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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 14 October 2014.)

The Hon. R.I. LUCAS (20:41): I rise to continue my remarks that I commenced last evening. In summary, last evening I indicated that this bill was seeking to clean up a mess that had been created by the financial mismanagement, negligence and incompetence of a Labor government over 12 years. My colleague the Hon. Mr Gazzola reminded me when last we debated the WorkCover legislation I had unkindly referred to him and other Labor backbenchers as sitting there 'fat, dumb and mute' and hoped that they would not do the same thing this time. I summarised by saying that they were about as useful as garden gnomes in terms of representing workers in the WorkCover debate of 2008. Time will tell in terms of this particular debate as to whether any of them are prepared to speak up.

In terms of the sad history of the Labor government's mismanagement of workers compensation legislation, one only has to look at a number of the decisions that the government has taken at various stages over the last 12 years. The government's quixotic attitude towards the use of redemptions is a perfect case in point. Depending on which particular minister at which particular time in which particular government and under which particular management of WorkCover, we had an approach as to whether or not redemptions were to be either allowed, encouraged or discouraged.

At varying stages we had ministers, and we had learned reports which had been written for those ministers, indicating that the use of redemptions encouraged a culture which was not to be supported within workers compensation administration in South Australia and, therefore, those Labor ministers and administrations decided that redemptions should not be encouraged.

At other stages over the last 12 years, WorkCover and ministers have gone on redemption binges to clean up or remove from the books significant numbers of injured workers. I think anyone who traces the history of government policy in relation to the use of redemptions over the last 12 years certainly would not be able to see any coherent thread in terms of this Labor administration as to whether or not they were going to support them.

As you would know, Mr President, the terms of the legislation in 2008 essentially were meant to almost prevent the use of redemptions except in the most exceptional of circumstances, and that again was part of the package of changes that the government brought to the parliament in 2008. Prior to that—during, in and around about the period 2005-06—we had the significant debate at the time, again championed by this Labor government, that in some way the introduction of a monopoly claims manager was going to significantly improve the administration of the WorkCover scheme and would in some way significantly reduce it by, I think they used a figure of, up to $100 million.

Members interjecting:

The PRESIDENT: I would just like to remind honourable members that the Hon. Mr Lucas is giving a speech.

The Hon. R.I. LUCAS: I am used to people not listening to what I am saying, Mr President. It does not worry me. In terms of the argument the government used for a monopoly claims manager, they convinced themselves that, by removing any semblance of competition in terms of a claims manager and any pressure on the claims manager, in some way that would improve the performance of the claims managers and also reduce significantly the unfunded liability of the scheme. They similarly convinced themselves that, if they had a monopoly legal services provider, again, that would significantly reduce costs and make major savings and reduce the extent of the unfunded liability of the scheme.

The naivety of the government, its ministers and management of WorkCover—and, indeed, the board of WorkCover at various times—was stunning for all to see. How some of those people could have convinced themselves that removing completely the element of competition in terms of, in particular, claims management, was going to be conducive to effective and efficient management of the workers compensation scheme defies belief. Indeed, the reality of the various reviews and reports in recent years has demonstrated that that was a disaster area.

I have referred to the inquiry by the Occupational Safety, Rehabilitation and Compensation Committee in 2012 and I was a party to that particular inquiry and, indeed, supported I think the initial reference in that committee to look again at WorkCover. I think in and around about 2007 or 2008 a motion moved in this house referring to the Statutory Authorities Review Committee inquiring into the mismanagement of WorkCover was passed and the committee met, I think, through the period of 2008-09, and its committee report was signed by the Hon. Carmel Zollo in February 2010 just prior to the 2010 state election.

That inquiry was brought about because of the significant deterioration in terms of the performance of WorkCover, major concerns in relation to its governance, that is, mismanagement and its performance in terms of the premiums being charged, the unfunded liability and also its appalling performance in terms of return to work.

It has been quite apparent for quite some time. Newer members elected to the parliament since 2009-10 would be unfamiliar with the background of that report but I just refer briefly to a number of the bits of evidence that were taken at the time and, in particular, to the minority report signed by the Hon. Terry Stephens and me in relation to one particular aspect of that.

Other major issues that were raised during that report were significant concerns about the waste of money in terms of rehabilitation and the appalling performance in terms of rehabilitation and the return-to-work performance of the scheme. Significant questions were raised at that time about conflicts of interest to which I think the Hon. Mr Brokenshire has referred in terms of board member Sandra De Poi and the very significant contracts that her companies received from WorkCover.

One of the major concerns during that particular period were the significant concerns obviously being raised not only by whistleblowers within WorkCover about the influence of Ms De Poi and the contracts that were going to Ms De Poi, but clearly also coming from many others who were active within the rehabilitation industry.

The report refers to evidence provided by Les Birch, someone who would be very familiar to many on the left of the Labor Party and at that time a workers compensation advocate for the CFMEU, who spoke out and gave evidence quite passionately about some of the concerns in relation to rehabilitation, conflict of interest issues and a number of others. Even Janet Giles, SA Unions former board member, gave evidence which raised some concerns in relation to Ms De Poi's position on behalf of the union movement, along with representatives of injured workers and the Work Injured Resource Connection's Ms Rosemary McKenzie-Ferguson, so a large cross-section of people raised concerns at that time.

One of the issues was the fact that, if a particular company was getting a lion's share of the rehabilitation contracts and their performance could be demonstrated to have been much better than all the other performers, there can be little criticism made of that and that was an issue we pursued during that particular inquiry and then again through the inquiry of the Parliamentary Committee into Occupational Safety, Rehabilitation and Compensation.

