NSW inquiry into workers’ compensation illustrates short-termism 4


UnionsNSW are campaigning strongly on OHS issues during an inquiry by Joint Select Committee on the NSW Workers’ Compensation Scheme into workers compensation.  They make the point that a focus on the reduction of injury is the most effective way of rendering a workers compensation scheme “profitable”.  By neglecting worker safety, injuries increase and there is a higher demand on compensation and rehabilitation resources.

A major concern in the campaign is that the government is focussing on reducing costs and, in workers’ compensation schemes, that often results in fewer resources for injured workers and their families.

Tim Ayres, Secretary of the Australian Manufacturing Workers Union, was quoted in the Sydney Morning Herald:

“If NSW employers want to save money on workers’ comp premiums, they should focus on reducing their premiums by providing safer workplaces where workers don’t get injured and killed.”

But a draft submission, seen by SafetyAtWorkBlog, by the International Governance and Performance Research Centre (IGPRC) of Macquarie University provides some balance into the rhetoric.

The NSW Workcover issues paper for this inquiry outlines seven “solutions” that they want considered for reform.  Improving safety is the first.

  1. “enhance NSW workplace safety by preventing and reducing incidents and fatalities;
  2. contribute to the economic and jobs growth, including for small businesses, by ensuring that premiums are comparable with other states and there are optimal insurance arrangements;
  3. promote recovery and the health benefits of returning to work;
  4. guarantee quality long term medical and financial support for seriously injured workers;
  5. support less seriously injured workers to recover and regain their financial independence;
  6. reduce the high regulatory burden and make it simple for injured workers, employers and service providers to navigate the system; and
  7. strongly discourage payments, treatments and services that do not contribute to recovery and return to work.”

The draft of that submission of  the International Governance and Performance Research Centre (IGPRC) of Macquarie University points out that the issues paper above seems to focus on the reduction of benefits but that

“…improved WHS [Work Health and Safety] performance at an enterprise level translates to less compensation claims and increased financial stability of the Scheme”. (page 2)

Some of the current debate seems to be on a report from PricewaterhouseCoopers (only the Executive Summary is currently available online) which states

“the Independent Scheme actuary projects that an increase of 28% in premium rates would be required if no changes are made to the scheme”.

This is an estimate for a 5 year turnaround but the PwC report also notes that if the timeframe was 10 years, the premium rate rise would only be 8%.  The cost impost over the long term sounds much more reasonable, even if it does not fit the political election cycle.

But the IGPRC submission emphasises that these estimates are “if no changes are made to the scheme“.  Imagine what could be achieved in cost reduction and control if there was a concerted effort in reducing worker injury and illness!

The submission also questions the push for comparing scheme performance to other Australian States.  It states that

“Direct comparisons across jurisdictions are not possible for a range of factors including differences in:

  • Number of workplaces and workers,
  • Level of coverage and entitlements,
  • Scheme management structure (eg central management, use of agents or hybrid models),
  • Scheme governance structures, policies and procedures,
  • Underlying differences in health & safety regulation, education, training and enforcement.”

The Federal Government has indicated an attempt at harmonising workers’ compensation schemes after it has completed it OHS harmonisation strategy.  Although this seems increasingly unlikely, the debate in New South Wales strengthens the argument for reform in the sector.

SafetyAtWorkBlog has discussed the recent figures released by Safe Work Australia on injury and illness costs as a counterpoint to business sector claims of the “burden” of safety but IGPRC submission provides an enlightening comparison with Safe Work Australia’s 2009 data with the earlier 2001 data.

The increase in costs to employers is dwarfed by the increased cost burden to the worker.  IGPRC points out that

“Between 2001 and 2009 (latest available data) the total cost burden on community stakeholders, such as taxpayers and compensation scheme participants, has reduced by 32% (from 52% to 21%)

  • 6% of this decrease shifted to those employers responsible for the workplaces in which these injuries/illnesses occurred
  • 94% shifted to the injured workers and their families….” (page 7)

Reducing workplace injuries and illnesses also reduces the need for workers’ compensation so the focus of any review into the economic viability of workers’ compensation schemes must also include strategies for the reduction of illness and injury.

Business concerns about the increased costs to them of injuries and illnesses may be voiced at high volume but there is evidence that the cost burden of poor safety management is increasingly being borne by the worker and their families.

The  Joint Select Committee on the NSW Workers’ Compensation Scheme may believe its inquiry has a clear focus on workers’ compensation and economics but the control measures for change may come from well outside its expected area.  Sustainable change in the quality of life of workers will come when the political parties and governments plan for change over the long term and not expect quick fixes that fit the political election cycle.

This change is most likely to come from an analysis of work and occupational safety and health in the broader social context and not just in the context of industrial relations.  There is no doubt that this path is the harder to travel for society, business and government but it is the most rewarding and the one that supports our international moral obligations.

Kevin Jones

4 comments

  1. Talk about stating the “bleeding” obvious, Legislation is in place to facilitate compliance in the work place, but it would seem the resources and political will to police that legislation in any meaningful way will never be in place.

    While employers continue to flout the rules with impunity there will not be a change. Once again I say, on the spot fines for any breach with an adequate “Police” force will certainly focus minds on compliance with an immediate benefit via reduction in injury rates and consequent costs.

    The enforcement fines will more than cover any inspectorate cost so it is a “WIN – WIN” situation all round.

  2. Tony, I am not sure that on-the-spot fines are necessarily effective. I seem to remember that NSW Workcover has used these measures in the past will dubious effect. I know there has been research into this area, perhaps, by Richard Johnstone.

    I beleive that WorkSafe Victoria has had this option for years but has chosen not to apply it. I will see if I can find out why?

  3. What I have observed in various workplaces is an ignorance of what unsafe workpractices are , these then are not monitored until to late and then the blame game starts , I have seen both employer and employee ignore safe workplace practices because of the culture that has been alllowed to develop ,to often people are ony aware of how to do their job but not how to do it safely or dont care ,it may also be that individuals who are not ohs reps should also be encouraged to report to a worksafe any concerns over safety as they may not have ohs reps or the rep is not up to the job .Something that does not get measured in workplace statistics is high employee turnover sometimes over 100 percent because of workplace practices ,Kevin if you can find out what the statistics are for employees able to work till retirement age uninjured, it might make sad reading and that could be a measurement of what our safety culture has achieved.

  4. Its all about control. Its easy to say “if there were no injuries there would be no cost” but the government is unable to enforce everyone to be safe. What they can control is the scheme and how benefits are paid, so they are aiming to do that. Which is great. On the prevention side WorkCover should break its internal silo’s and work with the scheme agents to improve safety.

    As for the “less benefits for workers” one of the issues paper’s points was to pay increased benefits and care for seriously injured workers. They want to look after these workers more thoroughly, and stop paying the bludgers, rorters, and lazy people.

    The unions have both copped a grilling and spouted some rhetoric in the inquiry so far. Favourite grilling was a union boss telling them the deficit was invented and not real, then getting trapped as he is on the board of WorkCover and signed off on subsequent budgets and actuarial reports saying there is a deficit. Favourite rhetoric was a union boss when asked if they support commutations saying “yes we support commutations, there needs to be an avenue for workers to escape the tyranny of the insurers”. Tyranny is such a great word.

    I’m behind the issues paper, nearly all of their points were spot on. I just hope the politicians are serious about reform, and ask the right questions that are central to the issue (and from what I hear they are missing the mark on that one).

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