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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
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Bills

Return to Work Corporation of South Australia (Crown Claims Management) Amendment Bill

Committee Stage

In committee.

(Continued from 20 June 2017.)

Clause 1.

The Hon. P. MALINAUSKAS: I thought I might start by bringing back to the chamber some information, particularly around the issues the Hon. Mr Lucas was asking about yesterday. I understand that a more comprehensive explanation of a range of issues was emailed to members during the course of the day, but I think it will be important to read, for the purpose of Hansard at the very least, some of the responses to the Hon. Mr Lucas's questions.

Total Crown claims costs are approximately $120 million per annum—for example, pre and post 1 July 2017 claims. The estimated $26 million premium is included in this amount; that is, the Crown will pay no more than the estimated $120 million for all claims in the 2017-18 year—that is the current and new claims. On this basis it is a cost neutral model. The premium of $26 million is an estimated cost of new claims for the 2017-18 financial year and includes income support and medical costs associated with those claims. This amount of $26 million would have been paid by the Crown in any event. Public sector injury management staff continue to be required to manage all current claims, and there are approximately 3,500 of them.

In addition, public sector staff will also need to perform the functions of the Return to Work Coordinator, as prescribed under the Return to Work Act, to support return to work of new claims in the 2017-18 financial year. The reforms will be financially neutral to both ReturnToWorkSA and government agencies in the first instance. All claims build up over time. ReturnToWorkSA, based on actuarial advice, will charge government agencies based on the estimated costs it will incur.

The factor that will ultimately dictate financial outcomes for government agencies is the incidence of workplace injury, the effectiveness of claims management, and the achievement of return-to-work outcomes. As outlined above, this is expected to improve over time due to the reforms, and any financial benefit would be available for the government to redirect towards core public services.

The Hon. R.I. LUCAS: There is a whole series of questions that I put to the minister, and the minister has rightly pointed out that there are answers that have been provided by way of email but, of course, they are not part of the Hansard debate. I will leave it to other members, the Hon. Tammy Franks and the Hon. John Darley, in relation to their own questions and whether they wish the same, but I certainly want to see the answers—or I am happy to read onto the record the answers I have been provided by the government.

Essentially, I am in the minister's hands, but there are many pages of answers that have been provided, and I think those who are following this debate—and certainly the minister's advisers would be aware that there are a number of individual stakeholders who are following this particular debate—would want to see the government's response to the various questions that have been put as part of the Hansard record. So, I am in the minister's hands. Is he going to read the rest of the answers that have been provided as part of the official government response on these issues into the Hansard record?

The Hon. P. MALINAUSKAS: I am more than happy to read them out; in fact, that was my original intention—it was suggested to me. I received advice that we might deal with the first component around that cost issue, since that dominated the line of questioning yesterday, and then we would move on to some of the other issues. However, I am more than happy to read them all out in one hit and go back and address the questions as they arise.

Continuing on from the remarks I previously made, it is important to note that it is difficult to compare the Crown or any other self-insured scheme against the registered scheme in terms of claim costs. ReturnToWorkSA completely accounts for all claims costs including agency costs, the WHS fee, the SAET costs, the costs associated with running the insurer and regulations. ReturnToWorkSA monitors all costs so that it is completely transparent and accounted for and audited. This is so that premiums are able to be accurately calculated.

Crown workers compensation costs are based upon what is recorded in SIMS and may not include internal rehabilitation costs, costs for the SIMS databases, the self-insured levy costs, costs of staff in claims management roles or other internal staffing costs that support claims management. This means that a simple comparison against the Crown's costs and the registered scheme is open to misinterpretation. The model under the bill would enable a whole-of-government approach to reporting and close monitoring of claims costs and liabilities. This would contribute to better informed injury prevention and risk management strategies.

Regarding evidence and rationale to support the changes: ReturnToWorkSA has made significant improvements in the quality and consistency of claims management services to over 50,000 registered employers and their workers in the state over the last two years. The government considered whether there were any opportunities for the Crown to also benefit from the strategies that ReturnToWorkSA has employed, taking into account ReturnToWorkSA is solely focused on work injury claims as its core business. It makes sense to streamline the management of work injury claims for the Crown.