Sadly, through all that period, the government and WorkCover could not demonstrate to either of those committees that rehabilitation contracts were being awarded on the basis of those who did the best work in terms of returning injured workers to work. One would think that over the space of 12 years or so WorkCover and the government could have constructed some mechanism at some stage in that 12-year period.

With the millions of dollars—and we were spending, as I indicated yesterday, significantly more on rehabilitation—one would think it would not be beyond the wit or wisdom of somebody within the government or WorkCover at some stage to develop a mechanism where, if we were going to spend all this money, we could actually demonstrate that we were directing the resources to companies and individuals who were doing wonderful work with injured workers in terms of their performance, but WorkCover at no stage was able to demonstrate that.

The closest we got in the 2012 inquiry was that WorkCover was working assiduously on trying to develop performance indicators and a new process and mechanism as to how to measure return-to-work performance and in terms of allocating contracts, and that was the concern. Certainly some information that was leaked from a whistleblower within WorkCover indicated on the basis of those blunt figures—and they were published in one of the media outlets as well at that time—that Ms De Poi's companies could not demonstrate that their return-to-work performance was better than the other companies with which they were competing and that is what, of course, set up a lot of the concerns.

There were many others which have been raised in the various committees and I have raised publicly, but I do not propose to delay the debate today. It was a perfect example of something as critical as rehabilitation and return to work where we were spending tens of millions of dollars over a period of time and where the financial mismanagement and the negligence of governments, of ministers, of boards, and of WorkCover management demonstrated just one of the problems that we had with WorkCover, governments and management.

The second example that I will take out of the Statutory Authorities Review Committee report related to the issue of a monopoly contract in terms of claims management. The evidence of this committee and others showed that there were very significant concerns about the way Employers Mutual managed claims management during the period they had the monopoly arrangement, but this minority report, signed, as I said, by my colleague the Hon. Terry Stephens and myself, related to two issues. One was the fact that the government and WorkCover had decided to offer the monopoly contract to Employers Mutual. Frankly, the evidence from everyone was that, right until the death knell, no-one realised that the government and WorkCover were going to award a monopoly contract.

Most of the competitors and the tenderers at that time were assuming that there would be a panel of two or three, which is subsequently what we have (we have two claims managers now), which to all of them seemed to make sense. No-one assumed that the government or the board would be stupid enough to give, in essence, the whole lot to one claims manager but, sadly, that is what occurred.

Then what happened is that WorkCover renegotiated this contract with Employers Mutual, and there was a lot of suspicion that Employers Mutual had engaged in what might be described as the 'bid low and then renegotiate later' mechanism of winning the contract. I am sure that Employers Mutual at the time denied and now will deny that was the case, but that was certainly the suspicion from others in the field. Those suspicions were heightened when, soon after, the WorkCover board and the government renegotiated the contract with Employers Mutual. I want to read in full the one page of the minority report signed in February 2010. It is headed 'Renegotiated Contract', and it states:

1.) At the December 08 meeting of the Committee, Liberal Members first questioned WorkCover representatives about industry concerns that WorkCover was renegotiating the five-year claims management contract WorkCover had entered into with EML in 2006. Industry concerns were that WorkCover was offering EML a new contract with significant increases in revenue, less than halfway through a five-year contract.

2.) Liberal Members are disappointed in the evidence of the former Chairman of WorkCover, Mr Bruce Carter, who told the Committee that EML would not receive windfall financial benefits from the Government's 2008 legislative changes under the original contract. The current Chairman, Mr Bentley's, evidence made it clear that that evidence was not correct.

3.) Liberal Members strongly oppose the view of WorkCover and the majority of the Members of the Committee to prevent greater details of the potential multimillion dollar benefits to EML from the renegotiated contract to be released publicly.

4.) Liberal Members accept some details of the renegotiated contract should be kept confidential, however, at the very least, details of the maximum 'upside' and 'downside' that could be received by EML under the renegotiated contract should be made public.

5.) The renegotiated contract was finally signed in April 2009 but was made retrospective to July 2008. In the first year under the renegotiated contract (2008-09), EML received $48.9 million, or an increase of $17.2 million over 2007-08 payments.

6.) At a time when significant criticism remains about the management of WorkCover, Liberal Members believe it is unacceptable that the Rann Government and WorkCover should allow such a massive increase in payments without appropriate public scrutiny and accountability.

7.) Liberal Members believe WorkCover need to answer publicly the question as to whether EML won the original tender on the basis of being willing to accept 'upside and downside' conditions of the proposed contract that were unacceptable to other bidders and whether the renegotiated contract has significantly amended those 'upside and downside' conditions in a way which provide a significant financial benefit to EML.

I have read the minority report in its entirety because it is yet another example. Of the two examples I have given, one was the mismanagement of rehabilitation contracts, return-to-work processes, and the conflict of interest issues of board members and others. The second one was significant mismanagement in terms of the decision to have a monopoly supplier claims manager and then, very soon after negotiating the monopoly arrangement, secretly renegotiating a contract with a significant multimillion dollar financial benefit to Employers Mutual ensuing as a result of those decisions. These were typical of the financial mismanagement of the WorkCover scheme which has led us to the sort of mess we see before us now.

We were told that they had fixed the mess in 2008 when we debated the major changes to WorkCover. We were told at the time that the government's WorkCover reforms would help us deliver a workers compensation scheme that was fully funded, fair to workers and affordable. We were told that the government was committed to maintaining the best and fairest workers compensation scheme in the nation.

We were told that changes to the WorkCover scheme were aimed specifically at improving the rehabilitation and the return-to-work rates of injured workers and at making the scheme more affordable and efficient. We were of course told that the government was going to remove the unfunded liability, reduce the levy rates to somewhere between 2.25 and 2.75 per cent, and that in the end everything was going to be basically hunky-dory with the workers compensation scheme if only the parliament would support the 2008 WorkCover changes.

