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Legislative Council - Fifty-Third Parliament, First Session (53-1)
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Return to Work Bill

Second Reading

Adjourned debate on second reading.

(Continued from 24 September 2014.)

The Hon. R.L. BROKENSHIRE (17:50): I rise on behalf of Family First today to talk to the Return to Work Bill. At the start, I put on the public record that it is unfortunate that we are having to deal with this bill today, because under this government for 12 years we have seen an absolute deterioration of three key areas of WorkCover. Firstly, we have seen us become an incredibly expensive state in which to do business because of the high rate that employers have to pay to the WorkCover scheme in South Australia.

Secondly, back in 2002 when this government came to office, WorkCover was effectively fully funded, and we have seen a situation over that 12 years where it has gone from effectively a fully funded scheme, where the government of the day could have written out a cheque without too much difficulty and paid the whole lot of the unfunded liability, to a scheme now where, even though there have been some improvements in the last 12 months, the fact of the matter is that the unfunded liability is still, as I understand it, over $1 billion.

Thirdly, I think it is important to put this on the public record, because I talk to a lot of constituents across the state and there has always been a school of thought within a lot of people's minds that a Labor government would look after workers better than a Liberal government, but that is just simply not true. When my father talked to me as a young person about the ideology and philosophy of the Liberal and Labor parties, he always said that the ideology of the Labor Party was that they would look after the worker, they would look after the battler, and that the Liberal Party was more focused on enterprise, capital growth and employers being able to employ more people. In summary, they were some of the differences that he told me about.

Sadly, whilst that may have been the case way back when I was a young person, the reality is that under this Rann-Weatherill government, of which for part of the time the Premier was actually the minister responsible for WorkCover, as I understand it, we actually have seen a huge deterioration in the rights of workers. The most draconian, of course, was when we saw a situation where, after 13 weeks on the WorkCover scheme, you received a 10 per cent reduction in your wages or salary, and after 26 weeks, you received a 20 per cent reduction. Even though as an innocent worker going about your duty for your employer and for your family you were sadly injured, your whole family had to suffer. That has all happened under 12 years of Labor government.

About 12 months ago—not quite that long ago—the Attorney-General, the Minister for Industrial Relations, said publicly, 'The system is buggered; WorkCover is buggered.' That is what he said, and that was the first admission by anyone in the Labor government that they had effectively stuffed WorkCover. You bet they have, because there have been no winners. The cost of doing business has actually gone through the roof, employers have had to pay massive premiums and the injured have received fewer benefits.

There are about 15,500 new claimants a year, and 70 per cent of those claimants receive either no income maintenance or less than two weeks income maintenance. South Australia's return-to-work rate remains well below that of all other states, and has been consistently below the national average for many years. South Australia has the highest average premium rate at about double the rate of other jurisdictions of 2.75 per cent for the 2014-15 financial year, compared with 1.47 per cent in New South Wales, 1.272 per cent in Victoria, and 1.2 per cent in Queensland.

Modelling the future impact of the changes on workers using historical data indicates that about 94 per cent of people who work with an injury will receive either some improved or the same income support benefits. From that viewpoint, on the face of it I have to congratulate the Attorney-General and Minister for Industrial Relations for having a go at trying to get a scheme that is better.

Family First's position is that, after quite a lot of deliberation, we will support the bill, because something has to happen. It has been said clearly by the Attorney-General that 'the system is buggered', to use his words, and something has to happen. I will in committee ask the minister responsible how the government can guarantee, how it can put the government seal on this bill with the minister signing off on the fact that $180 million a year will be going back into the employers' pockets.

It is specifically on that basis, and that basis alone, that the employers and the representative groups, like Business SA, have actually asked us to support this legislation. It is a big and bold statement for a government that has actually ruined WorkCover and run it up to massive deficits that all of a sudden we see a situation where it will save employers $180 million and then inject that money back, hopefully, into growing the economy.