The Crown, although one employer, operates in silos, with individual agencies replicating claims management processes. There is no overarching risk management approach and most agencies have developed their own processes and practices in the management of their work injury claims. ReturnToWorkSA's highly developed IT systems and data analytics will be of significant benefit to the Crown, not only in identifying and managing risk but obtaining a collective and accurate view of Crown claim costs and return-to-work outcomes and performance. This level of data capability is currently unavailable to the Crown.

In terms of the benefits to injured workers: as stated in the second reading speech, the government is focused on ensuring that injured workers are supported with high level services to optimise their recovery and return to work. Currently within Crown there are 12 separate operating units undertaking injury management functions for their agencies. With 12 different areas working independently, there are different ways in which claims are managed.

These differing arrangements across Crown also mean that best practice cannot be easily acted on or implemented across the Crown. It is also difficult to get a clear line of sight of public sector-wide return-to-work rates injury vocations, and that can aid in prevention, risk management and benchmarking to ensure public sector employees are receiving the very best service.

Specifically, benefits to injured workers under the proposed ReturnToWorkSA service model includes access to telephone reporting, which means quicker claim determination and deployment of return-to-work services. Telephone reporting is particularly beneficial to workers in remote and regional areas and volunteers who are covered under the act. The mobile claims management model is a feature of the return-to-work scheme, which will provide face-to-face personalised support to facilitate return to work for injured workers. Mobile case managers are employed to make decisions on the spot, which assists in the timely provision of return-to-work services.

Access to established and effective reskilling and retraining programs is a dedicated reconnect service that is aimed at helping those injured workers whose income support entitlements are ending. This service connects workers with community-based, government and other services to support them through this transition. The bill will also strengthen support for workers who are unable to return to their pre-injury role in finding something suitable for them in another government agency.

Currently, it can be difficult for agencies to have line of sight over other employment opportunities for workers across government. Again, as outlined in the speech tabled in the bill, there is variability across the public sector. This is particularly notable for workers with a serious injury claim. ReturnToWorkSA has a well-established area that supports workers with most serious injuries—for example, workers with a traumatic brain injury or limb amputation whose lives would be significantly impacted by the injury. These staff deal exclusively with significant injury claims, giving them the expertise and ability to support those injured workers.

Currently, all Crown agencies have small numbers of this type of claim and there is no overarching structured approach on how these workers are supported. Due to these small numbers, agencies have not developed the same level of specialist expertise in supporting workers with significant injuries as they have at ReturnToWorkSA. The government feels that having ReturnToWorkSA manage these claims will bolster the support provided to these injured workers.

Regarding the questions of Mr Lucas yesterday about the number of staff impacted: as mentioned above in response to the question of the Hon. Tammy Franks, the Commissioner for Public Sector Employment issued a communication in May to all agency chief executives stating that over the next 12 months there will be no reduction in the Crown injury management workforce as a result of the transition of work injury claims management to ReturnToWorkSA. Regarding costs, these concerns were addressed earlier. Total Crown claims cost approximately $120 million per annum. The estimated $26 million premium is included in that amount.

Regarding the Hon. Mr Lucas' question about ramping up and ramping down with regard to costs and potential future premium costs: as claims build up over time, ReturnToWorkSA, based on actuarial advice, will charge government agencies based on the estimated costs it will incur. The fact that that will dictate financial outcomes for government agencies, as stated earlier, is the incidence of workplace injury, the effect it has on claims management and the achievement of return-to-work outcomes. As outlined above and mentioned previously (so I will say it again), this is expected to improve over time due to the reforms and any financial benefit would be available for the government to redirect towards core public services.

Regarding questions from the Hon. Tammy Franks on the increased costs for education, particularly in the area of special needs: government agencies, including Education, are already fully budgeted for the future costs associated with workers compensation claims. The proposed arrangements will result in no net expenditure increase but rather a change in the nature of expenditure over time from the direct costs of workers compensation.

