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Legislative Council - Fifty-Fifth Parliament, First Session (55-1)
2022-06-02 Daily Xml
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Return to Work (Permanent Impairment Assessment) Amendment Bill

Introduction and First Reading

The Hon. K.J. MAHER (Attorney-General, Minister for Aboriginal Affairs, Minister for Industrial Relations and Public Sector) (11:08): Obtained leave and introduced a bill for an act to amend the Return to Work Act 2014. Read a first time.

Second Reading

The Hon. K.J. MAHER (Attorney-General, Minister for Aboriginal Affairs, Minister for Industrial Relations and Public Sector) (11:08): I move:

That this bill be now read a second time.

This bill amends the Return to Work Act 2014 (the act) to clarify an issue of statutory construction arising from the decision of the Full Court in the Supreme Court in the Return to Work Corporation of South Australia v Summerfield. The Return to Work scheme which governs the support provided to workers who suffer a work injury was designed to encourage a focus on achieving better health outcomes through a timely return to work. The benefits the scheme provided to injured workers were balanced by the inclusion of clear boundaries to ensure the sustainability of the scheme.

The Return to Work Act was critical in ensuring the financial sustainability of workers compensation in South Australia. Up until the passage of the act there was very little time under the previous legislation where the scheme maintained sufficient assets to cover liabilities owed to injured workers. In comparison, the scheme has been fully funded almost every year since the passage of the act in 2014.

The recent decision in Summerfield has undermined the boundaries that allow the scheme to remain financially sustainable in the long term and continue to support injured workers. The decision affects the combination of impairments under section 22(8)(c) of the act for the purpose of determining a worker's whole person impairment (WPI). The decision makes it easier to combine impairments from different injuries, even if those injuries occur in different circumstances, even months or years apart.

This significantly increases the amount of lump sum compensation a worker may be entitled to for their injuries. Most importantly, it allows significantly more workers to reach the 30 per cent WPI threshold to be taken as seriously injured, which entitles a worker to weekly income support payments until retirement age and medical expenses for life.

When the scheme was first introduced it was designed and costed to support around 60 new seriously injured workers every year. This has proven to be an underestimate and the scheme is currently forecast to support around 105 new seriously injured workers in the 2022-23 financial year.

The decision in Summerfield is projected to double that number to around 200 new seriously injured workers every year. Each of those claims costs the scheme an average of $1.3 million; however, there is a very wide distribution and some will cost the scheme significantly more over the life of the claim.

As a direct result of the Summerfield decision, the scheme is no longer fully funded, with a funding ratio of 89 per cent assets to liabilities as of December 2021 and a $1 billion funding black hole due to insufficient premiums being collected to cover past claims affected by the decision. The scheme is expected to require an additional $100 million in premiums every year going forward.

Without legislative change, it is projected the scheme's average premium rate will be forced to increase from the current 1.7 per cent to 2.2 per cent or higher to cover the costs of the Summerfield decision. This would leave South Australia with the highest average premium rate of any Australian mainland state on an ongoing basis. These premiums would ultimately need to be paid by South Australian employers, many of them small businesses.

The first Summerfield decision was handed down in May 2019. Since then, the former Treasurer Rob Lucas and the then Liberal government had three years to address issues raised by this decision and provide certainty to South Australian businesses and workers. Instead, they stuck their heads in the sand and allowed a billion-dollar funding black hole to develop on their watch.

The Malinauskas government is committed to keeping the scheme within its legislative target of a maximum 2 per cent average premium rate to ensure the scheme is financially sustainable and does not impose an unfair disadvantage on South Australian businesses.

This bill responds to the Summerfield decision by amending the provisions relating to a combination of impairments in section 22(8)(c) to make it clear that an injured worker is entitled to combine impairments from their injuries only when they arise from the 'same trauma', not the 'same injury or cause', as stated in the act. Consequential amendments ensure continuity and consistency of language throughout the act.