The other side of it is that, yes, it is true now that there will be changes to improve the situation for most workers in the first two years, and up to the end of the first year those workers will receive 100 per cent of their entitlements and after that come down, as I understand, 20 per cent, so to 80 per cent of their wages after the first year. The problem with this (and where I really find it interesting) is that the Labor Party—and, I might add, the unions in this case—must have a reason to be so quiet. I have not had the unions come to me at all on this legislation, and I want to put that on the public record.

I had the unions roll over on the Public Sector Act reforms that the now Premier put forward, which were draconian and against the best interests of the public sector workforce, but there has to be a reason. I do not have my finger on the pulse of the reason yet, but there must be a reason the unions are so quiet. I do not understand why anyone would want to pay to be a member of a union that is prepared to let a government do you over in the longer term.

I will just explain how I see them being done over. Whilst they have had some of their entitlements put back for the first year, the reality is that after two years they will absolutely be dumped on the scrapheap. That is what will happen to them. If some are able to get some sort of lump sum redemption, they will be doing very well, but for the rest of them after two years they will be on the scrapheap. So, where is the union looking after a worker who simply goes to work?

In fact, the only union I have seen with any credibility that has come out has been the Police Association through its President, Mr Mark Carroll, who said on ABC radio that the changes could leave injured officers financially worse off in doing their job. I will quote what he had to say:

To find themselves left out in the cold if they suffer any other further injuries because, as we know, the payments under the new legislation—

and this is the key—

will cease two years after the original injury, and we just don't think that's fair and reasonable for our members who have put themselves in harm's way to protect the community.

I totally agree with the Police Association, but they are the only ones who I have seen come out arguing the case against supporting this legislation. I think the parliament needs to have a close look at why the unions are so quiet in this whole matter, because there has to be something happening behind closed doors.

Nevertheless, whatever that may be, I suggest that it is something that probably employers and Business SA have not had a close enough look at. I do not trust the unions to just absolutely and categorically let a Labor government do over workers without some backdoor, backhanded payment structure coming back somewhere in the future. Let's have a look at that during the committee stage. It is very interesting and ironic that there are a number of Labor members of parliament in both our house and the other place who have a union background and who went into bat for and represented these workers, but they must forget about the workers when they come in here.

The Hon. R.I. Lucas: Name them.

The Hon. R.L. BROKENSHIRE: Well, we know them. There is such a long list and, sir, it is such a long list and so late at night that it would take me a very long time. It just amazes me that you can get in there and fight like mad; in fact, I can tell you that some of those now members of parliament, when they were in senior positions in the union, would be out there blocking King William Street, blocking North Terrace, and absolutely blocking the steps of Parliament House if a Liberal government was doing this.

I know that for a fact. Go and ask the Hon. Graham Ingerson about some minor changes that he made and see what a carry-on and dance they did, and how bad it was, and the Liberal government was so terrible, and they were anti-employees, and all the rest of it, and yet now it is like a puppy having its tummy tickled. They are so quiet; they are just smiling, sitting there in their chairs. To me that is deplorable.

I will spend a lot of my time over the next three years going around South Australia telling the workers what this government has actually done to them, telling them what this government has done to them and to their families. Mark my words, there will be a number of decent and genuinely injured workers who will be thrown on the scrapheap after two years. If you reckon there is a problem living below the poverty line for 2.5 million people now, just wait until you see what happens with those people.

I had a word to an advocate of injured workers only this week, and I will be looking to put in an amendment to support advocates for injured workers because I think more than ever they will need advocates, the way this bill is. She said, 'Robert, we're already having workers suicide, we're already having their families ripped apart by what's happening with the lack of management in WorkCover now. Imagine just what it's going to be like in a couple of years when this legislation becomes a reality.' She said, 'I will be attending more funerals of injured'—

The Hon. G.A. Kandelaars: Is that why you're supporting it?

The Hon. R.L. BROKENSHIRE: No; I'm supporting it because I want your government's head out there. You are the ones who have written the legislation. I want jobs as well. It is a difficult situation, but I do not want to walk away from here without putting the facts on the table, but it is a balancing act. I suggest to you that the hoodwinking and the lack of support from the unions is something that needs to be questioned and examined.