The Hon. T.A. Franks: You did that one yesterday.

The Hon. P. MALINAUSKAS: Yes. Did I address the AEU concerns that principals will spend more time in the tribunal?

The Hon. T.A. Franks: You did that one yesterday. But then I had the new letter from the AEU and their concerns, because previously it was just my verbal discussion.

The Hon. P. MALINAUSKAS: In response to the questions from the AEU, through Tammy Franks, regarding the privatisation of claims management: it is not privatisation. ReturnToWorkSA is a government agency and will be managing the claims that agents implement through the ReturnToWorkSA model. Regarding the loss of experienced DECD claims management staff: there will be no reduction in injury management staff for the first 12 months due to the transition.

The imposition of a return-to-work premium on DECD schools and preschools: the department has confirmed that there will be no imposition of a return-to-work premium on schools and preschools. The financial arrangements remain as they are currently. Regarding possible impositions of financial penalties on schools and preschools: there will be no financial penalties on schools and preschools. There will be no impact on schools and preschools regarding costs. DECD will continue to manage their costs centrally.

Regarding administrative accountability for leaders: leaders will continue to support their work injured staff in the same way they currently are assisted. The changes do not impact on how work injury people are managed. Increased administrative workload for leaders: there will be no change to how injured workers are supported whilst on modified duties. The loss of intervention support: early intervention will continue to be provided, as it is currently, through the DECD injury management unit.

There is no rationale for increases in legal disputation as a result of the proposed transition. The injury management unit, within the department, will continue to have a central role in the management of claims and will liaise with claims management agents.

Regarding the administrative costs and comparison of Crown versus ReturnToWorkSA performance: the administrative costs and better return-to-work rates are currently not measured by government. This is part of the problem and cannot be compared. There is no transparency in the government arrangements. I think that answers the bulk of the questions from the Hon. Tammy Franks.

The Hon. T.A. FRANKS: The cost of the Bentley-Latham report? And if you are going to release the report? I know you are going to say no, but the cost?

The Hon. P. MALINAUSKAS: I am advised that the cost of the report is approximately $111,000.

The Hon. R.I. LUCAS: I thank the minister. There have been about 23 pages of answers and tabled letters provided to members, and the minister has gone through a good chunk of that. There is one that I want to read onto the record.

The Hon. P. MALINAUSKAS: I was trying not to repeat myself.

The Hon. R.I. LUCAS: I understand. I am making no criticism. Given the complexity of this, because there were questions asked at two different stages and by various members which traversed the same area, I seek leave to table a copy of the 23-page document that was provided to me and to other members on behalf of the government which provides answers to questions raised by members in this chamber and also provides copies of correspondence that was requested by various members.

Leave granted.

The Hon. R.I. LUCAS: Whilst all of that will not be part of the Hansard record, it will be tabled and available for those who might want to pursue it. There is one particular question and answer that I want to read onto the public record, and that was the question I put:

What individual premiums will be charged post 1 July from ReturnToWorkSA to each individual department and agency?

The answer from the government is as follows:

Agencies currently incur the costs of worker's compensation claims directly (e.g. income maintenance and the reimbursement of medical expenses etc).

For claims with an injury date prior to 1 July 2017, this will continue to be the case under the proposed new framework. This expenditure will reduce over time as these claims are closed out.

Should the legislation before Parliament pass, RTWSA would start managing and incurring costs for new claims from July 2017, and will begin to levy a charge or a 'premium' on Government agencies. This charge will be small initially, and build up over time as the number of claims build up each year.

I interpose here, Mr Chairman, because this was similar to the wording that the minister quoted yesterday. It says here that the premiums that will be charged will be small initially and build up over time. We are told that the premium in the first year is going to be $26 million. I put this question yesterday, and I will repeat it after I have read the rest of this answer onto the record. It appears what the government is saying is that the initial premium is $26 million and this sentence here is saying that that is small and it will build up over time as the number of claims build up each year. The premium will start at $26 million a year from ReturnToWorkSA and will then build to a much more significant number as ReturnToWorkSA takes over more and more claims, obviously as the old claims are worked out. I go back to the provided answer:

Government agencies already fully budget for future costs associated with worker's compensation claims. The proposed arrangements will result in no net expenditure increase, but rather a change in the nature of expenditure over time from the direct costs of worker's compensation (which will phase down), to a payment to RTWSA (which will phase up).

