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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

Committee Stage

In committee (resumed on motion).

(Continued from page 3134.)

Clause 15.

The Hon. M. PARNELL: I have moved my amendment No.10, and I have told the committee that it is a test clause. I will not be speaking separately to or dividing on my amendments Nos 11 and 12. I took the opportunity during the break to revise some of my material, which I had removed from my second reading speech. I have now removed a fair bit more of it for the purpose of advancing the debate on this clause. Having said that, there are a couple of—

The Hon. D.W. Ridgway interjecting:

The CHAIRMAN: Order! It is not the time for making speeches: it is the time for committee.

The Hon. M. PARNELL: I want to get straight back into the committee's important work. There are a couple of case studies to provide and a couple of comments to make, and then I want to test the will of the committee on this amendment. As I said, this is the amendment that everyone has been talking about. It is the step-down amendment. We are told that there is $400 million of savings. So, even at $5 million a minute, we are making rapid progress in dealing with this amendment.

The first case study that I want to put to the committee involves an injured police officer. Thirteen weeks after this police officer shatters his leg, when a joy-rider rams his police car, he gets his pay reduced to 90 per cent. A senior constable's base pay is about $1,257 per week, including super, before tax. This policeman has two preschool children. His wife works part time as a cleaner.

From the day after the joy-rider shatters the policeman's leg, the policeman loses money because of the injury. The government's plan starts with all workers losing their superannuation contributions. That is the existing system; we have not fixed that. That means 9 per cent goes to start with. That would cost the police officer about $103 a week, or $5,400 a year.

The policeman has major, permanent damage to his hip and knee. He faces a number of major operations and a long recovery. After 13 weeks his pay is cut another $115 a week so, under the government's plan, the family is already down $218—the super plus the pay. Even though the super is not to be collected in the short term (it is in the long term), I think it makes sense to regard it in this way. After 26 weeks the government takes another $115 a week from the policeman and that, in total, is $333 per week gone. South Australian working families, in my opinion and in the opinion of the hundreds of people who have written to me on this, do not deserve to lose $333 a week, 26 weeks after being hurt at work. That is $12,875 per year.

The second case study is that of a cleaner: the cleaner is lifting a big bin, the catch breaks and it falls on the cleaner resulting in a severe injury. The issue of the safety of the bins might have been raised for some time but nothing was done about it. Let us look at such a worker. The state minimum wage for a full-time worker is $522.15 before tax. That is not much to get by on and to support a family, to start with. So, if they lose their 9 per cent super, that is $50 a week or $2,443 each year. At 13 weeks it is down to 90 per cent, so that is another $52 a week which leaves them with $472 per week to pay the mortgage, feed and clothe the kids and pay power bills. At 26 weeks it is down to 80 per cent and the pay is cut by another $52—a total cut of $104 a week, or $154 if you include the superannuation. That leaves just $448 a week, because you were injured at work. In the case study I have given the employer was negligent in that it failed to deal with the issue that ultimately gave rise to the injury.

The question that raises for us, in dealing with this bill, is that when people like the policeman with the shattered leg ask whether this is fair the answer, very clearly, is that it is not. You would expect that, in putting a proposition like this forward, the government has given serious and careful consideration to the impact on injured workers and their families. I doubt that that has happened. However, I will ask the minister what studies have been done either by the government or by WorkCover on the impact of this plan to cut worker entitlements and, in particular, what is the impact of taking $5,693 in the first year away from a minimum wage earner? What effect will that have on a family's ability to keep their heads above water, pay their mortgage and pay the rent? Have any such studies been done?

I have some further brief comments to make but I will first put that question to see whether the minister has an answer about what economic studies have been done in relation to the impact on low-paid workers, in particular.

The Hon. P. HOLLOWAY: There have been no studies in relation to the sort of information the honourable member is talking about. However, he would know what other workers compensation schemes in this country pay, and he would also be well aware that there has been a lot of information that relates to return to work and how that is impacted upon by the compensability of injuries. He would also be aware, I am sure, of the work that has been done into the impact on those workers who have soft tissue injuries but who do not get back to work within the 13 weeks or so and become, in a sense, long-term victims of the system.

I think that is the other side of the coin that has to be looked at. It appears to me that that is the one thing in this whole debate that people overlook. Clearly, in our state there are a lot more people in this tail who are still on workers compensation after two years than would be the case in other schemes. It is clear that those workers are badly affected by the system, and that is not good for those workers. We do have that evidence. What we are trying to do here is reach a balance. Of course, if you do reduce benefits, that will have an impact on those workers. But, clearly, if we do not do anything about the return-to-work rates, likewise that will have a very severe impact on a number of workers who do not get back to work. That much we also know.

The Hon. M. PARNELL: There are two positions that have been put in relation to cutting injured workers' entitlements. The WorkCover position is that the financial hardship that results from reducing workers' income compensation would give workers a bigger incentive to return to work. That appears to be the WorkCover position. On the other hand, the Clayton position totally rejected that analysis. The Clayton report said, at page 97:

Most workers return to work as soon as their injuries have healed, irrespective of economic incentive articulated through the benefit system.

It seems to me that, when it suits the government, it says that it accepts Mr Clayton's report; that is the impression the government gives. However, it is clear that Mr Clayton does not accept the idea that workers need to suffer financial hardship to have an incentive to return to work.

The final point I will make on this amendment is to remind members that in some cases the person is not going back to work. The person might be in a coma. First of all, we cut their super, then we cut their pay to 90 per cent and then to 80 per cent. Maybe they will stay on the system as part of a long tail, but how do you motivate a person in a coma to go back to work? Clearly, that is not going to happen. I think it would have been far better for us to listen to that part of Mr Clayton's report that says that we do not need to starve people back to work.

I make the point again that this clause is at the heart of this system. This is the clause that everyone has been talking about, and I will divide on it. This is the clause in terms of which, if you do not support my amendment, you support these step-downs, you support the hypocrisy of the government, and you support letting the Premier get away with what he said 13 years ago and his completely backtracking now. Thirteen years ago, the Premier was going to fight tooth and nail; every Labor member was going to vote against every clause of this bill. This is the heart of it now. I urge all members to support this amendment.

The Hon. P. HOLLOWAY: First, let me say that this was not the bill that was before the parliament 13 years ago. Secondly, Mr Clayton, in fact, recommended step-downs that are more severe than those that are in this bill. He suggested an 80 per cent step-down after 13 weeks; this bill contains a 90 per cent step-down after 13 weeks, followed by an 80 per cent step-down after 26 weeks. So, in fact, it is not correct to suggest that Mr Clayton did not recommend step-downs.

The Hon. SANDRA KANCK: This is the line in the sand for me. When I made my second reading speech, I said that I thought there were some good things in the bill, and I said that whether or not I supported the bill at the third reading would be dependent on what amendments got up. This is the crucial amendment for me. As the bill stands, clause 15 (the replacement section 35 in the act) is the clause that begins to take away workers' entitlements.

If the Hon. Mark Parnell's test amendment is not supported, I will not be able to support the bill. I was surprised to find out that the Clayton Walsh report, for instance, suggested that people who had fractures as part of their work injuries would basically be healed within six weeks and easily able to be back at work at 13 weeks. I would really like to know—and perhaps the minister can tell me about this—what the medical evidence of this is.

I am going to talk about my own personal experience having had a fall at the beginning of December in which I sprained both ankles. In the case of the left ankle, I had an avulsion fracture. An avulsion fracture is a very small piece of bone that breaks on the tip of a bone which occurred when the foot bends over and the tendons and ligaments are put under stress. Remember this was not a work injury, but it is a good example of how wrong I think the Clayton Walsh got it on this issue. I had a week at home in which I could barely walk and, when I came back to work the following week, I started seeing a physio every second day. The rate at which I could walk, by the way, was in crossing North Terrace, for example, I could get halfway across before the pedestrian lights started flashing. It took me three months of going to the physio to have my feet in any sort of working order and even then I was still not walking at the normal pace of other people.

I thought to myself, what if it had been a work injury and what if I had been in a job that required me to stand all day or to be walking or even running in some cases? What possible good would it have done me to be forced back to work? It is described within the Clayton Walsh report or by the government as an incentive; if anything, it probably would have damaged my ankles further if I had been put in that situation of having to go back to work. The logic is not there. I would like the minister to provide information about the medical source of the information that says that people with fractures of their limbs will have them cured and ready to go back to work in six weeks. As I said, this amendment is my line in the sand and, if the amendment is not accepted, I will be voting against the bill at the third reading.

The Hon. P. HOLLOWAY: The step down does not occur until after 13 weeks, so the argument about six weeks is irrelevant as far as the first step down point is concerned. What we do know is that the evidence suggests that most of those soft tissue injuries—

The Hon. Sandra Kanck: No, they were fractures.

The Hon. P. HOLLOWAY: In relation to fractures—certainly, as to the majority of injuries that people incur that are compensable, we know that about 80 per cent of those people are back at work by 13 weeks, and that is—

The Hon. Sandra Kanck: So, why do you need something that penalises it?

The Hon. P. HOLLOWAY: The thing is there is no penalty up until 13 weeks, even though in some states like Victoria there are immediate step downs, but we are not proposing that here.

The Hon. D.G.E. HOOD: I rise briefly to make some comments on this amendment. I said at some stage yesterday early on in the debate that I would only make a few contributions during the committee stage and this will be one of those, and it will be brief at that.

I just want to state on the record Family First's support for the amendment and opposition to the proposed step-down. I think the stories have been outlined well, and the case studies have been given. The truth is that people do not get hurt at work through choice. They get hurt at work through unfortunate circumstances whether it be the employer's fault or whether it be their own fault. Whoever's fault it is, the bottom line is that people do not choose to get hurt.

Therefore, they should not suffer as a result by having their income slowly eroded. We will certainly support the amendment. We take issue with the step-down. We think that the unfortunate thing is that the workers are bearing the brunt of all of the negative aspects of this bill, and the management of WorkCover Corporation really gets off scot-free. That is the real problem. As I said, we will certainly support the amendment, and we really have no sympathy for the step-downs in the bill.

The Hon. J.A. DARLEY: I will certainly support this amendment for the reasons that have already been outlined by others.

The committee divided on the amendment:

AYES (3)

Darley, J.A. Hood, D.G.E. Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C.

PAIRS (6)

Bressington, A. Dawkins, J.S.L.
Evans, A.L. Schaefer, C.V.
Kanck, S.M. Gago, G.E.


Majority of 9 for the noes.

Amendment thus negatived.

The Hon. M. PARNELL: I move:

Page 18, lines 13 to 15—Delete paragraph (e)

The issue at stake here relates to weekly payments and, in particular, prescribed allowances. My amendment proposes to remove the paragraph that states:

A reference to weekly earnings, or current weekly earnings, is a reference to weekly earnings exclusive of prescribed allowances.

The WorkCover proposal, which the government appears to have adopted, was that we should try to make the calculation of average weekly earnings simpler and that that would reduce disputes. I said, and I have said it before in other contexts, that the simplest and fairest way of doing that is to average all earnings and not to have exclusions. By deleting the ability to specify allowances that can be excluded, the calculation system becomes simpler and fairer and there will be fewer disputes.

What the government is doing here—and I think that this is an important point—is that this is direct discrimination against blue collar workers, in particular. The reason for that is that more white collar and non-union members are on salaries, or they may have traded away their allowances for a flat rate. So, the government plan to continue to exclude allowances—in other words, just pretend that they are not there—will, I believe, hit blue collar workers and union members harder than other workers.

There is no proposal to deal with white collar workers in the same way, not that I am suggesting the government should, but I think we need to be clear that this particular measure does distinguish between the different salary and remuneration packages that attach to union and blue collar workers predominantly, compared to white collar workers. If you have traded away your allowances in some enterprise bargaining agreement then you are not caught by this provision in the legislation.

In urging members to support this amendment, I say that, if you want to do the right thing by unions, by union members and by blue collar workers who have fought to keep their rights and have not traded them away, this amendment should be supported.

The Hon. P. HOLLOWAY: The government believes that the Hon. Mr Parnell seems to have misunderstood the connection between clause 35 and section 4, average weekly earnings.

The bill rewrites and reorganises section 35 into four new sections (sections 35 to 35C), but the text of the original section 35(7)(c) is retained in new section 35(8)(e). Mr Parnell's amendment would delete proposed new section 35(8)(e) from the bill. In other words, weekly earnings would not be specifically defined to exclude prescribed allowances. The upshot of this is that prescribed allowances would not be excluded from weekly earnings that are subtracted from notional weekly earnings in the calculation of weekly payments.

The government opposes this amendment, as removing the exclusion of prescribed allowances from weekly earnings is flawed, misguided and inconsistent with related parts of the Workers Rehabilitation and Compensation Act on allowances. It would mean that, despite prescribed allowances being excluded from a worker's notional weekly earnings under sections 3 and 4 of the act, a partially incapacitated worker's prescribed allowances would be included in the actual or deemed weekly earnings subtracted from notional weekly earnings to calculate the final reduced weekly payments. This is fundamentally unfair and inconsistent for injured workers and surely not what Mr Parnell would intend.

Amendment negatived.

The Hon. M. PARNELL: Amendments Nos 11 and 12 are consequential, and I will not move them. I move:

Page 19, line 16—After 'despite the disability' insert:

and that the Corporation can demonstrate is reasonably available to the worker in his or her particular circumstances

The subject matter of this part of clause 15 is in relation to designated weekly payments, and I seek to address fictional work. Although it is in a different context from before, it is the same issue. The amendment aims to bring this legislation closer to reality and out of the fictional arrangements the government seeks to create. Under the government's bill, a worker's pay can be cut based on what earnings WorkCover designates they earn.

Under the government's proposal, there does not seem to be any need for the work to be actually available for a worker. Once again, if a worker could, in theory, do a job but no employer will give them a go because of their work injury, their wages are cut, and that is not fair. This amendment requires that WorkCover establish that a job it says the worker could be doing will be reasonably available. I do not think that is too much to ask before a person's livelihood is cut or taken away altogether. Because the subject matter is similar to issues we have raised before, I want to hear the government's response, but I do not intend to divide on this amendment.

The Hon. P. HOLLOWAY: This amendment would tighten the definition of designated weekly earnings. This would not only reintroduce the state of the labour market test to the assessment of suitable employment but would go further than the current provisions. Currently, the requirement to show that a worker has a reasonable prospect of obtaining suitable employment applies only to workers incapacitated for more than a year. There is a range of other similar references that apply only to workers incapacitated for more than two years.

The government opposes this amendment. It really strikes at the heart of what the government's bill is trying to achieve—namely, encouraging workers, employers and WorkCover to focus more on opportunities for return to work, rather than stay on the system. We effectively had this debate in another context last night.

The Hon. R.P. WORTLEY: Is the minister aware of the concerns of many union stakeholders—in particular, the state secretary of the Australian Manufacturing Workers Union, Mr John Camillo—that workers will be subjected to the work capacity review without having access to the appropriate rehabilitation? Is the minister confident that this will not occur?

The Hon. P. HOLLOWAY: I thank the Hon. Mr Wortley for his question. I think we are all aware of the concerns raised by many members of the community—including, obviously, union officials—about the work capacity review and the need to ensure that workers have received appropriate rehabilitation. The work capacity review is an important part of the government's proposed reforms; however, I am confident that injured workers will not be treated unfairly in these reviews and that the reviews will not lead to cessation of payment should the worker not receive rehabilitation if rehabilitation should have reasonably been provided.

Members may not be aware of a decision of the Victorian Supreme Court on essentially the same provisions in the case of Woolworths v Jeffreys & Ors in 2007. I believe this is a useful decision which may be instructive to the courts in South Australia. In that case the medical panel found the worker had no current work capacity from a physical and vocational perspective, and I quote:

The panel considers that it is possible that the plaintiff's condition could improve with appropriate rehabilitation, and that with retraining, he could acquire further vocational skills to allow employment in positions where he would be able to work and cope with his restricted left hand function. However, as there is no current rehabilitation plan in place, the panel considers that the plaintiff's condition is unlikely to improve in the foreseeable future, and the panel therefore concluded that he is likely to continue indefinitely to have no current work capacity.