We, the Liberal Party, were sceptical at the time, but ultimately the government, with the actuarial advice they said they had, indicated that if the legislation went through all those good things would happen to workers compensation in South Australia. The reality is that six years later, as we are now, none of that has occurred. The Deputy Premier has referred to the scheme, in his words, as being 'buggered', and many others—injured workers, long-suffering employers—would use even stronger language than that to describe their experiences with WorkCover and the mismanagement and performance of WorkCover over the last six years.

So we approach this particular debate, I guess, rightfully sceptical about the claims that again have been made by the government. We are hopeful as a political party, as an alternative government, that on this occasion, unlike on all the previous occasions, that the lessons might have been learnt, that some of the claims for this package of changes will be delivered, that they will be successful and that we will see not only the reduction in levy rates and the removal of the unfunded liability but, hopefully and just as importantly, improved rehabilitation performance and improved return-to-work figures for those injured workers under our workers compensation scheme. Time will tell on all those indicators.

We accept that there are some key differences in terms of this package of change which will give greater hope for the achievement of some of the lofty goals which have been outlined by all who support the scheme. Certainly, as the Liberal leader, the member for Dunstan, has indicated, the Liberal Party is prepared to demonstrate or has already demonstrated its willingness to work with the government in terms of delivering on a significant WorkCover reform package.

In terms of looking at the relative performance of WorkCover, I just want to briefly refer to one other section of the Statutory Authorities Review Committee report which refers to the evidence Mr Robin Shaw gave on behalf of Self Insurers of South Australia (SISA), in terms of how their organisation and their employers work with exactly the same legislation but obviously much more successfully. The committee reports in the following ways. Mr Shaw also—

Members interjecting:

The PRESIDENT: Could I just ask members to be a little quieter.

The Hon. R.I. LUCAS: Mr Shaw also gave evidence about the claimed benefits of self-insurance, that is:

Comparative levy cost was lower at 1.7 per cent rather than 3 per cent;

Lower lost time claim frequency per $ million remuneration;

Lower average claim numbers, donations and costs resulting in self-insurers having 22 per cent of claim liabilities, even though 36 per cent of the scheme; and

Better return to work performance.

In summary, Mr Shaw reported that some companies were saving up to $7 million per year by becoming a self-insurer.

The committee recommended there that:

WorkCover should stop its practice of significantly increasing fees, such as its 'exit or discontinuance' fee designed to discourage companies from becoming self-insured. In particular, WorkCover should not proceed with the current fee increases outlined in [a particular regulation that had been] gazetted on 26 November...

That recommendation was disagreed to by the two Labor members of the committee at the time—the Hon. Carmel Zollo and the Hon. Ian Hunter. The Hon. Mr Hunter, given the position he is adopting now, might be interested in having a look at the recommendations he supported on the Statutory Authorities Review Committee at some stage (or maybe one of his staff members might) to contrast the position he adopted in that report with the position he is adopting as a minister in the Weatherill government now.

What that was demonstrating was that self-insurers, according to Mr Shaw, were using the same legislation—the workers compensation legislation—yet delivering significantly better performance both in terms of financial performance and in terms of return to work for injured workers under the same legislation. I think that was the sort of evidence that led committee members to believe that what we were seeing was significant mismanagement within WorkCover by the board, by management and by ministers of the WorkCover legislation. Clearly, self-insurers were managing, as I said, to perform significantly better than WorkCover were under the same legislation.

In relation to the bill before us, I think it is fair to say that the general feedback we have received as we have consulted with stakeholders from employer organisations has been supportive of the legislation, certainly encouraging the Liberal Party and other non-government members to support the legislation. I think the major driver of that is obviously the proposed reduction in the average levy rate to 2 per cent and the associated potential saving in aggregate to employers of about $180 million a year; that is the essential driver for many of the business organisations.

It is fair to say a number of those business organisations, when first consulted by the government, opposed some significant elements of the reform package—in particular, the reintroduction of common law—but the government has adapted its common law provisions, which we will discuss later in the committee stage. The general feedback from employer organisations has been that, whilst it does not obviously include everything they would have wished for, and many of them still oppose common law even at the 30 per cent threshold, they believe that the package should be supported on the basis that it gives them the best chance of reducing premiums and solving some of the problems they see with workers compensation.

Some of the more trenchant of the employer organisations or those with a stronger view opposed to the reintroduction of common law argue that, whilst the current threshold is 30 per cent, once the toe is in the water it will be relatively easy for a future government and a future parliament to reintroduce legislation to change the 30 per cent threshold. But, as I said, in the end, virtually all of the employer organisations have basically said, on balance, they would like to see the package supported. Some have raised particular issues in a couple of areas where they would be prepared to support amendment of the package, and I will address those in a moment. The Liberal Party is currently considering its position in relation to a limited number of potential amendments.

I have to say that, as with some other members, I have been amazed, as the shadow minister for industrial relations, having contacted SA Unions and number of the unions, seeking their viewpoint on the legislation, that until this week I had received no contact at all. Earlier this week, I received a copy of a letter the Police Association of South Australia had, I think, released publicly, and also sent to minister Rau at an earlier stage, indicating their strong opposition to the legislation and raising some individual concerns about aspects of the legislation across the board. I think the Hon. Mr Brokenshire has referred to that, and I will not go into it in detail.

Elizabeth Dabars from the Australian Nursing and Midwifery Federation did send me an acknowledgement letter which indicated that they continue to negotiate with the government, and if at any stage they wanted to come back with more detail in terms of any concerns, they would do so. Other than that acknowledgement letter and an indication that they were continuing to negotiate with the government, I have had no further contact from the nursing federation.

