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

Second Reading

Adjourned debate on second reading.

(Continued from 1 May 2008. Page 2619.)

The Hon. T.J. STEPHENS (22:45): I rise to speak on this most important bill—although I am not sure whether 'important' is the correct word, perhaps it should be most 'infamous' bill—which has come about as a result of WorkCover's $1.3 billion black hole under the watch of the Rann Labor government.

For six years this Labor government has messed about with this scheme while its financial performance has rapidly deteriorated. I also continue to be disappointed that state Labor spent all of 2007 attacking the federal government's WorkChoices legislation while Premier Mike Rann was secretly planning to cut the entitlements of workers. All I can say to that is: shame Premier Rann, shame. No wonder the union movement is now rallying against this Rann Labor government, with advertisements that are not dissimilar to the anti-WorkChoices campaign. Labor has well and truly deserted its true believers, and it did not have to be this way.

Premier Rann now claims that the only way to fix the WorkCover problem is to proceed with the Labor Party's plan to cut payments to workers. The problem is that this is just another example of the Premier claiming that his government will fix WorkCover but, Mr President, you and I both know that it has form on this. Labor claimed 18 months ago that changing the claims management model of WorkCover would fix the return to work problems that had plagued the scheme. It claimed, shortly after its election in 2002, that replacing the board and senior management would result in much better performance. Neither of these claims provided solutions—in fact, they have been proven to be untrue. So here we go again, with the Labor government claiming that it can solve the problem. This government is all talk.

In his report, Mr Alan Clayton writes, 'The scheme began the 2000s in an apparently healthy position with respect to both financial stability and a reputation for forward thinking.' That was until Premier Rann and his Labor government fell in, in 2002. Since Premier Rann came into power in 2002 WorkCover has become a disaster for South Australia. It now threatens the state's financial reputation and credit rating. The Liberal Party had to clean up after Labor after the collapse of the State Bank, and it is becoming clear that we will have to do the same in 2010 and clean up this massive mess.

I cannot shake the thought that we simply should not be here debating this bill today. The fact that we are doing so is testament to a history of government inaction, a government that has been arrogant, and a government that has been in a state of denial over WorkCover's problems. Since late 2002 the state Liberals have asked truckloads of questions, which should have alerted the government to a whole range of problems that were growing within the WorkCover Corporation. Those questions are documented in Hansard, and the Labor Party knows that they will continue to sit there, serving as a gruesome reminder that warnings were given but were arrogantly ignored.

Many of those questions came directly from the WorkCover quarterly reports. The problems were hardly hidden and, for the state Liberals, these reports pointed out what was actually happening within WorkCover. We were alarmed by it—as we should have been—and we are still deeply concerned. However, we Liberals are a helpful bunch, and those warnings were graciously shared with the government during many question times. Again, it was a state of denial. Time and time again the warnings were ignored, and usually in a most arrogant way.

We then saw that the information in the quarterly reports was disappearing or being cut back This clearly demonstrated that the government did not want to know about it; it simply wanted to sweep things under the carpet and enjoy the trappings of government.

Since 2002, WorkCover has had a history of acting CEOs who, understandably, cannot make the sorts of wide-ranging changes that were certainly needed in that corporation. We had a stand-off on the appointment of a new CEO, and the delay coincided with a time when things started to go downhill very fast. If you trace the history of the whole WorkCover mess, the fact that we lost a CEO who was running the scheme efficiently and all of a sudden we did not have a CEO appointed for an extensive period of time really did see the problems grow.

The fact that the former CEO, Mr Keith Brown, did not reapply for a contract extension because the government made it quite clear that it would not be granted, shows the sort of unrest that has beset the WorkCover Corporation and demonstrates that the organisation has been lacking in strong and consistent leadership. It is disappointing that all the denials, mistakes and general incompetence are now going to affect injured workers.

All Liberal members of parliament have received dozens of letters from workers asking for our help, but also warning us that they will watch how we vote. To these people I say that the opposition would like to amend or defeat this legislation. Sadly though, the fact is that the government has created this situation through its own incompetent mismanagement and it now must be fixed. Amendments will not fix this legislation. Unfortunately for the workers, the government must now be given the opportunity to fix this scheme.

I also say to those people, and they must know this, that a Liberal government would never have allowed this to happen. In opposition, with the little resources that we have had, we were able to follow the deterioration of WorkCover and alert anybody who would listen about what was going on. Premier Rann and his Labor government have ignored our warnings and now it is up to Premier Rann and Labor to attempt to clean up the mess they have created. From here until the next election we will hold this government accountable for this disgraceful situation.

We will hold it accountable for the disaster it has delivered and the mistakes it has made over the last six years, and for the mistakes it will no doubt continue to make, until South Australians will have the opportunity to throw out this incompetent and arrogant government. It is a government that just doesn't get it. It is a government that is losing touch; it is a government that is tired; and it is a government that is going to crucify the most vulnerable of South Australians. This legislation and this government are a disgrace.

The Hon. R.I. LUCAS (22:52): I say at the outset that the shadow minister for the party in another place, the Hon. Robert Lawson and others have very comprehensively outlined the Liberal Party's position in relation to the WorkCover legislation. I do not intend to traverse many of the issues that they have already comprehensively covered, but there is enough wriggle room to allow me to make a modest contribution to the second reading debate.

First, I pay tribute to the Hon. Rob Kerin, the Hon. Iain Evans and now Mr. Martin Hamilton-Smith, but in particular the Hon. Rob Kerin, who, back when this was deemed by the media and other supposedly respected political commentators and the government not to be an issue, week after week after week went out there highlighting and warning this government (from 2002 onwards) of the problems of WorkCover.

I will not go through all of it, but he asked literally hundreds of questions. He issued dozens and dozens of press releases. He made countless speeches, warning the government (from 2002 onwards) of the problems of WorkCover. We saw the arrogance of ministers such as the Hon. Mr Holloway, but in particular the Premier, the Treasurer, the Minister for Infrastructure and the minister responsible for WorkCover (the Hon. Mr Wright), who just ignored it. They laughed, they scoffed, they belittled, they did whatever they could, with a compliant media, I might say, and ignored the warnings that the Hon. Rob Kerin was giving from 2002.

To his credit, for a period of a year or so when he was leader, the Hon. Iain Evans also pursued the issue. So, for six years, predominantly under Rob Kerin but latterly under Iain Evans and Martin Hamilton-Smith, Liberal leaders and the Liberal Party have been trying to highlight the issue.

One of the problems has been encapsulated by a number of prominent members of the media in recent times now that it is an issue, in terms of trying to rationalise away why they did not give this issue prominence when Rob Kerin raised it. They basically said, 'Well, this was not a sexy issue. It was a difficult one.' The television journalists said, 'It was a difficult issue to get pictures for. It wasn't a good television story. It wasn't a sexy story in terms of what was going on.'

Perhaps that is a sad statement on the state of the electronic media and television, particularly in relation to those circumstances. I agree that it is a difficult story for television in terms of pictures but, around the world, a major financial scandal was brewing and was being warned about as a political issue. We now see in essence what Rob Kerin was warning: an unfunded liability which is heading towards $1 billion. Supposedly—and it has not been denied by the Premier—the Premier told the state executive of the Australian Labor Party that this threatens the AAA credit rating of the state, something he denied on a number of occasions when it was raised earlier, but supposedly that is what he has said to the state executive of the Labor Party.

The point that I am trying to make at the outset is that there are other areas like this to which the media is not attracted because it is not media-sexy or not a good television story, but the reality is that this was (and is) an important political issue deserving of prominent treatment by members of the media irrespective of how difficult an issue it was. The challenge for the Liberal Party through Rob Kerin and others is obviously to work harder to try to make it more attractive to the media, so we accept some responsibility there.

What I am saying is that the media has some responsibility, in my humble view, to make a judgment as to whether or not what the person—in this case Rob Kerin—said was correct or not and, if they believe that it was correct, then irrespective of how difficult an issue it might be in terms of media coverage, they had a responsibility to report prominently and frequently the problems in relation to the issue.

Because we have a one-newspaper town with limited alternative political comment from other sections of the media, we have a situation where if the media on a week-by-week basis is belting the hell out of a government (whether it is Liberal or Labor), inevitably the chances of a government responding in a shorter time frame are maximised. We are seeing it in the transport system at the moment, because the government and the Minister for Transport are getting belted on a daily basis.

I am sure we are going to see government responses sooner than we otherwise would have, whether it be on electrification or an extension of the tram line down to the Port in the coming budget, because of a combination of political pressure and media pressure on a government and ministers making it impossible for the government not to respond. I think that is the first lesson that all of us should learn: the politicians, the opposition and government, but also members of the media in relation to this issue of WorkCover.