The case in the Supreme Court arose from action taken by Woolworths to set aside the medical panel's decision as to the worker's future work capacity and to challenge whether the medical panel could make such a finding at all. The Supreme Court found, and again I quote:

In my view, the panel's reference to the absence of a 'rehabilitation plan' in the last sentence of the last paragraph of the panel's reasons (set out at [5] above) should not be taken as being confined to Jeffreys' physical injuries. When read as a whole, it is apparent that the panel was adverting to the fact that there was no rehabilitation plan in the wider sense, by which Jeffreys was to be rehabilitated and retrained so as to re-enter the workforce. Similarly, when the panel said Jeffreys' 'condition' was unlikely to improve, it was referring to his general predicament, namely that he was injured and had no current work capacity as a result...Rather, in all of the circumstances of the case, bearing in mind the time elapsed since the injury, the lack of rehabilitation and retraining in that time, and the lack of evidence as to any actual rehabilitation and training to be undertaken by Jeffreys in the future, the panel concluded that Jeffreys was likely to continue indefinitely to have no current work capacity. In my view this conclusion was well open to the panel.

I trust that will allay the honourable member's concerns.

Amendment negatived.

The Hon. M. PARNELL: I move:

Page 20, lines 6 to 43, page 21, lines 1 to 43 and page 22, lines 1 to 11—Delete sections 35B and 35C

This amendment again in relation to weekly payments is on the topic of abolishing work capacity reviews. As I have said before, the regime provided for by clause 15 is probably the single biggest attack on injured workers' rights. It will reduce the pay and stop the pay of probably thousands of injured workers. My understanding is that WorkCover has said that, by themselves, these provisions will deliver a $55 million annual cash transfer from injured workers and their families to business, and in terms of long-term liabilities, up to about a $400 million transfer from injured workers and their families to business. This is an extreme attack on workers' rights.

There are some fundamental absurdities in proposed sections 35B and 35C. In particular, in relation to partially incapacitated workers, it tries to sweep under the carpet the fact that for many, and perhaps even for most partially incapacitated workers, the biggest barrier to obtaining a job is not the injury itself, it is the fact of having a work injury. I will not refer again to the case of WorkCover Corporation and Warren, as I have read abstracts from it before when that issue was raised. I think that this does highlight the unfairness of this legislation.

Under the current laws, if you have lost earning capacity, you can continue to receive payments for that, even if they are deemed to have been able to do some job which they cannot get because of discrimination against injured workers. However, under these provisions (sections 35B and 35C), if no employer will give a partially incapacitated worker a go because they have had a work injury, then the partially incapacitated worker can have their payments stopped altogether. Because injured workers are discriminated against, they have their income stopped. For the life of me, I cannot see how that is fair.

Another element of sections 35B and 35C that is particularly problematic is the requirement to continue to get income compensation. Not only do you have to be incapacitated at the time but a guess has to be made about how you will be in the future. I say that decisions about workers' income should be based on facts and not guesses—no matter how educated—about what will happen in the future. I will have more to say about that when moving my next amendment. Whilst I do want to hear the minister's response, I will not be dividing on this amendment.

The Hon. P. HOLLOWAY: The Hon. Mr Parnell's amendment would delete proposed sections 35B and 35C entirely from the bill. If this was combined with his other amendments, although we have already negated some of them, it would remove all references to entitlement periods in the bill and therefore dismantle the intended step-down structure. The amendment would also remove all provisions determining how weekly payments are calculated and reviewed after the third entitlement period, namely, 130 weeks of incapacity; in other words, work capacity reviews would be abolished.

The Hon. Mr Parnell does not propose to replace any of those deleted provisions. Under his amendments, as I am sure he is well aware, workers would always receive weekly payments of 100 per cent of notional weekly earnings with no step downs and never be subject to work capacity reviews after 130 weeks of incapacity. I can understand why he is moving those changes to parts of the bill, but obviously this is a key part of the bill. We have already debated the issue about why we are doing that and that is why we oppose the amendment.

The Hon. SANDRA KANCK: I indicate support for the amendment. What the minister has said is completely right. The clear intention of the amendment is to ensure that the step-down provisions are not able to be put into operation, and that is the reason why I will be supporting the amendment.

Amendment negatived.

The Hon. M. PARNELL: I move:

Page 20—

Lines 14 and 15—Delete paragraph (b)

Lines 33 and 34—Delete paragraph (b)

These are the amendments to which I alluded at the end of my discussion on my previous amendment. They relate to weekly payments but, in particular, abolishing the future element of the total incapacity test. I move both the amendments because they relate to the same thing, pretty well. For example, in new section 35B, which is headed 'weekly payments after expiry of designated periods—no work capacity', basically the exemption from cutting payments is that two tests must be met. The first test is that the person has no current work capacity; and, secondly, they are likely to continue indefinitely to have no current work capacity.

Leaving aside the grammar there (that is, that we are talking about a current capacity into the future), it is that second element that my amendments seek to remove. In essence, the provisions about totally incapacitated workers provide that, for workers to receive weekly payments of income maintenance after 130 weeks, they must establish that they have no current work capacity and are likely to continue indefinitely to have no current work capacity. The effect of that is that not only does a worker have to be totally incapacitated at the time but also they have to be likely to continue indefinitely to have no current work capacity.

This means that the incomes of injured workers' families are stopped based on a guess, even though it may be an educated guess. I would expect that, in some cases, the consideration will be that a worker has a particular condition, that that condition usually resolves itself in a certain way and therefore it is likely that they will get better in the future. Of course, what happens in an ordinary or an average case is not what happens in every case, and I think that is where that goes to the heart of the unfairness. Why should injured workers who are in fact totally incapacitated for the long term lose all income compensation because of a wrong guess about how their injury will develop in the future?

There are other situations, though, that expose the gross unfairness of this provision. With many serious injuries (back, knee and shoulder injuries), it is not uncommon that many years after the initial injury surgery even further surgery can be required, which, of course, can mean that the worker is totally incapacitated while they are in hospital, often for a period of recovery. However, where that person expects to have a partial capacity for work when they recover from the surgery, they will have no entitlement for compensation for the time they are flat on their back in hospital having surgery for their work injury, and that is just grossly unfair.

For a worker to go through the pain and dislocation to their lives of surgery and hospital stays and because they are likely to improve following the surgery there is no income compensation, and that is just shameful. With a compensation system based on weekly payments of income maintenance, not a lump sum system based on the assessment of future loss, I think it is absurd to cut off payments for someone who is at the time totally incapacitated based on a guess that they will get better in the future. It is very different from lump sum compensation cases in courts where that assessment is made and incorporated into the payment.

If the worker does get better, appropriate action can be taken at the time. There is simply no justification that I can see for this attack on injured workers. I urge all members who are keen to see fairness put back into this legislation to support this amendment.

The Hon. P. HOLLOWAY: New section 35B of the bill states that a worker's entitlement to weekly payments ceases at the end of the third entitlement period, unless the worker is assessed as:

(a) having no current work capacity; and

(b) likely to continue indefinitely to have no current work capacity.

Mr Parnell's two amendments would delete the use of paragraph (b) in section 35B. In other words, a worker need not be assessed as being likely to continue indefinitely to have no current work capacity to have their entitlements continue.

With the series of amendments that Mr Parnell is moving, really he is seeking to basically reverse the fundamental decision of step-downs. This is just another way of doing it. The government obviously opposes the amendment as it would significantly weaken work capacity reviews under new sections 35B and 35C, and fundamentally undercut the objectives of the bill, which is strongly focused on getting injured workers back into the workforce. The amendments would render much of the actuarial underpinning of the bill useless and, therefore, imperil the intended cost savings to the scheme, which are critical.

The fundamental problem with the current provisions is that they do not create enough incentive for injured workers to return to work. The work capacity test will create a robust way to determine who has an ongoing entitlement to compensation beyond 130 weeks and will do this on the basis of capacity for work. The proposed provisions are consistent with equivalent provisions interstate and they, of course, were endorsed in the Clayton report.

The committee divided on the amendments:

AYES (3)

Hood, D.G.E. Kanck, S.M. Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C.

PAIRS (6)

Bressington, A. Dawkins, J.S.L.
Evans, A.L. Schaefer, C.V.
Darley, J.A. Gago, G.E.


Majority of 9 for the noes.

Amendments thus negatived.

The Hon. M. PARNELL: If it is convenient for the committee, I will move amendments 3, 4 and 5. They are all to clause 15. I move:

Page 21—

Lines 16 to 22—Delete subsection (2) and substitute:

(2) The Corporation is to determine that the worker's entitlement to weekly payments under this Division does not cease, as contemplated by subsection (1), if the Corporation is satisfied—

(a) that the worker is in employment and that because of the compensable disability the worker is incapable of undertaking further or additional employment or work which would increase the worker's current weekly earnings; or

(b) that the worker is in employment and that the worker is taking reasonable steps to secure further or additional employment or work up to his or her level of work capacity; or

(c) that the employer from whose employment the disability arose is in breach of section 58B on account of not providing suitable employment for the worker under the requirements of that section (unless that section does not apply (or has ceased to apply) in the particular case); or

(d) that the worker has participated to a reasonable extent in any rehabilitation programs provided by the Corporation for the purposes of this Act and that further rehabilitation under this Act is reasonably likely to increase the worker's level of work capacity.

Lines 30 and 31—Delete 'subsection (2) on the ground that the Corporation is not satisfied under the requirements of that subsection' and substitute:

Paragraph (a) of subsection (2) on the ground that the Corporation is not satisfied under the requirements of that paragraph

Page 22, lines 7 and 8—Delete 'matters specified in' and substitute:

Ground or grounds on which the entitlement arose under

The purpose of these amendments is to provide for a fairer, partial incapacity test. The amendments are similar in some ways to the amendments that I have moved to other sections, in particular, section 35B. One of the major elements of unfairness in the government's proposal is this requirement that it be likely that a worker will continue indefinitely to be incapable of undertaking further or additional work which increases the worker's current weekly earnings.

It is in relation to partial incapacity, so the test is in relation to further or additional work which increases the worker's currently weekly earnings rather than any work at all. Again, I say there is no justification for stopping workers' income based on guesses about what they might be able to do in the future. But also under the government's proposed section 35C, if the injured worker has not been able to get a job, even if it is due to discrimination against injured workers, their weekly payments are stopped altogether.

Under the amendments I propose, if the injured worker is able to meet the government's proposed requirements (which will still be extremely difficult, to say the least), they will continue to be entitled to weekly payments. In the amendments I have moved there are other situations in which a partially incapacitated worker will be able to continue to receive weekly payments. The first addition I have moved would allow for partially incapacitated workers to continue to receive weekly payments if the injured worker can establish that they are in employment and that the worker is taking reasonable steps to secure further or additional employment or work up to his or her level of work capacity.

So that means that the injured worker has actually managed to get a job, which can be difficult, and that they are doing what they reasonably can to get more work. So perhaps the major difference between my approach and the government's approach is that under the government's proposal it does not matter how hard the injured worker tries to get a better job or more hours, it does not matter what they do to try to get a better job or more hours, if they cannot get that better job or more hours, they lose their weekly payments, and I think that is fundamentally unfair.

The next way that a partially incapacitated injured worker can establish an entitlement is if the employer, where they were hurt in the first place, is legally obliged to provide them with work and has not done so. Section 58B of the act places obligations on employers, with various exceptions, to provide work to injured workers. The feedback I have received is that this provision is widely flouted. Only WorkCover has the right to enforce that obligation, and by and large it does not enforce it. I understand that there has never been a prosecution by WorkCover of an employer for breaching that obligation.

So my amendment essentially is for—as the former Howard government used to refer to it in social security terms—a bit of mutual obligation. If the employer breaks the law and does not provide work to the injured worker, then the injured worker should not have their payment stopped for not having a job. It is a basic amendment. The employer is legally obliged to provide work, but they do not, so the injured worker should not lose their income for not being able to get a job. The final basis for a worker's payments continuing that is added by my amendment is where there is more useful rehabilitation that should take place.

This will not be of any assistance to workers who themselves do not try to participate in rehabilitation: it will only assist injured workers who have tried to be rehabilitated but regarding whom there is still more to do. When injured workers continuing the rehabilitation process is likely to increase their ability to work, their income support should continue while they are still in the rehabilitation process. This is particularly important, given the shocking track record of WorkCover in failing to provide decent rehabilitation in a timely way. If we genuinely want to rehabilitate injured workers, they must continue to receive income support while that is going on, and that is what the last element of my amendment is all about.

Permanently partially incapacitated workers are probably the single biggest financial losers in this bill, and this amendment is about approaching and dealing with the huge hurdles they have to getting back to work and making sure they receive the income support they deserve in a decent and realistic way. I urge all members to support this amendment, which I will divide on. It is a test for amendments 4 and 5 also.

The Hon. P. HOLLOWAY: The government opposes these three amendments. It is important to make the point that a worker with work capacity and working at that capacity will continue to have an entitlement beyond 130 weeks. I will read out what the Clayton review says on this subject, as follows:

The position taken by the review involves two book-end propositions: the first is that the South Australian scheme needs to be very strongly focused upon the attainment of early and durable return to work. The second is that there does need to be a clear understanding of the boundary point of the system in terms of the weekly payments of compensation to workers who have a current work capacity. This point in the review's recommendation is that 130 weeks of benefits duration—not only should this point be clear but the process for determining ongoing benefit entitlement should also be so characterised.

The government opposes this amendment as it would make it much harder for WorkCover to cease or reduce weekly payments after 130 weeks' incapacity where a worker has some level of work capacity. This would strike at the very heart of the culture shift the government is trying to achieve through this bill, namely, fostering a greater focus on rehabilitation, return to work among all stakeholders and encouraging injured workers to pursue these opportunities rather than stay on long-term compensation to their detriment. This series of amendments would basically render useless the entire work capacity review process. It could not work effectively if WorkCover was so constricted in its decision-making powers.

The Hon. SANDRA KANCK: I indicate Democrat support for this amendment. As currently worded in the bill, it seems that a worker who has a disability will be treated as if somehow they are to blame. I know from correspondence I have had from people—emails and letters—about this bill there is a recurring theme in many of them about people who have disabilities as a result of their work injuries finding it very difficult to get another job.

As soon as they let on that they are carrying an injury they are no longer considered for the position they are trying to obtain. I think that the amendment that the Hon. Mark Parnell has moved will make it a little more reasonable, I suppose, for workers in that situation. It is for that reason that I support the amendment. I think it is just a much more humane approach to injured workers.

The committee divided on the amendments:

AYES (2)

Kanck, S.M. Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C.

PAIRS (6)

Bressington, A. Dawkins, J.S.L.
Evans, A.L. Schaefer, C.V.
Darley, J.A. Gago, G.E.


Majority of 10 for the noes.

Amendments thus negatived; clause passed.

Clause 16.

The Hon. M. PARNELL: The deed has been done in relation to clause 15, but there is still some damage to be repaired, and clause 16 provides the committee with a further opportunity to redeem itself. This clause relates to the discontinuance of weekly payments. I have a couple of very brief comments before I move my amendment. Again, there is a trifecta of amendments, but I will get to that in a second. My comments (and then ultimately a question of the minister) relate to clause 16(2). This deals with section 36 of the act, which is about the discontinuance or reduction of weekly payments, and the existing legislation provides for weekly payments to be discontinued if there is a breach of mutuality. Section 36(1a) of the existing act sets out a non-exhaustive list of things that are considered to be breaches of the obligation of mutuality. Included in that list are things such as:

...the Corporation has, by written notice to the worker, required the worker to submit to an examination by a recognised medical expert nominated by the Corporation and the worker fails to comply with the requirement within the time allowed in the notice or obstructs the examination;

Another thing in the list is:

...the worker refuses or fails to participate in a rehabilitation program under this act or participates in a way that frustrates the objectives of the program;

A third element in the list is:

...the worker fails to comply with an obligation under a rehabilitation and return-to-work plan under this act.

And a fourth is:

...the worker does anything else that is, apart from this subsection, recognised as a breach of the obligation of mutuality.

