Business assessment of OHS

Australia’s Productivity Commission released its draft report into Performance Benchmarking of Australian Business Regulation: Occupational Health and Safety on 27 January 2010.  The 432-page report will take some time to read and digest but below are the general key points of the report

• “This study compares inter-jurisdictional differences in occupational health and safety (OHS) legislation in 2008-09 and its administration and enforcement and the costs they imposed on business. Such benchmarking provides information which can support current moves to establish a consistent regulatory approach to OHS across all jurisdictions.
• Generally, OHS performance has been improving. National injury incidence rates have fallen almost 20 per cent between 2002-03 and 2007-08.
• The core OHS Acts of all jurisdictions are all based on the principle of allocating duties of care to those most able to influence OHS outcomes and yet the Acts differ.
• In addition, there are 70 industry or hazard-specific Acts which regulate OHS in some way. For states with separate mining regulations (New South Wales, Queensland, Western Australia) compliance burdens are greater in Western Australia which has a lesser reliance on performance and process-based regulation.
• The burdens from jurisdictional differences in OHS regulation fall most heavily on businesses which operate in more than one state or territory.
• Among regulations aimed at improving the culture of compliance, different requirements across jurisdictions for record keeping, training, and worker participation and representation result in differences in the burdens imposed on business.
• Among regulations aimed at managing particular hazards, the different requirements across the jurisdictions with regard to asbestos, manual handling and falls result in differences in the burdens imposed on business.
• Only Queensland and Western Australia provide a code of practice on how to detect and manage bullying, even though this and other psychosocial hazards place very high costs on business.
• Australian OHS regulators commonly use a cooperative, graduated approach to achieve compliance. They apply a risk-based approach to enforcement and generally seek to minimise adverse side effects on business.
• There are significant differences among OHS regulators in: their level of resources; funding sources; availability and application of enforcement tools; appeal mechanisms; and transparency.”

It is important to note that the Productivity Commission focusses economic data and impact.  This point is alluded to in the first bullet point above but needs emphasising.  The report is looking at the impact of existing OHS legislation  – “its administration and enforcement and the costs they imposed on business.”   The report acknowledges that this information is likely to be relevant for Australia’s OHS law harmonisation program but also states its limitations:

“…any review which focuses on the costs imposed on business rather than the costs and benefits on all groups must necessarily be more limited in the insights it can provide.”

The Australian Chamber of Commerce and Industry finds a lot to like in the report but the ACCI has never been big on the social consequences of workplace injury or illness.  Referring the ACCI’s 2005 OHS “blueprint‘ only emphasises the need for the blueprint to be thoroughly revised to consider the substantial industrial relations changes Australia has undergone, the OHS harmonisation process currently underway and the workers’ compensation reforms forecast for the next couple of years.

There are a couple of points in this initial period after the release of such a large report that should be made.

Injury Rates

The Productivity Commission says that injury rates have fallen.  This is based on fatality rates – a solid benchmark that would be larger if all jurisdictions included journey-to-work fatalities.  It is also based on workers compensation claims data that is roundly acknowledged to be an underestimation of work-related injury and illness.  One may look at the comparative statistics (page xiii) and say that few countries can match Scandinavian rates until one realises that we have a higher fatality rate than the UK! – our closest legislative neighbour. [Perhaps Australia can begin another competition with the “Mother Country” based on the ashes of dead workers instead of cricket bails?]

Number of Businesses Effected by Legislative Overlap

It is accepted that OHS compliance confusion and costs hit those companies that operate across State boundaries the hardest .  In October 2008, the Federal Workplace Relations Minister, Julia Gillard, stated that the harmonisation benefits would go to “39,000 businesses that operate across state boundaries” (page 9400 of Hansard for 16 October 2008).  Statistics from the Australian Securities & Investments Commission show that, at the time of the Minister’s statement, there were 1,663,707 registered companies)  SafetyAtWorkBlog calculates the Minister’s estimate to equate to around 2.34% of all Australian registered companies*.

Bullying

The report states

“Only Queensland and Western Australia provide a code of practice [on workplace bullying]”

Technically……. Yes.

WorkSafe Victoria was one of the first States to introduce guidance on workplace bullying in February 2003.  The trade unions wanted a formal Code of Practice but had to settle for a “guidance note”.  In effect, the guidance note has had as much clout as a code of practice but the Productivity Commission applies the technically correct definition.  This seems unfair when Victorian businesses have incurred as much cost from implementing the workplace bullying guidance note as they would from a code of practice.

By emphasising codes of practice the Commission is able to state:

“It is likely that businesses in Queensland, South Australia and Western Australia feel a greater pressure or incentive to address and deal with psychosocial issues than firms in other jurisdictions due to the use of codes, provisions in Acts and inspectors.  These jurisdictions have all experienced significant declines in claims related to bullying and harassment in the past five years.  The resultant savings may have matched or even outweighed any extra compliance costs firms have faced as a result of these measures.” (p.277)

The amount of work undertaken by Victoria’s WorkSafe Inspectors on the issue of bullying and stress in the public sector seems not to be relevant in the view of the Commission.

As well as the bullying guide mentioned above, WorkSafe Victoria has produced guidance on stress in the public sector since at least 2005.

To some extent the Productivity Commission report has duplicated some of the work undertaken by the National OHS Harmonisation process, particularly in identifying similar OHS codes and standards.  It has done this in the context of business costs but it seems that the report has ignored the contribution of safety professionals and Health & Safety Representatives in the reduction of business costs.

The report illustrates the benchmarking of business OHS costs – an important report for policy- and decision-making.  But it is not an indication of the level of safety in workplaces.  To broaden the relevance and application of this report as a safety indicator should be seen as a trap for most but it is likely to be an opportunity for many of business lobbyists.

This article is based on an initial scan of this large report and further details are likely to emerge in the near future.  All interested parties are encouraged to download the report, or to obtain a hard copy from the Productivity Commission (it is understood these are dispatched for free), and to constantly remind oneself whilst reading of the shortcomings of the data available.

Kevin Jones

*We realise that “businesses” are different from “registered companies” but if any reader can provide a more accurate calculation, please email it through.

UPDATE 29 January 2010

A hard copy of the report was received within 24 hours of the request.  Bravo Productivity Commission.