The second point I want to canvass is the issue regarding the hypocrisy and integrity of the Rann government on this issue and of its senior ministers, from the Premier and the minister down. To that end, I am not going to quote Liberal politicians or media operators; I am going to quote friends of yours, Mr President, and friends of your union colleagues within the Labor caucus, as to the sorts of commitments that they were being given by this government.

I refer to an interview on ABC Radio on 30 January 2007 with Mr Nick Thredgold (who was, at that stage, the president of SA Unions) on the issue of WorkCover's unfunded liabilities. At that stage, ABC Radio was asking some questions about issues the Liberal Party had been raising about WorkCover's unfunded liability. The question from David Bevan was, 'Have you been given a commitment by the minister responsible'—that is, Michael Wright—'that workers' benefits won't be cut?' That is a pretty blunt question.

Nick Thredgold said, 'We've got the commitment from the appropriate minister.' David Bevan said, 'And that is Michael Wright?' The response was, 'Yes.' David Bevan then asked, 'Have you got a commitment from Kevin Foley that the workers' benefits won't be cut?' Nick Thredgold replied, 'Look, we deal with the appropriate minister for the appropriate issue that we're dealing with that concerns members of unions.'

Matthew Abraham then said, 'So you've got it in writing or is it a handshake or—?' Mr Thredgold responded, 'We've written and sought commitments and my understanding is that we have verbal commitments from the minister that employee entitlements will not be cut.' David Bevan said, 'Do you think you'd better get it in writing?' Nick Thredgold replied, 'Well, we've sought that response.' David Bevan said, 'And it hasn't been forthcoming?' Nick Thredgold answered, 'Not to my knowledge at this point.' David Bevan asked, 'Does that worry you?' Nick Thredgold replied, 'No, it doesn't worry me. Michael Wright is a man of his word. We are confident that the commitment that we've been given will hold up.'

Mr President, I know that you were very active in discussions with minister Wright, going back some years, with some of your union colleagues, when he was tossing a coin as to whether to join the left faction or the right faction of the Australian Labor Party, so you know Mr Wright pretty well. However, here we have Nick Thredgold, on behalf of SA Unions, telling everyone as of January last year, 'Look, we've had a commitment. Michael Wright, he is a man of his word. We are confident that the commitment he has given us will be held up.' What was the commitment? That is, that there will not be any cut in worker benefits or entitlements whilst he was the minister. That was Mr Nick Thredgold.

I am indebted to my lower house colleague, the shadow minister Duncan McFetridge, because when he addressed this issue in the House of Assembly he referred to a copy of an email which had been given to him, again, Mr President, from someone you would know pretty well—and that is Mr Les Birch. He was described by Mr McFetridge as a workers compensation advocate employed for the past 14 years by the Construction, Forestry, Mining and Energy Union in the Forestry and Furnishing Products Division. He is more than just a workers compensation advocate, as you, Mr President, would know but, nevertheless, he has been actively engaged in workers compensation since 1979. From 1987 to 1994 he was actually a WorkCover Board member. What did Mr Birch say in relation to this issue? He stated:

In 2000 and 2001 Michael Wright attended at least three meetings at the United Trades and Labor Council's office on South Terrace in Adelaide. On one occasion the opposition leader Mike Rann accompanied Michael Wright. On each occasion Michael Wright gave an absolute assurance that, on the election of the ALP to government, the Workers Rehabilitation and Compensation Act would be improved to benefit injured workers.

On one occasion Michael Wright stated that should the ALP be elected in 2002, he would have a review conducted of the workers compensation scheme within six weeks after being elected, and the findings would be introduced through legislative change. The trade union representatives involved in workers compensation at the time felt that the time frame was ambitious, but the commitment was welcomed.

Further it states:

Minister Wright is to be condemned for his failure to honour his commitment to the trade union movement and his lack of responsibility in addressing the leadership management problems within the WorkCover Corporation...In mid-2007, I and another union official—

that is Les Birch—

were invited to minister Wright's office to discuss our concerns that the corporation was outsourcing their responsibilities under sections 58B and 58C of the act to Employers Mutual, which is like putting Dracula in charge of the blood bank. The minister stated that he shared our concerns but was powerless to do anything about it as it was a WorkCover Board decision. During our discussion I raised with minister Wright the trade union movement's concerns that the corporation was working on amendments to the legislation that were draconian. He gave his undertaking that while he was the minister responsible for workers compensation in South Australia he would not introduce legislation that was detrimental to injured workers. History has now shown that minister Wright has reneged on that undertaking just as he reneged on [his] promise in relation to the Stanley review in 2002.

So we have minister Wright giving a commitment face to face to Nick Thredgold on behalf of Unions SA that he would not cut workers' benefits, and then Les Birch and another union official—unnamed—had a discussion with minister Wright and minister Wright gave the undertaking that while he was the minister responsible for workers compensation he would not introduce legislation that was detrimental to injured workers.

There are a number of other examples of that, but I give those as two examples of the stark hypocrisy of the Rann government, from the Premier through to the minister responsible, minister Wright, and the other ministers. They were prepared to make any commitment that they believed was necessary to union leaders, to former friends and colleagues—to anyone—in relation to workers compensation, knowing full well that they had no intention of keeping those particular commitments.

In talking about the hypocrisy of the government and the Premier, I go back to the 1995 debate briefly—not to all the quotes but to some of the quotes of the now Premier, Mike Rann (who was then state opposition leader) in relation to the workers compensation changes being proposed at that stage by the former Liberal government.

I might say that the chair of WorkCover conceded recently that if some of those changes in relation to step-downs, which were of a more modest proportion than the government is proposing, had actually passed the parliament in 1995, our WorkCover scheme would not be facing the same level of problems and unfunded liabilities that we currently confront. So there was a proposition to fix this back in 1995, and Mike Rann and the Australian Labor Party fought tooth and nail to defeat those particular propositions. As a result, 13 years later the situation has spiralled out of control and, of course, they now have to introduce and are introducing much more draconian changes in the workers compensation legislation. Going back to 1995:

State Opposition Leader Mike Rann says the Liberals must recognise the human toll of their draconian WorkCover bill which will be debated when parliament returns this week...Mr Rann today met with two injured workers and their families and heard first hand their concerns about having their income cut down to below pension level under the Liberals' radical plan.

I wonder whether Premier Rann is meeting with injured workers as we debate this particular bill, listening to their concerns at the moment about the proposals that he is now introducing, because he was not prepared to take action or support action going back as far as 1995. Then further on, the quote that he loved to use during that period, 'There are better ways of attracting business than on the broken backs of workers,' was the famous Mike Rann quote in the 1995. Further on, he said:

WorkCover cannot substantiate any savings from privatising claims management, except on the basis of an ideological assumption.

The Rann government, under its watch, has a privatised claims management system which it confirmed in a monopoly arrangement with Employers Mutual. Further on, he said, 'This bill is an attack on families.' In 1995, he said, 'I want to talk a little bit about the hypocrisy of this government.' During this debate, I and other members want to talk about the hypocrisy of Premier Mike Rann, the Treasurer, Kevin Foley, minister Wright and others.

As part of my research into the arrant hypocrisy of members of the Labor Party, you will be pleased to know that I had a good look at contributions that you, Mr President, and other Labor members have given in this chamber over the past years. I need not remind you, Mr President, or the Hon. Mr Gazzola in particular, of your vicious attacks on Liberal members and the Liberal government over a range of issues in relation to workers' entitlements and benefits, extending from debate about the WorkChoices legislation and through debate on workers compensation or other benefits for workers in South Australia.

One can go back, as I did last night, to look at the contribution from former president the Hon. Ron Roberts when we last debated the WorkCover legislation in this chamber, as well as the contributions from people like the Hon. Paul Holloway on a range of issues. In the 2007 debate on Australian workplace agreements, the Hon. Paul Holloway said:

The Australian Labor Party was founded in the 1890s. It is the oldest political party in Australia by a long way...to protect the conditions of Australian workers and to give them a fair go.

In the 21st century, we live in a different industrial environment. Many of the practices of the past have been changed by both Labor and Conservative governments. What has not changed is that the Australian Labor Party believes in a fair go for Australian workers and their families, and that will continue.

They were the lofty words of the Leader of the Government in this place as he launched an attack on the Liberal Party, Liberal members and Liberal governments, trying to argue that the Australian Labor Party was the party that would protect the conditions of Australian workers and give them a fair go and that what had not changed in the 21st century—according to the Hon. Mr Holloway—was that the Australian Labor Party would always deliver a fair go for Australian workers and their families.

They have been the claims by Labor representatives over the years and, in particular, in this chamber in recent times. In this debate, we have been the fearless advocates of South Australian workers. This bill has been before the chamber for a couple of weeks and, so far, members of all political persuasions have spoken, with the exception of the Australian Labor Party.