The proposal in the government's clause 16(2) is to add the following to that list:

...the worker refuses or fails to participate in assessments of the worker's capacity, rehabilitation progress or future employment prospects (including by failing to attend);

It seems to me that there is a fairly broad list of items in terms of the proposals in clause 16(2), and that what is referred to in that clause can be well and truly covered by the existing sections. As I understand it, rehabilitation programs and rehabilitation and return-to-work plans almost without exception require the worker to attend all appointments made for them. That seems to make proposed clause 16(2) redundant. Can the minister advise of any specific case, preferably an actual decision of the Workers Compensation Tribunal, that establishes that there is a need for clause 16(2)?

The Hon. CARMEL ZOLLO: I am advised that there is no case because the circumstances are not covered by the current act, so there is nothing to test.

The Hon. M. PARNELL: I would like the minister to further clarify that. My point was that, yes, there is a new provision, but aren't the types of situations that could be caught by the new provision already covered by the old provision? Why do we need the new provision?

The Hon. CARMEL ZOLLO: My advice is that they are not the same.

The Hon. M. PARNELL: I am not trying to push this point too far, but it seems that they are the same. Can the minister get some advice as to how they are different? Why am I wrong? Why aren't the circumstances covered by the addition already covered by the existing provisions?

The Hon. CARMEL ZOLLO: I am advised that, if there is no plan or program in place, there is no mandatory requirement to attend an appointment other than with a doctor.

The Hon. M. PARNELL: I foreshadowed that I would be moving these three amendments. I have been reminded that amendments Nos 15, 16 and 17 are, in fact, consequential and relate to the issue of step-downs. I will not be moving them, so we can perhaps proceed to my next amendments under clause 16.

The Hon. M. PARNELL: I move:

Page 22, after line 25—insert:

(2a) Section 36(1b)–after paragraph (b) insert:

or

(c) by virtue only of resigning from employment to undertake study or other employment or work.

This relates to the discontinuance of weekly payments. The issue that I am seeking to address here is that, in relation to a person who is undertaking study or taking another job, it is not in breach of their obligation of mutuality. At present, if an injured worker resigns from their job to try to better themselves through study or to take up other job opportunities, they are likely to be deemed to have breached mutuality and, therefore, their payments can be stopped.

Having a work injury should not lock people into a situation where some of the most important decisions about their lives are subject to a tick off from WorkCover on threat of having their income cut. It might be that a worker is in a dead-in job, with no chance of advancement and they want to take another job that has more opportunities for advancement. My question is: why should they be penalised for doing that? If a worker wants to undertake study to improve their skills, to take up jobs where there are skill shortages, for example, why should they be punished for doing that?

The amendment that I have moved inserts a new paragraph (2a) which refers to those two circumstances; in other words, a person resigning from employment to undertake study or other employment or work. This is an important amendment and I urge all members to support it.

The Hon. CARMEL ZOLLO: My advice is that we are opposing this amendment as it effectively means that a worker could quit their current job and begin studying without having that included in the rehabilitation and return-to-work plan or affecting their workers compensation entitlements. Retraining can already be funded by WorkCover under particular guidelines. It is not appropriate to legislate to allow workers to independently decide to quit their jobs to study and expect that not to breach the obligation of mutuality.

Amendment negatived.

The CHAIRMAN: The next indicated amendment is No. 18, Parnell 2.

The Hon. M. PARNELL: This is the critical amendment for me in clause 16. I will move amendments 18 and 19 together, if I may. They both relate to this clause. I am trying to think whether these amendments are identical or very close, at least, to the Hon. Ann Bressington's amendments 11 and 12, so perhaps we can deal with them together.

The CHAIRMAN: Order! Those in the name of the Hon. Ms Bressington are not identical; they are in between.

The Hon. M. PARNELL: I will just move the first one and regard it as a test for the second one, but I will speak to them both now. I move:

Page 23, lines 19 to 36, page 24, lines 1 to 25—Delete subclause (8) and substitute:

(8) Section 36(4)(b)—delete ', arbitration'

(8a) Section 36(4a)—delete subsection (4a)

My amendments seek to remove one of the very worst elements of this bill. They remove one of the elements about which I have received a great deal of communication and about which there has been a great deal of outrage in the community.

The government's proposals, as we have discussed before in committee, are about starving injured workers into submission when WorkCover makes wrong decisions to cut their income. I think there can be no mistake about this. The government's provision that I am seeking to amend is all about increasing the power of WorkCover and exempt employers to bully workers and to stop them getting access to their legal rights.

Sadly, the government's proposal takes workers compensation in this state back to a situation that Shakespeare recognised as a problem all those centuries ago, where he said, 'A poor man's right in the law is like a fish in a net; it will not out.'

The government's proposal is, in reality, to savagely reduce access to justice, and I will explain why I believe it is so serious. At present, under section 36(4) of the act, if WorkCover or an exempt employer makes a decision that stops or cuts injured workers' weekly payments, if it is disputed within 21 days it is automatically suspended (in other words, payments continue), and when the matter comes before the Workers Compensation Tribunal, the tribunal then exercises a discretion about whether payments continue until the dispute is resolved. If the worker loses the dispute, WorkCover or the exempt employer can recover the payments from the injured worker. Section 36(4)(b) of the current act provides:

The tribunal may further suspend the operation of the decision (from time to time) to allow a reasonable opportunity for resolution of the dispute by conciliation, arbitration or judicial determination (as the case requires) without prejudice to the worker's financial position in the meanwhile.

Those last words 'without prejudice to the worker's financial position in the meanwhile' are the crucial words. The government's clause is designed to prejudice workers' financial position in the meanwhile: that is exactly what it does, and that is what it is about. Under the existing arrangements, WorkCover or the exempt employer cannot end up out of pocket because, if they were right in the first place, they get their money back. So, it is a fine position for them to be in: they cannot lose.

As I understand it, WorkCover has argued for this provision as being necessary to pull into line injured workers who are doing the wrong thing. If that is what it is really about, it should be applied only to situations where it is alleged that the worker has done something wrong.

The government's amendments moved in the other place to this clause, which now form part of the clause as it reached us, are nothing more than a thinly veiled attempt to appear to soften what the government is doing. However, the clause still remains an extremely unfair and inappropriate attack on workers' rights. Following the government amendments in the other place, the clause now includes a provision that says:

...on the application for review, it appears to the WorkCover Ombudsman that it was not reasonably open to the corporation to decide to discontinue the payments, having regard to the circumstances of the case.

Usually when workers' payments are stopped or reduced, that is based on one view of the facts or one view of the medical opinion when there will often be different views. WorkCover will simply say that it preferred one opinion to another, and workers' payments, in practice, will not be restored in the vast majority of cases by the WorkCover Ombudsman, and that is exactly how WorkCover wants it. WorkCover wants to put injured workers in a situation where they cannot afford to stand up for their legal rights because their payments have been stopped.

It is common, I understand, for exempt employers and for WorkCover to stop workers' payments based on the opinion of a doctor who is well known to give opinions adverse to workers and whose opinions are routinely rejected by courts and tribunals. Those workers and their families will suffer when their income is stopped completely, based on a questionable medical opinion. Many injured workers will feel that they have no option but to give in and walk away.

That is what the government's proposal is all about and that is what this amendment is designed to stop. It is a terrible affront to injured workers to use the weapon of cutting payments during a dispute to prevent disputes. I think that is an appalling way for this system to operate, and that is why I say that this, for me, is a very important amendment. It is an amendment on which many unions and individuals have written to me and urged me to try to reform this clause, and that is why I urge all honourable members to support the amendment.

The Hon. CARMEL ZOLLO: My advice is that the government opposes this amendment because it undermines one of the key objectives of our amendments: providing incentives for workers to return to work. The current act allows a worker to dispute the cessation of their income maintenance and have it immediately reinstated until the dispute is settled. This situation is repeated nowhere else in Australia. This effectively encourages the worker to prolong the dispute as long as possible to continue the payments and it reduces their will to work towards a settlement and refocuses their energies on rehabilitation and return to work.

The expert advice of the Clayton review is that the existing provisions are a major disincentive to effective rehabilitation, early dispute resolution and return to work. To protect injured workers from poor decision-making, we have also provided a safety net by giving the WorkCover Ombudsman the power, in certain circumstances, to reinstate weekly earnings.

The Hon. SANDRA KANCK: I indicate that the Hon. Ann Bressington has an amendment on file that is very similar to the Hon. Mark Parnell's, except that I think the Hon Mark Parnell's amendment goes one step further. According to the information that the Hon. Ann Bressington's office has given to me, she is aiming to prevent the corporation from starving an injured worker who disputes the decision by a claims manager or executive of WorkCover, so I think it is appropriate to indicate support for the Hon. Mark Parnell's amendment on behalf of the Hon. Ann Bressington, and also for myself, but I think it is important that the—

The CHAIRMAN: The government might accept that out of the goodness of its heart. It is not up to me.

The Hon. SANDRA KANCK: I think it is important even though she is not here that her intention should be recorded for posterity that she was also trying to deal with this particular issue. I also speak for myself in indicating support for the Hon Mark Parnell's amendment.

The CHAIRMAN: I think the similarity between the two amendments makes it quite clear that the Hon. Ms Bressington was going along the same lines.

The committee divided on the amendment:

AYES (3)

Hood, D.G.E. Kanck, S.M. Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P.
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C. (teller)

PAIRS (6)

Bressington, A. Dawkins, J.S.L.
Darley, J.A. Schaefer, C.V.
Evans, A.L. Gago, G.E.


Majority of 9 for the noes.

Amendment thus negatived.

The Hon. M. PARNELL: My amendment No.19 is consequential, so I will not speak to it and I will not vote on it, but I would like Hansard to record it, so I move:

Page 24, lines 36 to 42, page 25 lines 1 to 29—Delete subsections (15), (16) and (17)

Amendment negatived; clause passed.

Clause 17.

The Hon. M. PARNELL: I have three amendments to clause 17 but, before I move them, I will ask some questions of the minister. This clause inserts a new section 37, which relates to the calculation of the average weekly earnings of a worker for the purpose of making an adjustment due to the change in a component of the worker's remuneration used to determine average weekly earnings, or a change in the equipment or facilities provided or made available to the worker.

As I understand it, this particular clause was not recommended by the Clayton report. My questions of the minister are: what problems is the clause designed to address, and can the minister provide some examples?

The ACTING CHAIRMAN (Hon. R.P. Wortley): Your amendments Nos 15, 16 and 17 are very similar; are you moving them all together?

The Hon. M. PARNELL: I want to ask some questions of the minister on clause 17 first, but I will move them.

The Hon. CARMEL ZOLLO: My advice is that it is anticipated that this proposal will improve the efficiency and effectiveness of claims administration by reducing the number of adjustment related disputes relating to the calculation of AWE, thus ensuring that injured workers are compensated appropriately in a timely manner. The inclusion of this clause gives WorkCover the authority to redetermine AWE, which it does not currently have the power to do.

Other than section 39, there is no other existing provision within the WRCA that allows WorkCover to redetermine average weekly earnings (AWE). Anecdotal experience suggests that non-cash benefits associated with remuneration packages, such as cars, phones and/or laptops, are not typically included in the initial calculation of workers' average weekly earnings. For workers to have these non-cash benefits included within their average weekly earnings, experience has shown that they generally need to lodge a notice of dispute with the South Australian Workers Compensation Tribunal to have their average weekly earnings redetermined.

Further, I am advised that, in situations where workers are likely to be incapacitated for work for a significant period of time, employers will typically ask for such non-cash benefits to be returned to them until such time as the worker is fit to recommence employment. Approximately 20 per cent of disputes in the scheme relate to the calculation of average weekly earnings and weekly payments, this includes AWE definition, calculation of weekly payments, questions of capacity and adjustments.

The Hon. M. PARNELL: I thank the minister for her answer. I now ask the minister whether she can explain to me the difference between the proposal in the bill and the existing act. This relates to proposed new section 37(1), which includes the following:

The corporation may, on its own initiative or at the request of the worker, review the calculation of the average weekly earnings of a worker...

Existing section 38 provides:

...the Corporation may on its own initiative and shall if requested by a worker or an employer review the amount of the weekly payments made to a worker who has suffered a compensable disability.

Can the minister explain why, in proposed new section 37, there is no mention of any ability of an employer to request that a review takes place under that section?

The Hon. CARMEL ZOLLO: I am advised that at the moment there is no equivalent provision. This amendment allows us to redetermine average weekly earnings for non-cash benefits.

The Hon. M. PARNELL: I thank the minister for that answer, although it is not how I had read it, but I will accept her answer. Before I move my amendments, my final question relates to proposed new section 37(5), which provides:

An adjustment under this section—

(a) will take effect as an adjustment to the worker's notional weekly earnings (and may therefore increase or reduce weekly payments under this Division); and

(b) operates from a date determined by the Corporation (which may be an antecedent date but not a date that is before the date of the change on which the adjustment is based and not so as to result in a retrospective reduction in weekly payments).

It is complicated wording, but I want the minister to explain how such an adjustment can operate from an antecedent date without being a retrospective reduction in weekly payments. Can the minister give an example of where that could occur?

The Hon. CARMEL ZOLLO: I am advised that it would not work to the worker's detriment in any shape or form. If the compensating authority has been slow in determining the matter, the worker can get benefits in arrears.

The Hon. M. PARNELL: I thank the minister for her answer. Those are my questions on the clause. I have three amendments (Nos. 15, 16 and 17). Effectively, they are all the same issue and relate to parliamentary oversight. It is an issue we have canvassed a number of times, so I move the amendments but will not discuss them further or divide on them. I move:

Page 26—

Lines 1 and 2—Delete 'a designated manner and a designated form' and substitute 'the prescribed manner and form'

Line 4—Delete 'a designated form' and substitute 'the prescribed form'

Lines 28 and 29—Delete 'a designated form' and substitute 'the prescribed form'

Amendments negatived; clause passed.

Clause 18.

The Hon. M. PARNELL: Before moving my amendment I have a couple of questions on the clause, which relates to the two-year review. My understanding was that, in recommending the work capacity review provisions in clause 15 of the bill, the Clayton report intended that they replace existing two-year review provisions in section 38. However, in this bill the government is keeping the two-year review provisions and just adding on the 130-week work capacity review provisions. Can the minister explain, by reference to the Clayton report or elsewhere, why this approach has been taken?

The Hon. CARMEL ZOLLO: My advice is that these provisions need to be retained in order to transition to the new arrangements in clause 15.

The Hon. M. PARNELL: Does that mean that after some transitional period it will be removed?

The Hon. CARMEL ZOLLO: My advice is that it will be redundant.

The Hon. M. PARNELL: Section 38(1a) of the existing act, which is retained under this bill, provides:

If a period of incapacity continues for more than one year, the corporation must conduct a review under this section in the second year of incapacity and in each subsequent year of the incapacity.

That appears to me to mean that the compensating authorities would be obliged to have a review like this at the two-year point as well as the work capacity review at 130 weeks. Is that correct; and if it is, is it an unnecessary duplication?

The Hon. CARMEL ZOLLO: My advice is that that is correct; it can be one and the same process. This is just another matter of transitioning to the new provisions.

The Hon. M. PARNELL: I understand the minister's answer: it can be one and the same process. My question is: will it be one and the same process; and will the minister assure the committee that there will not be two such reviews very close together, as I anticipated in my question?

The Hon. CARMEL ZOLLO: My advice is that it would not be necessary.

The Hon. M. PARNELL: As I understand it, the case law that exists in relation to this legislation has defined the term 'incapacity' as being a reduction in a worker's ability to sell their labour on the open market and, as such, even a fairly minor ongoing injury can be an incapacity. That appears to me to mean that, even if a worker is not receiving weekly payments because of the very harsh 130 week review in clause 15 but they still have some ongoing symptoms and therefore have an ongoing incapacity, compensating authorities will still be obliged to conduct a section 38 review each year, in any event. Will the minister advise whether that is the correct interpretation?

The Hon. CARMEL ZOLLO: My advice is that again this is about transitioning to new provisions and the reviews would apply as set out in clause 15.

The Hon. M. PARNELL: The two amendments I have in relation to this clause (amendments Nos 18 and 19 in the set Parnell 1) relate to the issue of parliamentary oversight of delegated legislation. It is an issue that we have agitated already, so I will not be moving those amendments.

Clause passed.

Clause 19.

The Hon. M. PARNELL: This clause relates to discontinuance due to the passage of time. As I understand it, the government is proposing to delete existing section 38A, as it has essentially shifted the relevant powers into section 36 of the act through an earlier clause. Will the minister confirm whether that is the case and, if it is not the case, why is section 38A being deleted?

