government activities, but it could easily amount to $50 million a year. We are uncertain as to the amount of income that a single claims manager gets from WorkCover. In fact, that is one of the documents that we are requesting to be provided to the parliament. Because of that uncertainty, we do not know whether this is a $100 million or $500 million outsourcing contract; in fact, it could be more. That is the concern that we, as an opposition—and the community—have: not being informed of the financial arrangements and the audit risks that the arrangement in place at the moment poses to the state.

The agreement goes on to state that WorkCover will discharge that responsibility in part by entering into a contract with private sector bodies to manage and determine claims. First, the responsibility of efficient and economic operation of the scheme has clearly not been achieved under WorkCover's current contractual arrangements. Secondly, as I pointed out before, the Auditor-General has no oversight of WorkCover. In his report for the year ended 30 June 2005, he stated that the minister had commissioned a report on certain practices which would be critical to the financial management of WorkCover. The response to this was the Statutes Amendment (WorkCover Governance Reform) Bill, which included a provision that would have legislated that the Auditor-General had an ongoing role in reviewing WorkCover's finances, but the bill lapsed and was never reintroduced.

The financial sustainability of WorkCover is in serious question, and it is doubtful that the sole claims manager—an approach that WorkCover has adopted—will achieve the fully funded scheme by 2012, as WorkCover has claimed. The handing of a monopoly contract to Employers Mutual Ltd occurred, despite the fact that Allianz continued to perform the claims management function for the Motor Accident Commission, which the Treasurer himself has noted as performing better than WorkCover. Employers Mutual Ltd (EML) is a New South Wales group which, at that point, had no experience in operating in the South Australian market. Further to the dwindling success of WorkCover and EML's partnership, employers in South Australia are more reluctant to fill 'light duties' with people on WorkCover, which has a further negative impact on the return to work rate. Around 86 per cent of South Australian businesses are classed as small businesses and simply do not have the flexibility to employ recovering people. Research has consistently revealed that the longer injured employees are absent from work the more likely it is that they will not return.

The Campbell Research & Consulting Return to Work Monitor 2005-06 pointed out that 35  per cent of South Australian injured workers are classified as non-durable return to work or no return to work compared with a national average of 20 per cent, so we are nearly twice as bad as the national average under this current WorkCover arrangement. WorkCover cannot seem to work through why they have so many long-term cases. This situation led to a circumstance—alleged by one of our former colleagues the Hon. Angus Redford back in 2005, along with a reporter at the Independent Weekly—where WorkCover had contacted its four claims agents, who were told to redeem 10 specified or nominated claims amounting to more than $100,000 each—a total of $4 million. I think the Hon Angus Redford speculated on that and called them the Lucky 40—a collection of the longest 10 claimants of each claims management agent. It was further speculated that, through WorkCover taking files from the agents to handle itself and offering redemptions exceeding the amount which agents were allowed to offer, it would focus the blame on the agents rather than WorkCover.

The claims management agreement also states on page 15 that WorkCover may give Employers Mutual notice of its intention to extend the term of contract, depending on a satisfactory level of performance. There is no measure of how a satisfactory level of performance will be determined, and does Employers Mutual have any appeal rights in the circumstances where a level is not achieved in WorkCover's view? In respect of an agent's key personnel, WorkCover may make certain requests if they determine the turnover of personnel to be unacceptable (clause 4.6(n) of the agreement). We are asking for that information to be provided to this parliament. What data concerning the turnover rate is the agent expected to supply in this circumstance? This is a question that I think will be pursued by the Statutory Authorities Review Committee. I note that the agent may also be required to meet with WorkCover to discuss the reasons for the turnover rate. Have any circumstances occurred when this has been necessary, and what were the specific reasons in those cases? Again, this would be a good line of questioning for the committee.

Apart from the financial crisis of WorkCover, a serious problem existing in WorkCover is this culture of blame. As reported in the Independent Weekly of 6 March 2005, 'WorkCover is known to handle external relationships poorly with an adversarial culture'. The culture within WorkCover is the probable reason that such a great deal of information is leaked to the opposition. It is also reported that claims agents had commented on the lack of communication from WorkCover and had, in the past, heard of happenings within WorkCover through public statements.

Clause 4.6(n) provides that WorkCover may require drug screening for the agent's personnel. Again, that raises a whole number of questions: has this ever occurred before, and have any suggestions been documented about the relationship between any positive drug tests and the alleged low morale within WorkCover and its agent? Under the agent's performance evaluation program in clause 7.1 of the agreement, the performance of the agent will be measured by APEP. Has WorkCover published this document and, if so, when will it be available in the public domain? We have heard that this single claims manager is WorkCover's solution to driving down the unfunded liability, yet all the performance appraisals that are built into this agreement have not seen the light of day, so that is a document we will be pursuing. Clause 7.3 provides that the agent may provide other reports from time to time on matters notified in writing by WorkCover. Given the significance of the unfunded liability and the position we see WorkCover in, again, these are reports which, if they have been requested, we would like provided to the committee and the parliament.