Sir, when you look at the other side of the equation and the employers, you can understand why they are in a situation where they are screaming out for relief, and I have already highlighted some of that here in the debate this afternoon. If you are trying to tender for a product that you manufacture against states where you double your WorkCover rate for a start, then of course you will have a massive land tax situation in South Australia, the payroll tax situation, and now the emergency services levy, just to add another one, which has now gone from an emergency services levy to another property tax; that is what it has done under this government. It is all backwards at the moment for businesses and, therefore, I can understand why businesses want this bill to pass.

In balancing it up, we will support the bill because there is no option or alternative. What I simply said and what I have put on the public record is: where are the unions and why is it a Labor government that is doing this? In the future when people come to see me in my office I will be able to show them the debate and talk to them about who actually brought this legislation forward.

There are other options that could have been looked at, and I still do not really understand why the South Australian government of the day has to have a WorkCover Corporation as it is. We did not always have one. We had some bad laws way back when we did not have modern employment practices that were more considerate to workers, but why we actually even have to have a WorkCover Corporation and not just have good laws and let businesses go out and actually tender is still beyond me.

I would love to go to my insurance company, with all the other insurance we have to have, and say, 'Here is my business. What is my premium going to be?' I have not got that luxury because I am a small business like most. There are only a few, less than 100, businesses in this state that are self-insured, so there is not a lot of choice. It is more an ideology that goes right back in the Labor Party to the Hon. Jack Wright. Because he brought in WorkCover Labor has enshrined it, but we have to deal with what is put to us here in the house.

One of the things that really does concern me is that we have a situation where there could be a common law opportunity. Legal advice to me says that in almost all of the cases it will be very hard to prove negligence under common law so, again, the reality is that the Weatherill Labor government has made it a straight intent that workers will be worse off in time if they happen to be seriously injured. There will be some that will be better off over that two-year period.

The point that I want to finish with, though, is that we have not had any discussion about what is going to happen with the restructuring of WorkCover. First of all, the board of WorkCover has been an absolute failure up until at least recent times. We have seen appointments to the board from the union as a payback to the Labor government, so they have had one of their heads on there. We have seen people like Sandra De Poi who, as a partner of one of the ministers in this government, was on that board and whose company also had the only case management contract for some time. We have seen that sort of situation and at the same time we have actually seen a situation where we have seen blowout after blowout in the unfunded liability and in the other financial issues regarding WorkCover.

What I have experienced is a lack of case management and a lack of good outcomes. In fact, when they do finally get good medical assistance and they are healed from their injury, they are most of the time damaged badly from a mental health point of view and a lot of them unfortunately cannot go back to work. The reason I raise that is I think WorkCover needs to actually have a good hard look at itself as well and needs to actually have a look at how it is going to manage its responsibilities into the future, because it is not just a matter of dropping premiums and changing how workers are given entitlements, but surely it is a matter of how they actually case manage, get people back to work and, importantly, become efficient and effective in WorkCover.

The reality is that—and I think most members would agree with this, even the government ones if they were frank with us—all of us have had dozens of constituents, if not hundreds if you have been in here for a while, that come to us a thorough mess because of the way they have not been managed properly by WorkCover. There is no discussion that I have heard from the Attorney-General on what he intends to do to improve that side of it, but at the end of the day what we have is a mess on our hands.

The government have now come up with an option. It is incumbent on us to support the government overall although we have concerns because we have a state that is in a very difficult position even though the government say that things are good and things are improving all the time. The truth of the matter is that things are damn tough in this state, and if we can help to stimulate some progress with reductions in the rates then we will be in a situation where hopefully that is one step forward in improving the economic opportunities for job creation through further growth in existing and new businesses in the state.