By incorporating the 'same trauma' test, this bill explicitly adopts the reasoning of Chief Justice Kourakis concerning the same phrase in Marrone v Employers Mutual Limited (2013) SASCFC 67. The use of this well-settled legal definition aims to provide much-needed certainty about the operation of section 22(8)(c). These changes will restore the scheme to how it was originally intended to operate when the Return to Work Act was passed prior to the Summerfield decision.

This bill will apply to all workers who undergo their whole person impairment assessment after 1 January 2023. This provides advance notice of the changes to workers, doctors, legal professionals and the South Australian Employment Tribunal so that appropriate arrangements can be made prior to the commencement of the legislation.

The board of Return to Work has made it clear that, if this legislation is not passed before the winter break, it intends to bring forward its decision on the average premium rates for the 2023-24 financial year to give businesses advance warning of the significant premium increases that will be necessary if parliament does not remedy the Summerfield decision.

I can confirm that this bill, as is convention, will not be debated today. The bill will be listed for debate in the next parliamentary week of sitting. In the meantime, the government will consult with affected stakeholders and take their views into account. We are committed to ensuring this legislation goes no further than necessary to restore the scheme to its original intended operation.

The government fully understands this bill will be a disappointment to some stakeholders and that workers will be left worse off because of these changes. The government recognises that, while there are many positive aspects of the current scheme, it is not perfect. That is why we will separately be introducing legislation to improve the operation of the scheme for injured workers. This will strengthen the duty of employers to provide modified alternative duties and close loopholes which prevent workers from accessing much-needed surgery. A draft version of that legislation is intended to be tabled next week so that members can have certainty of the government's commitment to reform this area.

The government will be consulting on that legislation with workers, unions and businesses over the winter break and is open to considering other improvements to the scheme that do not impose an unreasonable adverse impact on premium rates or the financial sustainability of the scheme. The intended application of the changes to the combination of impairments in this bill can be illustrated with three examples.

Example 1: as a worker goes to pick up his toolbox he falls over and injures his right knee (event A). The worker has a short period off work and returns to work. However, six months later, he claims as a result of an altered gait over time (event B) caused by his original knee injury he has sustained a lumbar spine injury. As a result of his lumbar spine injury he takes medication (event C) and develops issues chewing and swallowing.

The worker is assessed by an accredited medical practitioner as having a 10 per cent whole person impairment in relation to the right knee, a 12 per cent WPI in relation to the lumbar spine and a 14 per cent WPI in relation to the chewing and swallowing injury. Without the change in this bill, the impairments for these injuries would be combined and they would be found to have shared a common cause, being the original right knee injury, and the worker would be a seriously injured worker as his combination of WPI would be over 30 per cent.

With the change in this bill, the worker would be entitled to compensation for each of his injuries, but his injuries would not be combined to determine his degree of impairment. This is because the injury to the right knee arises out of event A, the injury to his lumbar spine arises out of the series of events A and B and the issues with his chewing and swallowing arise out of the series of events A, B and C. Event A and the two series—A and B and A, B and C—are not identical, so the right knee injury, the lumbar spine injury and the chewing and swallowing injury are not from the same trauma.

What this example serves to illustrate is that any two injuries do not arise out of the same series of events, that is, the same trauma, unless all of the events are the exclusive cause of both injuries. Two further examples provide scenarios where a combination would be likely to occur.

Example 2: a worker is working on a platform a couple of metres above the ground, trying to pull a fitting from a wall when the fitting suddenly gives way, causing her to stumble and fall off the platform to the ground, which leads to a broken right ankle and a tear in her left shoulder. This event is the exclusive cause of the injury to the right ankle and the left shoulder, so they are from the same trauma.

Example 3: a worker is lifting a heavy box and suffers a work injury to the lower lumbar disc. They subsequently develop sciatica as a normal progression of the disc injury. The sciatica is treated as part of the disc injury, so it would be from the same trauma—by way of example.

