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Legislative Council - Fifty-Second Parliament, First Session (52-1)
2010-07-21 Daily Xml
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WORKERS REHABILITATION AND COMPENSATION

Adjourned debate on motion of Hon. R.I. Lucas:

That the regulations under the Workers Rehabilitation and Compensation Act 1986 concerning claims and registration—discontinuance fee, made on 26 November 2009 and laid on the table of this council on 11 May 2010, be disallowed.

(Continued from 23 June 2010.)

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Industrial Relations, Minister Assisting the Premier in Public Sector Management) (20:13): The government opposes this disallowance motion. Section 76AA of the Workers Rehabilitation and Compensation Act gives WorkCover the power to impose a discontinuance fee upon employers when they cease to be registered with the scheme. Regulation 16A of the Claims and Registration Regulations sets the formula for the calculation of this discontinuance fee. The formula was developed and consulted on by WorkCover and supported by the government.

As all members are aware, a previous disallowance motion against this regulation was debated and passed last year. The government opposed the motion, maintaining that the formula within the regulation is the simplest and fairest method of calculating a discontinuance fee that appropriately requires employers exiting the scheme to pay their share of historically insufficient levies.

As such, this government remade the regulation in November last year. However, the opposition has seen fit to move another disallowance motion without seeking any information about why a discontinuance fee is necessary. It has also not considered any views, other than that of the organisation Self Insurers of South Australia (SISA), which clearly has a vested interest in increasing its membership through more employers moving to self-insurance in South Australia.

The honourable member argues that the discontinuance fee prevents employers from moving to self-insurance and, thereby, reduces the opportunities of workers to return to work. In actual fact the existence of the discontinuance fee allows the WorkCover board to continue applications for self-insurance and be confident that when employers exit the scheme there will be no adverse impact on WorkCover's finances.

Under section 60 of the act, the WorkCover board is required to consider the impact on the fund of any move to self-insurance. Any move to self-insurance results in loss of levies for WorkCover and may have an adverse impact on a scheme which is currently underfunded. The existence of the discontinuance fee allows the board to satisfy the requirement under section 60 and know that there is no impact on the scheme.

The honourable member referred in his speech to two actuarial reports which indicated that the average levy rate would not change if the percentage of self-insurers in the scheme changed. However, let me point out that the PricewaterhouseCooper's report is more than 12 years old and was released at a time when the financial difficulties of the scheme were not yet clear. The other report referred to was from 2004 and its conclusions were based on assumptions, including the exit fee at the time, and so cannot be applied to a situation where no exit or discontinuance fees exist.

Finally, allow me to restate the reasons that WorkCover and the government continue to support a discontinuance fee. Historically, WorkCover has had levy rates which, with hindsight, were set below what was necessary to appropriately fund the scheme. WorkCover is now rectifying this situation. Employers who leave the scheme are charged a discontinuance fee as they have, in general, previously been undercharged and they will no longer contribute to restoring the scheme to a position of full funding.

The formula within the regulation links the amount payable by the existing employer directly to the level of underfunding experienced by the fund. It is the simplest and fairest method of calculating a discontinuance fee that appropriately requires employers exiting the scheme to pay their share of historically insufficient levies. When the scheme is fully funded, the discontinuance fee will be zero.

So, let me ask members of the opposition why, after repeatedly berating WorkCover in parliament and in the press about the scheme's financial status, they oppose measures such as these which seek to address the problem? As a member of a responsible government, I oppose the disallowance motion.

The Hon. A. BRESSINGTON (20:18): I rise briefly to reaffirm my support for the motion to disallow the regulations under the Workers Rehabilitation and Compensation Act 1986 concerning discontinuance fees. For those seeking my rationale I refer to my speech made on 18 November last year. As was outlined by the Hon. Rob Lucas (who has taken the reins on this issue from the Hon. Rob Lawson), self-insurers, regardless of the measure used, achieve far better results for both employers and injured workers.