This party, according to its leader and others like yourself, Mr President, was there to fight for South Australian workers. We might as well have had four garden gnomes sitting on the back bench for all the contributions we have had from the four Labor backbenchers in this council: not a squeak out of the Hon. Mr Wortley, the Hon. Mr Finnigan, the Hon. Mr Hunter or the Hon. Mr Gazzola.

We have heard lots of talk in the corridors and in the media of the fierce opposition of certain unnamed members of the Labor caucus—some in this chamber—to the government's proposals They roar like lions in the corridors, but they perform like pussycats where it counts—that is, in this chamber. They are out in the corridors talking to people about what they are doing and how they are fighting for the unions and the workers but, where it counts—in this chamber—there is not a squeak out of a single Labor member on behalf of working-class families in South Australia. Why? Because Labor members in this chamber are gutless.

They are prepared to talk big to their union mates and colleagues. They are prepared to talk big to the journalists who will listen to them and protect their names and identities. They are prepared to talk big about what they are prepared to do and what they are trying to do. But, in the end, they are doing nothing. They are not prepared even to stand up in this chamber and speak on this issue.

Let me refer to the contribution made in 1995 by the very good friend of the Leader of the Government (and I am delighted to see him), the Treasurer (Mr Foley). When addressing marginal seat members of the Liberal Party in 1995 on the WorkCover legislation, Kevin Foley (now Deputy Premier) said:

I can tell the members for Hanson, Elder, Reynell and Kaurna that, if they want a career in parliament beyond four years, they had better start making noises in their caucus. If they are fair dinkum representative members of parliament they should be standing in their caucus and thumping this government for some of the most malicious legislation that any government has introduced.

At the end of the day, we on this side of the chamber will acknowledge the care, the financial security and the wellbeing of members of the workforce who are injured are our paramount priority.

When addressing the Liberal backbenchers, he said:

I say: stand up for once. It is about time a few of you showed a bit of guts, took on this front bench and stood up for people who voted for you. If nothing else, if you have no compassion, have some political brains.

That was Kevin Foley in 1995 on a much milder version, in terms of step-downs in particular, of the WorkCover legislation than we are being confronted with. He was challenging members of the caucus to have some guts and stand up for South Australian families and workers. It is even worse and accentuated for members of unions within the Labor Party caucus.

Where are their guts to stand up on behalf of the workers of South Australia? As I said, it is easy for them to talk to the media and union leaders and say what they are going to do but, of course, this is where the action should occur.

We have all these government members refusing to speak on this bill. It is obviously not a big enough or important enough issue for them. If this issue is not big enough, what are these garden gnomes on the back bench really passionate about? What really drives them to get up and speak? If they are not prepared to speak on WorkCover, what sorts of issues do the garden gnomes want to speak on? What are they passionate enough about to speak on in this chamber? For the Hon. Russell Wortley it was David Hicks, a confessed supporter of terrorism.

The Hon. P. HOLLOWAY: On a point of order, Mr President, I suggest that David Hicks has nothing to do with WorkCover.

The PRESIDENT: No; I do not think that David Hicks has been injured lately.

The Hon. R.I. LUCAS: We do not know that, do we? The point is that the Hon. Russell Wortley felt so strongly that he was prepared to speak passionately about the problems that he saw for someone like David Hicks, but he is not prepared to stand up in this place and speak passionately on behalf of the workers of South Australia in relation to this legislation. It is the same thing when one looks at the contribution of the Hon. Russell Wortley on the May Day March, something about which he wanted to speak passionately—

The Hon. P. HOLLOWAY: Mr President, I rise on a point of order. I suggest that the comments of the Hon. Rob Lucas have nothing whatsoever do with the WorkCover bill.

The PRESIDENT: Order! The Hon. Mr Lucas will stick to the bill.

The Hon. R.I. LUCAS: When the Hon. Russell Wortley spoke on the May Day March, he was talking about the working conditions of South Australian workers. He proudly indicated that he had been attending the May Day March for probably 30 years now, although I do not know whether he attended the most recent May Day march a week ago. He said:

With the enactment of the federal industrial relations legislation, the federal Liberal government has actually declared war on the working people of this country. That industrial relations act has stripped away the rights and conditions for which generations of working people in this country have fought...One of the reasons for that was the very fact that the Liberals have embarked upon this war against working people, and it only goes to show the myth about the Liberals being a friend of the working person is just that—a myth.

From the mouth of the Hon. Russell Wortley, the point is that the real myth about which we are talking is that the Australian Labor Party is a friend of the South Australian worker. The Hon. Russell Wortley is often prepared to attack the Liberal Party and Liberal governments in relation to issues relating to working conditions for South Australian workers, but on this particular issue nothing at all.

The Hon. Mr Gazzola has spoken passionately on topics such as the Murray Bridge ALP sub-branch centenary, European carp and Port Vincent. They are the sorts of issues about which he has been passionate and about which he has been prepared to stand up and speak in this chamber, but not WorkCover. I am delighted to see the Hon. Bernie Finnigan. What is he passionate about? What does he speak on in this chamber? Certainly not WorkCover. He is passionate about (perhaps not surprisingly) things such as edible estates—that is, lawns that you can eat—and the Mount Gambier Christmas pageant. They are the sorts of things that will get the Hon. Mr Finnigan up, but he will not speak on the WorkCover legislation. He is not prepared to justify his vote and his position on the WorkCover legislation.

The Hon. B.V. Finnigan: How do you know? The debate has not finished yet.

The Hon. R.I. LUCAS: Because you are not listed to. We have been waiting days on end for you to have the courage to speak on this issue, but not one of the garden gnomes on the back bench is prepared to justify their vote on the WorkCover legislation. All we get is hypocrisy from the Leader of the Government, and we cannot get a squeak out of the garden gnomes behind him on this particular issue. Members opposite have every opportunity to get up tonight: one of you get up tonight and justify your position to South Australian workers on this particular legislation. If you have the guts and the courage, get up and speak, because I am sure that the unions of South Australia, the workers of South Australia, want to hear you justify your position in relation to this issue. They are delighted to know that the Hon. Mr Finnigan is prepared to talk about edible estates and the Christmas pageant, but they want to here him speak on the WorkCover bill.

The Hon. P. HOLLOWAY: Mr President, I rise on a point of order. My point of order is one of relevance. The Hon. Rob Lucas has been speaking for at least 10 minutes and has not once referred to what he believes about the bill. Instead of talking about what other people might be doing, I suggest that he adhere to standing orders and confine his remarks to the bill.

The PRESIDENT: The Hon. Mr Lucas will confine his remarks to the bill.

The Hon. R.I. LUCAS: I am certainly doing that. The last of the garden gnomes is the Hon. Mr Hunter.

The Hon. P. HOLLOWAY: Mr President, I rise on a point of order. The Hon. Robert Lucas is quite out of order in using that description. It is unparliamentary and I suggest that he not use it any further.

The Hon. R.I. LUCAS: I am talking about the Hon. Mr Hunter now. What is the Hon. Mr Hunter passionate about? Why will he not speak on the WorkCover legislation and justify his position to South Australian workers?

The Hon. P. HOLLOWAY: Again, the Hon. Rob Lucas is defying the standing orders of this place. I ask you to bring him to attention and make him speak to the substance of this bill.

The PRESIDENT: The Hon. Mr Lucas will refrain from going off the subject of the bill.

The Hon. R.I. LUCAS: Thank you, Mr President. Mr President, you will be pleased to know that he is the last of the garden gnomes to whom I will be referring.

The Hon. P. HOLLOWAY: Mr President, I have a point of order. There are standing orders in this place. I suggest that it is out of order for the honourable member to refer to members in that way. Either we have standing orders in this place or we do not. I suggest that he be asked to withdraw, and I request that the Hon. Mr Lucas withdraw that term.

The PRESIDENT: The Hon. Mr Lucas will refer to members opposite as 'honourable members'.

The Hon. R.I. LUCAS: The honourable garden gnomes—

The PRESIDENT: Order!

The Hon. P. HOLLOWAY: Mr President, the Hon. Rob Lucas is deliberately defying your ruling.

The PRESIDENT: The Hon. Mr Lucas will refer to members opposite as 'honourable members'.

The Hon. R.I. LUCAS: What is the Hon. Mr Hunter passionate about? He is passionate about red-tailed black cockatoos and glossy black cockatoos. He has a great interest in that particular species. He has also asked questions on native species and threatened native species. They are the sorts of issues about which the Hon. Mr Hunter is passionate.