After weighing it all up and after talking to many members of parliament, I think a lot of them think similarly to me and they are supporting this bill because this is the only option that has been put up by the government. However, the test now will be what happens in the future. Will there be $180 million of money returned to employers? We will ask more about that in committee stage. Will the scrap heap be a major problem? It is a sad situation, but those workers who are effectively put on a scrap heap are going to start to see that impact in about two years and eight months, which is interesting, because that will be the year before the election.

It will be interesting to see what happens with those particular individuals and what they think about this government, and what unions may or may not do then when they see those workers going onto that scrap heap.With those words, I think we have made it pretty clear what our concerns are, but when you get a situation where over 12 years you have seen an absolute deterioration of a WorkCover scheme, something has to happen, and this is a policy the government wants supported.

The Hon. R.I. LUCAS (18:11): I rise to commence some remarks this evening in supporting the second reading of the bill. Given the lateness of the hour, I indicate that I will seek leave to conclude my remarks. As we are aware, the government (the Premier and the Deputy Premier) have outlined that they have introduced this particular legislation to seek to reduce the cost to businesses in South Australia by $180 million a year. They continue to pat themselves on the back, prematurely at this stage, indicating that this is the most significant cost reduction initiative that any government could take—far bigger than any of the tax reduction initiatives and others that were discussed in the period leading up to the state election.

The first point I would make is that the cost of doing business in South Australia will be assisted potentially by the passage of the legislation, but this and much more will need to be done if our businesses in South Australia are to be cost competitive on the national and international stage. This is a necessary step, but not a sufficient step in terms of returning South Australian businesses to a cost competitive position, as I said, on the national or international stage.

The second point I would make is this: Premier Weatherill and the Weatherill government seek to claim credit for cleaning up a mess that has been a mess solely of its own creation over a period of 12 years. I am reminded of the juvenile arsonist who has been caught burning the school building down and has been compelled under a community service order to clean up the mess that he has created, then seeking to claim credit for cleaning up or attempting to clean up the mess that the juvenile arsonist has created in the first place.

Premier Weatherill and the Weatherill government are the juvenile arsonist. They have burnt the place down and they have created the mess. They are being required under public pressure to do something about it, to clean up the mess, and now they seek public support and approval for cleaning up the mess that they created in the first place. I seek leave to have incorporated into Hansard without my reading it a purely statistical table on the unfunded liability, liabilities and assets of the WorkCover Corporation from 1987-88 through to the most recent figures of 2013-14.

Leave granted.

Table 1

Table 1 illustrates the assets versus liabilities, together with the percentage of how fully funded WorkCover has been since the establishment of the scheme. It clearly shows the closest the Corporation has come to being fully funded in the last 10 years was 97.3 per cent in 1999-00.

Year ending30 June Total Liabilities($m) Total Assets($m) (Unfunded Liability)($m)$m %Fully Funded
1987/1988 125.8 115.7 (4.3) 96.7
1988/1989 281.0 248.3 (18.2) 93.6
1989/1990 532.8 372.3 (150.0) 72.3
1990/1991 678.4 530.5 (134.5) 80.4
1991/1992 755.4 641.4 (97.2) 87.3
1992/1993 754.4 736.4 5.2 100.7
1993/1994 824.1 688.4 (111.4) 87.0
1994/1995 945.4 694.5 (207.1) 70.7
1995/1996 831.8 624.7 (207.1) 74.7
1996/1997 719.2 609.2 (110.0) 84.7
1997/1998 729.4 650.5 (79.0) 89.2
1998/1999 743.9 714.9 (29.0) 96.1
1999/2000 836.3 814.0 (22.3) 97.3
2000/2001 860.5 804.9 (55.5) 93.5
2001/2002 949.4 757.0 (192.4) 79.7
2002/2003 1,312.7 721.6 (591.1) 55.0
2003/2004 1,444.0 871.9 (572.1) 60.4
2004/2005 1,772.6 1,120.4 (652.1) 63.2
2005/2006 1,922.8 1,288.1 (694.1) 67.0
2006/2007 2,398.5 1.546.0 (843.5) 64.4
2007/2008 2,512.4 1,528.4 (984.0) 60.8
2008/2009 2,449.0 1,390.0 (1,059.0) 56.7
2009/2010 2,553 1,571 (982) 61.5
2010/2011 2,706 1,754 (952) 64.8
2011/2012 3,403 2,014 (1,389) 59.2
2012/2013 3,764 2,398 (1,366) 63.7
2013/2014 3,899 2,767 (1,132) 71.0

Note: Figures from 2009-10 onwards have rounded to the full amount.