Given this, I am of the opinion that this parliament should not intentionally impede a company's ability to move to self-insurer status. However, their departure from the WorkCover scheme must be equitable to those who remain. Thanks to a briefing provided this morning by the minister and the Chief Executive of the corporation, I have a greater understanding of how the arrangements prior to these regulations, to which we will revert, fall short in achieving this. That said, I remain of the opinion that the proposed discontinuance fees still go too far.

I am hopeful that, if these regulations are again disallowed, the government will not simply re-introduce them without amendment but instead will encourage WorkCover Corporation to engage in meaningful negotiations with Self Insurers of South Australia, as I believe a middle ground can surely be found. It has always been my understanding that the intent of disallowing this regulation was to try to force the corporation and the government to move forward to a more cooperative approach and away from an adversarial one.

I would just like to make the point that there is no objection from self-insurers, or anyone else, to the existence of disallowance or exit fees. Self-insurers are not saying that they do not want to pay any fees. They are just saying that with the formula devised now it will be prohibitive for any business to move to self-insured status. I believe that middle ground can be reached if we can get WorkCover Corporation and SISA to sit down and try to reach agreement on what is equitable for everyone.

The Hon. T.A. JENNINGS (20:20): I rise to indicate that the Greens will oppose the motion to disallow the regulations under the Workers Rehabilitation and Compensation Act 1986 concerning claims and registration discontinuance fees. I thank the minister for providing a briefing to my office. I also acknowledge that this reflects the position the Greens last took when this matter was discussed.

The rationale put before us is that, as we know, the WorkCover scheme has probably been very underfunded—and historically so. We are looking at many other issues with the WorkCover scheme, and the Greens will work with other members in this place in relation to them. I look forward to the review of the WorkCover scheme some time later this year.

The Greens have a principle of a publicly well-funded WorkCover scheme. We have a principle that injured workers should be protected. In fact, no-one should be injured or die as a result of leaving for their job that morning. No mother, father or child should lose a family member due to a workplace incident.

We have accepted the government's case that this fee does not put in place unnecessary barriers for those who wish to become self-insured. I reiterate that the Greens' position is that we would prefer a robust public system rather than people leaving to self-insure.

The Hon. R.I. LUCAS (20:22): I thank members for their contributions to the debate. Given that the debate was first conducted only a little while ago, it was reasonable that those of us who contributed before did not repeat earlier contributions. There were some new members in the chamber who did need to address the issue at hand, so I thank those members for their contributions.

I will briefly make two or three points in response. I did note with interest that the Leader of the Government indicated—and I will check the Hansard—or said something along the lines that the levy had been set at too low a level in terms of achieving the goal of full funding of WorkCover.

I do note that only recently WorkCover announced a reduction in the WorkCover levy. The minister in charge of WorkCover is saying that the levy rate has been set at too low a level when WorkCover Corporation has only just reduced it, so the minister responsible for WorkCover is actually speaking out against a decision which the WorkCover Corporation has only just taken and which is supported by the Premier and Treasurer in South Australia.

The Leader of the Government is adopting a courageous position in opposing the position of the Premier, the Treasurer and WorkCover Corporation. Nevertheless, we admire his courage. It might be an indication that he does not see himself long for the position and the chamber—but that is a matter for debate on another occasion.

The PRESIDENT: The Hon. Mr Lucas should stick to the motion.

The Hon. R.I. LUCAS: It is the motion, Mr President.

The PRESIDENT: It has nothing to do with the motion.

The Hon. R.I. LUCAS: Exactly what the Leader of the Government said was that the level of the WorkCover levy had been set at too low a level. Mr President, I am responding only to the statement made by the Leader of the Government, which, Mr President, I gather you allowed as part of the debate. I was just responding to it.

I raised another issue in my contribution which the minister responded to only briefly. I think it is only fair that, if it wants to argue a position in relation to this, the government should provide some actuarially-based evidence to justify the position it is adopting.