When one looks at the CFMEU, SA Unions, the AWU, the AEU and the PSA—a significant number of representatives of workers in South Australia—not one of them took the trouble to put a point of view to me. A number of other members on the crossbenches have indicated to me that they too had received little or no contact from unions or union representatives in relation to the WorkCover bill, which also surprised me. I have seen every change in WorkCover legislation since 1982 go through this parliament, and this would be the first time ever that the union movement has demonstrated little or no interest in putting a forward a point of view one way or another on workers compensation legislation.

I have seen changes introduced by Labor governments and Liberal governments. It is fair to say I think unions tend to get more het up with amendments moved by Liberal governments than Labor governments, Mr President. I think you and your colourful history can attest to views that you might have expressed in the mid-1990s about workers compensation legislation. You gave very powerful speeches, with your long hair flowing, on the steps of Parliament House and in Victoria Square, Mr President, railing against the sins of Liberal governments on workers compensation legislation.

I can assure you that in terms of the modest attempts at reforming WorkCover of the mid-1990s, they have been nothing compared to the Labor government attempts of 2008 and 2014. Putting that interesting observation to the side, I have got to say that this is the first time I have ever experienced the fact that union representatives have not even taken the trouble to express a point of view, not only to the Liberal Party but to some of the members of the crossbenches who have been regular representatives of their views in the parliament, particularly during the 2008 debates that we can recall.

It is therefore very hard to put on the record what the union view is of these changes. Again, I hope that maybe a member of the Labor caucus might stand up and indicate the views of the unions that have been represented to them in relation to the legislation. Even if they think it is the greatest thing since sliced bread and they congratulate the Labor government on the reforms to workers compensation in South Australia, we would welcome hearing that via the Hon. Mr Kandelaars, the Hon. Mr Gazzola or the Hon. Mr Maher, or indeed anyone who might have the courage to stand up—

The Hon. K.J. Maher: Tung.

The Hon. R.I. LUCAS: The Hon. Mr Ngo might have the courage to stand up and at least indicate what the union views might be on the Labor government initiatives. We would be delighted to know what Mr Malinauskas's views are, or his union's, given that he is on the board.

The Hon. K.J. Maher: Ring him up. I'm sure he'd like to hear from you.

The Hon. R.I. LUCAS: Well, no, he is on the board, so he may well be conflicted in relation to this. If I was receiving $50,000-plus, or whatever it is, I would probably be conflicted too. I am sure his union has a view. We would like to know what the shoppies' view is. The Hon. Mr Ngo may well be able to indicate that the shoppies are 100 per cent behind this legislative reform. It would be useful for us to be informed of the views of prominent unions in South Australia that have generally always engaged in debate on key issues that impact on the rights of workers in this state.

On the one hand we have essentially the business employer groups strongly supporting, with some reservations about some things—unions, who knows? There is another group that has put a point of view to us. Clearly there have been significant concerns raised by representatives of the legal fraternity. The Australian Lawyers Alliance and the Law Society have raised some significant issues. There might be an opportunity during the committee stage of the debate for them to put some of the concerns that they have raised on behalf of the legal fraternity and also on behalf of injured workers, as they would put it.

The AMA has made quite a considered submission and it has significant concerns about a range of issues. I had a discussion with minister Rau today and it appears that the AMA submission that I have raises some issues, one of which has been picked up by the government, clearly subsequent to an earlier draft of the bill that the AMA may have been referring to. Nevertheless, the AMA still has some significant issues in its correspondence to members.

The Australian Rehabilitation Providers Association might also have been working off an older or an original version of the draft of the bill, but it has raised some significant issues as well. One of the issues, which, again, we will have the opportunity to debate during the committee stage, is the potential impact on the removal of secondaries in the government legislation and what impact that might have on the potential of employers to employ people who have a workers compensation history. The association has raised the concern, as have some others, as to whether or not this particular change may well mean that some injured workers might be less likely to be employed by employers.

Certainly in the minister's summary for this, I know that WorkCover employees and the minister's advisers will assist the minister with the provision of some information, but certainly at the closing of the second reading it would be useful to get from the government its response to the issue that the Australian Rehabilitation Providers Association has raised, about the potential impact of the removal of secondaries. What is the legal position? There was some discussion on this in the committee stage, about the right of an employer to ask an employee about their workers compensation history and what are the rights of injured workers in relation to not answering those questions. Clearly, if the questions are asked and you do not answer them, that probably answers the question anyway, from the employer's viewpoint.

I would be interested in the government's advice on the rights of both employers to ask and employees, or potential employees, to either respond or not respond, and what the government's advice is in terms of the potential impact on the capacity for injured workers to find work under the new arrangement. As I said, there was some debate on that, which I noticed in the House of Assembly, but I would be interested in the government's considered position on that so that in my discussions with the Rehabilitation Providers Association I can at least say, 'Well, look, this is the government or WorkCover's view on this and that your concerns are not well founded and they believe that the injured worker's position will be adequately protected in some way.'

As some members might be aware, all non-government members received more than 20 pages of amendments to the government's original bill in the dying days before the debate in the House of Assembly. I think the bill was debated on the Tuesday and 13 pages of amendments arrived on the Friday, I am going on memory here, then four or five pages on the Saturday or Sunday, another two pages on the Monday and then there were another two pages of amendments that were received yesterday in relation to it. That can be a criticism of the government, it might also be a fact that at least they are improving it as we go. The legislation is evolving and if members raise issues then, potentially, the minister may well be prepared to have a look at improving the legislation.

Our position, as the member for Dunstan has outlined in another place, is that we are not seeking to delay the bill. We will not be a part of any deliberate attempt to delay or filibuster the legislation. We have indicated, through the member for Dunstan, our support for the broad reform package. We will therefore take some convincing in terms of supporting significant amendments to it. We are certainly supportive of the notion of ensuring the capacity to deliver, to the extent that it is possible, the 2 per cent average levy rate and hopefully better because 2 per cent still means it will be the most expensive workers compensation scheme in the country. Ultimately, we have to aim for 1.5 per cent or lower. We are advised that WorkCover management and the board believe that with the legislation they might be able to do significantly better than the 2 per cent. Again, time will tell.