The Hon. CARMEL ZOLLO: My advice is that this section of the Workers Rehabilitation Compensation Act becomes obsolete because clause 16 of the Workers Rehabilitation and Compensation (Scheme Review) Amendment Bill 2008 proposes to include this circumstance in a revised section 36 of the WRCA.

Clause passed.

Clause 20.

The Hon. M. PARNELL: I advise the committee that I will not be moving amendment Nos 21 and 22 in 'Parnell-1', but I will move amendment No. 20 in 'Parnell-2'. I therefore move:

Page 27, after line 7—Insert:

(ab) providing advice as to the changes in rates of remuneration that are relevant to the operation of subsection (2)(a)(i); and

This clause relates to economic adjustments to weekly payments, and my amendment relates to providing better information for workers to assist them in making decisions. Subclause (3) of this clause is one of the few positive changes for injured workers in this bill, although it is a relatively minor change. Under existing arrangements, when workers' weekly payments are reviewed after each year of incapacity they are increased, either by reference to an Australian Bureau of Statistics figure or, if the worker so elects, by reference to award or enterprise agreement increases at the workplace where they were injured.

Many workers have felt it an injustice that, just because they are injured, they do not receive the same pay rise as their workmates until many months later. The government has largely addressed this issue, and that is a good thing. My amendment, however, is about ensuring that when workers come to making a decision about whether the ABS figure should be applied or whether an award or enterprise figure should be applied they have the information they need to make an informed decision. WorkCover's practice to date in dealing with these adjustments has been to advise injured workers what the relevant ABS figure is at a given time so that they can take that into account, and it is proper and desirable that that happen.

What my amendment would do is require compensating authorities to advise the injured worker what the relevant award or enterprise agreement figure would be. Now, particularly in the case of severely injured workers, it is likely that, if they are unable to work, they have lost contact with their workplace. There may be a poor relationship between the injured worker and the former employer, with the injured worker being aggrieved having been injured at work and the employer resenting the cost implications of the work injury. For many workers it is no easy thing to establish what the relevant award or enterprise agreement figure would be. For compensating authorities it should be a very easy task.

Exempt employers must know what the figure is as they have to pay it to their own employees. In terms of WorkCover, they need to maintain periodic contact with the employer in managing the claim, and they can easily obtain the information that way. This is a very simple amendment, but it could have serious consequences for injured workers. No doubt in most cases they would want to elect to have their weekly payments adjusted in a way that provides them with the best rise they can get, whether that is ABS or through changes to an industrial award.

My amendment says, 'Let us give them access to this information'; because for many of them it would be very difficult unless they are computer literate, they know the numbers to ring and they know the questions to ask the person who answers an industrial relation-type helpline. Why not make it a requirement that the compensating authority provide that information to them? This is an important amendment. I think it does have implications for injured workers and I urge members to support it.

The Hon. CARMEL ZOLLO: I am advised that this amendment is opposed on the ground that section 39 already requires that adjustments to weekly payments must be based on pay increases that the worker may have been entitled to during that year of incapacity due to any changes to an award or enterprise agreement. We believe it would be unreasonable to put the onus on WorkCover to identify what awards people are covered by, what adjustments have been made to those awards and, ultimately, we believe that the responsibility rests with the worker. Also, there may be a liability attached to WorkCover if WorkCover gets it wrong.

The Hon. M. PARNELL: I thank the minister for her answer, but I disagree with her assessment of it. It seems to me that it is far easier for WorkCover to get it right than it is for a worker to discover what their former colleagues, of perhaps several years earlier, are now getting. It seems to me to be a very simple provision. It does not, in my view, create so much additional red tape to be an onerous burden. We are asking for the people who have this information at their fingertips to simply advise the injured workers of the two sets of numbers that they have to choose between and, thereby, give the injured worker the best chance of getting the best payment.

We must remember that we are not talking about them getting the full entitlement in terms of what they would have received had they not been injured. It is a step-down entitlement and even a few extra dollars can make a big difference. Therefore I maintain that this amendment should be supported.

The committee divided on the amendment:

AYES (3)

Hood, D.G.E. Kanck, S.M. Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P.
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C. (teller)

PAIRS (6)

Bressington, A. Dawkins, J.S.L.
Evans, A.L. Schaefer, C.V.
Darley, J.A. Gago, G.E.


Majority of 9 for the noes.

Amendment thus negatived; clause passed.

New clause 20A.

The Hon. M. PARNELL: I move:

Page 27, after line 22—Insert:

20A—Insertion of section 40A

After section 40 insert:

40A—Superannuation

(1) for each payment of compensation under this Division, there will be taken to be a liability to pay an amount into a superannuation fund as if the compensation constituted a payment of wages to the worker.

(2) In connection with the operation of subsection (1)—

(a) the liability under that subsection must be satisfied by—

(i) if the worker is in employment—the worker's employer or, if the worker has 2 or more employers, the worker's employers in proportions determined by agreement between them or, in default of agreement, by the Corporation; and

(ii) if the worker is not in employment—the Corporation; and

(b) the amount of the liability, and the superannuation fund into which the amount must be paid, will be determined in accordance with the regulations.

(3) A superannuation fund under subsection (2)(b) must provide a reasonable level of superannuation after taking into account prevailing community standards.

The Hon. R.D. Lawson: You already lost this.

The Hon. M. PARNELL: No. I have referred to the question of superannuation, but I said earlier that I had not moved it and I am now moving it in relation to superannuation. I think one of the greatest achievements of the Hawke-Keating federal Labor government was the introduction of compulsory superannuation contributions, and that has played a major role in lifting Australia's retirement savings and our nation's overall level of savings, and there have been very positive economic effects.

In considering this new clause, which is to provide for superannuation payments to be made to injured workers, it is important to remember some of the history around the introduction of compulsory superannuation contributions. During the Hawke-Keating government a series of agreements with the Australian Council of Trade Unions delivered benefits to workers through the Social Security system, the taxation system and compulsory superannuation in exchange for reduced wage outcomes. These benefits, including compulsory superannuation, were negotiated with the government instead of higher wages. So, in essence, compulsory superannuation contributions are part of a worker's wages. They are earnings in exchange for their work, but they are paid in a different form and they are paid at the end of a worker's working life. By taking away their compulsory superannuation contributions, injured workers suffer a real pay cut. They lose the superannuation they received in exchange for moderating their wage demands, and that is not fair.

Consider the position of an apprentice who is catastrophically injured and can never return to work. What sort of retirement income can they expect? The answer is: just the pension, and that is if it still exists by the time they get to age 65, and I do think that that is fair. As I understand it, no other state has a provision like the one I am seeking to incorporate, and I have no difficulty with that. I think if it is a fair provision and, if we are the only state that does it, good for us.

Under real Labor governments, such as the Dunstan government, doing things better and differently and leading the way was a badge of honour, yet so much of the debate we have seen from this government and in relation to this bill is about not leading but following, and taking the worst of what other states have to offer rather than the best. It will not be a surprise if the government claims that this amendment is not feasible because it does not fit with current Australian Taxation Office policy, or some other similar excuse, because that is all it will be: an excuse. We can make this work if we want it to. If the government actually wants to do the right thing by injured workers to make sure they have a decent standard of living in their later years, then I believe the state government can make this happen.

The amendment is not overly prescriptive. It leaves the details of the relevant arrangements to be set by the government by regulation. Many injured workers are shocked when they find that their chance for income security in retirement has been ripped away from them just because they have had a work injury. This is another area that highlights the injustice of the government's position to make South Australian workers second-class citizens compared with workers in every other state by denying them common law rights because, under common law, loss of superannuation contributions is something that is taken into account.

I understand that employers are also aggrieved about the current situation, which they see as an injustice, because their payments of levy to WorkCover are based on their payroll, including superannuation, so employers pay levies to WorkCover based on wages and superannuation, but WorkCover excludes superannuation from what it has to pay injured workers. If members want to see some true progressive reform in relation to workers compensation, they will support this amendment that provides that injured workers can still get superannuation. The amendment is not prescriptive. The amount of the superannuation liability, the fund it is to be paid into, will all be determined by regulations. This is an enabling amendment that allows injured workers to get effective employer contributions for their retirement.

The Hon. P. HOLLOWAY: The government opposes this amendment, as employers' general obligation to pay superannuation is a commonwealth matter covered by the Superannuation Guarantee Administration Act of 1992. Superannuation is calculated as a percentage of an employee's ordinary time earnings, which is defined in section 6(1) of that act. While that definition does not mention workers compensation payments, subsequent Australian Tax Office rulings, the most current being SGR94/4, have clearly indicated that workers compensation payments are not to be included in ordinary time earnings as they are not payments for work actually performed. The ATO superannuation rulings do not distinguish workers compensation payments paid by the employer instead of a compensating authority. The worker is not actually working for the money they are receiving and it is not included in the earnings base.

I point out that the current arrangements are consistent with the equivalent interstate provisions. If we were to adopt this amendment moved by the Hon. Mark Parnell, it would result in significant new costs for employers not applicable in other Australian jurisdictions and would therefore impact upon the competitiveness of South Australian employers. Recently in its budget Victoria reduced the rate of the WorkCover levy employers pay down to just a little less than 1.4 per cent and we are at 3 per cent. The differential between the two states—Victoria and South Australia, the two manufacturing states—five years ago was around .7 per cent and it is now 1.6 per cent. If we are to have measures like this put in, and if all Mark Parnell's amendments in this bill got up, we would have to increase the levy rate for employers. Just this amendment alone would add 9 per cent to the pay-out in relation to our scheme relative to every other state's scheme, so the differential in levies would grow beyond the 1.6 per cent-plus difference that it is already with Victoria.

It is all very well for the Hon. Mark Parnell to talk about Dunstan being progressive and so on, but it would not be very progressive if we had totally uncompetitive costs for employing people in this state, particularly in the manufacturing industries, relative to our neighbouring states. We all know we have to be competitive in other tax rates, and if we allow the differential to grow too much it must mean that anyone who wants to be involved in the manufacturing industry would go to Victoria or other states with lower rates rather than come here. We have to remain competitive if we are to provide jobs, so it is not just a matter of looking after injured workers. We also have to provide jobs in our state and be competitive with other parts of Australia. It really is disingenuous of the Hon. Mark Parnell to just look at the whole issue in isolation, as if one can totally focus on it from the one perspective of what this bill might do to injured workers.

There is a far broader context in which governments have to consider measures such as this, and this amendment illustrates that better than most. It is not in the interests of the South Australian workforce to add a significant additional impact on the competitiveness of our employers. Already the differentials that we have in workers compensation rates are starting to have an impact on the attractiveness of South Australia as a destination for employment, particularly in some of the manufacturing sectors. If we were to take up these sorts of arrangements, combined with all the other amendments moved by the Hon. Mark Parnell, we would have much greater difficulty, indeed, in providing employment of that nature in our state. Really, this is why we must oppose the amendment.

The CHAIRMAN: Yesterday you moved an amendment in relation to 'any prescribed allowances' under new section 4, which provides:

(14) Despite a preceding subsection, the following will be disregarded for the purposes of determining the average weekly earnings of a worker:

(a) any contribution paid or payable by an employer to a superannuation scheme for the benefit of the worker.

b) any prescribed allowances.

As a result of your amendment being defeated and new section 4(14) remaining in the bill, how does it allow for an amendment such as you are seeking here?

The Hon. M. PARNELL: My understanding is that I would seek to have clause 6 recommitted if this amendment was successful. Perhaps I should have moved an amendment earlier. I can take advice now from parliamentary counsel, if that would assist.

The CHAIRMAN: Well, if this amendment gets defeated it solves the problem, of course. Otherwise, if this amendment is carried then we have a dog's breakfast.

The Hon. M. PARNELL: We will test it and the problem may evaporate shortly. I do need to respond to what the minister said. I have been mindful of issues such as the unfunded liability and the competitiveness of South Australian businesses. The point that was made during the second reading debate—and we do not need to go over it in great detail now—is that if South Australia is already the cheapest place to do business with WorkCover levies already higher than other states, then it is a bit rich to say that if injured—

The Hon. P. Holloway: We are losing that benefit because the gap is narrowing rapidly.

The CHAIRMAN: Order! We will not start a debate.

The Hon. M. PARNELL: My point is that the government seems concerned that whilst we might be the cheapest place to do business that might evaporate if we add too many imposts. The point is that the government is already cutting the levies of employers, and it does not need to do that. It is counterproductive to reducing the unfunded liability. In relation to businesses not wanting to come to South Australia because we have a socially progressive measure which provides that injured workers can continue to get their superannuation payment, I would think that when we talk about a place being attractive to business we are also talking about its being attractive to workers. What better advertisement for South Australia than to say, 'Come to South Australia. If you are unfortunate enough to be injured, we have the best workers compensation scheme.'

The Hon. P. Holloway interjecting:

The Hon. M. PARNELL: I will test the will of the committee on this provision. I am not convinced that the impediments that the minister has put in place of this provision are not surmountable—I think they are—and I would be delighted to partake of the dog's breakfast and go back and recommit some clauses if we need to later on due to some oversight. But for now this is an important amendment, and I want to test the will of the committee.

The committee divided on the new clause:

AYES (3)

Darley, J.A. Kanck, S.M. Parnell, M. (teller)

NOES (13)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hood, D.G.E. Hunter, I.K. Lawson, R.D.
Lensink, J.M.A. Lucas, R.I. Ridgway, D.W.
Stephens, T.J. Wade, S.G. Wortley, R.P.
Zollo, C.

PAIRS (2)

Bressington, A. Dawkins, J.S.L.


Majority of10 for the noes.

New clause thus negatived.

Clause 21 passed.

Clause 22.

The Hon. M. PARNELL: I have some questions of the minister in relation to clause 22 which I would like to put before I deal with the amendments. Clause 22 relates to the redemption of liabilities. It appears to me, from reading this clause, that the ability to redeem entitlements to medical expenses will remain essentially as it is now. My question is: why has the government retained the existing arrangements for medical expenses but has made quite radical changes in relation to redemptions for weekly payments? Why is there a different treatment for the two types of payment?

The Hon. P. HOLLOWAY: The principal reason is that the use of medical redemptions is minimal now. This amendment focuses on the redemption of weekly payments. In his report, Mr Clayton, and a number of others, have talked about what they describe as a 'lump sum culture' that has developed, and the principal reason the government has moved this clause is essentially to address that.

The Hon. M. PARNELL: The issue of redemptions is probably the one on which I have received the most conflicting opinion and advice from different stakeholders. My understanding is that, whilst WorkCover's handling of redemptions is seen by the government and WorkCover itself to have created major problems, the exempt insurers, on the other hand, feel that they have been able to use redemptions very successfully as a liability management tool, and they point to the improved success of their schemes. My question to the government is: why has WorkCover failed so badly, whereas the exempt employers claim to have succeeded in relation to exemptions?

The Hon. P. HOLLOWAY: I would not say it is comparing apples and pears but, clearly, there are significant differences between exempt employers and WorkCover. One would really have to look at the individual circumstances of the particular exempt employers to try to answer that question. I do not think this is really productive. We could debate some of these issues all night but I do not think it is really going to help us in relation to this particular clause.

The Hon. M. PARNELL: My next question relates to proposed new section 42(2)(e)(iii), which provides:

The tribunal, constituted of a presidential member, has determined, on the basis of a joint application made to the tribunal by the worker and the corporation, in contemplation of an agreement being entered into under this section, that the continuation of weekly payments is contrary to the best interests of the worker from a psychological and social perspective.

The question for me relates to the social perspective. Can the minister explain how he envisages the tribunal will approach the question of determining what is in the best interests of the worker from a social perspective and, in particular, indicate whether that refers to the perspective of society as a whole, or whether it is something narrower; and, if it is narrower, what is it?

The Hon. P. HOLLOWAY: I am advised that Mr Clayton, in his report, said that redemptions should be used in exceptional circumstances. I understand he gave an example of someone who had an aggressive terminal illness who may be in a position by way of a redemption to finalise their financial affairs before they pass on. So, I think it is in those exceptional circumstances that he suggested that that should occur, and I think that is really why the third part under section 42(2)(e) appears.