The Hon. I.K. Hunter interjecting:

The Hon. R.I. LUCAS: There is a lot more than that. The point I make about the Hon. Mr Hunter, as I do about other members of the back bench who are not prepared to squeak up, is that they are the sorts of issues on which they are prepared to speak passionately in this council. Whether it is a black cockatoo, native species or an edible estate—or whatever it happens to be—they are prepared to stand up and talk about those issues because that is what drives them; they are passionate about those things.

They will stand up and talk about those issues, but on something such as the WorkCover legislation, on something which is important to their own constituency and the workers of South Australia, they will not stand up, squeak up and justify their position on the legislation. They can roar like lions in the corridors but they are judged by what they do in this chamber during this debate.

Mr President, as you would know, the Labor Party has a history of members who felt passionate about particular issues and were prepared to stand up and vote in accordance with their conscience. In relatively recent times, people such as the Hons Trevor Crothers and Terry Cameron felt so strongly about the state debt of South Australia and electricity that they spoke and voted in accordance with their conscience because it was so important to the future of the state and their own views in relation to it. Prior to that, the Hon. Norm Foster voted on the Roxby Downs development—a development that the Premier and the government seek to take as their own.

They are three examples where Labor members felt passionately about something and were prepared to put the interests of the state and their personal views ahead of the interests of their own party and their political masters and leaders. The four Labor members on the backbench—or indeed any of them—have supposedly felt so strongly about this issue that they have been whispering or roaring in the corridors to their union colleagues: 'We'll fight the good fight for you, comrade. We'll raise the issue in caucus. We'll try to get the issue addressed in caucus. Some of us are thinking seriously about crossing the floor.' The media was being told last week that four members of caucus in the lower house had thought about crossing the floor if the Liberal Party had voted against the legislation.

Supposedly some sections of the media have been told of one or two members in this chamber who were saying they felt so passionately and seriously about this issue that they were looking at all their options. It is easy to talk in the corridors, but you are judged as members on what you are prepared to say and do in this chamber, whether it be tonight or over the coming weeks.

The final issue I want to address is a specific issue concerning the actuarial advice that the government has used in relation to this issue, because this is just further testimony, I think, to the ineptitude and incompetence of the government, in particular, the minister. Mr President, you will probably have forgotten, and I will not embarrass you by quoting your exact words, that you and, indeed, many other government members in both houses over recent years attacked the former Liberal government by consistently saying that the Liberal government had understated the level of unfunded liabilities back in 2001-02 by about $100 million. As I said, rather than embarrassing you, Mr President, by looking at one of your former contributions, let me refer to some of the contributions made by minister Wright and Treasurer Foley when he attacked the former government and the former actuary of the WorkCover board.

I think it was the former board, not the current board, which is a good board, that sacked the former actuary, and they did it for a good reason—

said Michael Wright in December 2006—

I was advised by the former board that the former actuary—who, to the best of my memory, was sacked by the former board—may have underestimated the unfunded liability by $100 million—

said minister Wright in December 2006. Not to be outdone, Treasurer Foley, in September 2003, said:

The figures used under the Liberal government were wrong, and may have been wrong to the tune of $100 million. They significantly understated the true level of liabilities.

Again, Treasurer Foley in September 2003 said:

Very, very poor actuarial advice from the then actuary under the Liberal government's governance saw a reduction in the levy rate that should not have occurred.

So, from 2003 to 2006, minister Wright, Treasurer Foley, your good self, Mr President, and any other number of Labor members in both houses, attacked the former government and said that we had deliberately understated the liabilities back in 2001-02, that we had used that to justify a reduction in the levy rate, and that there was, in essence, very poor actuarial advice, and the old board had properly sacked and got rid of the actuary.

I was intrigued when the Hon. Mr Holloway and his colleagues decided to have a review. We know why they had the review after November 2006, getting the recommendations from the board about reductions in benefits for workers. They had to buy a 12-month space for the federal election so they decided to have a review, and that has been referred to by other speakers. So they appointed two people, Mr Clayton and Mr Walsh, to conduct the review.

It just so happens that Mr Walsh was the actuary who was sacked by the former WorkCover board in 2001-02. They spent five years attacking Mr Walsh as the former actuary of WorkCover and the Liberal government, and then they said, 'We have appointed an expert actuary and an expert to conduct this review of WorkCover', and who do they appoint? They appoint Mr Walsh, whom they had spent five years attacking and denigrating in the House of Assembly and the Legislative Council.

The Hon. R.D. Lawson: No wonder you've lost your tongue, Bernie.

The Hon. R.I. LUCAS: Yes, exactly, and no wonder they are not squeaking up. That is just one example of the ineptitude and incompetence of minister Wright. It is not surprising that the political commentators are speculating that, if there is to be a ministerial reshuffle, he and the Hon. Gail Gago are the two likely prospects to go.

That is only one example of the incompetence and ineptitude of minister Wright on this issue. Imagine spending five years attacking an actuary and then you are asked to appoint an expert actuary to conduct this review so that you can go out to the unions and say, 'We have had this expert in and we have a major problem', and who does minister Wright appoint? He appoints the bloke they have been attacking for five years as, in essence, being incompetent and that it was a good thing he was sacked by the former board of WorkCover. My humble view is that the South Australian media have let the government and the minister off the hook in relation to that issue because, although the issue has been raised, minister Wright and Treasurer Foley have managed to wriggle their way out of some public justification on that issue.

Either they have been misleading the house for five years and they had to make an apology to Mr Walsh for five years of blatant attacks on him and his competence as an actuary, or they have bumbled and stumbled badly in terms of who they have used as an expert actuary to justify to the unions in South Australia, and others, that, 'We have the best actuary in. He is the one who told us that we have these problems and, sadly, we have to go down this path to reduce benefits for South Australian workers.' As I said, there are many other examples of the minister's and the government's incompetence but, in the second reading, I do not intend to go through all those. That particular example has not been picked up by other members.

I await with interest the rest of this debate to see whether or not any of the government members have got the courage, have got the guts, to stand up in this chamber. The Hon. Mr Finnigan implies that he has a little of the latter, but let us see it in political terms. Let us see him or one of his colleagues stand up in this chamber and justify their position in relation to the legislation and justify to the people, the workers and the unions of South Australia as to why they are going down this path.

The Hon. J.A. DARLEY (23:37): I rise to speak on this important bill. At the outset I express my disappointment in the government for trying to push this bill through with undue haste. Members should surely have adequate time to properly prepare a contribution to a bill that is of such significance. I am sure that I am not alone in these thoughts, and I question the government's motives in attempting to push this bill through in such a short time without having gained a thorough and comprehensive understanding as to the effects of this bill. I believe that, in part, the unfunded liability has been caused by the management procedures applied by the WorkCover Corporation and its claims manager, EML, whereby injured workers are pushed and shoved into a position of frustration to a point where they become utterly dejected and understandably difficult to deal with.

It has been said on numerous occasions by a well-respected Adelaide psychologist that if you do not have a problem before you were injured at work and you become a WorkCover client you will have a problem soon afterwards. The board and the WorkCover Corporation allowed the unfunded liability to accumulate to its current position of around $1 billion. Under normal business governance, the executive would have taken immediate remedial action to get the scheme back on track. In March 2006, the WorkCover Corporation put out the following press release:

We are confident we have the right settings in place to achieve improved service and results in coming years for injured workers and employers who fund the scheme, and we remain on target to achieve full funding by 2012-13.

Shortly afterwards in September 2006, the CEO of WorkCover, Julia Davison, indicated the following:

Operationally the year has been one of notable achievement with the appointment of Employers Mutual as its sole claims agent and the sole provision of legal services by Minter Ellison. Internally we have established the organisational capability and leadership required to tackle the scheme's challenges.

Ms Davison also indicated that WorkCover had developed return-to-work performance targets that it and Employers Mutual would aim to achieve over the coming 12 months to avoid further increases in the claims liability. I would have thought that the board and the government would have closely monitored the situation, particularly in light of the fact that I understand the Under Treasurer attended board meetings. This close monitoring and reporting of the changed operation of the corporation clearly could not have occurred for the corporation to be now faced with the current predicament. There is no doubt WorkCover reforms are highly contentious as not only do they affect injured workers but also other parties who are involved, such as rehabilitation providers, the legal profession, doctors and unions.

In light of this, when trying to gain an understanding of the community and professional sentiment in regard to this bill, I met with a number of organisations including the Public Service Association, Self Insurers of South Australia, the Australian Lawyers Alliance, SA Unions, the Work Injured Resource Connection, representatives from rehabilitation providers, Business SA and a number of legal professionals with vast experience in working with the scheme. The overwhelming feeling from all these organisations, except Business SA, is one of concern attributed to the proposed amendments. There was general consensus that what is needed as a matter of urgency for the WorkCover scheme is not legislative change, as the government is proposing, but rather a cultural change throughout the scheme.