The transitional provisions contained in this bill operate so that the changes apply to any work injury that has not yet progressed to a final examination of WPI prior to 1 January 2023. Schedule 1 defines when a final examination of WPI has occurred and notably it will not have occurred where further attendance, radiological or other investigation or examination is required—including any attendance following further radiological or other investigation or examination—to enable an assessment of the WPI. Essentially, everything that is necessary to enable an assessment of the whole person impairment must have been completed.

It is intended that if there is more than one assessor required to assess impairment for injuries from the same trauma, as long as one of the examinations has been completed by one of the assessors before the designated date, the changes will not apply.

I seek leave to have the second reading explanation of clauses inserted in Hansard without my reading it.

Leave not granted.

The Hon. K.J. MAHER: Explanation of clauses:

Part 1—Preliminary

1—Short title

2—Commencement

These clauses are formal.

Part 2—Amendment of Return to Work Act 2014

3—Amendment of section 4—Interpretation

This clause amends the definition of trauma so that for the purpose of the principal act, trauma means an event, or the same series of events, out of which a work injury arises.

The clause also inserts proposed subsection (7a) to provide further detail about the meaning of trauma in the event that there is more than one work injury so that all the events forming the series of events need to be the exclusive causes of both or all of the injuries in order for the series of events to constitute the same trauma for both or all of the injuries.

4—Amendment of section 22—Assessment of permanent impairment

This clause amends section 22 of the principal act by substituting subsection (8)(c) so that the following principle is taken into account (when assessing the degree of impairment applying to a work injury), namely, the principal that if a worker suffers two or more injuries arising from the same trauma, the injuries are to be assessed together and combined to determine the degree of impairment of the worker (using any principle set out in the Impairment Assessment Guidelines).

5—Amendment of section 56—Lump sum payments—economic loss

This clause amends section 56 of the principal act by substituting subsection (5) so that in determining an entitlement to compensation for loss of future earning capacity by way of a lump sum under the principal act, if a worker suffers two or more work injuries arising from the same trauma, the injuries will be assessed together and combined to determine the degree of impairment of the worker (using any principle set out in the Impairment Assessment Guidelines).

6—Amendment of section 58—Lump sum payments—non-economic loss

This clause amends section 58 of the principal act by substituting subsection (6)(a) so that in determining an entitlement to compensation for non-economic loss by way of a lump sum under the principal act, if a worker suffers two or more work injuries arising from the same trauma, the injuries will be assessed together and combined to determine the degree of impairment of the worker (using any principle set out in the Impairment Assessment Guidelines).

7—Amendment of section 122—Powers and procedures on a referral

This clause amends section 122 of the principal act by substituting subsection (6)(d) so that, if a medical question relates to any matter that is relevant to the assessment of whole person impairment (including as to whether an impairment is permanent), the following principle is taken into account, namely, the principle that if a worker suffers two or more injuries arising from the same trauma, the injuries are to be assessed together and combined to determine the degree of impairment of the worker (using any principle set out in the Impairment Assessment Guidelines).

Schedule 1—Transitional provisions

1—Interpretation

This clause inserts definitions to support the transitional provision.

2—Application of amendments

This clause sets out transitional arrangements to support the implementation of the measure.

The transitional arrangements provide that the amendments made to the principal act by the measure apply in relation to any work injury where the final examination relating to the worker by an accredited medical practitioner for the purposes of an assessment under section 22 of the principal act occurs on or after the designated day.

The transitional arrangements further provide for the arrangements that apply where two or more accredited medical practitioners are required to undertake an examination or assessment under section 22 of the principal act to determine the degree of impairment of a worker in relation to injuries arising from the same trauma so that the amendments made to the principal act by the measure will only apply if none of the injuries are the subject of a final examination by an accredited medical practitioner for the purposes of an assessment under section 22 of the principal act before the designated day.

The transitional clause finally provides that the final examination relating to a worker by an accredited medical practitioner is when no further attendance, radiological or other investigation or examination is required (including any attendance following further radiological or other investigation or examination) to enable an assessment of whole person impairment under section 22 of the principal act.

Debate adjourned on motion of Hon. N.J. Centofanti.

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