Our general position will be that we will take a power of convincing, I guess, to adopt or support amendments which might impact on that 2 per cent levy rate or amendments that might impact on the removal of the unfunded liability, the $1.1 billion plus that is there on the most recent figures. There are some other areas which I will canvass which we do not believe will impact on either of those and we are certainly considering potential amendments in a couple of areas. We are also having discussions, as we indicated we would do, with minister Rau and his advisers in terms of the government's position on some of those amendments. We will ultimately make a decision when our party room next meets on the issues.

I am assuming that some of the crossbenchers may well have amendments. One or two of them have already indicated that they are contemplating amendments. I think the Hon. Mr Brokenshire indicated in his contribution that he was looking at, potentially, some amendments in relation to representatives of injured workers in South Australia and one particular provision which I will address in a moment. So, we will listen to those particular debates and arguments before we conclude a final position on each of those.

I now want to address some of the areas of potential amendment or particular areas that we are seeking further information on from the government. I did get an answer from Minister Rau today on one of the issues, but I would like to have it put on the public record: the position of the WorkCover Ombudsman is being removed, and I would like it placed on the public record what the termination arrangements will be for the WorkCover Ombudsman. My understanding is that there is no termination payout other than whatever accrued leave entitlements he might have. I seek clarification and confirmation from the government in relation to the termination arrangements, should the legislation pass, for the WorkCover Ombudsman.

Secondly, the government has made some claims in the second reading debate and also in private briefings (and I do not have the exact figure) that somewhere in the order of 94 per cent to 96 per cent of workers will be 'better off'—I think that was the phrase—if this legislation passes. I seek clarification of the exact number and how that number has been calculated, to put on the public record, and also clarification as to whether it is 'better off' or 'no worse off' in terms of the government's advice on that particular number.

I seek further information in terms of the number of individuals who might be impacted, on an annual basis, or would have a greater than 30 per cent WPI. I have had some informal advice that that is in and of the order of 35 to 40 per annum. Clearly, the 30 per cent WPI threshold is an important one in the context of this legislation in terms of entitlement to benefits or issues of common law access. As I said, I have had some informal advice that the number is in the order of 35 to 40 a year but I seek clarification as to whether that is correct out of the total number of claims.

I also seek clarification—again, I am not sure where I obtained the figures but I think at some stage someone quoted to me that 72 per cent of workers were back at work within four weeks and I think it was 92 per cent or about 90 per cent were back at work within the 52-week period. That 90 per cent or 92 per cent figure is obviously getting pretty close to that 94 per cent or 96 per cent figure that the government quotes as being 'better off'. I seek clarification of those particular figures that someone has given me at some stage, and whether the government or WorkCover can put on the public record the precise numbers so that they can be part of the public record and part of this particular debate.

I seek clarification in terms of an issue that was briefly explored in the House of Assembly debate. Clause 18 of the bill is the employer's duty to provide work and issues were raised there I think by the member for Schubert. I am not sure who else might have raised the issue. Some employer groups have raised this issue with me again and that is that after the two-year period, when income maintenance concludes and, in essence, WorkCover wipes its hands of the financial responsibility for the injured worker, the question has been raised as to whether under clause 18 (the employer's duty to provide work) in what circumstances is there an ongoing responsibility on the employer to continue to provide work for an injured worker.

In some of the briefings that I have had already I have been given some information but I would like to see that information clarified and put on the public record; I guess as to the government's position on it. My understanding of the advice that I have received is that this is an existing requirement I think from the government's viewpoint that ultimately any dispute would be resolved by the employment tribunal.

Some of the employers, of course, are not entirely comforted by the fact that that will be resolved by the employment tribunal but I just seek clarification as to whether, if that is the current position, does the Workers Compensation Tribunal similarly resolve the issues currently and the employment tribunal resolution of the issue under the proposed scheme just mirror the current arrangements or has it been changed in any way? I would seek some clarification in response to the second reading of the government's interpretation of that, and I would certainly flag that we will further explore the implications of clause 18 during the committee stages of the legislation.

One of the big issues that the Liberal Party has been asked to address has been the issue of the employment tribunal. Anyone who followed the House of Assembly debate will know that there is a significant body of opinion within the Liberal Party, which reflects a significant body of opinion within a number of employer groups, that it makes no sense to establish a new employment tribunal at a time when the government is patting itself on the back for gutting and removing a quarter or more of the number of boards and committees in South Australia.

As members will be aware, the government is to introduce omnibus legislation to get rid of a significant number of boards and committees. The Premier has nailed his colours to the mast, saying that a lot of these are a waste of space and why don't we merge, amalgamate or abolish a number of these bodies when it is possible.

A number of employer groups have said, 'Well, we hear what the Premier says. Why, then, are we going to the trouble of establishing an employment tribunal when we have SACAT and we can just seamlessly slip the workers compensation issues into one of the streams, or a new stream, of SACAT?' That is certainly a strong view being expressed by a number of employer groups, and as the House of Assembly debate will indicate, a number of members of the Liberal Party have fairly represented those particular views.

The minister will put down on the public record their position, but I had a further discussion with minister Rau about the issue today and flagged the fact that we had not finalised a position but we were contemplating amendments, because clearly this is not something that would impact on the 2 per cent average levy rate or remove the unfunded liability, and that this was an issue that we were still considering.