The Hon. M. PARNELL: As I understand it, WorkCover's approach to redemptions of income maintenance has been to say that, if a worker, based on their current income entitlements, is entitled to receive, for example, $100,000 through to retirement age, WorkCover would pay only a percentage by way of redemption. If that is the case, is there a particular actuarial model that WorkCover applies in that regard, and is there any such model or guideline that the minister can table, or any rules that WorkCover or EML apply when determining the maximum amount they will pay for a redemption in given circumstances?

The Hon. P. HOLLOWAY: I am informed that the answer is essentially no, there are not any guidelines, etc. My advice is that the act provides that redemptions are an agreement between WorkCover and the worker concerned.

The Hon. M. PARNELL: As I understand it (and I think the minister partly explained this in his answer to my first question), the major reason the government is moving to heavily restrict the use of redemptions is that it believes they are bad for return to work, and I think the minister referred to the lump sum culture in that regard. As I understand it, when references have been made to a lump sum culture, what that really means is that WorkCover alleges that injured workers are intentionally not returning to work when they could in order to try to get a redemption payment.

I have a number of questions to try to test whether that is really the case, and the first question is: is there any actual evidence to establish this claim that workers are choosing not to return to work in order to get a redemption?

The Hon. P. HOLLOWAY: That is obviously a leading question from the Hon. Mark Parnell. We can just go back to the basic statistics that characterise our WorkCover scheme as having the worst return-to-work record in Australia, and there are obviously a number of reasons why that is the case. There are two features of the WorkCover scheme in this state that stand out, and they are not unrelated. One, of course, is that it has the highest (and significantly higher) levy rates of any state scheme and, secondly, it has the poorest return-to-work record (and significantly poorer) of any state scheme.

Those basic statistics obviously demand answering by the government, and I guess that is what this bill is all about. It is a complex issue. A lot of factors are involved in the reasons why our scheme has those two features, but this is one that has obviously been put up by Mr Clayton as one of the contributing factors. I am also advised that there is the New South Wales experience. They moved away from lump sum settlements, and I am advised that their return-to-work rate got better as a consequence of that, or at least it was attributed to that.

The Hon. M. PARNELL: Following on from the minister's answer, as I understand it, the incentive arrangements for claims agents that were put in place by the former Liberal government meant that the insurance companies outsourced claims management to receive the same reward payment for getting a worker off the system via redemption as they did for getting an injured worker back to work and, as a result, because spending someone else's money is much easier than achieving a genuine return to work, by the time this government came to power in 2000, almost all the discontinuances of longer-term injured workers were happening via redemption.

I think what that means is that the claims managers had effectively been de-skilled and had lost the knowledge, skills and abilities required to get people back to work. My question of the minister is: what research has the government done to see whether this lump sum culture that they talk about is really a culture on the part of the claims managers rather than the injured workers because, if that is the case, it would seem to me that we could fix that without legislation, in terms of WorkCover case managers, by simply telling them what the rules are and that they are to apply in considering redemptions. I acknowledge that the minister said there are no rules, but it seems that we could approach this problem from the perspective of dealing with the claims managers rather than just dealing with the workers.

The Hon. P. HOLLOWAY: In relation to the first point, I will not dispute what the honourable member said about the previous scheme. I understand that with the old agents it was observed that their remuneration was increasing but also the liability was increasing, and it was a consequence of that that WorkCover has an improved contract with EML to address what were demonstrated to be those original flaws.

The Hon. M. PARNELL: As I understand it, over the past few years WorkCover has attempted to break the lump sum culture, as it has been referred to, by putting out the message that there will be far fewer redemptions. For the first three-quarters of each financial year that has essentially been true, as I understand it, but in the last financial quarter of the past few financial years there has been a mad rush by WorkCover to do redemptions, and that has totally destroyed their efforts to send the message that there will be fewer redemptions. Can the minister advise whether that analysis is basically correct and whether the rush for exemptions is focused on the final quarter of each year? If the minister has any figures, I would be pleased to hear them.

The Hon. P. HOLLOWAY: I am advised that there was a spike in the June quarter of 2006 reflecting the arrangements as we moved to the single agent, EML, so there was a spike in that year that reflected those changes. I believe it was a one-off situation, and I am advised that we can table the redemption information. We do not have it now, but we can do that tomorrow in relation to other financial years. There was that spike in 2006 in the last quarter of the financial year reflecting those particular movements to a single agent.

The Hon. M. PARNELL: I thank the minister for his answer and for that commitment. My next question is in relation to the Self Insurers of South Australia and, in fact, whether that body or any self-insurers individually have made submissions to the government about clause 22 or redemptions generally. Can the minister advise the committee as to the thrust of that sector's view on redemptions?

The Hon. P. HOLLOWAY: I advise that the government is well aware that self-insurers do not like the changes that are being made. That is a fair reflection. However, the government believes that there are three factors which mitigate against that. First of all, there is a better return to work up front; secondly, there is a stronger work capacity test after 130 weeks; and, thirdly, because of the unique arrangements that apply to self-insurers, they have an advantage at managing their claims. When one puts those three together, we believe that that justifies the measures taken, even though the self-insurers obviously will not like the changes.

The Hon. M. PARNELL: I will shortly move an amendment that deals with that issue, because I think the minister is correct in saying that the self-insurers do not like it. One of the self-insurers is the state government, and I am interested to know what advice has been given to the state government by the public servants who run the state government's workers compensation about the proposal in clause 22.

The Hon. P. HOLLOWAY: I cannot enlighten the committee in relation to that. The minister may or may not have had any specific advice in relation to that, but I cannot enlighten the committee on it.

The Hon. M. PARNELL: It might be an opportune time for me now to move my amendments to clause 22. The amendments are numbered 22 and 23.

The CHAIRMAN: We just want 22.

The Hon. M. PARNELL: I will move the first one but I will regard it as a test for the second. I move:

Page 27, after line 26—Insert:

(a1) Section 42(1)—delete 'the worker and the corporation' and substitute:

an eligible worker and the relevant self-insured employer.

There are two main elements to this amendment. The first element deals with exempt employers, or self-insured employers, and that aspect of the amendment is based on the simple principle that 'if it ain't broke you don't fix it'. There are many strongly differing views, as I have said, on the pros and cons of redemptions in terms of the WorkCover Corporation, but all the opinion that I have heard about redemptions and exempt employers goes one way. They say that it is a good thing: workers want them and exempt employers see it as a good way to manage their liabilities.

Because of the vastly differing opinion about the merits of redemptions for claims managed by WorkCover, I am not opposing the government's amendments in respect of claims managed by WorkCover, but I think it is a totally different situation when it comes to the exempts (the self-insured). Just because WorkCover cannot competently use redemptions should not mean that the exempts lose the option as well.

The minister has more or less said that they do not want two sets of rules for the two types of employers. My view is that the approach taken by this parliament should be nuanced and we should take account of relevant differences where they exist. Very clearly, there is a major difference between the ability of WorkCover to manage using redemptions and the ability of the exempt employers.

The second element of my amendment—and I will speak to this now to save doing it later—relates to workers who have already been on the workers compensation scheme for a substantial period of time. That aspect of the amendment will ameliorate, to some extent, the harsh and unfair retrospective elements of this legislation and allow long-term injured workers to exit the scheme with some dignity and financial security.

This parliament, like most parliaments, has been loath to make retrospective changes to the law, but we are doing it here in this bill. Advocates for injured workers tell me that many injured workers have expressed shock and disbelief at the retrospective applications of these laws. I think that these workers do deserve the ability to exit the scheme with dignity and with financial security and so that is what the second part of my amendment seeks to do.

The Hon. P. HOLLOWAY: The government opposes the amendment on the grounds that it further restricts the availability of section 42 redemptions to workers whose entitlement to compensation arose from employment by a self-insured employer. The workers whose entitlement to compensation arose from employment by a registered employer would be excluded under the Hon. Mr Parnell's amendment, thereby making it inequitable and discriminatory in nature.

Under the government's amendment, all workers would be eligible for a redemption payment subject to the relevant eligibility criteria. There are no policy grounds on which to base the distinction between workers of a self-insured employer and a registered employer. I will point out for the benefit of the committee that I am advised that 62 per cent of injured workers are under the WorkCover scheme and 38 per cent, which would include public servants, are subject to self-insurance. So, the capacity is there for a significant inequity.

I should also point out for the benefit of the committee, that, under the government's proposal, for those workers who had been on the scheme for more than three years there would be an additional year's transitional provision for this measure to apply. Essentially, those arguments also apply for the next amendment, so I will not argue it again, either.

The committee divided on the amendment:

AYES (3)

Darley, J.A. Kanck, S.M. Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C.

PAIRS (6)

Bressington, A. Dawkins, J.S.L.
Evans, A.L. Schaefer, C.V.
Hood, D.G.E. Gago, G.E.


Majority of 9 for the noes.

Amendment thus negatived.

The Hon. M. PARNELL: I move:

Page 27, lines 28 to 36 and page 28, lines 1 to 7—Delete subclause (2) and substitute:

(2) Section 42(2)(c)—Delete paragraph (c)

(3) Section 42(4)—Delete 'the Corporation notifies a worker' and substitute: a self-insured employer notifies an eligible worker

(4) Section 42(4)—Delete 'the Corporation' and substitute: the self-insured employer

(5) Section 42(5)—Delete 'the Corporation' and substitute: the self-insured employer

(6) Section 42—After subsection (9) insert:

(9a) In addition, a designated worker (being, if the worker is also an eligible worker, a worker who has not obtained a redemption under a preceding subsection) is entitled to a capital payment to redeem all liabilities referred to in subsection (1) if the worker has received competent professional advice about the consequences of redemption.

(9b) The amount paid on a redemption under subsection (9a) will be determined after taking into account and applying (as relevant)—

(a) discounting and other factors prescribed by the regulations; and

(b) if the Corporation thinks fit—the advice of an actuary nominated by the Corporation.

(7) Section 42-after subsection (11) insert:

(12) In this section—

designated worker means a worker (whether or not an eligible worker) who has been paid compensation under this Division on account of an incapacity for work arising in respect of a particular compensable disability for a period exceeding 130 weeks (whether consecutive or not);

eligible worker means a worker whose entitlement to compensation arose from employment by a self-insured employer.

Amendment negatived.

The Hon. J.A. DARLEY: I move:

Page 27, lines 28 to 36, page 28, lines 1 to 7—Delete subclause (2) and substitute:

(2) Section 42—After subsection(11) insert:

(12) An agreement must not be entered into under this section if it is inconsistent with the redemption guidelines.

(13) The redemption guidelines will not apply to self-insured employers.

(14) In this section—

'redemption guidelines' means guidelines published by the minister from time to time in the Gazette for the purposes of this section.

This amendment relates to redemptions and aims to address concerns raised by the government and the WorkCover Corporation regarding individuals who are accused (I believe unfairly) of hanging on for lump sum payouts. Honourable members will note that it is only binding on the WorkCover Corporation and not on self-insured employers.

There is no doubt that there are many people who are not able to return to work, and these people should have their claims finalised and be compensated by way of redemption. The government's approach has been to make it even more difficult for individuals to be compensated for their injuries by way of redemption through introducing extra and (many would say) unreasonable criteria which would need to be addressed. In effect, the changes will amount to the abandoning of redemptions and consequently the removal of one effective tool available to workers and employers to reach a resolution where it is inappropriate for the employment relationship to continue—or even when it is simply more preferable for the relationship to be severed for the benefit of both parties.

Given the unlikelihood of the government's amendments being opposed by a majority of members, this amendment attempts to achieve some reasonable concessions, and I urge honourable members to support it. It 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. It would still have the intended purpose of restricting redemptions and expose those who simply unreasonably hang on for a lump sum payout—thus alleviating any concerns regarding the apparent existence of a compensation culture.

I stress again that, when drafting this amendment (along with several others), the intention was to provide an alternative which was better than what is currently proposed but which was also likely to gain the support of other honourable members. Further, it should be reiterated that the purpose of the amendment is to ensure that the minister exercised discretion when determining what the guidelines will include so as to enable redemptions where they are beneficial to both parties. It is not intended to effectively ban redemptions in those situations. I ask honourable members to support the amendment.

The Hon. P. HOLLOWAY: The government opposes the amendment. We have just had the argument, with the previous issue of redemptions, about having separate guidelines for self-insured employers as opposed to those covered by the WorkCover scheme; essentially we have already had the debate with the previous amendment. More generally, the government opposes the amendment because it has just proposed to significantly restrict redemptions, and it stands by that amendment. The redemptions are simply not sustainable for the scheme due to what we have called a lump sum culture, and we trust their minimisation will help restore the scheme to full funding and ultimately reduce its cost.

The Hon. M. PARNELL: I support the honourable member's amendment—again, for the reasons I gave when moving my own amendments.

The Hon. R.D. LAWSON: It is with some reluctance that I advise the opposition does not support the Hon. Mr Darley's amendment. The question of redemptions and the treatment given to redemptions in this legislation has caused considerable concern in the Liberal Party room, and there are many who consider that the availability of redemptions is an important aspect of a compensation scheme of this kind. We have been most impressed by the fact that the exempt employers appear to have used redemptions effectively over some considerable time.

However, one of a number of factors which led us to conclude that it is appropriate in a measure of this kind (devised by the government to get itself out of a hole of its own making on the backs of injured workers) was that the self-insurers, or the exempt employers through their association, indicated that they were prepared to forgo the capacity that they had enjoyed for a number of years to employer redemptions. They believed and strongly supported the measure introduced by the government and urged us to support it. That was one factor.

Another factor is—and this has been a major consideration for us throughout—that this is part of the government's package to ensure that WorkCover is a viable organisation and that South Australian workers have access to a viable compensation scheme into the future. It is for that reason that we, not without some reluctance, have agreed to go along with this and other aspects of the government's bill. I regret that we will not be able to support the well considered amendment of the Hon. Mr Darley.

Amendment negatived; clause passed.


[Sitting suspended from 22:57 to 23:25]


The Hon. P. HOLLOWAY: I want to clarify an answer I gave to an earlier question from the Hon. Mr Parnell on clause 22 which relates to redemptions. I indicated there were no guidelines concerning how to establish a redemption amount. However, I have been further advised there is a board policy on redemptions which sets criteria for those claims for which it would be appropriate to consider redemptions. WorkCover's Annual Report 2006-07 states:

Redemptions must be agreed by both WorkCover through Employers Mutual acting on our behalf and the injured worker. They are generally only made if they meet the following criteria:

Section 43 entitlements lump sum compensation for permanent disability have been paid, determined or agreed;

rehabilitation and return to work efforts have been exhausted, inclusive of any retraining being explored;

the claim is generally not subject to dispute or disputes in the Workers Compensation tribunal;

the injury is not serious, catastrophic, requiring ongoing compensation and significant medical treatment; and

other relevant circumstances are taken into account.

Clause 23.

The Hon. M. PARNELL: I have no amendments to this clause but I do have some questions. This clause deletes Division 4B in relation to loss of earning capacity payments. My understanding is that WorkCover has generally not entered into new loss and earning capacity arrangements with workers for some years. Will the minister advise when WorkCover most recently used this provision?

The Hon. P. HOLLOWAY: The best advice I can come up with is around 1996-97, but we would like to get that advice confirmed. If it is any different we will correct the record.

The Hon. M. PARNELL: I thank the minister. It is my understanding that it has been some time, but if that can be clarified that is terrific. In terms of exempt employers, does the minister have any information about whether they have been using this provision in recent times?

The Hon. P. HOLLOWAY: My advice is that they have not been.

The Hon. M. PARNELL: The final question flowing from those answers is: why not? Rather than remove this section from the legislation, why not leave it there dormant, so that if there was a need to use it (whether it is WorkCover or an exempt or self-insured employer), that they could, in some circumstance, decide to use it later on? The question is: what is gained by removing it from the legislation? Why can't it just be left dormant for later use, if needed?

The Hon. P. HOLLOWAY: My advice is that the loss of earning capacity provisions were introduced in July 1993. The original intention of the loss of earning capacity was to convert the weekly payments of workers who were on weekly payments for a period of greater than two years to capital loss lump sum payments where they had no prospect of a return to work in the foreseeable future. Loss of earning capacity assessments and, therefore, loss of earning capacity payments were for periods of no less than one year and generally for two years, but not more.