Whilst I appreciate the government is attempting to modify the scheme in order to improve it, I do not believe amendments will achieve anything other than addressing the issue of the unfunded liability and providing a short-term answer to the problems associated with the scheme. When initially introduced, the WorkCover legislation was specifically designed to be user friendly for injured workers, without necessarily needing to engage the services of a lawyer. This has been described as an abject failure and as problems have arisen with the scheme it seems that the solution each time has been to make amendments to the legislation.

It is of no surprise then that the government's solution to the current issues with the WorkCover scheme is to implement more amendments to the legislation. This is despite the fact that previous amendments have resulted in little or no improvement to the scheme; in fact, they have created further problems. As one representative of the legal profession I spoke to put it, when you cobble things on you create inconsistencies within the act. Legislation that was designed to be user friendly has now become so complex that even qualified lawyers with years of experience in the field have expressed frustration at the intricacies of the legislation, so much so that it has been suggested that a complete overhaul of the scheme is needed.

It is inevitable that there will be further inconsistencies and unintended consequences from these amendments. It is evident that there are other more far-reaching problems with the scheme that the bill will not address and that the government needs to implement changes to address these underlying issues that will result in a change to the attitude and culture of all parties involved in the WorkCover scheme. I say this despite suggestions that cultural change forms one of the reasons for the review of the legislation. The cultural issues go much further than those expressed by the government, which appear to be secondary to the financial deterioration of the scheme. The government is said to have framed the view and proposed changes to the South Australian Workers Compensation Scheme as occurring against a background of a deterioration of WorkCover's compensation funds.

Further, it suggests 'that the underlying influences on the financial deterioration of WorkCover is one common element, a shift in culture away from injury management and return towards a culture of compensation. It claims that this is the culture that needs to be turned around, with a renewed emphasis on rehabilitation and return to work'. Based on my discussions with WorkCover, I am not confident that incorporating a need for cultural change in the CEO's performance agreement is enough to ensure the sort of turnaround required, particularly given that in 2006 WorkCover's CEO indicated that, first, 'a great deal of progress has been made in implementing the changes needed to turn the scheme around' and, secondly, that internally WorkCover had established the organisational capability and leadership required to tackle the scheme's challenges.

I also question the follow-up of the board in this regard, given that it is a representative of the board made up of stakeholders, presumably with their own agendas. What became evident from speaking to various organisations is that there are a number of common concerns regarding proposed changes to the legislation. The proposed medical panels is just one area that raised significant concerns. Whilst the implementation of medical panels has been successful in other states, there is no guarantee that the same results could be achieved should they be introduced in South Australia.

Many of the new proposals, such as this one, are based on the Victorian workers compensation model. It should be noted that medical panels in Victoria are rarely used, whereas the proposals in this bill would see a greater reliance on panels. I question the need to re-establish medical panels, as I understand that they were previously a provision of the South Australian scheme and were abolished due to the lack of doctors and the delays associated with convening them. Not only does the government seek to re-establish medical panels, the powers of the proposed new panels are much wider than those prescribed in the original act.

Unions SA states that medical panels were abolished for good reasons and they should not be reintroduced, for the same good reasons. South Australia already suffers from a shortage of doctors, let alone specialists, who will temporarily absent themselves as practising clinicians. Despite having the backing of the AMA, concerns have been raised about finding the available expertise in South Australia, where shortages already exist, and the general view is that this will be problematic and cause further burdens to the system.

The suggestion to remove doctors from an already limited supply would cause further delays for injured workers, who currently have an average wait of 2½ months to see a specialist. What we will see are medical panels that are made up of generalists and not specialists, contrary to what is intended. In consideration of the fact that South Australia has such a small medical community, especially with respect to specialists, there is a high probability that conflicts of interest will arise on a frequent basis. SISA believes that 'panels are likely to see people who have been treated or reviewed by one of its members. While mechanisms of recusal will no doubt exist, obtaining replacements at short notice will be problematic, given the workforce issues'.

Furthermore, medical panels will address issues that go far beyond just medical issues. As the Law Society has highlighted, 'many of the issues that WorkCover identified as medical questions are not medical questions but questions involving medical issues and factual questions, or medical questions that involve medical issues, factual issues and legal issues. The question of whether employment is suitable is not simply a medical question'. Doctors are not trained as judges, and it is unfair to expect workers to accept the decision that has been made by a panel whose members have not had the relevant training and do not possess the relevant knowledge to make a fair decision.

There is little incentive for doctors, especially specialists, to sit on these panels. It simply does not make sense that a practising specialist will leave their consulting rooms to sit on a panel that offers little remuneration or any other incentive when their skills are so highly sought after in the medical field. There is currently a delay in dispute resolution and, if all the cases are to be referred to the medical panel, it is inevitable that a queue would be created due to the backlog of cases that need to be heard, with some estimating as long as 18 months.

The operation of the medical panels also needs to be scrutinised. The little information that is available indicates a departure from the norm of having a clear and transparent decision-making process. The proposal has indicated that medical panels will operate essentially behind closed doors. Legal representation is prohibited. Whilst this applies to both parties, it would be fair to say that this would be a disadvantage to the worker, as their adversary would be experienced in appearing before the medical panel and in with dealing with other such claims. Injured workers usually only possess knowledge directly relating to their case and experiences.

Furthermore, injured workers are not given the opportunity to prepare their case, as they are not allowed to make a request to see the information that has been presented to the panel. The medical panels are not required to give in-depth reasons as to how they arrived at their decision, and there is no means to appeal the decision that is made. Conversely, should WorkCover be dissatisfied with the result, it can direct an injured worker to appear before the panel again and again. There is no limit as to how many times an injured worker can be sent to the medical panels, and it is WorkCover alone that possesses the power to order an injured worker to appear before them. This is done entirely at the discretion of WorkCover.

Another concern involves the composition of panels because, in general terms, there are said to be two diverging groups of medical experts who work in this field. The first takes a philosophical view that is sympathetic to employees, and the second takes a hard line and an unsympathetic view. It would appear to me that there is a need to aim for a level of consistency between doctors, as I understand exists in the New South Wales scheme. Safeguards will most definitely be required to prevent either group from prevailing on medical panels. Further, if the government insists upon the implementation of medical panels, their role should be limited to an advisory role in the context of work capacity reviews.

Common law is a feature of WorkCover's compensation schemes, even in limited forms, in all Australian states, with the exception of South Australia. This is a stark turnaround for a state that was once nationally recognised as having the best managed scheme and providing the most generous benefits to injured workers. It is worth noting that, at that time, South Australia did have access to common law. The importance of common law damages varies from state to state, and I have been provided with information by the PSA that outlines this. I seek leave to have a statistical table incorporated in Hansard without my reading it.

Leave granted.

Common Law Payments 2006-07
NSW VIC QLD WA TAS
Common Law Payments ($) $190.0 million $372.3 million $279.3 million $65.6 million $5.3 million
Common Law Payments (%) 11.4 28.4 41.4 13.7 5.2


The Hon. J.A. DARLEY: The table demonstrates the extent of common law claims in recent years, and it shows the dollar amounts for common law payments that were made nationally in 2006-07, with the exception of data provided for New South Wales, where the only data that was available was for 2005-06. The Victorian WorkCover authority made the largest number of common law claims, at $372.3 million, which is in stark contrast to WorkCover Tasmania, which paid only $5.2 million. It also outlines the percentage of the total claims that were paid out through common law in each state. This demonstrates the overall significance of common law in each individual scheme.

The jurisdictions that have a heavy uptake of common law payouts as a feature of their scheme obviously have the higher percentages. The table shows that common law plays only a minor role in the Tasmanian scheme, a moderate role in the New South Wales and Western Australian schemes, and a prominent role in the Queensland and Victorian schemes.

Considering that both the Clayton Walsh review and the Labor government have expressed the view that South Australia's WorkCover scheme needs to be re-aligned with its Victorian counterpart, it is interesting that the government has not chosen to adopt access to common law as part of these two new proposals.

The proposed bill has been criticised for adopting the negative sanctions against workers, as introduced by former premier Jeff Kennett in Victoria, such as reducing payments. However, the government has not adopted their approach to common law. This provides a disincentive to employers to manage workplace risk and prevents relief for those injured through negligence to pursue compensation in the form of damages.

In June 2007, the PSA provided a submission to the review into the WorkCover scheme (prepared by the University of South Australia), entitled 'WorkCover Under Siege—Review into South Australia's Workers Rehabilitation and Compensation Scheme'. It states:

When considered in context, claims by the Premier and his Minister for Industrial Relations that the passage of Labor's workers compensation bill would leave South Australia's WorkCover scheme as the fairest in the country are untenable. These claims lack substance and are not supported by the evidence. Such claims may be best regarded as a cynical exercise in political spin, designed to obscure what in reality is a draconian assault on the entitlements of injured workers in this state.