Minister Rau's position—and I am sure the minister in this chamber will put on the public record his position—I think fairly reflected the views he expressed in the House of Assembly debate and that is, if I can understate the case, they are not attracted to that particular notion. He has provided me with some information from Justice Greg Parker, who is the president of SACAT; I think that is his formal title. I certainly intend during the break to catch up with Justice Parker, if he is willing, to explore his views.

I have only had a quick look at the information provided today, but I think a fair summary of that is that the government's view, and Justice Parker's view, is that it is all too difficult in the short term to be able to use the SACAT for the purposes that are currently being contemplated, that is, for workers compensation issues. It is fair to say that, and I think several years down the track, to use a phrase that I saw, Justice Parker and possibly even the government might not see opposition to an eventual move, but certainly Justice Parker's view anyway—let's leave it at that—is that in the immediate future he sees it as being administratively difficult.

I will certainly have that discussion, but I would have to indicate at this stage, for the reasons that I have, that the Liberal Party is considering its position in relation to that. I know some of the crossbenchers already have obviously had a similar lobby and have indicated support for moving to a position of using the SACAT. I guess what I am flagging is we will continue that discussion, but I am mindful of the advice that Justice Parker has provided.

It may well be that there is an alternative. I have not discussed this with parliamentary counsel or indeed the government or anyone yet, but it may well be that in some way there could be a trigger such as a sunset clause put in the legislation, if for example there was not to be a move to SACAT immediately, but some sort of trigger to be left in the legislation which would require a future government after an appropriate period of time (whether that is four or five years) to revisit the issue. That is some sort of sunset provision so that the employment tribunal would have to be reconfirmed by an extension of the legislation, or the government would at that particular time make a decision as to whether the SACAT was able to take over responsibility.

Something along those lines at least leaves the power with the parliament at some stage, albeit conceding that for a period of four or five years it would remain in the proposed employment tribunal. As I said, that is not something that I have discussed with anyone yet, but there are various options I guess between abolishing the employment tribunal and putting it in SACAT or just accepting the employment tribunal. I am flagging I guess at this stage a willingness to explore all of those options, and we will have those discussions with the appropriate people at the appropriate time.

The issue of the industry cap has been an issue that has been explored in the House of Assembly, and I have received some correspondence from minister Rau which I will place on the public record. I had asked some questions in recent days about the actual impact on employers and I have received a note which is headed 'WorkCover premiums—effect of removing industry rate cap'. This is from minister Rau's advisers, from WorkCover, I expect:

If the Return To Work Bill 2014 passes in its current format, it is envisaged that there will be an average reduction to each industry rate of 27 per cent. This would result in almost all industries or 3,546 employers having base rates lower than the current 7.5 per cent industry rate cap.

Based on current figures, with removal of the cap under the new scheme, 99 employers in 4 industries (0.20% of all employers) will have an industry rate greater than 7.5%.

These four industries are described below:

They are:

Industry description: cutlery and hand tools; number of employers: 2; post reform industry rate: 10.72%;

Industry description: horse recreation and sport industry; number of employers: 75; post reform industry rate: 9.53%;

Industry description: nonferrous casting or forging; number of employers: 7; post reform industry rate: 9.06%;

Industry description: meat processing; number of employers: 15; post reform industry rate: 8.25%.

The note concludes:

To mitigate against a sudden increase in Premiums to these employers, the Government is considering phasing in a transitional period over 3 to 5 years to limit any increases to industry rates above 7.5%.

The minister has broadly indicated that in the House of Assembly and in the discussions I have had with him has again indicated that. I had flagged with him that the Liberal Party is considering a potential legislative amendment to require a transitional period of potentially five years for the removal of industry caps. The government's position is they would prefer not to see a legislative amendment and the minister is prepared to countenance either a statement in the house or a direction to the board to indicate as minister that he would direct the board to deliver a transitional period of the removal of the industry cap.

I am willing to indicate, on behalf of the Liberal Party, that we are prepared to contemplate achieving this mechanism without necessarily moving an amendment. My preferred option at this stage would be for the minister, on behalf of minister Rau, to read in this house the precise terms of a direction that he would indicate he would issue to the board in terms of a transitional period for the removal of the industry cap of five years. This note from the minister indicates a transitional period of three to five years.

The industry groups have indicated to me that they have requested a five-year transitional period. We are talking about a relatively small number of employers. It does not impact on the 2 per cent average levy rate goal, because essentially all it means is that for a period of five years other employers will, in essence, accept a slightly higher burden for this limited number of employers as they manage the transition to the removal of the industry cap.

So, I place on the record that request to the minister to see his response to that. Our request is that the precise words of a direction that he would issue to the board would be read so that we would know exactly the direction the minister would be issuing to the board in relation to this five-year transition period.

There have also been questions raised about amendments the government made to its own bill in relation to the 2 per cent target. In the original drafting of the bill was a very tight use of words (which I will explore in committee on this bill), which said that basically WorkCover had to achieve the 2 per cent average levy rate. The government amended its own legislation to indicate, in essence, that it will seek to achieve an average of 2 per cent.

There was an extended debate in the House of Assembly in relation to why the government did that. I seek for the public record in this debate, given that it has been further raised by employer groups with me, the minister outlining the reasons why they moved that amendment for the purposes of having it on the record during this debate. The government's proposal in the amendments now before us is that, 'if the corporation determines it will be unable to achieve the rate referred to in subsection (1) in relation to a particular financial year, the corporation must furnish a report to the minister that sets out the reasons for not being able to achieve that rate'.

There was some discussion by the member for Bragg on behalf of the Liberal Party about that particular report. I want to flag that this is an area where we will look at a potential amendment, unless we can arrive at some sort of understanding, agreement or undertaking from the minister in relation to this report. There is certainly an argument in that report from WorkCover—and the minister says that it may well be the global financial crisis or some particular reason—as to why it is just impossible for WorkCover to achieve this average levy rate of 2 per cent. We can all at least understand the theoretical possibility of that occurring.