A key point is that the arrangements for Government agencies will operate separately from the current Registered Scheme. There will be no effect on the premium for the current Registered Scheme for private employers as a result of the proposed reforms.

RTWSA will recover the costs of the government's worker's compensation claims, and its own administration costs in managing those claims. It will generate no profit (or loss), nor will it improve (or deteriorate) its net asset position as a result of the reforms. The intent is to transfer the management of the government's worker's compensation claims to RTWSA and achieve a neutral financial outcome for both RTWSA and Government agencies in the first instance. As is the case now, the factor that will dictate financial outcomes for the government is the incidence of workplace injury and the effectiveness of claims management and the achievement of return to work outcomes.

It is expected that over time the common expert administration and management of claims as well as the experience and advice to agencies from RTWSA would result in lower costs, which would be available for the Government to redirect towards core public services.

As claims build up over time, RTWSA, based on actuarial advice, will base its 'premium' each year on the payments it projects it will incur in managing agency claims, plus administration costs.

Each agency will be levied a separate premium, based on estimated individual experience of that agency in the coming year.

The 2017-18 premium will be set at approximately $26 million in total for the Government, again reflecting the expected cost of new claims next year, plus administration costs for RTWSA. As self-insurers, government agencies already pay RTWSA a self-insurer levy, which in total adds to approximately $5 million each year. This is estimated to be sufficient to cover the initial administration cost to be incurred by RTWSA in 2017-18 in managing the government's claims.

The 'premium' is broken up based on expected costs for each individual agency. RTWSA will invoice agencies twice yearly in equal instalments.

There is also a separate question that I asked about why SA Water was being exempted, because they had done a separate calculation that it was going to cost too much, and the prepared answer is:

The Minister for Industrial Relations has confirmed that SA Water will not be inconvenienced by this proposed change. RTWSA has assisted SA Water understand their work injury insurance options and is helping them progress with their preferred option of private self-insurance.

I note there that the government's response states that 'SA Water will not be inconvenienced by this proposed change.' That is because they have done the calculation, said that it is going to cost too much, and they have asked to be exempted, and the government has agreed to them being exempted, so the reason they will not be inconvenienced by the change is that they have been exempted from the change. They are going to continue to be self-insurers because, as they gave evidence to Budget and Finance, if they were to go down this path, there would be a significant increase in their cost of managing workers compensation claims within SA Water.

There are a couple of other questions in relation to questions that SISA had put, and I had put on the public record, and I want to read those answers too. Regarding self-insured versus ReturnToWorkSA costs, that answer has been given in a response to an earlier question. Then it continues:

(b) Experience rated costs

An experience rated cost does not apply for Crown agencies in this proposed model. The proposed Crown premium is based on the claims experience of the Crown.

Each agency will be levied a separate premium, based on estimated individual experience of that agency in the coming year and informed by particular claims history. There will not be cross-subsidisation between agencies.

I interpose there that that will be an important issue for agencies in terms of managing their costs. As the Bentley-Latham report has indicated, there are some agencies, some of which are responsible to minister Malinauskas in this chamber, in particular, Correctional Services and I think SAPOL as well, where the cost of workers compensation for, one would imagine obvious reasons, is significantly higher. This particular answer from the government indicates that the minister's agencies will be penalised through the premium charge as a result of their claims experience and history.

There are similar issues in relation to health, again for obvious reasons, and also in education, again for obvious reasons, in relation to the safety and welfare of staff. For example, in health, staff are sometimes exposed to violent patients; and in the education area, staff are sometimes exposed to the violent behaviour of students, together with the complexity of the work that they undertake. It is clear that there is not going to be any cross-subsidy within the Crown; it will be something based on the claims experience. I think ministers who are responsible for those individual agencies are going to need to bear that in mind should they still be responsible for those agencies post March next year.