Instead of having arguably one of Australia's best systems of weekly payments for injured workers, the government's legislation if passed would ensure that most genuine South Australians seriously injured at work would have their payments dramatically reduced or discontinued should they have the misfortune of being unable to return to work within 130 weeks.

The fact that all other state workers compensation schemes in Australia provide injured workers with access to common law damages reinforces the lack of fairness that is at the heart of the government's bill. As suggested by the PSA, instead of being one of the country's best schemes, WorkCover looks like it could end up as a Clayton scheme.

The government has failed to recognise that even limited access to common law exists in other statutory no-fault schemes with no excessive funding or dispute risks. Furthermore, there are pure common law schemes that have no problems with being fully funded for the history of the scheme. Such an example would be the South Australian Motor Accident Scheme. Less than 1 per cent of all claims are resolved by way of judicial resolution within the South Australian Motor Accident Scheme.

The view to continue to enforce blocking access to common law is now outdated, as this method of resolution is no longer the open-ended damages regime that it once was, and it should be highlighted that there are few major heads of damage that do not have at least limited access to common law.

There will always be people who fall within the scheme and who will benefit from being able to seek damages from a negligent employer. This is especially evident in cases where the injured worker does not possess any capacity to return to work. In these cases, a judicial decision can hold a mutually beneficial arrangement for both the injured worker and the insurer. Common law could especially benefit seriously injured workers where they can establish negligence by their employers. This is especially the case in those schemes where weekly payments are arbitrarily terminated either when a specified dollar amount is reached or where deeming provisions cut in.

Whilst it could be argued that full access to common law could result in lengthy litigation, it seems unfair that South Australian injured workers are denied at least limited access to common law. The Law Society suggests that there should be a threshold for accessing common law damages. A threshold, such as allowing access of common law only to persons who have more than 15 per cent whole-of-body impairment, could potentially minimise the number of less significantly injured workers seeking common law solutions.

In contrast, the Australian Lawyers Alliance believes that access to common law should be unfettered and negligent employers should be held accountable. The society suggests that it should be up to the worker to determine whether they would like to pursue a common law claim and, if so, their entitlements under the scheme should cease once a successful outcome has been obtained.

I am inclined to think that, on balance, the position of the Australian Lawyers Alliance is a better position, but I believe it is inevitable that this parliament will revisit the issue of common law damages. The government is trying to cut workers' entitlements and yet continues to deny them access to common law to seek damages, as is the right of every injured worker who falls within the workers compensation schemes of all other jurisdictions even in limited forms.

Throughout the legislative debate the Self-Insurers of South Australia (SISA), representatives for employers affected by balancing payments, maintained a somewhat objective approach, refusing to participate in media campaigns and the like in an effort to allow this parliament to remedy the shortcomings of the scheme without reference to sectional interests for the greater good of the scheme. At least that was the approach that SISA took prior to the government moving a series of amendments to the bill, including those relating to discontinuance fees, which will in effect legislate exit fees.

SISA has addressed the issue of exit fees in response to the bill. Balancing payments, or exit fees, as they are commonly referred to, are WorkCover's attempt to recover the future levy surcharges that employers would have had to pay should they have remained insured by WorkCover.

The logic behind this balancing payment, according to SISA, is that 'all insured employers have underpaid levies in past years and will need to pay more in future years to make up the shortfall. It believes that organisations moving into self-insurance should not be able to escape the repayments of the shortfall'. This argument is inherently flawed due to the fact that self-insurers accept the responsibility for any existing claims and liabilities from the moment they become self-insured, and WorkCover is also very well protected against the risk of self-insurers becoming insolvent. Should WorkCover be responsible for maintaining the existing claims, it could be argued that the balancing payment is necessary to order to fund these claims. However, it is quite clearly not the case. It seems to me that these exit fees are nothing more than WorkCover implementing a grab for money as a punishment for employers who choose to leave the mismanaged scheme. These payments commonly range from tens of thousands of dollars up to several million dollars, with at least one being contested in the Supreme Court at present.

Considering that the unfunded liability currently sits at close to $1 billion, the payments that are recovered from self insurers represent a drop in the ocean when compared with the unfunded liability. SISA's best estimate is that 'the system might at best recover $3 million to $5 million in a year, or .007 per cent of the last published figure for the unfunded liability'. This would, of course, be an average figure and would not take into account the exceptionally large exit fees payable by large corporations. This shows that a payment that often has a significant impact on businesses has only a miniscule impact in terms of reducing unfunded liability. This payment is especially unfair for small businesses, which simply cannot afford the exit fee and are therefore given no option but to remain insured by WorkCover. It also has the potential to act as a disincentive for investment in South Australia. There are examples of people who have gone bankrupt and who have been forced to close their business as a result of the exorbitant exit fees that were levied upon them.

While the premise of the proposed changes is to assist in reducing the unfunded liability of WorkCover, the fact is that more than 40 per cent of the total scheme is self insured and has no unfunded liability. This includes local government. At least one is in surplus, and they have the bonus of having lower levies to pay. They operate within exactly the same act and have exactly the same workers' entitlements. The injured workers from these employers, who do not have an unfunded liability issue, will suffer from these severe cuts because of the actions of the WorkCover board and its management.

The PSA and others argue that the WorkCover Corporation board members and general management team have not managed the scheme effectively. Continuous budget tightening, whilst the unfunded liability is continually growing, shows a lack of experience regarding the scheme. Self insurers have shown that operating workers compensation schemes under the act is not inherently unworkable. Changing the way WorkCover is administered will assist with many of the challenges currently facing it without having to resort to changing legislation or slashing workers' entitlements. The fact that the self-insured sector does not have the same problems reaffirms this argument. Perhaps the solution to fixing the problem is addressing the source of the difficulties rather than implementing changes to a system that will still not address the fundamental underlying problems. There is no reason why the current system could not be reformed to ensure that injured workers are not bearing the brunt of the changes.

Another concern relates to the two-year review provisions. I believe that the two-year review clause within the current act is being ignored. This clause provides an avenue whereby workers who no longer have a legitimate need to be on the scheme are identified and entitlements are ceased. Effective use of this clause would see a reduction in the tail and a reduction in the number of workers who are exploiting the scheme. Again, there are a number of contributing factors as to why this particular provision has not been effective; however, it lies largely with the claims agents. Effective rehabilitation is required within the first two years to identify whether there is any capacity to return to work. Without the application of effective rehabilitation, a two-year review is insignificant, as the true potential of return to work would be masked by the need for further rehabilitation.

As previously mentioned, it is the early notification and intervention that are the key to gaining the most out of rehabilitation. There are only a small number of people on the scheme who are trying to rort the system for financial benefit. These are the people upon whom the two-year review will focus. Since WorkCover's adopting EML as its sole claims agent, the two-year review has virtually been ignored, and the number of people who are on the scheme long-term is continuing to rise.

It has been suggested that it is too time-consuming for WorkCover to prove that a worker has the capacity to work. One way of addressing this issue would be to reverse the onus of proof; that it is the worker's responsibility to prove that they still need to be on the scheme. Genuine cases would be relatively easy to identify, whereas fraudulent cases would be exposed. This would ensure that those who should be on the scheme will remain and those who should not will be removed.

From conversations I have held with the Public Service Association, SA Unions and especially with representatives from the rehabilitation sector, it is evident to me that one of the greatest concerns is in regards to claim efficiency, that is, the time which it takes from the moment of injury to rehabilitation. There has been strong evidence supporting the claim that early notification of injury results in a worker being able to return to work.

At the moment a number of contributing factors are hindering the process of a worker receiving rehabilitation within a reasonable timeframe and thus productively returning to the workplace as soon as possible. First, there is the issue of claims determination. EML suffers from a chronic staffing issue, where experienced claims managers are few and far between, and this is compounded by the high turnover of staff.

There have been suggestions that claims managers should be trained to deal with specific areas of industry so that they have a better understanding of the injured worker and are able to identify when a high risk claim is presented. It is often argued that claims managers do not possess the skills and maturity to deal effectively with the intricacies of high risk claims. No doubt having the skills to deal with claims effectively and seeing a positive result for injured workers would provide greater job satisfaction for claims managers.

It is recognised that claims managers are often under-resourced and this results in the time which it takes for a claim to be determined to be prolonged. This, in turn, results in delays in access to rehabilitation, which sees injured workers stay on the scheme for longer periods. Workers often become despondent while waiting for their claims to be determined which, in turn, can cause psychological blocks to rehabilitation.