The Hon. R.I. LUCAS: This table is an extension of the table produced in a report I will refer to in a moment by the Parliamentary Committee on Occupational Safety, Rehabilitation and Compensation in 2012, which produced figures through to 2008-09, and my office has gone to various WorkCover reports since then, including the one tabled today for 2013-14, to extend the time line of the figures.

What this table shows is the performance history in terms of the unfunded liability of the scheme, its liabilities and assets and the percentage of the scheme that is fully-funded or not over that 26-year period. If I go back to the commencement of this particular period of the Labor government, the last full year of the former Liberal government was 2000-01, and in June 2001, the unfunded liability of WorkCover was the sum of $55.5 million and the scheme at that stage was almost fully-funded at 93.5 per cent funded.

The Hon. R.L. Brokenshire: Well managed, it was.

The Hon. R.I. LUCAS: As the Hon. Mr Brokenshire referred to earlier in his comments and he does so by way of interjection again. What we see since that period of 2000-01 is a steady deterioration, so that for each of the last three years, the unfunded liability has been well in excess of $1 billion: in June 2012, $1.389 billion; in June 2013, $1.366 billion; and this year, in June 2014, a slight reduction to $1.132 billion. In terms of the percentage of the scheme that is fully-funded or not, comparing it to 93.5 per cent, which is what the Labor government inherited when they took power in 2002, instead of 93.5 per cent for each of the last three years, it has been 59.2 per cent funded, 63.7 per cent funded and 71.0 per cent funded.

Just looking at the financial performance of the scheme which, when one listens to the public debate from the Premier and the government, seems to be the major driver of the legislation that we have before us, it is clear that the mess has been entirely created by 12 years of financial mismanagement, appalling governance, interminable reviews, an interminable number of reviews and attempts and promises to fix the problem. I will refer to a number of those, in particular the most recent attempts in 2008, where all sorts of claims were made by the Labor government about fixing the scheme, but they were not the only claims that were made over this 12-year period.

If I can refer to the seminal work of the Parliamentary Committee on Occupational Safety, Rehabilitation and Compensation tabled on 27 November 2012, the committee was chaired by the member for Ashford. I was a member, and I cannot remember but I think the Hon. Mr Gazzola was a member up until October 2012—so, just before that time—and the Hon. Mr Kandelaars, as is his way, came in to take all the glory in October 2012, just in time for the tabling of this report.

This particular committee looked at the performance of WorkCover and not just the financial performance. What we were interested in, and what a number of us have been raging on about, was the appalling performance of WorkCover right across the board, not just in terms of its financial performance but in terms of its impact on workers and in particular in terms of rehabilitation and return to work. The executive summary of that particular report—chaired by, as I said, a Labor member, and unanimously supported, I think, on my recollection—said:

The performance of the workers compensation rehabilitation scheme in South Australia has been called the worst in the nation—

and it refers to the SafeWork Australia Comparative Performance Monitoring Report in 2011. The executive summary continues:

In South Australia, the return to work rate has consistently been below the national average every year that the Australia & New Zealand Return to Work Monitor—

The Campbell return-to-work monitor—

has been conducted.

I repeat, every year the return-to-work performance in South Australia has been worse than the national average. It continues:

It is currently the lowest of any other state or territory. The scheme's unfunded liability is the highest in the nation.