The next question that SISA put is, 'Is ReturnToWorkSA well equipped to manage Crown claims?' and the answer is:

The Minister is confident in the abilities of ReturnToWorkSA in providing effective, personalised, face to face return to work services for injured workers and agencies under this model.

In terms of preparing for the transition, ReturnToWorkSA has dedicated Account Managers working with agencies closely on establishing service level agreements and assisting agencies in introducing complementary internal processes and procedures pending passage of the Bill.

(d) Understanding the many Acts; for example Police, Health, Education, Public Service, Courts that all set conditions that influence entitlements outside the RTW Act.

RTWSA deals with all types of employers (that is 50,000) and their inherent industrial complexities.

Entitlements above the threshold of the Return to Work Act will continue to be managed by relevant agencies.

As members would appreciate, ReturnToWorkSA's role as it stands is administering the entitlements under the legislated Return to Work scheme, not the particular enterprise arrangements operating in differing agencies.

Again, I interpose: that will be important for agencies like SAPOL and some of the emergency services agencies where the enterprise agreements, as a result of negotiations over recent years, have resulted in benefits over and above the benefits within ReturnToWorkSA. So, what ReturnToWorkSA is saying is, 'We'll just handle the legislated benefits to workers. You will need to continue to have staff that will manage anything that is over and above the legislated benefits from the Return To Work Act.'

(e) Keeping track of the wide range of EBAs, most of which affect entitlements in different ways; for example, who will pay ex gratia entitlements beyond the RTW Act caps that are being added to the Police EBA, and how, and when?

The answer is:

Entitlements above the threshold of the Return to Work Act will continue to be managed by relevant agencies.

By 'manage' that means the cost of that for the ex gratia entitlements would need to be paid for by the agencies.

(f) Managing the many very complex claims—police, emergency services, corrections, secondary teaching and the like. We note in passing RTWSA took back from the claims agents all of the serious and complex claims some years ago. One has to ask what that says about the capabilities of the current claims management model overseen by the Corporation.

The answer from the government is:

Yes, it is true that ReturnToWorkSA has a specialised area to deal with the most serious injuries. The government appreciates that each agency has particular circumstances and complexities.

ReturnToWorkSA is well progressed working with agencies to develop service level arrangements to ensure the services provided by ReturnToWorkSA meet their needs and complements their systems. The Government and ReturnToWorkSA acknowledges that each agency's circumstances are unique.

Each arrangement is being tailored to the particular agency, with support from a dedicated ReturnToWorkSA Account Manager.

(g) Assuming there is a separate Crown premium pool (which would have to be necessary to isolate both pools from even greater cross-subsidies), the cross-subsidies between agencies will be vast unless there is a super-sensitive experience rating component (which, taken to an extreme, would be tantamount to self-insurance by any other name).

The answer is:

As the Minister outlined in the other place, there will be no cross-subsidisation between the Crown and private registered employers paying premium. It is not contemplated in this model that cross-subsidisation between the two cohorts of premium payers would occur—in accounting terms, these arrangements will be separate.

As claims build up over time, RTWSA, based on actuarial advice, would base the premium each year on the payment it projects it would incur in managing government agency claims, plus administration costs.

Each agency will be levied in a separate premium, based on the estimated individual experience of that agency in the coming year and informed by particular claims history. There will not be cross-subsidies between agencies.

RTWSA will hold financial responsibility for the worker's compensation liability, and the premium framework is a matter between RTWSA and government agencies.

(h) The experience-rated cost to many agencies will inevitably be much greater than current SI [self-insurance costs] for any agency with complex time-lost claims. Furthermore, those agencies with relatively fewer time-lost claims will be cross-subsidising those that have more (assuming that the experience rating is less than 100% of their claim costs). To this extent, the higher-risk agencies will have de-sensitised premiums and arguably a lesser drive to improve health and safety performance than if they were covering 100% of their own costs.

The government answer:

As already outlined, each agency will be levied a separate premium, based on estimated individual experience of that agency in the coming year and informed by particular claims history. There will not be cross-subsidisation between agencies.