WorkCover received legal advice that, as they were considered capital payments, they were not assessable for income tax purposes. One of the adverse consequences of applying the loss of earning capacity provisions is that workers are no longer subject to the provisions in section 36 of the Workers Rehabilitation and Compensation Act relating to discontinuance and reduction of weekly payments, as they are no longer in receipt of weekly payments. Loss of earning capacity payments have received criticism for being unfair as workers have tended to spend the money quickly and then were left with no income support.

Clause passed.

Clause 24.

The Hon. M. PARNELL: I move:

Page 28, line 22—Delete 'Schedule 3' and substitute:

Schedule 2A

In a move that I am sure will warm the cockles of the heart of many members here, I indicate that this is a test for my amendments Nos 24 (which I am moving), 26, 27, 28, 29, 30 and 31. I will deal with 25 separately. Clause 24 relates to section 43 of the act. Section 43 provides for lump sum compensation for a worker's non-economic loss and it substitutes a number of new provisions in a new section 43. My amendments are all aimed at ensuring that workers are no worse off under the government's proposals, with the exception of the threshold issue, which I will come to and deal with separately in my amendment No. 25. As I understand it, it is fairly uncontroversial that the area where WorkCover has concerns about its liabilities is in relation to income compensation, and that is what the concerns about the unfunded liabilities are largely about.

As I understand it, there are no particular concerns about non-economic loss payments increasing liabilities inappropriately. When that is the case, I say that there is simply no basis upon which injured workers should be left worse off; in other words, this is not part of the problem. One reason why (despite all the government's promotion of its increase in the prescribed sum for these purposes) there are still major concerns in this area is that the government has refused to release the regulations and guidelines that will dictate how workers' entitlements will be calculated.

If the government wanted to allay these concerns, it could simply release those guidelines and regulations. The fact that it has steadfastly refused to do so does not inspire confidence. When there is no problem in terms of the unfunded liability with these payments, the position that I take is to say: why not make sure that workers cannot be worse off? The government's so-called no disadvantage provision, even though I say it is not a real no disadvantage provision, is something of an attempt to deal with this issue, but it does not allow the injured worker to make an informed decision, whereas my amendment does. I will not read out all of the amendments, but they do all relate to that issue of workers not being worse off, and I urge members to support them.

The Hon. P. HOLLOWAY: Clause 24 of the bill provides a new framework for determining permanent impairment. WorkCover will use the American Medical Association guidelines, which are widely used. The section will increase the lump sums available. This clause is not about reducing expenditure. I also indicate that the guidelines in relation to lump sum compensation will be developed with stakeholders and then gazetted. So I think they are the key messages of the clause.

The government opposes the amendment moved by the Hon. Mark Parnell because it is superfluous and unnecessary and merely replicates the government's original proposal. Many entitlements under section 43, I am advised, are made available to compensate comparatively minor disabilities, with the exception of the supplementary benefit available under section 43(7a) of the Workers Rehabilitation and Compensation Act. The current South Australian legislation does little to weight the expenditure on lump sums in favour of the most seriously injured. In South Australia the assessment of permanent disability is a significant contributor to the level of disputes.

I am advised that section 43 disputes in 2005-06 constituted 22.7 per cent of all non-exempt disputes, and they do little to further the management of the claim and the return to work process. With the exception of claims for noise-induced hearing loss, which has a threshold of 5 per cent, no thresholds currently apply in South Australia. The existence of thresholds is a key design feature which weights the payment of lump sums for non-economic loss to the most seriously injured.

The committee divided on the amendment:

AYES (3)

Hood, D.G.E. Kanck, S.M. Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C.

PAIRS (6)

Bressington, A. Dawkins, J.S.L.
Evans, A.L. Schaefer, C.V.
Darley, J.A. Gago, G.E.


Majority of 9 for the noes.

Amendment thus negatived.

The Hon. M. PARNELL: I move:

Page 28, lines 25 to 28—Delete subsections (4) and (5).

This amendment deals with the issue of thresholds, and the minister started to talk about thresholds in his answer to my question previously. The amendment is to delete new subsections (4) and (5) in new section 43. Subsection (4) provides:

An entitlement does not arise under this section if the worker's degree of permanent impairment is less than 5 per cent.

Subsection (5) states:

An entitlement does not arise under this section in relation to a psychiatric impairment.

My amendment does two things in removing both those provisions: first, it deletes what I say is a very unfair and immoral rule that workers who end up with a permanent loss of function of less than 5 per cent of their whole body receive not one cent of compensation for their non-economic loss, and it also removes the ban on non-economic loss compensation for psychiatric injuries. I will speak first to the issue of the 5 per cent threshold.

Many members here have children who are now in the workforce, and many young kids often start out in hospitality, in pubs and so on. Let us consider the position of a young girl paying her way through university by working in a pub (I will call her Sophie for this example). One night at work Sophie is picking up dirty glasses from tables in the pub towards the end of the night when drunken patrons take offence at her collecting the empty glasses. For whatever reason, they get into their adult heads that it is her fault; they push her, she slips and smashes her face into the corner of a table.

Sophie always took a lot of pride in her appearance but, as a result of these drunken louts, she now has a scar on her face. Some members might think that is not a big deal but to Sophie it is a very big deal. The scar is not seen to be a 5 per cent whole body disfigurement so Sophie receives no compensation at all for being scarred for life. That is the impact of the government's provision. Members should ask themselves, if that were their son or daughter, whether they would think that is fair.

I will give another example. David hurts his knee at work and he needs surgery. The first surgery does not go well and he suffers a lot of pain. He then has to have a second lot of surgery which goes much better and David gets a fair amount of improvement. Both lots of surgery involve pain, which continues through the process of rehabilitating the joint. Once the injury settles down, David's loss of function is 4.8 per cent; so David gets not 1¢ compensation for his pain or for the fact that his knee will never be quite the same again.

I will give a final example. Tim works in construction. Over the years, as is often the case in construction, Tim has a number of different injuries. He ends up with a 4 per cent whole body loss of function due to an injury to his right knee, a 4 per cent whole body loss of function to his left shoulder and a 4 per cent whole body loss of function to his right wrist. It is a 12 per cent whole body loss of function overall but, because of the threshold and the requirement that separate injuries cannot be added together, Tim gets not 1¢ compensation for permanent loss of function. I think this is grossly unfair. I think it is, in fact, immoral. I do not think it is justified by any liability problem in terms of non-economic loss.

In relation to the second part of my amendment, members should consider that some of the workers who suffer the most crippling permanent psychiatric injuries are those workers who put themselves in harm's way for the community; for example, police officers, firefighters and nurses who work in emergency departments. When in the course of looking after us they are exposed to horrendous situations that leave them permanently psychiatrically scarred, under this bill they get nothing. That is not what Clayton recommended and it is not what happens in Victoria (which is the model for much of the rest of this bill). Certainly, if we had common law claims that issue would be well and truly dealt with.

A number of us here have studied law. I can remember quite well one of the first things we studied in tort law was the concept of nervous shock—the sort of psychiatric illness to which our emergency services officers would be potentially subjected every day. These are important amendments. Dealing both with the 5 per cent threshold and with psychiatric illnesses, these are a key amendment for me. I urge all members to support the amendment.

The Hon. P. HOLLOWAY: The Hon. Mr Parnell's amendment deletes the 5 per cent impairment threshold for section 43 lump sum compensation, and also deletes the subsection which specifies that there is lump sum entitlement for psychiatric impairment. The government opposes this amendment.

The existence of an impairment threshold is a key design feature that will allow compensation to be directed towards the most seriously injured. The government intends that the changes to section 43 will not lead to a reduction in expenditure on lump sum compensation. This is about weighting the system towards those with more serious injuries.

The impairment threshold of 5 per cent will remove claims for relatively small payments, which can lead to disputes and which can remove the focus from return-to-work efforts. The impairment threshold of 5 per cent, I am advised, is still far less and, therefore, more advantageous to workers than the scheme which exists in Victoria, where it is 10 per cent.

We also oppose the amendment which seeks to remove the stipulation that an entitlement does not arise in the event of a psychiatric impairment. The inclusion of these entitlements for psychiatric impairment would add a significant cost to the scheme and is not in keeping with best practice management of mental health. The labelling of someone as having a permanent mental health condition works against recovery efforts, where it is vital that the individual believes that improvement is achievable.

The CHAIRMAN: The Hon. Mr Darley has an amendment. I will ask him to move that amendment now.

The Hon. J.A. DARLEY: I move:

Page 28, lines 25 to 28—Delete subsections (4) and (5) and substitute:

(4) An entitlement does not arise under this section if—

(a) in any case of permanent impairment other than psychiatric impairment—the worker's degree of impairment is less than 5 per cent;

(b) in the case of permanent psychiatric impairment—the worker's degree of impairment is less than 10 per cent.

This amendment reintroduces provisions relating to lump sum payments for psychiatric impairment. Clause 24 of the government's bill provides that, if a worker suffers a compensable disability resulting in permanent impairment as assessed in accordance with section 43A, the worker is entitled to lump sum compensation. An entitlement only arises if the worker's degree of permanent impairment is more than 5 per cent.

However, an entitlement does not arise in relation to psychiatric impairment, as was first proposed under the original bill as introduced by the government. This amendment seeks to reintroduce those provisions as first proposed by the government and to provide an entitlement in relation to psychiatric impairment where the worker's degree of impairment is more than 10 per cent.

One of the issues that has gained a lot of momentum during this debate has been whether or not South Australian workers should have access to common law damages. The general consensus appears to be that access to common law should be reintroduced, and I will be supporting amendments in relation to this, as proposed by other honourable members.

One of the main reasons for the reintroduction of common law is that there is no good reason why an injured worker should be treated differently from, say, a person who has been injured as a result of a car accident when it comes to compensation. The same can be said for psychiatric impairments, particularly given that as a society we have become more aware and, indeed, accepting of the profound effects that psychiatric illnesses can have on an individual's life.

The slightly higher threshold of 10 per cent applicable to this amendment as compared to that regarding physical impairments is intended as a middle-of-the-road approach, taking into account concerns raised with me about psychiatric impairments sometimes being harder to establish than physical impairments. I urge all honourable members to support this amendment.

The Hon. P. HOLLOWAY: The arguments that I made against the Hon. Mr Parnell's amendments would also apply against this amendment. Obviously, Mr Darley's amendment does not deviate as far as the Hon. Mr Parnell's amendments do from the government clause, but the same arguments apply, and that is why we oppose both amendments.

The CHAIRMAN: The question before the chair is that subsections (4) and (5) as proposed to be struck out by the Hons Mr Darley and Mr Parnell stand as printed.

The committee divided on the question:

AYES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C.

NOES (3)

Darley, J.A. Hood, D.G.E. Parnell, M. (teller)

PAIRS (6)

Dawkins, J.S.L. Bressington, A.
Schaefer, C.V. Evans, A.L.
Gago, G.E. Kanck, S.M.


Majority of 9 for the ayes.

Question thus carried.

Clause 25.

The CHAIRMAN: The next amendment is No. 24, Parnell 1.

The Hon. M. PARNELL: Before I move that amendment, I have a question for the minister. Clause 25 amends section 44, compensation payable on death, weekly payments. Will the minister explain what change of substance to income entitlements in relation to deaths are effected by this clause?

The Hon. P. HOLLOWAY: My advice is that this section deals only with the entitlement of a spouse, domestic partner or dependent child to weekly payments. This clause does not serve to change existing death entitlements but rather only proposes to move entitlements associated with lump sums, funeral benefits and counselling services to a different area within the Workers Rehabilitation and Compensation Act.

The Hon. M. PARNELL: I move:

Page 32, after line 19—insert:

(7a) For the purposes of this section, a person with a physical or mental disability under the care of the worker (and dependent, at least to some extent, on the worker) will be entitled to the same compensation under this section as the compensation payable to a dependent child (having regard to the extent of the person's dependency and on the basis that a reference in this section to a dependent child will be taken to include a reference to such a person).

My amendment proposes to insert a new subsection (7a) into section 44. This amendment is about a situation that I expect would rarely arise, although I am aware of at least one actual case. It is a basic question, for me, of looking after some of the most disadvantaged people in our community. This amendment is about making sure that, where a worker is killed at work and a physically or intellectually disabled person is dependent on the worker who was killed, they get proper income compensation.

I expect that WorkCover will have told the government to argue that this is unnecessary. If that is the argument, my response would be to say that, even if it thinks it is unnecessary, it does no more than make absolutely certain that disabled South Australians (who lose the person they had been dependent on to workplace death) get looked after. I do not think that is too much to ask.

I have had some personal experience in caring for the disabled and one feature that struck me was the fear often held by the parents of disabled children in particular of what would happen to their son or daughter if something were to happen to them. Many of them go to great lengths to try to establish their affairs in such a way that their disabled children will be looked after. However, it might not always be a child; it might be someone else who is dependent on them. I think this is an important amendment and, as I said, I hope it is not needed too often but, if it was only ever used once, I think it would be worth our efforts in having it inserted into the bill.

The Hon. P. HOLLOWAY: The Hon. Mr Parnell's amendment has the effect of creating another category of claimant who may not be a spouse or domestic partner. The government is opposed to this as there is already comprehensive coverage under the Workers Rehabilitation and Compensation Act.

The Hon. M. PARNELL: I am not satisfied with the minister's answer but, given the hour, I will not be dividing on this amendment.

Amendment negatived; clause passed.

Clause 26.

The Hon. M. PARNELL: Can the minister explain the difference between this clause and the existing arrangements for lump sum payments in relation to workplace deaths, in particular, where there are multiple dependants who are entitled to lump sum payments?

The Hon. P. HOLLOWAY: This clause inserts a new section 45A that details the lump sum entitlement to which a dependent spouse, domestic partner or child is entitled on the death of a worker as a result of a work-related injury. Section 45A introduces new definitions of 'child', 'dependent child', 'dependent partner', and 'partially dependent partner' not previously defined under section 44.

This clause is a consequential amendment following the proposed introduction of Victorian provisions with respect to non-economic loss payments. It increases the quantum of lump sums payable upon the death of a worker to 100 per cent of the prescribed sum (that is, $400,000 up from the existing lump sum figure of $230,983). The proposal amends current provisions by apportioning the amount of lump sum payable to dependent or partially dependent partners so that in situations where the deceased worker has more than one dependent spouse the lump sum payable is shared equally among dependent partners.

The proposal also apportions the amount of lump sum payable to dependent children. An orphan child within this context may still have a live parent but is classified as an orphan child if, at the time of the death of the worker, his or her parent or parents did not provide them with any economic support and such parent was not a dependent domestic partner of the worker.

Clause passed.

Clause 27.

The Hon. M. PARNELL: I have some questions in relation to this clause, and there is an amendment standing in my name. We had said that we would finish at midnight tonight, and I ask the minister whether that is still the government's intention.

The Hon. P. HOLLOWAY: We did have a significant break, so I would like to go on a little longer. We are nowhere near halfway through this bill yet and, given the time, I think we should go on for a while longer, otherwise there is absolutely no chance that we will finish this in the time we have. It is really a matter for the committee but, given the number of clauses we still have to consider, I am certainly happy to proceed for a while longer. If we are not here extra time tonight, we will be here extra time tomorrow night.

The Hon. M. PARNELL: In order to assist the committee in the management of its business, I can say that we have well and truly broken the back of this. I know the minister has more folders and that he is well prepared; he is anticipating the range of questions we will be asking, but I doubt very much that we will be here anything like this time tomorrow night.

The Hon. R.I. Lucas interjecting:

The Hon. M. PARNELL: I can just indicate how I see it going. My expectation was that we would finish close to midnight and I would like to do that. I am happy to come back tomorrow morning as we said we would but I think that, in terms of the proper functioning of the committee, that would be a sensible way to go. I am happy to proceed with clause 27, as I have been invited to, but I would then invite the committee to consider whether that might be a good time for us to break.

The Hon. R.I. Lucas: You've just wasted five minutes.

The Hon. M. PARNELL: I won't be baited by the Hon. Rob Lucas. Clause 27 relates to an amendment to clause 46 which is in relation to the incidence of liability. My first question of the minister is to do with subclause (4) of the clause, and that provides that a new subsection 8B be incorporated. Section 52(5) of the current act provides:

Within 5 business days after receipt of a claim under this section, an employer (not being an exempt employer) shall forward to the Corporation—

(a) a copy of the claim;

(b) a statement in the prescribed form containing such information as may be prescribed.