To be fair to the minister, this was raised with him, I assume, on the run in the House of Assembly debate, but he would have had time to reflect on it now. The minister's initial response was, essentially, details of that report potentially would be made available when the annual report was produced. The annual report can arrive as late as October or November. I am assuming the minister will receive this particular report long before the end of the financial year. I am not sure how early WorkCover would make the decisions in relation to the average levy rate that would apply for the subsequent financial year, but one would imagine it would be at least a month or so beforehand. Potentially, the minister may well have received this advice in May and its details might not be produced until the annual report.

On the surface of it, it does not seem to make too much sense at all, because at some stage the fact that you have not achieved the 2 per cent levy rate will be announced by WorkCover or the government, and there will be public pressure to indicate why that is the case. One would think that access to the advice from WorkCover will need, in some form or another, to be made available publicly to others than just the minister.

The amendment that we would potentially be looking at would in some way require the report to be tabled in parliament within a certain number of sitting days after the minister receives it. The other alternative is an amendment provided at the time that the levy rate is announced publicly by WorkCover for the subsequent financial year. We do not have a view about it other than we think that, if WorkCover's going to provide the minister with reasons why they cannot achieve the 2 per cent levy rate, that information should be provided to a wider group and certainly to the parliament as to the reasons the WorkCover board has given.

It may well be that if it is made publicly available, as is the way with statutory authorities, the formal advice will be tailored and the board and management will provide informal advice as to further details; but that is the way of the world. There is not much that can be done if that occurs, but some information should be provided. I think there was an extended debate about this in the other place, and I flag that it is an issue on which the opposition will contemplate an amendment. We would like to have a discussion with the minister about that particular issue.

There are two final areas in terms of potential amendments, and one I have already flagged with the government. The member for Unley has been in active discussion with Group Training Australia for a long period of time, so I understand, but I only became aware of these discussions in the last few days. The discussions relate to particular concerns that they have with WorkCover recoveries against host employers. I had a brief discussion with the minister and his advisers today. They have undertaken to provide me with further information about this issue, which they believe I should be aware of. I have indicated that we have not finalised a view as a party yet. There is some willingness from members of the Liberal Party to be sympathetic to the claims from Group Training Australia and the problems that they have outlined on behalf of host employers.

I understand from the advice that I was given today that the government believes that there is significant information that should be made available to us before we can form a view about it. I indicate that I look forward to that information being provided and, secondly, in terms of the minister's response in this place, we would also be interested in putting on the public record the issues, as the government and WorkCover see them, in relation to Group Training Australia and the host employers and the reasons the government and WorkCover believe the current arrangements are fair to group training schemes, host employers, and to individual apprentices and trainees who might be injured as part of any group training arrangement.

The final area in terms of seeking information and potential amendment is this. The Hon. Mr Brokenshire raised some issues on behalf of advocates for injured workers, in particular that tireless advocate Ms Rosemary McKenzie-Ferguson, who has undertaken much good work on behalf of injured workers in South Australia. As I understand it, the Hon. Mr Brokenshire has not produced any amendments yet, but he is contemplating potential amendments to at least one of the clauses in the Return to Work Bill. I think it possibly relates to clause 29—Related initiatives. At the moment, clause 29 provides:

The Corporation may, as it thinks fit…

(c) encourage and support the work of organisations that provide assistance to workers who have suffered work related injuries.

One of the amendments that has been flagged to me was that, rather than 'may', it might be strengthened to 'must' or 'shall' or words to that effect. As I said, I have not seen the Hon. Mr  Brokenshire's amendments, but he has spoken generally of being sympathetic to the request. He has spoken privately to me to see whether or not we would be prepared to support amendment. We will reserve our position in relation to any amendment, obviously, until we have had a chance to see them and to consult on them.

I have briefly raised this issue already with the minister, but I wanted to flag tonight that I am aware that WorkCover in previous incarnations, I think in particular under the management leadership of Mr Keith Brown some time ago and even for a brief period after that, had a series of stakeholder groups (I am not sure what their formal title might have been)—and this was not the minister because there is an advisory committee to the minister in the bill.

On a relatively regular basis, management met with stakeholders and outlined major issues, consulted and got feedback, which hopefully might have been of some use. It was also of use to the various stakeholders in terms of the direction that WorkCover was heading. It is fair to say that changed under Mr McCarthy, but even prior to that under Mr Thompson, and the stakeholder groups have been removed either completely or significantly. I suspect it is completely, but I stand to be corrected if I am wrong.

I accept the view that management of WorkCover, particularly the chief executive, would not want to be bound. Mr Brown might have been, but other chief executives may well want to adopt a different approach, and I respect that as an entitlement for a chief executive to adopt. I think the notion that a structured stakeholder forum which allowed access to various stakeholders, such as advocates for injured workers, union representatives, the AMA, and I am sure there are others, on a regular basis (I am thinking three or four times a year), meeting with not necessarily the chief executive of WorkCover but at least a senior manager of WorkCover.

I think that is what occurred sometimes in the past. I see no great problem with that. In fact, I see a potential significant benefit; that is, it allows some who may be concerned about the direction of the WorkCover reforms to continue to provide at least feedback to the management of WorkCover in terms of the scheme so that they can be made aware of the concerns that unions, medical practitioners or advocates on behalf of injured workers might have about the reforms and an opportunity for WorkCover management to, hopefully, provide information that might allay the concerns of some of those stakeholders.