That was at that stage at $1.13 billion at 30 June 2012, up from $437 million from 30 June 2011, shifting the funding ratio from 64.8 per cent to 59.2 per cent. It continues:

Other indicators which reveal South Australia's poor performance include a high average claim length, high average claim cost and low stakeholder satisfaction ratings. Statistics and evidence presented to the committee showed that the use of rehabilitation services is high in South Australia but that satisfaction ratings for these services is low. This, in conjunction with poor return to work rates, indicated to the committee that rehabilitation in South Australia is not operating effectively.

There was a lot of evidence taken by that committee on the actual impact and performance of WorkCover in relation to injured workers, in relation to the rehabilitation services and return-to-work services that were supposedly being provided to injured workers in South Australia.

It is sad testimony to a Labor government that, after 12 years we are still talking about the worst performing workers compensation scheme in the country in terms of the impact on employers, that is, as the Hon. Mr Brokenshire has referred to, the average levy rate for employers was double, and sometimes more than double, the national average and the average of employers in every other jurisdiction, particularly on the eastern seaboard. That is the financial impact.

I would have thought, if I was a union representing a Labor member of a Labor caucus, if on the one hand we had the most expensive and costly and pricey scheme in the country but if we were producing Rolls Royce performances for injured workers in terms of returning them to work, then, as a card carrying member of the union and as a card carrying member of the Labor Party, I might put my hand up and say, 'It's costing us double but we are achieving double the value in terms of return to work and rehabilitation for injured workers. We are getting them back to work better. We are providing a better service. Their satisfaction with WorkCover is much better than the satisfaction of workers with the equivalent corporations in other states. They are happy with the service they get from claims managers and WorkCover and the rehabilitation service providers.'

What we knew and what that committee report ultimately found was that it was actually the reverse. We were paying twice-plus in terms of the costs of the scheme but we had the worst return-to-work rates in the nation. The satisfaction level of workers, injured workers in particular and their representatives, was the worst in the nation. We had the worst of all worlds. We had the worst costed scheme in the nation and we were providing the worst services for injured workers in the nation. That is under 12 years of Labor government.

That is why I say: shame on all of us in South Australia but, in particular, shame on those who represent the workers in, supposedly, the workers' party, the Australian Labor Party, because they have been in government for 12 years and what have they done about it over a 12-year period? They have done nothing.

We have heard various people roar like lions in the corridors of power in the South Australian Parliament about what they do sticking up for injured workers but, when they get into the caucus or the cabinet or when they come into this parliament, they whimper like pussy cats. They will roar like lions to their union mates and say, 'We'll stick up for you. We'll stand up for your interests,' but there is nothing when it really matters.

I hope that during this particular debate members of the Labor caucus will speak up. I note that in the House of Assembly only one member of the Labor caucus stood up and spoke, and that was the member for Ashford. I would be pretty confident, given the recent record, that as the Hon. Mr Gazzola nears his final days in this parliament, he may well stand up on behalf of the workers and speak fearlessly. He did not speak in 2008, and I reminded him of that at the time. I would certainly be encouraged if the Hon. Mr Gazzola, at least, had the courage to stand up, remember his union colleagues from the left within the union movement, and be the lone voice.

The Hon. J.S.L. Dawkins interjecting:

The Hon. R.I. LUCAS: We will wait and see whether the Hon. Mr Kandelaars will speak. As the Hon. Mr Gazzola referred to the Hon. Mr Maher as the new left, we would be pretty convinced that the representatives of the new left will certainly not be standing up and speaking out on behalf of the workers.

The Hon. J.M. Gazzola: You described us as fat, dumb and mute last time.

The Hon. R.I. LUCAS: Fat, dumb and mute. I did describe all of you as fat, dumb and mute last time, and I think as useful as garden gnomes. Only time will tell this time around. We will wait and see whether the supposed representatives of the workers will follow—very tentatively, I might note, from the member for Ashford. She gave a mild and tempered speech, but at least she spoke on the bill in the House of Assembly. I seek leave to conclude my remarks.

Leave granted; debate adjourned.


At 18:28 the council adjourned until Wednesday 15 October 2014 at 14:15.


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