(i) In most cases, for agencies with higher levels of complex time-lost claims, the experience is due to the high-risk nature of the roles of the carry out. To a large extent, these agencies will be a very limited in their ability to rein in these risks, which will perpetuate these significant experience premium costs and cross-subsidies, which are, after all, paid by the taxpayer.

The government answer:

Agencies—like they do now—will have the opportunity to influence their claims cost through risk management, prevention strategies and activities, and also improved return to work outcomes.

As already outlined, there will not be cross subsidisation between agencies. It is expected that over time the common expert administration and management of claims as well as the experience and advice to agencies from RTWSA would result in lower costs, which would be available for the Government to redirect towards core public services.

Finally:

(j) Why are the serious/catastrophic claims not managed by Agents?

The government answer:

Given the small number and unique nature of these types of claims, it makes sense for these to be managed in one specialist area. Typically around 8 people each year suffer a severe and traumatic work injury in South Australia's registered scheme.

ReturnToWorkSA understands that workers who have severe traumatic work injuries require a high level of personalised support and case management. Together with their families, they need ongoing support from the time of injury to achieve sustainable quality of life outcomes commensurate with their abilities. To provide a greater level of care to people with severe and traumatic injuries, ReturnToWorkSA established a specialised unit made up of a small team of insurance claim consultants and disability support consultants. The team provides assistance under the EnABLE program which is designed to support and empower people with a severe traumatic injury.

Individually tailored care and support service that enables participants to achieve their personal goals, have greater control over their lives, build positive aspirations, maximise their independence and participate more fully in the community. ReturnToWorkSA believes that focusing on recovery, and achieving a positive quality of life are important elements in providing lifetime care to workers with a severe traumatic injury.

I wanted to read in particular the answers to the questions that the Self Insurers had put because they are indeed an active stakeholder following this particular debate. They had put a series of questions and the government did provide those answers and they are now part of the formal Hansard record. I am not sure what the government's intention is, if we are proceeding this evening.

My first question in relation to the prepared responses is: what are the costs to individual agencies? The government says total Crown claims costs are approximately $120 million per year, that is both the pre July and the post July claims. The estimated $26 million premium is an estimated cost to the new claims for the 2017-18 financial year.

My question to the minister is: given that the new claims costs are estimated to be $26 million for 2017-18 and the total Crown claims costs are approximately $120 million for both pre and post, is it fair for the committee members to assume that the government's estimated costs for the Crown for 2016-17 were $94 million; that is, the $120 million minus the $26 million estimate for the additional costs in 2017-18?

The Hon. P. MALINAUSKAS: The answer to the Hon. Mr Lucas's question, I am advised, is no. The total cost for the 2015-16 year was still approximately $120 million-odd.

The Hon. R.I. LUCAS: For 2016-17 or 2015-16?

The Hon. P. MALINAUSKAS: Sorry, 2016-17.

The Hon. R.I. LUCAS: So, the minister is saying, based on advice obviously, that the total Crown claims cost for 2016-17 is $120 million. The government then says that the $26 million is an estimated cost of new claims for the 2017-18 financial year. There is $26 million of new claims in 2017-18, yet the total costs in 2017-18 are going to be $120 million and the total costs in 2016-17 are going to be $120 million.

I assume the minister is therefore arguing that $26 million exactly of total claims costs disappear. If the total number is staying the same at $120 million and there is $26 million of new costs as a result of new claims after 1 July, I am assuming the only way that can be correct is that the government is saying to us that exactly $26 million of old claims costs pre 1 July is going to disappear; it is going to be perfectly complementary.

The Hon. P. MALINAUSKAS: My advice is that the $120 million is relatively consistent between the two financial years in question. The $26 million represents the payment to ReturnToWorkSA by the government and the remaining $94 million-odd reflects, I am advised, the claims cost associated with the previous claims in the previous financial year.