Injured workers who have had to wait for rehabilitation are often harder to treat because they have been absent from the workplace for an extended period of time and have become deconditioned to the prospect of returning to work. An excellent example of early access to rehabilitation, being the key to returning injured workers to their place of employment, is shown with companies that have early incident notification arrangements with rehabilitation providers.

I have been provided with an example where two soft tissue injuries have occurred in the one workplace in the past two months. One case involved a wrist injury and the other an elbow. As a result of having an early incident notification arrangement, both injuries were reported to the rehabilitation provider within 48 hours. Consequently, rehabilitation was able to begin immediately with both workers and both have returned to work at their full pre-injury hours.

The duties that one worker performs is exactly the same as it was pre-injury, whilst the other has only needed a 5 per cent modification to their role. This shows that with early rehabilitation it is possible to return to work within two months from the time of injury and function at 95 per cent, at least, if not 100 per cent, of pre-injury performance. It is obvious that having these workers undergo rehabilitation, instead of having them wait at home while their claims were being determined, was a much more productive use of the two-month time period.

I have also heard from rehabilitation providers who have contacted injured workers once a claim has been determined and found them to be very angry. They are frustrated at the time it has taken from the time of injury for it to be reported, the claim determined and finally passed on to the rehabilitation provider. During this entire process they are denied access to rehabilitation and are simply expected to wait.

I heard of one appalling example where the time from injury to first contact with the rehabilitator was 14 years. Determining claims earlier and providing rehabilitation sooner can only result in injured workers coming off the scheme at a much earlier stage. It has been suggested that claims should be determined within 21 days of submission by the employer. Whilst this period would be considered to be a reasonable time for a claim to be determined, it should be noted that New South Wales has a determination period of only seven days. That is based on research that if a claim is not determined within seven days there is only a 25 per cent or less chance of a satisfactory outcome.

What is often lost in the discussion of statistics and legislation is that these changes affect real people. I am sure that I am not the only member who has received letters and phone calls from constituents who have urged me to think about their personal situations when coming to a position in regard to the bill: people who have not only suffered the trauma of being injured at work but have suffered distress and financial strain due to their loss of income and consequent loss of confidence and self-esteem issues; people who feel worthless as they are treated as merely a case number without any regard to their personal situation; people who have been trapped in a system that was intended to help them.

Further compounding the issues already outlined is the problem of dealing with Centrelink. Anyone who has dealt with Centrelink would be aware that this in itself is a taxing and soul-destroying experience, let alone when coupled with all the other stressful factors already outlined.

Furthermore, the current bill has been criticised by many as an exercise in buck-passing and cost-shifting on to Centrelink. I have been made aware of people losing their homes, of marriage breakdowns and suicides as a result of workplace injury and the system that failed them. It should simply never get to that point. I think that the human aspect is often forgotten, and we need to keep in mind that these changes can have a very profound effect on people's lives.

In fact, just last week, my office received a call from a constituent who was already pushed to the limit with the existing legislation, and who had attempted to take his life on a number of occasions. These are generally the people who do possess some capacity to return to work. No doubt, there are some people who are not able to return to work. These people should be compensated by way of redemption.

I question why the government has chosen to legislate this particular feature of the WorkCover scheme. Surely the government can still achieve what it aims to do by way of a ministerial direction to the WorkCover Corporation to apply the suggested amendments in the bill relating to redemptions as guidelines. This option would allow for flexibility and discretion when considering redemptions, whilst also providing for situations where it is inappropriate for the employment relationship to continue or when all parties agree that a redemption would be beneficial to both.

This would still have the intended purpose of restricting redemptions and exposing those who simply hang on for a lump-sum payout. One of the strongest arguments against the new amendments is that they will disadvantage a large proportion of workers by cutting their entitlements early on in the scheme. The government argues that there will be better benefits for those who are severely injured. However, I would like to take the opportunity to highlight a recent example and also some case studies highlighting the effect that these amendments will have on typical injured workers.

The Advertiser recently published an article which highlighted the serious and dangerous conditions in which employees find themselves during their employment. The case concerned a firefighter working for Forestry SA, which is a South Australian government department. Eight years ago, the employee was almost killed when a fireball engulfed his car whilst he was working. The worker was forced to take shelter inside his vehicle which was engulfed in flames. Had he been outside, he would have died. The vehicle offered a level of protection, but the fire was so intense that the worker was burned severely to the point of being virtually unrecognisable.

The injuries that he sustained were horrific, and he was placed in intensive care for 2½  weeks. Fortunately, this employee recovered, but he had to spend a total of 12 months away from work. Not only are people such as this dealt a severe blow by being injured, they are often then faced with the additional anxiety and stress of dealing with the economic realities brought about by the potential loss of income.

In today's terms of increasing interest rates, petrol costs and other demands, this could have devastating consequences. Do any workers, especially those doing dangerous work like firefighting to protect all South Australians, really deserve to be hit so unfairly?

The following case studies highlight the effects of the amendments. Case 1 concerns a correctional services officer who, as the result of a severe bashing by an inmate one day, was left with severe injuries to his head and upper body. Consequently, he was forced to take 20 weeks' leave from work in order to accommodate effective recovery. His place of employment has provided him with counselling in order to assist him to return to work. Under the new proposals he would be entitled to his full pre-injury wage of $1,000 per week for the first 13 weeks only. For the remainder of the time off his payments are reduced by 10 per cent, resulting in a loss of $700 over 20 weeks.

Case 2 concerns a cleaner who worked for an agency that was contracted to clean office blocks in the Adelaide CBD. The worker is a single mother with two young children. She had previously made a complaint to her employer regarding the weight of the vacuum cleaner provided to her. The vacuum cleaner was causing pain in her shoulders. Her employer agreed to provide her with a new lightweight vacuum cleaner but did not act promptly and, as a result, she suffers from chronic pain. She was away from work for a total of 45 weeks. Her payments were cut by 10 per cent after the first 13 weeks and a further 10 per cent after 26 weeks. After 45 weeks' leave she has lost $2,550 due to the new amendments.

Case 3 concerns a first-year paramedic employed by the Ambulance Service on $500 a week. During an emergency callout the ambulance he was travelling in was involved in an accident and he was severely injured. After 18 months of extensive medical treatment he was able to return to work. However, under the proposed amendments he not only has to suffer the after-effects of his injury but also suffer the loss of $5,250 due to the reductions in his payments.

Case 4 concerns a registered nurse who developed chronic back pain as a result of the continual lifting that is involved when working in an aged care facility. She had previously raised her concerns with her employer but no action was taken to purchase lifting equipment. Her recovery was slow and, on advice from an orthopaedic specialist, she underwent surgery. Unfortunately, this was not as successful as was hoped and she continues to suffer from chronic back pain.

The return-to-work plan that was devised by WorkCover's claims agent was not effective. Whilst trying to recover from her injury, her employment was terminated and she applied for retraining. WorkCover refused her application. She has not worked for over 30 months and has lost over $22,000 due to her injury. Her situation was further exacerbated by the fact that she was informed that WorkCover will cease her entitlements.

Case 5 concerns a formworker employed by one of Australia's largest construction companies. Whilst working on a major project in the southern suburbs he fell from a height of nine metres. The resultant injuries he received were compounded by the fact that his employer failed to implement adequate fall protection measures. His injuries were so severe that they required a lengthy hospital stay with a requirement for more surgery at a later date. Two weeks after being discharged from hospital, his employment was terminated. The following 18 months were peppered with hospital stays and he was frustrated at his inability to work. During the 30 months that he has been part of the WorkCover scheme, he has had four claims managers and his application for retraining is yet to be approved. Again, his situation is further compounded by the information that his entitlement will soon cease, as WorkCover has not determined his injuries to be severe enough to warrant ongoing payment or a redemption.

In all of the above cases, if the injured workers had been living in other jurisdictions, their financial losses as a result of their injuries would not have been so great. Furthermore, in the last two examples (the registered nurse and the formworker) they would have been eligible to apply for compensation for negligence through common law. Even though access is in a limited form in some states, it is still a better option than being denied access to common law entirely.

Again, I emphasise that I do not believe the legislative change, especially this change, is what is needed for the WorkCover scheme. The cultural shift which focuses on early intervention and return to work is required for the scheme to be successful.

The attitude of claims managers, lawyers, doctors, rehabilitation providers, workers and all others involved in the scheme needs to be altered so that the aim is to have the injured worker return to work as quickly as possible, but not to the detriment of their health.

The issues that I have mentioned are only some of the matters that concern me regarding the bill. I would like to have spoken more extensively on other matters; however, due to the short notice and the haste in which the government is trying to progress the bill, this simply was not possible, other than to say that, based on past performance, simply legislating to cut payments will not guarantee success.