There is a $1,000 penalty for non-compliance. So, the obligation under that section is to submit a claim received from a worker to WorkCover within five days, and it is an offence not to do so. WorkCover has been at some pains to say how important it is to submit claims quickly so that they can be dealt with even to the extent of spending, no doubt, large amounts of money on television advertising. As I understand it—and I ask the minister to confirm this—WorkCover has never prosecuted an employer for flouting this requirement. Is that correct?

The Hon. P. HOLLOWAY: Under new subsection 8B the corporation will undertake that liability of an employer in respect of a particular disability, if the corporation is satisfied that the employer has complied with its responsibilities under section 52(5) within two business days after receipt of the worker's claim. This clause, therefore, incentivises employers to lodge claims early by waiving their liability to pay the first two weeks of an injured worker's income maintenance. This proposal enhances return-to-work incentives for employers by transferring the liability to pay the first two weeks of an injured worker's income maintenance from employers to WorkCover. Over time, this is anticipated to contribute to the achievement of improved return to work outcomes and the financial sustainability of the scheme.

The proposal will also help to build a proactive injury management culture amongst employers and reinforce employers' obligation to ensure early claim reporting and facilitate the claim process. Rebating employer excess where there is early reporting of claims is one strategy that will achieve this.

The Hon. M. PARNELL: I thank the minister for his answer, but, if we can contrast the position here with the position in Victoria, we can see that in Victoria they take this issue seriously. They enforce the law. Members can go to the Victorian WorkCover website to see that for themselves. If you look at this proposal from the government in a general law enforcement context, the government says here to employers, 'If you break the law, don't worry; we won't prosecute you, and if you comply with the law, you get a cash reward.'

It is similar in a way to saying to drivers, 'Don't worry; if you run a red light, we won't fine you, and if you do the right thing, if you don't run red lights, then we'll send you a cheque.' It seems to me to be a very odd way to be managing compliance with legal requirements. I think that this exposes some real double standards and hypocrisy in these measures. There is no action taken on lawbreaking by employers in the workers comp area, and there is a cash reward for employers who do not break the law.

My question of the minister is: why is the government handing out cash in order to get employers to follow the law rather than treating employers like any other citizens and prosecuting them when they break the law?

The Hon. P. HOLLOWAY: I really thought I answered that in the previous comment where I said that the clause gives an incentive to employers to lodge claims early by waiving their liability to pay the first two weeks of an injured worker's income maintenance. To continue what I said before, this proposal enhances return-to-work incentives for employers by transferring the liability for the first two weeks of injured workers' income maintenance from employers to WorkCover and, over time, it is anticipated that this will contribute to the achievement of improved return-to-work outcomes and the financial sustainability of the scheme.

The Hon. M. PARNELL: At this point, Mr Chairman, I will move my amendment, which you have already pointed out is identical to amendment No.14 in the name of Ann Bressington. I move:

Page 36, after line 10—Insert:

(2a) Section 46(3)(a)—delete 'two weeks' and substitute

4 weeks

(2b) Section 46(3)(b)—delete paragraph (b) and substitute:

(b) if the period of the incapacity is more than 4 weeks—for the first 4 weeks of the period of incapacity.

(2c) Section 46(4)—delete 'twice' and substitute:

4 times

The amendment that I propose inserts three new paragraphs into section 46. The government has claimed that this bill is driven by the need to reduce the unfunded liability. We have talked about that a fair bit. Anyone who understands how insurance works will appreciate that premiums and liabilities are very substantially affected by the level at which excesses are set.

This amendment moves the employer excess for lost time claims from the first two weeks of wages to the first four weeks of wages and in any event, as I understand it, employers can elect to buy out that excess by paying a higher premium. I think it would also be accepted that excesses can assist in focusing the mind of employers on making sure that they do their utmost to reduce work injuries.

In essence, what this amendment seeks to do, in one fell swoop, is deliver a reduction in liabilities, which would create the potential for a reduction in premiums and create far better incentives for employers to deliver safer workplaces, and all of those things, I think we would appreciate, are good things.

That is why I say that this amendment is deserving of support, but I just have one final question of the minister before we test the will of the committee: has the government obtained any actuarial advice on the savings to the scheme that the government's amendment would deliver?

The Hon. P. HOLLOWAY: In relation to that question, the Clayton review found that the proposal to introduce a rebate on the excess payable by employers for early reporting of a claim would increase the cost of the scheme by approximately $5 million per annum, on a conservative basis, or about a 0.02 per cent increase in the ongoing scheme cost. This is likely to be cost beneficial in the long term. Better return to work outcomes can only be achieved if adequate incentives exist within the legislation. So, that is the answer I have been advised for that question.

In relation to the honourable member's amendment, the honourable member wishes to increase the employer excess so they would have to pay the first four weeks of an injured worker's income maintenance instead of the first two weeks, which is proposed in the bill. The government opposes the amendment as an unwarranted and direct cost shift to employers.

In addition, we proposed in the original amendment bill to give employers an incentive for the early reporting of injuries by waiving the employer excess. This amendment, rather than giving employers a reason for early reporting, punishes them for no good reason by doubling their excess.

The committee divided on the amendment:

AYES (3)

Darley, J.A. Kanck, S.M. Parnell, M. (teller)

NOES (13)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hood, D.G.E. Hunter, I.K. Lawson, R.D.
Lensink, J.M.A. Lucas, R.I. Ridgway, D.W.
Stephens, T.J. Wade, S.G. Wortley, R.P.
Zollo, C.

PAIRS (2)

Bressington, A. Dawkins, J.S.L.


Majority of 10 for the noes.

Amendment thus negatived; clause passed.

The Hon. M. PARNELL: I move:

That progress be reported.

In the debate we had yesterday in relation to how this was to proceed it was indicated that we would finish at midnight. We finished after 12.30 last night and it is now 12.30 again. I certainly did not support the government placing a time limit on the conclusion of the debate, but I have indicated that to the best of my knowledge, with the material I have and with the consequential amendments that arise, whilst not supporting the government's 6 o'clock deadline, I would be absolutely amazed if the debate goes beyond that. So, I think we are within the time frame the government was talking about and, given the hour, I believe it is appropriate for us to report progress. We have said that we will come back at 11am tomorrow.

The other point I would like to make is that, while people may say that this is all of my own making, it is very unusual for a committee stage to be so dominated by so few people; it is normally a load that is shared. In this case it is not, and I think it is an appropriate hour for us to adjourn and come back tomorrow morning to conclude this debate.

Motion negatived.

New clause 27A.

The Hon. M. PARNELL: I move:

New clause, page 36, after line 22—Insert:

27A—Amendment of section 47—Interest payable in consequence of delay

Section 47—After subsection (2) insert:

(3) The interest rate prescribed under subsection (1) will be doubled if it becomes apparent that the corporation has made a determination (including so as not to make a weekly payment) that was incapable of being reasonably justified in the circumstances.

This inserts a new clause 27A that amends section 47, which is in relation to interest payable due to unjustifiable delays. At present, workers receive interest on income compensation that is not paid on time, but the reality is that, when their income is denied due to totally unjustifiable decisions, more damage is often done than can be remedied by the ordinary level of interest. Interest at the ordinary rate does not make up for workers defaulting on mortgage or car loan repayments because their income has been stopped with no proper basis. The stress involved in not being able to pay the bills can be extreme.

Where there is no proper basis for cutting off a worker's income, there needs to be penalty interest. That is to punish the decision maker for cutting off a worker's income unjustifiably and to try to set things right for the injured worker concerned. My amendment proposes a doubling of the prescribed rate of interest and I think that that is an appropriate response where the cutting of the worker's entitlements was unjustifiable. I would urge all members to support this amendment.

The Hon. P. HOLLOWAY: The government opposes the amendment. The current section 47 of the act provides ample incentive for WorkCover to make weekly payments when they fall due. If the payments are delayed, WorkCover currently has to pay in excess of 10 per cent per annum interest on the back payment. The honourable member cannot be seriously suggesting that the penalty payment be increased to 20 per cent. I would argue that this is unnecessary and unwarranted. The suggested amendment will also cause unnecessary disputation while the parties argue about the reasonableness of the delay. It will lengthen disputes and take the focus away from rapid return to work, thus the government opposes the amendment.

The committee divided on the new clause:

AYES (4)

Darley, J.A. Hood, D.G.E. Kanck, S.M.
Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C.


Majority of 8 for the noes.

New clause thus negatived.

Clause 28.

The Hon. M. PARNELL: This clause amends section 50, which provides that the corporation is an insurer of last resort. The amendments the government is proposing are fairly straightforward and they are a consequence of the change in terminology from 'exempt employer' to 'self-insured employer'. In relation to the existing provisions of clause 51 and the changes proposed, will the minister explain what the differences are in practical terms between the existing provisions and this clause?

The Hon. P. HOLLOWAY: This amendment deletes the obsolete term 'exempt employer' and replaces this with the term 'self-insured employer'. This amendment is necessary as a consequence of the change in terminology from 'exempt employer' to 'self-insured employer'. The proposed amendment would bring the Workers Rehabilitation and Compensation Act up to date with the recent changes in terminology brought in by the government and WorkCover. The amendment would also make the Workers Rehabilitation and Compensation Act's terminology the same as in other states. The clause simply replaces the term 'exempt' with 'self-insured' in section 50(1) and (2), but does not materially alter the intent of the existing legislation.

Clause passed.

Clause 29.

The Hon. M. PARNELL: Before I move my amendments, I have some comments in relation to clause 29 generally. I have said once or twice before that there are very few positive changes in this bill, but this is one of them. It is a good change, and I congratulate the government on introducing it. However, I have already discussed the government's failure to consult properly on this bill, and the guidelines introduced under this section will clearly be the key to its operation. Can the minister give a commitment from the government that before finalising these guidelines they will be released to stakeholders and to the advisory committee?

The Hon. P. HOLLOWAY: My advice is that the government is committed to consulting on the guidelines through a forum; so that much of the guarantee I can give.

The Hon. M. PARNELL: I move:

Page 38, lines 1 and 2—Delete 'the employer or the Corporation may decide to' and substitute:

the Corporation may

I believe that this terminology is certainly more appropriate and more normal for legislative drafting than the words that I seek to strike out. Also, I believe that the decision here is really in the hands of the corporation rather than either the corporation or the employer. I would therefore urge all members to support this fairly sensible amendment.

The Hon. P. HOLLOWAY: The government opposes this amendment. It is removing the ability of the employer to cease weekly payments under the provisional payments arrangements. It is likely to lead to overpayments in those circumstances where entitlements should no longer be paid as outlined in the provisional payments guidelines. The consequences of overpayment in these circumstances can cause disputes and financial hardship to the worker when recovery of overpaid moneys is required.

The committee divided on the amendment:

AYES (2)

Kanck, S.M. Parnell, M. (teller)

NOES (14)

Darley, J.A. Finnigan, B.V. Gazzola, J.M.
Holloway, P. (teller) Hood, D.G.E. Hunter, I.K.
Lawson, R.D. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. Stephens, T.J. Wade, S.G.
Wortley, R.P. Zollo, C.


Majority of 12 for the noes.

Amendment thus negatived.

The Hon. M. PARNELL: The approach that I was taking in relation to these amendments that go to the question of parliamentary oversight, the question of what should be put into regulations and what should be left to WorkCover to simply prepare itself without going through regulations without parliamentary oversight was to concertina them and not move them. But I have to say I am very disappointed that the government, having put to us a program for how it thought this would sit and having got its way in this council passing a resolution that we would finish the debate tomorrow, and my having indicated that I think we will finish fairly early tomorrow and having reached—

The CHAIRMAN: The government's position was amended, I understood.

The Hon. M. PARNELL: The government's position might have been amended, but the point was that the effect of it was achieved, that we were going to finish. I understand the minister's caution—he's got a lot of material left.

The Hon. Sandra Kanck interjecting:

The Hon. M. PARNELL: I have more material to go, but the point is—

The Hon. P. Holloway interjecting:

The Hon. M. PARNELL: We will spend a bit of time tomorrow morning talking about medical panels, which will take a little while, but I gave my indication that, whilst it is difficult to judge the length of a debate, we will not go late into the evening tomorrow night. I cannot move again that we report progress, but I am not happy with the way we are dealing with this. We can be sensible. Members would have seen in my behaviour that, when we have a break, whether during the second reading or otherwise, I have tended to make every effort to identify where duplication existed, to identify where consequential amendments existed and tried to concertina my contribution. But I am disinclined to do that when we find no cooperation at all.

This is certainly a difficult debate. The government would rather we not be having it and all members would rather be home in bed. To the credit of this place, it has been conducted in a fairly civilised manner. We know people get tetchy when it is late. I am usually a fairly controlled person, but I am tetchy as the government has not stuck by the program it agreed to.

The Hon. P. Holloway: What guarantee can you give us that you will complete the debate at a reasonable time tomorrow?

The Hon. Sandra Kanck: He has already said it once; in fact, he has said it twice.

The Hon. P. Holloway: I would love to be satisfied that that will happen.

The Hon. R.I. Lucas: He is a politician and a lawyer: he has given you his word—what more do you want?

The Hon. M. PARNELL: This debate will be finished by six o'clock tomorrow.

The Hon. T.J. Stephens: That is Friday night.

The Hon. M. PARNELL: Six o'clock today.

The CHAIRMAN: Order! The honourable member might still be talking about why the debate is not finishing tonight.

The Hon. M. PARNELL: The time spent now is far less useful than time spent tomorrow.

The CHAIRMAN: Order! It has nothing to do with the clause. Do I understand that you are withdrawing these amendments?

The Hon. M. PARNELL: No. I am saying that if we cannot finish at a sensible time, I will move and divide on them.

The Hon. P. HOLLOWAY: If the committee will support me, at six o'clock tomorrow if we are still going, to truncate the rest of the debate and put them all together, I would be only too happy to move the adjournment now. If we are still going at six I will be happy to pull up stumps straightaway. We have that guarantee.

The CHAIRMAN: On the basis that the bill goes through.

The Hon. P. HOLLOWAY: If they are happy to do that: they have given their word and it is on the record. Is he happy to give that undertaking on the record? If so, I will move that progress be reported.

The Hon. R.D. LAWSON: The problem is that other members have amendments. The Hon. Mr Darley, for example, has amendments, so that undertaking from the Hon. Mr Parnell would not be satisfactory because other members have their right to speak.

The CHAIRMAN: So far we have wasted 10 minutes when we could have got to clause 31 at least.

The Hon. Sandra Kanck: I seconded the procedural motion.

The CHAIRMAN: Anybody is entitled to move that the committee adjourn—it cannot be debated.

The Hon. P. Holloway interjecting:

The Hon. M. PARNELL: The main difficulty I have with what the minister is asking for is precisely the difficulty the Hon. Rob Lawson identified. What I am saying is that the material that I have to put on the record will be finished by 6 o'clock tomorrow. I have no doubt about that. Where I have nervousness—and we said this yesterday in the debate—is setting absolute limits a long time in advance about when debate will finish. Now that we are a substantial way through the debate, I can indicate that with the material I have got I will not be speaking beyond 6 o'clock.

I think if we break now and I recompile my amendments—look at those that are consequential—then we will be finished. I cannot speak for the Hon. Mr Darley or the Hon. Ms Bressington who might come back from her sick bed. I can only speak for myself. The way in which the debate has gone, most of the amendments on which we have divided have been mine. I think we will have fewer divisions if we have a chance to collect our thoughts.

The Hon. D.W. RIDGWAY: The Hon. Ms Bressington is not here. No-one knows her plans in relation to her amendments. I know that the Hon. John Darley has some amendments. We are all here. I understand that people are tired but, frankly, another hour tonight would make it easier tomorrow. I have been here for only six years, but time slips away at the end of the evening, so that would be a favourable position.

The CHAIRMAN: So far we have wasted 12 minutes talking about it. We could have got to clause 31 in those 12 minutes, I am sure, and the minister might have thought that was sufficient progress. Now we have wasted 12 minutes debating when we should finish. A motion moved by the government was amended to allow the committee to sit past 12 o'clock.