The Hon. R.I. LUCAS: I think that is actually different to the answer the minister was advised earlier. That makes more sense to me, because the answer to the question is that the premium of $26 million is an estimated cost of new claims for the 2017-18 financial year. My question was: therefore, was $94 million the total cost of claims in 2016-17? The minister said, 'No, it was $120 million.' Now the minister is saying it is $94 million. The $94 million makes more sense to me rather than the first answer, which was that it was $120 million.

The Hon. P. MALINAUSKAS: There may have been confusion in understanding the question the first time round. My advice now is that that second piece might better reflect the question you are asking.

The Hon. R.I. LUCAS: The government, in its prepared response, says the $26 million premium is an estimated cost of new claims for the 2017-18 financial year and includes income support and medical costs. Is it just coincidental in the Bentley-Latham report, which I quoted from yesterday, that Bentley-Latham estimated that the total management expenses within the Crown at the moment was just under $26 million ($25.5 million dollars)?

I must admit that I assumed that the government had struck the $26 million figure on the basis of Bentley-Latham's report, which states that the total cost of managing claims within the Crown at the moment was just under $26 million and therefore that was the premium rate that was being struck in the first year.

But this answer is saying that is not the case: it is actually nothing to do with what the estimate of the total management expense in the government departments was in the first year; it is actually an actuarial estimate of what the total claims cost, both for income support and medical costs, will be for all new claims after 1 July. My question is: is it just happenstance that these numbers are almost exactly the same?

The Hon. P. MALINAUSKAS: Yes.

The Hon. R.I. LUCAS: We are just going to have to agree to disagree in relation what the essential premise is of the questions that I have put. I will restate the different view, and that is that the Bentley-Latham report highlighted that there are, as I said, up to 200 individuals (140 full-time equivalents) who are still going to be employed and therefore the costs of all of those people will still have to be incurred by the government through the budget and agencies.

In addition to that, the agencies will now have to pay $26 million in premiums to ReturnToWorkSA, and the government is saying, in its prepared response, that it is revenue-neutral to the government and ReturnToWorkSA. The illogicality of that should be evident to anyone who looks at it; it makes no sense at all. I understand the advice the government has received, and I am assuming that Treasury and ReturnToWorkSA have signed off on that advice, is that when we see the budget and when we get the individual agencies before Budget and Finance over the next nine months, each agency is going to say, 'Hey, we spent $10 million last year on workers compensation, and even with the premium it is going to be $10 million and we have been given no more money this year.'

That is the logical extension, at least for 2017-18, of the government's response. As I said, to me and to other observers who have looked at this, it just does not make any sense at all in terms of how you can keep all the existing staff and virtually all the existing costs—with the exception of the $5 million self-insurance fee you pay to ReturnToWorkSA—and you then have to add that $26 million in premiums to be paid to ReturnToWorkSA, and it is all revenue-neutral to both ReturnToWorkSA and to the individual agencies.

I am more interested in the impact on individual agencies and the budget impact. ReturnToWorkSA has to separately account for and manage its accounts, but it is off budget for all intents and purposes. The individual agencies—like the minister's agencies, SAPOL and others—are part of the general government sector and will be part of the calculation of the net operating balance. To myself and others, this just seems to be a recipe for increased costs for doing the same functions with no evident benefit from it.

As I said, the government's position, as per its responses, is that it does not agree with the position I am putting. I guess only time will tell. That is one of the key reasons we will not be supporting the third reading, because we are unconvinced by the answers Treasury and ReturnToWorkSA and government advisers have provided to this house, both in terms of the cost but also in terms what the claimed benefits might be.

My final point was in relation to the cost issue and the second answer the minister gave today. When I raised the question yesterday and said that Bentley-Latham highlighted the fact that the management costs of the current arrangements were actually lower than the management costs of ReturnToWorkSA, under the heading of Claims Cost Comparison, the government sought to respond to that. In part, they highlighted what ReturnToWorkSA included in their costs, and I accept some of those issues.

They then went on to say that the Crown's workers compensation costs are based on what is recorded in SIMS (the claims management database) and may not include internal rehab costs, costs for the SIMS databases, the self-insured levy costs, costs of staff in claims management roles, and other internal staffing costs that support claims management.