I suggest that, unless the WorkCover Board and WorkCover Corporation ensure that a paradigm shift in the culture occurs, then this bill will not achieve anything. The opposition has maintained that it is committed to fixing the WorkCover scheme. I believe a sunset clause that would force whoever is in government to revisit this issue by 31 December 2010 is appropriate. I will not be supporting the bill.

The Hon. C.V. SCHAEFER (00:20): I am somewhat disappointed to see you in the chair, Mr Acting President, because I want to spend some time tonight going back into the history of why we find ourselves in this parlous state, where I do not believe we have any option but to support this dreadful piece of legislation.

I served for four years on the Statutory Authorities Review Committee, a committee that I enjoyed very much and which was chaired by our current president, the Hon. Bob Sneath. In 2005, we undertook an inquiry into the WorkCover Corporation of South Australia, and now this government chooses to tell us that all of a sudden the fact that they are almost bankrupt has come as a complete surprise to them. However, as the Hon. Rob Lucas pointed out earlier, Rob Kerin, when he was leader of the opposition, spent many hours and issued many press releases trying to warn this government that they were out of control and were not managing the finances. And it has taken them until now to realise that they have on their hands a financial situation which is almost as bad as the State Bank.

It is interesting to look at some of the principal players now and during the State Bank debacle, because many of them are the same people. At that time, the now Treasurer was a financial adviser. That is a bit of a worry, isn't it! At that time the now Premier was a member of parliament, and so perhaps there is a part of me that should not be surprised that they have been unable to see what is happening to the WorkCover Corporation in spite of the warnings that they were given.

So, I have gone back to our 2005 report, and I want to quote somewhat extensively from it because it quite clearly shows that blind Freddy, not just the government, should have been able to see that they were in strife then and that, had they implemented some measure of caution in 2005, we might not see a situation that is almost beyond redemption now.

Some of the things that were quoted at the time were that 'the 2002-03 annual report of WorkCover stated the financial position as the worst in the corporation's history: 55 per cent funded, with total liabilities of $1.3693 billion and an unfunded liability of $591.1 million'. As we know, it has continued to spin. That was its worst recorded financial position in its 14-year history. It has now almost doubled in the ensuing three years. The report went on to say that the most recent annual report, 2003-04, announced a small improvement; however, the quarterly report stated total liabilities had risen in that 12 months to $1.5297 billion. The position in September 2005 was even worse. The committee went on to say:

Whilst the committee acknowledges that South Australia provides one of the most generous workers compensations in Australia, South Australia also has—

and this was in 2005—

the highest average levy rate.

The committee went on to say:

...the lack of monitoring of rehabilitation programs and the associated complaints process by the corporation is disturbing...rehabilitation, return to work and the performance of agents indicate that South Australia is not performing well.

This is in 2005. So, in 2005 we had the highest average levy rate, one of the worst rehabilitation and return-to-work rates, and a lack of monitoring of rehabilitation programs. That was then, and we can only assume that everything since has got worse, and who can we possibly blame? We have to blame the government of the day. For once, the government cannot even blame us, because it was its choice to kick out the old board and put in a new board, kick out the old actuary and put in a new actuary. The only thing it failed to do was kick out the minister, who has never had his head around how to manage this particularly complex financial management.

The committee went on to say:

…RTW, being 12 per cent—

This is in 2005—

below the Australian average and 24 per cent below the best performing jurisdiction of Seacare.

2 in 10 injured workers had not returned to work at all since their injury...

South Australia's average rehabilitation cost is 38 per cent below the Australian average and 58 per cent below that of the highest paying jurisdiction, ComCare.

So, we really did not get anything right even then. One of the things that we picked up again—which to me pointed out at the time the arrogance of the minister who has continued to be the minister—was that he has refused to listen to any of the warning signs that he has been given to such an extent that, when this whole thing has collapsed around this government's ears, it has been minister Conlon who has had to run things. Even the government did not trust minister Wright to do it.

His performance was indicated very clearly, I think, in 2002 when he was appointed as minister. It is noted in this report, which, I repeat, our President chaired. This was not a Liberal Party report: it was a standing committee chaired by a member of the left wing of the Labor Party. Even then we were able to say that the minister had refused to meet with, and be briefed by, the chair and the CEO of the corporation for nearly two months after his appointment as minister. One can only assume, given his performance since, that he has kept up that high work ethic.

Some other things of note within this report are:

The corporation has made a number of statements in annual reports in relation to expectations of being fully funded within a particular time frame. Not a single one has been achieved. Based on the funding model and the past financial history of the corporation, the committee believes the potential for the statement by the board chair for the corporation to be fully funded by 2012-13 to be realised is very low.

And one can only say that that has to be the understatement of the century. It is not just very low; it is impossible, because it has continued to spin out of control ever since.

The committee made some 25 recommendations at the time and, to my knowledge, not one has been enacted or even listened to One of those recommendations was as follows:

The committee feels that the workers compensation industry should be regulated by an independent arbiter similar in role to that of the Technical Regulator or the Essential Services Commission of South Australia, which regulate a number of outsourced government functions.

WorkCover should develop and publish reports with key indicators which compare the performance of the self insured sector with that of the Scheme to make available best practice in as many areas as possible.

Was that done? Absolutely not. Further on, the committee noted:

The Hon. Michael Wright MP, Minister for Industrial Relations, stated in a 2003 media release that the government will take action to ensure WorkCover is more accountable and transparent and that its finances are rigorously assessed.

The comment from the committee was, 'The committee is looking forward to these actions occurring.' As I say, that comment was made in 2005, but those actions have still not occurred. The eventual losers are the workers of South Australia. Only tonight someone asked me, 'What would you do? Would you hang the injured workers in the street?' No; I would not, and it is not impossible to run a good, fair workers compensation scheme at, if not a profit, at least cut even. The report also states:

In April and October 2004 the Victorian WorkCover Authority announced an historic trifecta—a fully funded scheme, increased support for injured workers and reduced employer premiums for 2004/5. Announcing a funding ratio of 101, a $1.2 billion full-year profit, a reduction in the ALR from 2.220 to 1.998 whilst having improved worker entitlements for the inclusion of overtime and shift allowances in the calculation of weekly compensation benefits, the VWA Chair said that the Authority's financial results for 2003/04 represented the most significant turning point in the scheme's 20 years history.

So, not only were we out of control but our government was too ignorant or arrogant to look across the border into Victoria and take a leaf from its book.

I want to raise this again because someone had the temerity to say that this started under a Liberal government. However, from 1996-97 to 1998-99 the scheme was considered to be fully funded. In 1997-88, the funding ratio was 96.5 per cent; by 30 June 2000, it was at 97.3 per cent; and by 2002-03, it was down to 55 per cent and falling.

Instead of an expected funding ratio of 81 per cent for 2002-03, the actual figure was 55 per cent; instead of the claims liability rising to $934.7 million, it rose to $1.3 billion; and, instead of the unfunded liability reducing to $182.9 million, it rose to $591 million. The funding model used by the corporation allowed for a negative return for one in every five years. Based on this funding model and past history, the committee noted that the potential for the statement by the board to be fully funded by 2012 was very low, as I previously said. Finally, I bring to the council's attention another quote from that 2005 report. Further, the report states:

No mention was made in the June 2003 actuarial report of the reform standards for the general insurance industry implemented from 1 July 2002 by the Australian Prudential Regulation Authority (APRA). APRA was created in 1998 as the single prudential supervisor for Australia's financial sector supervising, as well as general insurance companies, banks, building societies, credit unions, life insurance companies, friendly societies and superannuation funds. General insurers provide protection against a range of property and liability risks such as one or more of motor, marine, fire, health, mortgage, medical indemnity, business, workers compensation, home, sickness and accident.

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.

By every standard of comparison, South Australia was already out of control in 2005, yet this government has spent the past three years spinning further and further out of control, leaving its workers further at risk and having higher and higher comparative levy rates for employers. There has been no winner in this ghastly situation, purely because we have a government that is either incompetent or so arrogant that it has refused to see not just subtle warning signs but warning signs that have been hung out everywhere. It has taken no action until it is too late and, unfortunately, it will not be the bearer of this, the workers of South Australia will be.

The Hon. M. PARNELL (00:37): Given the lateness of the hour, I suggest that it might be convenient for me to make my second reading contribution tomorrow.

The ACTING PRESIDENT (Hon. J.S.L. Dawkins): Does the honourable member want to move the adjournment?

The Hon. M. PARNELL: If it does not stop me from speaking tomorrow morning, I move:

That the debate be adjourned.

The council divided on the motion:

AYES (12)

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

NOES (7)

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

Majority of 5 for the ayes.

Motion thus carried.

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