The Hon. P. HOLLOWAY: With the will of the committee, I think we can go on. I undertake that we will adjourn by 2 o'clock at the latest. An extra hour tonight should mean an hour less tomorrow, but if we need to sit until 6 o'clock or beyond, so be it.

The Hon. M. PARNELL: The minister is wrong and I invite him to reconsider. I will be in a better position tomorrow to save time for the committee. What we will get otherwise is an hour of dividing on every amendment and every clause as it is put—and we will not make any progress at all. It is not an ultimatum or a threat. I did say that the debate has been relatively civilised until now. Notwithstanding the difficulties identified in relation to other members, I would be amazed if it is even close to 6 o'clock; it is likely to be earlier. The undertaking for which the minister asked is impossible to give for one member. If we want an hour of wasted time between one and two this morning, I do not think that is the best use of our time. I invite the minister to reconsider his position.

The Hon. P. HOLLOWAY: I think it is time we got on with the clause. The views of the committee are well known. I suggest that we get on with the debate. If we waste an hour tonight, so be it. We have divided on just about every clause so I do not see that it will make a lot of difference.

The Hon. SANDRA KANCK: I move:

That progress be reported.

The committee divided on the motion:

AYES (2)

Kanck, S.M. (teller) Parnell, M.

NOES (14)

Darley, J.A. Finnigan, B.V. Gazzola, J.M.
Holloway, P. (teller) Hood, D.G.E. Hunter, I.K.
Lawson, R.D. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. Stephens, T.J. Wade, S.G.
Wortley, R.P. Zollo, C.


Majority of 12 for the noes.

Motion thus negatived.

The Hon. M. PARNELL: I move:

Page 38, line 13—Delete 'designated' and substitute:

prescribed

This amendment refers to the important issue of those matters that should be the subject of regulation. This amendment, by substituting 'prescribed' for 'designated', provides the mechanism for allowing parliamentary scrutiny.

The Hon. P. HOLLOWAY: The government opposes this amendment. We have had this debate on several previous occasions. The regulation of forms requires ministerial endorsement, parliamentary approval and proclamation by the Governor in Executive Council and, as I have argued on previous occasions, this is an administratively inefficient process that severely limits opportunities to amend the forms so that they remain up to date with changes to contemporary business practice.

The Hon. SANDRA KANCK: The Democrats believe very much in parliamentary scrutiny and, as a consequence, we will be supporting this amendment.

The committee divided on the amendment:

AYES (2)

Kanck, S.M. Parnell, M. (teller)

NOES (13)

Darley, J.A. Finnigan, B.V. Gazzola, J.M.
Holloway, P. (teller) Hood, D.G.E. Hunter, I.K.
Lawson, R.D. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. Stephens, T.J. Wortley, R.P.
Zollo, C.

Majority of 11 for the noes.

Amendment thus negatived.

The Hon. M. PARNELL: I move:

Page 38, line 23—Delete 'a designated' and substitute:

the prescribed

This amendment relates to the important issue of parliamentary scrutiny. Whilst we have discussed it before, I think it is worth discussing again. If we do not have forms, documents, codes or guidelines prescribed in regulations then they do not come to the parliament in the form of delegated legislation and we do not have the ability to disallow them.

I urge all members to support this amendment. I would add in the process that we are giving great credence to the words of the former opposition leader, Mike Rann, on the steps of Parliament House 13 years ago when he declared on behalf of the Australian Labor Party that every single member of the Labor Party would vote against every clause of the WorkCover bill. I did not think that we would need to go down that path, but it appears that we do; so I will be dividing on this amendment as well.

The Hon. P. HOLLOWAY: This is the 1994 bill, to my memory. I have already given the reasons when speaking to the previous amendment why we oppose it.

The Hon. SANDRA KANCK: Again I repeat what I have said on numerous occasions: it is really important to have that parliamentary scrutiny. The Democrats will support this amendment for that reason.

The committee divided on the amendment:

AYES (2)

Kanck, S.M. Parnell, M. (teller)

NOES (14)

Darley, J.A. Finnigan, B.V. Gazzola, J.M.
Holloway, P. (teller) Hood, D.G.E. Hunter, I.K.
Lawson, R.D. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. Stephens, T.J. Wade, S.G.
Wortley, R.P. Zollo, C.

Majority of 12 for the noes.

Amendment thus negatived.

The Hon. M. PARNELL: I move:

Page 30, line 30—Delete 'a designated' and substitute:

the prescribed

One important reason that we have omitted to discuss in relation to the prescribing of documents in a regulation is that the Hon. John Gazzola's Legislative Review Committee would miss out on the opportunity of being able to scrutinise these documents—to cast its scrutineering eye over it—and (as it does on occasion) report back to the parliament about inappropriate subordinate legislation. I think that is another very good reason why we should support the amendment. I urge all honourable members to support it.

The Hon. SANDRA KANCK: The Democrats most certainly will be supporting this as part of our long and proud tradition of ensuring absolute accountability, and bringing these things before parliament is the best way to do that.

The committee divided on the amendment:

AYES (2)

Kanck, S.M. Parnell, M. (teller)

NOES (14)

Darley, J.A. Finnigan, B.V. Gazzola, J.M.
Holloway, P. (teller) Hood, D.G.E. Hunter, I.K.
Lawson, R.D. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. Stephens, T.J. Wade, S.G.
Wortley, R.P. Zollo, C.


Majority of 12 for the noes.

Amendment thus negatived.

The committee divided on the clause:

AYES (14)

Darley, J.A. Finnigan, B.V. Gazzola, J.M.
Holloway, P. (teller) Hood, D.G.E. Hunter, I.K.
Lawson, R.D. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. Stephens, T.J. Wade, S.G.
Wortley, R.P. Zollo, C.

NOES (2)

Kanck, S.M. Parnell, M. (teller)


Majority of 12 for the ayes.

Clause thus passed.

Clause 30.

The Hon. M. PARNELL: My question of the minister is: did the self-insurers specifically request this clause?

The Hon. CARMEL ZOLLO: I am advised that the representative association is called the Self Insurers of South Australia, so we are aligning with what it calls itself. In recent times the state government and WorkCover have stopped using the term 'exempt employer' in their official publications and communications, instead using 'self-insured employer'. The term 'exempt' can imply that the employer is somehow absolved of responsibility under the act or is otherwise outside the framework of the WRCA. This is not the case.

The term is also not frequently used interstate, but the act still retains the original language referring to exempt employers. This component of the proposal is also consistent with a recommendation by the Else/Clayton review that the term 'exempt employer' be discarded because of its overtones of separateness and privilege in favour of the more neutral and descriptive term of 'self-insurance', which is applied generally elsewhere in Australia. Section 51(6) still retains the original language and refers to an exempt employer.

Clause passed.

Clause 31.

The Hon. M. PARNELL: I move:

Page 39, lines 37 and 38—Delete subclause (1)

Before I determine my approach to this amendment, because we have had what might be regarded as a little bit of unseemly division in proving a point, but we can progress with this bill a little further: is it still the minister's intention that we adjourn at 2 o'clock?

The Hon. P. HOLLOWAY: Yes.

The Hon. M. PARNELL: I will not be dividing on the amendment.

The Hon. P. HOLLOWAY: We oppose the amendment.

Amendment negatived.

The Hon. M. PARNELL: I will not move amendment No.30. It is consequential.

Clause passed.

Clause 32.

The Hon. M. PARNELL: I move:

Page 40, after line 18—Insert:

(2) Section 53—after subsection (8) insert:

(9) if the claim of a worker is rejected, the worker is still entitled to the reimbursement of any costs reasonably incurred by the worker in providing a certificate under section 52(1)(c) or any other medical evidence required by the Corporation in connection with the claim unless the Corporation believes that the worker has acted dishonestly in making the claim or providing information for the purposes of this Division or any other provisions of this Act (and a liability to make a reimbursement under this subsection will be taken to be a liability to pay compensation for the purposes of the other provisions of this Act).

The reason why this amendment is an important one is that it is to protect injured workers who have acted in good faith and made a claim but for some reason, most probably some technical reason, they find that they are not ultimately entitled. In pursuing such a claim in good faith, having been required by a compensating authority to spend money obtaining medical information such as reports, they can be reimbursed for that. So, it is a protective measure that seeks not to disadvantage workers who might not ultimately be entitled but who have, nevertheless, incurred medical expenses.

The Hon. P. HOLLOWAY: The government is opposed to this amendment as the costs of preparing and lodging claims for compensation have not traditionally been borne by compensating authorities. There has been little evidence to suggest that these costs are problematic for workers; nevertheless, any problems suffered by injured workers in this area should be suitably rectified by clauses 12 and 29 of the bill which set up provisional payments of medical expenses and weekly payments.

It is not necessary for workers to make a claim in order to be eligible for provisional payments: notification of the disability is sufficient. The early focus on treatment and rehabilitation and payment for it, as opposed to a focus on claims determination, will address these issues and, therefore, this amendment is unnecessary.

Amendment negatived; clause passed.

Clause 33.

The Hon. M. PARNELL: I move:

Page 40, after line 23—Insert:

(3) Section 54—after subsection (7) insert:

(7aa) A right of recovery may only be exercised by a claimant under subsection (7) if the claimant has taken reasonable steps to take responsibility for the injured party's reasonable costs associated with exercising his or her rights against the wrongdoer.

This amendment seeks to insert a new subsection (7aa) in section 54, and it relates to third party claims. This relates to the situation most commonly seen in relation to labour hire companies, but in other circumstances as well. Under existing law, if a worker is negligently injured at work and the negligence is on the part of someone other than their employer, then they can pursue that third party for negligence.

The situation might be—and I mentioned labour hire companies—that someone is employed by a labour hire company but they are working at a site where other parties are involved. If it is the negligence of those other parties that causes the injury, then the common law rights exist.

However, if the worker takes that common-law action then WorkCover gets back any money that it has spent or will spend on the worker's claim. The worker only receives the additional benefits that common law delivers, which are generally in excess of workers compensation benefits. Sometimes WorkCover will agree to fund such an action by an injured worker and indemnify the worker against adverse cost orders. The reason it does so is that it is clearly in WorkCover's interests for the action to proceed, because it gets its money back.

However, I believe a situation where WorkCover is not willing to take the risk with the worker, if it says to the worker, 'No; you invest the money, you take the risk of an adverse cost order, but if you win we will still take most of the damage', is fundamentally unfair—and that is what this amendment is designed to address. If WorkCover is willing to participate properly in such an action against a third party, to fund and indemnify, that is all well and good, but it should not receive the benefits of investments and risks taken by workers when it refuses to make the same investments or take the same risks itself.

It is very much a case of what is good for the goose is good for the gander. If WorkCover is standing in line to take the money it should also stand in line to take the risks. This is an important amendment and I seek the support of honourable members.

The Hon. P. HOLLOWAY: The Hon. Mr Parnell seeks to restrict the right of a compensating authority—in this case WorkCover or a self-insurer—to recovery of the costs that the compensating authority has indemnified a worker for solicitor-client costs, if a worker elects to pursue a wrongdoer for damages. The Hon. Mr Parnell's amendment is unnecessary and the government opposes it. As part of any legal proceedings against third-party wrongdoers, workers can and do negotiate reimbursement of their legal costs on a party to party basis. This reimbursement is quite separate from any damages recovered. Section 54 already prevents WorkCover from recovering more from an injured worker than they receive in damages. The worker's legal costs are not damages and as such cannot be claimed by WorkCover.

The committee divided on the amendment:

AYES (4)

Darley, J.A. Hood, D.G.E. Kanck, S.M.
Parnell, M. (teller)

NOES (12)

Finnigan, B.V. Gazzola, J.M. Holloway, P. (teller)
Hunter, I.K. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Stephens, T.J.
Wade, S.G. Wortley, R.P. Zollo, C.


Majority of 8 for the noes.

Amendment thus negatived; clause passed.

Clause 34 passed.

Clause 35.

The Hon. M. PARNELL: This clause relates to the employer's duty to provide work. I understand that the minister in the other place confirmed that WorkCover has never prosecuted an employer for a breach of its section 58B obligations, and if no-one is ever prosecuted, then it seems to me to be entirely irrelevant as to what the penalty is. Clause 35 proposes a maximum penalty of $25,000. Have any administrative steps been taken or any directions given to WorkCover so that it starts doing its job and enforces the law in terms of law breaking by employers?

The Hon. P. HOLLOWAY: First, I am advised that no formal directions have been issued by the minister. Secondly, under this package of reforms, the government will be establishing a return to work inspectorate and one of the functions of that inspectorate will be to enforce employers' obligations.

Clause passed.

Clause 36.

The Hon. M. PARNELL: In relation to this clause, which deals again with self-insured employers, certainly there is the standard change in terminology from 'exempt employer' to 'self-insured employer'. However, the clause also amends section 60 in relation to the registration of employers or groups of employers as self-insuring employers, and it makes other changes. This clause in a number of ways makes it easier for employers to become exempt and to stay exempt. The unions have strongly argued that the number of exempt employers in South Australia (which, as I understand on a proportionate basis, is more than in any other state) is bad for our workers compensation scheme.

There is serious cause for concern about WorkCover's regulation of exempt or self-insured employers, because, despite these employers being responsible for numerous industrial deaths and despite instances of seriously inappropriate claims management practices, WorkCover has never, as I understand it, revoked an exempt employer's licence for bad performance. I understand that there have been cases, including Mobil, where, due to the closing of Port Stanvac, the employer fell below the size requirement and was no longer exempt. That is an example of someone who lost their status but, as I understand it, there has never been a case of an exempt employer licence being revoked for poor performance.

Whilst there are some very poor performing exempt employers, in terms of safety and claims management, there are also some very good exempt employers. However, on balance, because of the concerns and the deputations made to me by the union movement and as a result of the abysmal track record of WorkCover in regulating exempt employers, I indicate that I oppose this clause.

The Hon. P. HOLLOWAY: Earlier in the debate the Hon. Mark Parnell—and I do not think I am doing him an injustice here—recognised that self-insurers have been better at getting workers back to work. That is generally acknowledged, so the honourable member really appears to be having it both ways in relation to that argument.

The Hon. M. PARNELL: I did acknowledge that some of their performance has been better, yet it seems that, when it comes to all exempt employers, it is not universal; and, when it comes to the regulation of exempt employers, that has been clearly lacking. That is why I oppose this clause and will be dividing on it.

The committee divided on the clause:

AYES (13)

Darley, J.A. Finnigan, B.V. Gazzola, J.M.
Holloway, P. (teller) Hunter, I.K. Lawson, R.D.
Lensink, J.M.A. Lucas, R.I. Ridgway, D.W.
Stephens, T.J. Wade, S.G. Wortley, R.P.
Zollo, C.

NOES (3)

Hood, D.G.E. Kanck, S.M. Parnell, M. (teller)


Majority of 10 for the ayes.

Clause thus passed.

Clause 37.

The Hon. M. PARNELL: I have no questions, no amendments and no objection to this clause.

Clause passed.

Clause 38.

The Hon. M. PARNELL: I have no objection and no questions.

Clause passed.

Clause 39.

The Hon. M. PARNELL: I do not want to go backwards. I did have an amendment, but it was a consequential one. I am assisting the committee racing toward our deadline. I have no questions on this clause.

Clause passed.

Clause 40.

The Hon. M. PARNELL: In the spirit of racing along, I have no questions on this clause.

Clause passed.

Clause 41.

The Hon. M. PARNELL: The amendment I have to this clause is consequential to an amendment that has been lost already; therefore, I will not be moving that amendment.

Clause passed.

Clause 42.

The Hon. M. PARNELL: I have no questions.

Clause passed.

Clause 43.

The Hon. M. PARNELL: This clause relates to levies of GST and proposes the insertion of two new subsections (5) and (6), in section 65. My question of the minister is: can he explain why this clause is necessary, and have any specific problems been encountered in relation to these commonwealth taxes?

The Hon. P. HOLLOWAY: The amendment relates to the WorkCover levy and making sure that it is GST exclusive. As the Minister for Industrial Relations pointed out in the debate in the House of Assembly, it is what happens in practice but putting it into the legislation removes any doubt.

Clause passed.

Progress reported; committee to sit again.

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