Financial dive for WorkCover NSW

SafetyAtWorkBlog recently reported on the financial results of the workers’ compensations schemes in South Australia and Victoria.  WorkCover New South Wales results were released on 7 April 2009.

According to an article in the Australian Financial Review (page 4, not available on line) the WorkCover NSW fund fell by $2.3 billion – the $625 million surplus in 2007-08 has plunged to a $1.77 billion deficit.  

WorkCover NSW has talked in the past about its positive achievements, and historically, they are right.  In their Annual Report 2007-08, they say (page 8 )

“The WorkCover Scheme’s financial position has improved from a deficit of $3.2 billion in 2002 to a surplus of $625 million in June 2008.”

“Accentuate the positives” is the government mantra across all departments but how do you continue to do this when your funding model has collapsed.  The AFR report says that Standard & Poor has estimated that this deficit represents 3% of the government’s consolidated revenue.  WorkCover is just one authority that relies on stockmarket returns

The Minister, Joe Tripodi is quoted in media reports as saying that the deficit was expected and is understandable and that the workers compensation scheme is “sound”.

Richard Gilley, a risk management consultant, said that economic downturns often coincide with an increase in the “frequency and severity of claims”.  

Tripodi has pledged not to increase premiums as that is the insurance cost to business, but one has to ask why not?  Premiums have been reduced throughout Australia during the “good” economic times with the understanding that this would increase the profitability of business and, maybe, just maybe, provide additional funds for business to reinvest in the safety levels of the business.

Perhaps this is the wrong time to increase premiums but the question should be asked nevertheless.

It is recommended that those government authorities who accept their excessive high premiums as the cost of operating in their sector be audited and the results presented to the board and the governing authority.  There are government authorities who do not recognize that the millions they pay in premiums originate from taxpayers and that, in 2008, maybe the community deserves the money that is being wasted in poorly-managed OHS and Return-To-Work systems in the public sector.

Kevin Jones

Categories government, politics, rehabilitation, Uncategorized, workers compensationTags , ,

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