A number of internal audits are required in clause 7.4 of the agreement, and we want to know: what have the outcomes been of required annual reports under the agent's internal audit and quality assurance program, and have any recommendations been made to the WorkCover board in response to these reports? Again, you can see that a range of reports is required by this agreement in a whole range of areas and, given the audit risk and the risk it poses to the state of South Australia and potentially our AAA credit rating, these again are important documents that need to be provided to the committee. The same questions may also be asked about audits of the agent instigated by WorkCover.

I will now move on to the tender process and the probity of that process leading to the appointment of a sole claims manager. A number of reports have been provided to the opposition about the WorkCover board appointing a subcommittee of the board after it called for tenders, and our understanding was that that would be to have multiple claims managers—two, three or possibly four but I think it was two or three. Our understanding is that that subcommittee conducted the tender process and provided a recommendation to the board, and companies tendered on the basis that they would be in a competitive environment with one or two other claims managers. We understand that a report was provided by this committee to the board, yet in the end the board did not accept the advice of that committee, and our understanding is that it did not refer its decision to appoint just a single claims manager back to that subcommittee.

The claims managers agreement between WorkCover and Employers Mutual had been obtained through freedom of information. The majority of documents called for in this motion are mentioned in that agreement and would most likely indicate the probity of the tender process. It is very clear why we want a number of these documents provided to the committee; it is because of questions about the probity of the tender process and particularly how well it was handled by WorkCover itself.

In the Sunday Mail of 13 February 2005 an article written by Mr Kevin Naughton claimed that 220 complex claims were taken back by WorkCover to be managed in-house by Jardine Lloyd Thompson, which was engaged to advise on the resolution of these claims. Angus Redford stated in Hansard that he had been told that the existing claims management agents were not consulted at all on the contract that went to Jardine Lloyd Thompson and that the contract did not go to tender. This indicates that WorkCover has a history of a lack of probity in its tender process.

Another case for the opposition's interest in these documents concerns page 7 of the agreement, where an expression of interest was requested or published. We do not know what the time frame was. It then goes on to state that Employers Mutual was invited to place a bid. We do not know how many other invitations were called for and whether this was a standard invitation or whether there were variations of the invitation for bids to be received. We also do not know what the process was for determining the successful bidder or who audited the probity of this process. Again, it comes back to the advice we have received that a subcommittee of the WorkCover board was set up, it was given the tender to evaluate on certain criteria and then the board changed its mind.

This WorkCover claims management agreement is quite interesting when you look at it. After the claims manager is appointed and has signed the agreement, when I look at some of the details of the agreement—I am not an auditor at all—they beg some questions. At page 12 the agreement states, '...a reference to this agreement is a reference to this Agreement as amended, varied, novated, supplemented or replaced from time to time'. Schedule P on page 164 of the claims management agreement states, '...the contents of this Schedule will be substantially reviewed and revised before the Commencement Date'.

In signing this agreement the single claims manager has agreed to its being changed substantially. As I said a moment ago, I am not an auditor and I do not know whether this is a normal practice, but it seems rather strange to me that you can go to tender to provide a service (and my understanding was that the tender was for multiple claims managers), and end up with a single claims manager and then the court says you can substantially change everything. So, in signing it, both parties agreed to substantially change it. It seems to me that there is huge uncertainty surrounding this agreement.

Another area of uncertainty is the process WorkCover uses to designate key personnel within its Employers Mutual organisation. Under clause 4.6 of the agreement, WorkCover has a particular role in dealing with the key personnel in this document. Clause 4.6 states:

Key Personnel: Prior to the commencement date, the agents will provide an organisational chart of all significant positions within the agent's personnel. WorkCover shall, in consultation with the agent, designate up to seven personnel in such positions to be held by key agent personnel. Key agent personnel must have skills, qualifications, experience and other attributes. WorkCover, in consultation with the agent, acting reasonably, determines what attributes such personnel should have for each of the desired positions. The agent shall identify and obtain WorkCover's approval of the persons to occupy these positions designated to be held by the key personnel prior to the commencement date.

As I have said, I am not certain of the arrangements for private outsourcing of government responsibilities like this, but it raises questions, such as: is this process consistent with other government outsourcing practices? What are the `requirements' for the relevant positions? Again, it is internal information that I think the South Australian public, the parliament and our Statutory Authorities Review Committee need to have. Did the agent offer any key personnel under this clause and were they rejected? We do not know. Has WorkCover requested that any matters relating to the performance of the agent's functions or any agent's personnel be investigated under clause 4.6j of this agreement? It goes on to say:

...if WorkCover has requested any matters relating to the performance of the agent's functions or if any of the agent's personnel have been investigated under 4.6j of this agreement. If in the event that WorkCover determines in good faith that continued assignment to the performance of the agent's functions of any of the agent's personnel, including key personnel, is not in the best interests of WorkCover, then WorkCover shall give the agent notice to that effect, requesting that the matters stated be investigated.