I raise tonight a possible alternative which might not require legislative amendment, as the Hon. Mr Brokenshire is considering, and indicate on behalf of the Liberal Party that, whilst we will consider any legislative amendment the Hon. Mr Brokenshire raises, if WorkCover and/or the government were to come back and indicate a willingness to engage stakeholders in some way, not necessarily to the extent that it might have occurred under Mr Brown but in some structured way, it may well be that that is a reasonable alternative to support for a legislative amendment that the Hon. Mr Brokenshire might be moving.

From that viewpoint, the Liberal Party is prepared to consider anything the Hon. Mr Brokenshire suggests, but I have raised with minister Rau whether or not there is an alternative which might meet some of the concerns that have been expressed by advocates on behalf of injured workers, and one would assume unions and some others as well.

As I said, there is an advisory committee to the minister but as with these committees to ministers, that is at one particular level. In terms of the actual practicality of what is being done by claims managers, rehabilitation agents and WorkCover agents, all those sorts of day-to-day and practical issues are being implemented by a big organisation though not necessarily part of the day-to-day work of ministers. Certainly it can be raised at that level if gets elevated to be a major issue of concern. Some sort of structured stakeholder consultation may well be productive for the overall efficiency and effectiveness of WorkCover and resolve many of these issues before they get out of control and out of hand.

With that, I indicate they are the areas, limited in number, where we are considering potential amendment. We have outlined to minister Rau our willingness to further discuss his views on potential amendments in those areas and, indeed, his views that he might have on any alternative propositions in the areas that we have flagged.

The Hon. A.L. McLACHLAN (21:57): My colleague the Hon. Mr Lucas has set out in great detail the position of the Liberal Party in respect of this bill. No doubt to the relief of members, I do not propose to speak at length on the same but rather provide the chamber with a few personal reflections through the prism of my own life experiences.

In the early formative years in my career in the law, I had the privilege of representing injured employees both under the old system and the new. Indeed, at that time, I worked alongside the Attorney-General (member for Enfield) in the other place standing shoulder to shoulder defending the rights of the worker. It has often been said, and has been alluded to inside and outside of this chamber, that the Liberal Party has little interest in the rights of the worker. That is not true.

We deeply respect the rights of the individual and from this seed grows our concern for all our citizens, including ensuring that those who are injured are properly cared for and compensated. We also believe that employment only comes from a vibrant economy, not the heavy and lethargic hand of bureaucracy. Certainly it is core to my own values that the injured must be cared for and compensation paid where appropriate.

It is a cruel irony for the injured that, with the introduction of this bill, the party which purports to represent them is potentially curtailing opportunities for their compensation. I do not intend to dwell on this matter, as it has been dealt with at length by the Hons Mr Lucas and Mr Brokenshire. This brings me to the bill which in my view is another attempt at balancing the cost to business while ensuring that injured employees are cared for and returned to work. You cannot blame us on this side of the chamber for having some doubt that this re-engineering of the scheme may travel down the same road of failure as those versions that came before it. However, I wish the endeavour well because it is important for the state's economy and to the welfare of its people to have a scheme of this nature that actually performs and one that we can all have a degree of confidence in.

I recall back in 2008, a time when there was an earlier attempt at reform, now considered an abject failure (or, to use the words of the Attorney-General, 'a false dawn'), that I read an article in TheAdvertiser from the then chair, Mr Bruce Carter. At that time Mr Carter was forcefully arguing for the reform and asserting that the changes would significantly improve the return-to-work rates and decrease the cost of the scheme to employers. In 2008, many in the business community held a different view and thought it unfair to reduce the rights of workers simply because it was their view that the scheme was being so poorly administered. It was a view with which I had much sympathy.

Well, here we are in 2014, a mere seven years after the previous failed attempt at reform, with a new scheme. The arguments prosecuted by the WorkCover board in 2008 have proved very misguided. With the existing scheme considered the poorest performing in the nation, I ask myself: how did we arrive at this point? The extant scheme has performed so poorly for so long that we have had to act. The costs to business are too high by comparison with other jurisdictions. The Local Government Association scheme, which is its immediate neighbour, outperforms it with a surplus. Such poor performance had to be responded to. It became a necessity.

But what does this teach us? What can we learn? In my view, it is not just a matter of the need for legislative reform. The extant scheme was poorly administered, poorly managed and poorly lead, with an inadequate focus and drive to assist workers back to work. The situation we find ourselves in is as a result of a pitiful failure of corporate governance and it is an embarrassment to this state. If we cannot run a scheme that looks after workers, how can the international investors have faith that we can lead the recovery of our state economy?

After my formative years in the law, my career journeyed into the world of finance and the boardroom, and it is the failure of corporate governance to which I wish to pay some attention, for I do not want to see us make the same mistakes as those we have made in the past. Put simply, going forward, the responsible minister must hold the board accountable for their performance and the board must likewise hold the CEO accountable. The CEO and his executive team must lead the organisation and hold themselves and all the employers and providers accountable for performance.

It is not that hard but it requires diligence, commitment and courage—courage being an attribute unfortunately not found residing in many boardrooms in the public sector these days. It is too easy to take the director fees, stay quiet and avert your gaze away from the realities of business. Going forward, every layer of leadership and management in the scheme must be qualified and proficient. The days have gone when we can afford to appoint (if I can use the term) 'favoured children' to the board. The board has to be diligent and drive performance of the new scheme.

I urge the minister responsible for the scheme to ensure that the board's performance is closely monitored. Those who have served on the board in the past should reflect on the contribution they have made. From the view I have, it is very little, given that we have had to relay the foundations of the scheme and reboot its operations.

I would like to think—and perhaps it is the dreamer in me—that there will come a time when we can talk not only about surpluses and reducing premiums but also increasing the entitlements of those the scheme has been designed to care for. It is pleasing to hear the reports of the good work of the new chief executive. I encourage the Attorney-General in his endeavours and I look forward to the committee stage.

Debate adjourned on motion of Hon. K.J. Maher.

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