So, the government is trying to imply from that that the actual cost of the claims management within the Crown, or within the current arrangements, is not accurate because it excludes these things. Well, I refer members to what I said yesterday when I quoted from the pages of the Bentley-Latham report. I cannot remember the page numbers, but in that it was quite clear that Bentley-Latham had included estimates of costs for the SIMS database, which was $595,000. They had included the costs for staff in claims management roles and other internal staffing costs, which was somewhere between $18 million and $25 million, depending on whether you included their section of $2.5 million for operating overheads, which appeared to refer to the cost of employing staff.

So, the prepared response from ReturnToWorkSA, which tries to rebut Bentley-Latham, which says, 'Hey, the current arrangements are cheap in terms of management,' is misleading and inaccurate, because the individual references they have made there are included in the estimates that Bentley-Latham put in that table, which comes to the $25.5 million estimate of the total cost of managing workers compensation under the current arrangements.

So, these things are included there, whereas the inference from the prepared response the minister has put on the record would lead a reader or listener to believe that they have not been accurate in terms of their claims in terms of the cost. Bentley-Latham did do that, they did include those particular costs in their calculation and it is there for the minister and his government advisers to look at.

If they want to rebut the accuracy of that then so be it, but it is misleading to say that maybe they did not include these particular estimates, when the government advisers and ReturnToWorkSA certainly know that Bentley-Latham did put specific estimates on those figures in their total estimate of the cost of management, currently at about $25.5 million.

Clause passed.

Remaining clauses (2 to 4) and title passed.

Bill reported without amendment.

Third Reading

The Hon. P. MALINAUSKAS (Minister for Police, Minister for Correctional Services, Minister for Emergency Services, Minister for Road Safety) (18:26): I move:

That this bill be now read a third time.

The Hon. R.I. LUCAS (18:26): I rise to speak briefly to the third reading. As I outlined at the second reading stage, we were prepared to support the second reading but we indicated that we were going to vote against the third reading and call a divide at the third reading. In summary, as I said at the second reading stage, we are unconvinced about the argument from the government as to the value and the need for this particular proposition. We think there will be increased costs. We are not convinced that there will be improved services for injured workers.

The evidence that the Hon. Tammy Franks put on the public record from the Australian Education Union in relation to the concerns that it has in relation to the way claims will be managed within education are reflected broadly in the responses that the PSA has put, and there is certainly significant concern in opposition from many involved in government departments and agencies about the government's proposition.

In concluding, as I said, this does not presuppose that if at some stage in the future a government—if we happen to be in opposition or if we happen to be in government—can be convinced that there was evidence that this would lead to reduced costs in terms of the management of workers compensation and to increased benefits to injured workers, then we would be prepared to have a fresh look at it. However, at this stage, there is not that evidence to justify support for the legislation. So, as we indicated at the second reading stage, we will vote against the third reading.

The Hon. K.L. VINCENT (18:28): Very briefly for the record, members will recall that when this bill was introduced I put a number of questions on the record on behalf of the Dignity Party, particularly regarding some concerns that particular organisations had, specifically the Royal Society for the Blind, Silver Chain Nursing and Minda Incorporated. As we have been able to work with the government to ensure that those organisations will not be adversely affected by the passage of this legislation and as our other questions have been satisfactorily answered, we are happy to support the passage of the bill.

The Hon. J.A. DARLEY (18:29): I am similarly not convinced by the information provided by the government and will not be supporting the third reading of the bill.

Ayes 7

Noes 8

Majority 1

AYES
Brokenshire, R.L. Gazzola, J.M. Hood, D.G.E.
Hunter, I.K. Maher, K.J. Malinauskas, P. (teller)
Vincent, K.L.
NOES
Darley, J.A. Dawkins, J.S.L. Franks, T.A.
Lucas, R.I. (teller) McLachlan, A.L. Parnell, M.C.
Ridgway, D.W. Stephens, T.J.
PAIRS
Gago, G.E. Wade, S.G. Hanson, J.E.
Lensink, J.M.A. Ngo, T.T. Lee, J.S.

Third reading thus negatived.

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