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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2008-11-13 Daily Xml
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WORKCOVER CORPORATION

The Hon. M. PARNELL (14:57): I seek leave to make a brief explanation before asking the Minister for Urban Development and Planning, representing the Minister for Industrial Relations, a question on the issue of WorkCover claims management.

Leave granted.

The Hon. M. PARNELL: In 2006, WorkCover CEO Julia Davison, in announcing the appointment of Employers Mutual Limited (EML) as WorkCover's sole claim agent, made a series of claims, including, in January:

Appointing Employers Mutual as sole agent provides better overall value, including savings for WorkCover of almost $5 million in agent fees, compared with the best multi-agent option that emerged during the contract negotiations.

In March she said:

As WorkCover's sole claims agent, EML expects to cut the claims liability by up to $100 million a year after only two years under the new contract.

In July she said:

Most importantly, EML is signed up to our strategic targets and its remuneration is tightly linked to their achievement, including incentives linked to improved service satisfaction for injured workers and employers and reducing WorkCover's liabilities.

A review of the corporation's annual reports shows that, after falling from $28.3 million in 2005-06 to $25.1 million in 2006-07, the cost of claims management has now increased by 26 per cent to $31.8 million in the past financial year. Yet, far from the way Ms Davision put it, when she said that 'EML's remuneration is tightly linked to their achievement', this significant hike in administration fees is accompanied in the annual report with significantly higher claims liabilities and the lowest funding level, at 60.8 per cent, in the corporation's history. As Dr Kevin Purse described in The Advertiser of 7 November:

There has been no reduction in liabilities since EML's appointment. Instead the scheme's liabilities have ballooned by a staggering $600 million to provide yet another damning indictment of WorkCover's disastrous outsourcing strategy.

My questions to the minister are:

1. Why has the amount paid to Employers Mutual Limited increased by 26 per cent in the past financial year when it has clearly not delivered on its commitment to reduce the corporation's liabilities by $100 million within two years?

2. Will the minister confirm any plans by WorkCover Corporation to outsource other parts of the corporation's activities?

3. In light of the worst funding ratio in WorkCover's history, will the government review its commitment to reduce employers' levies from July 2009 and, if not, why not?

The Hon. CARMEL ZOLLO (Minister for Correctional Services, Minister for Road Safety, Minister for Gambling, Minister Assisting the Minister for Multicultural Affairs) (14:59): I thank the honourable member for his question. I will refer it to the Minister for Industrial Relations in another place and bring back a response.

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