I indicated, based on the evidence taken by the Statutory Authorities Review Committee, that two actuarial reports had been presented to WorkCover, supposedly (and I asked for copies of those but, obviously, they are not going to be provided), which actually argued against the government's position, that is, these actuarial reports indicated that if employers left WorkCover to join self-insurance or to undertake self-insurance, there would not be this pressure on the levy rates for the remaining employers in the scheme.

The government's position and those who support the position of the government and of WorkCover is the reverse. I put on the record that we had been informed that there were two actuarial reports that argue against the government's position and WorkCover Corporation. The minister tonight, for the first time, has conceded that, in fact, that is the case. His only argument was that one of the reports was, I think, five or six years old and the other was 12 years old.

I note that nothing has been undertaken—that we are aware of, anyway—by WorkCover Corporation since, and I suspect that is because it has had two goes at asking the actuaries to try to back up their argument, and the actuaries have said, 'Well, no, what you're saying is wrong.'

I think that it is not unreasonable, given all the judgments we make about WorkCover—or not all the judgments but some of the judgments we make about WorkCover in relation to the unfunded liability—to say that, obviously, they are based on the expertise of those experts called actuaries who do the work and crunch the numbers and who make judgments about the impact of various decisions on the unfunded liability.

The minister here tonight for the first time has conceded that, over a period of time, two actuaries have done the work and come up with advice, evidently completely contrary to the government's position and to WorkCover Corporation's position, in relation to this issue. If the government wants to progress this, and I am not sure how the numbers in the chamber will go this evening, but if the government's position is maintained, it can just ignore this debate.

However, if this regulation is disallowed, what WorkCover or the government should do is, at the very least, commission an actuarial report to see whether or not that information can be used, perhaps, as the Hon. Ann Bressington said, to move this debate forward to some compromised position; that is, something different from the government's arrogant insistence that it knows best and that whatever the numbers are in relation to this formula, so be it, and it is just going to keep on reinstituting the regulation as it stands.

Certainly, my view will be, and I make it plain, that if it is disallowed this evening and if the government reintroduces it in exactly the same form without any consultation, on behalf of the Liberal Party I will take a position to the party room that we continue to seek to disallow it until the government is prepared to sit down, as the Hon. Ms Bressington has suggested, and, perhaps, seek some compromise.

But I think that doing any compromise can be done only on the basis of actuarial evidence. If the two actuarial reports so far do not support the government's case, then, maybe, if it gets a third actuary it might eventually find someone—I think we call it 'forum shopping', when one is talking about independent medical examiners or doctors—who is prepared to support its position. If that is the case, good luck to it; at least it will have some evidence to come to the Liberal Party and to Independent members to justify the position that it is adopting. I think that is not an unreasonable position to be putting to members.

With that, I am disappointed that the government is not prepared to make available the two reports. I guess we will have to go through the process of lodging FOI requests to see whether we can get both those reports now and make them more freely available in terms of better informing this particular debate. I would urge members in the chamber to support the disallowance to at least allow a further consideration by hopefully the government, WorkCover, SISA and all the other stakeholders in relation to this.

If I can conclude and just support the words of the Hon. Ms Bressington: WorkCover is about issues, obviously for employers, but more importantly it is about issues in terms of employees and injured workers. One of the critical things we were told throughout all of the recent investigations into WorkCover has been the issue of return to work. No-one has disputed the fact that self-insurers have far superior return-to-work measures than WorkCover Corporation. If one is interested in injured workers and employees, then that ought to be an issue that people consider when they address this particular resolution.

The council divided on the motion:

AYES (12)
Bressington, A. Brokenshire, R.L. Darley, J.A.
Dawkins, J.S.L. Hood, D.G.E. Lee, J.S.
Lensink, J.M.A. Lucas, R.I. (teller) Ridgway, D.W.
Stephens, T.J. Vincent, K.L. Wade, S.G.
NOES (9)
Finnigan, B.V. Gago, G.E. Gazzola, J.M.
Holloway, P. (teller) Hunter, I.K. Jennings, T.A.
Parnell, M. Wortley, R.P. Zollo, C.

Majority of 3 for the ayes.

Motion thus carried.

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