Have we actually seen WorkCover, having appointed this single claims manager, reject the personnel? As I have said, I am not an auditor, so I do not know whether these practices are consistent with normal outsourcing conventions, but it seems to lack the robustness and transparency the community deserves today.

I will now quickly touch on WorkCover's exposure to the subprime financial market. WorkCover's financial deterioration has occurred despite reasonable returns on investments and a favourable external and economic environment. Considering that WorkCover's return on investments has been reasonable, there is the potential that its unfunded liability will heavily increase with less success or a downturn in the market.

Page 71 of WorkCover's 2005-06 annual report includes a note to the financial statements, which lists securities on overseas stock exchanges as being almost $255 million. The next line under that note talks about unit trusts, unlisted property and debt security assets of $157 million. So, slightly over $400 million is invested overseas, and we have seen a significant downturn in the US market, particularly in the subprime mortgage market. Because of the lack of audit, we are not sure what those investments are or whether there is any great exposure. I know this government claims the AAA credit is due to all its hard work but, as all good commentators know, it was the hard work of the former Liberal government, and the diligent work of my colleague sitting behind me, the Hon. Rob Lucas, when he was treasurer, that laid the foundations and the groundwork for this state's AAA credit rating.

If there is a hiccup in the financial investments of WorkCover, it could have an impact almost overnight on WorkCover's unfunded liability, and we could see WorkCover in a worse situation than it is in today, and that could put our AAA rating at risk. If you look at the ratio of government debt to equity, South Australia's AAA credit rating is the most tenuous of all the mainland states (I think Tasmania now has a AA-plus credit rating). That is one of the triggers for this motion: with WorkCover having substantial overseas equities, we as the opposition want to achieve greater transparency in relation to WorkCover's exposure to this overseas financial crisis. Whether or not there is an exposure, we think that, certainly in the first instance, the parliament and the Statutory Authorities Review Committee should know.

Also, in relation to the actuarial report that was submitted to WorkCover in September, it has become government practice to consistently release quarterly and annual reports at the latest possible date and at the most inopportune times. I am sure we see a whole range of information (to name one, mid-year budget reviews) being dropped out just before Christmas. That is often a tactic used by this government to mask bad news. This timing has also been similar with estimate committee questioning on WorkCover, with a mere 45 minute allocation being consistently provided at times when it is less likely to receive media attention.

A document found on the WorkCover site lists a summary of recommendations that the WorkCover board has made for changes to the Workers Rehabilitation and Compensation Act 1986. These recommendations are primarily in response to WorkCover's financial crisis. It would be fair to assume that these changes would have a significant financial effect on WorkCover. That is a list that is a bit like a sheet of information on what the legislative changes will do to WorkCover and how they will affect it. It is a like a summary of the legislative changes. It would be interesting to know whether the actuary has considered these significant legislative changes in calculating that unfunded liability which, as I mentioned earlier, is calculated over a 40 year period. Hopefully, the 2007 actuarial report will shed some light on that, because we are not sure whether the legislative changes have been factored in. I indicated that, in the actuarial statement, changes and future changes are often taken into account, but we can see that the unfunded liability is significantly higher than the figure that has been published. That is why we seek those documents for the committee—we believe it is of the utmost importance to have this potential disaster addressed as soon as possible.

Finally, there are a couple of interesting issues that arise in relation to this claims management agreement. On page 30 it states that WorkCover shall pay the agent a remuneration calculated in the manner specified in schedule D of the agreement. We have applied to have schedule D released under freedom of information but, unfortunately, our request has been rejected. Further down the page it states that in certain circumstances, which are listed later, an agent's remuneration will be adjusted if a particular circumstance causes the financial consequences of the agent to exceed a financial threshold. One of the circumstances listed is a change to the relevant law. It is difficult to know the full implications of this clause because, as I said, schedule D is one of the documents that we have been unsuccessful in obtaining a copy of through FOI.

However, it is possible, because parliament decides on the changes to workers' entitlements, and this change would constitute a change to the relevant law, a decision made by parliament could potentially amount to a windfall being gained by the single claims agent. So, this motion seeks to have those documents supplied to the Statutory Authorities Review Committee, and a number of others listed in the original motion, which are likely to provide evidence of WorkCover's actual financial position, along with the probity of the tender process which led to Employers Mutual being engaged as WorkCover's sole claims manager, and its success in providing services to WorkCover. As I indicated earlier when I started my contribution, I ask members to give this matter priority so we can vote on it next week, Wednesday 24 October, because we would like to give the WorkCover Corporation a reasonable amount of time to address the request and provide those documents to the Statutory Authorities Review Committee and parliament on 21 November. I commend the motion to the council.

Debate adjourned on motion of the Hon. I.K. Hunter.

The Hon. P. HOLLOWAY: Mr President, I draw your attention to the state of the council.

A quorum having been formed:

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