Workers comp becomes political but not in a nice way

Workers’ compensation clearly has become a political issue in Australia recently due to cock-ups, and electioneering.

Embarrassment

The Australian Financial Review has embarrassed the Liberal Party’s shadow Minister for WorkCover in Victoria, Gordon Rich-Phillips.  Rich-Phillips issued a media release claiming the Victorian Government had been inactive on some deficiencies in the WorkCover system that had been highlighted by the chief justice of the Supreme Court.  Unfortunately, the Government had responded with legislative changes that had already been in Parliament.  The Government was provided a free political kick in this election year.

Rich-Phillips is expanding his information network on OHS issues.

This a minor cock-up but illustrates that workers’ compensation schemes have political sensitivities and that the matter can be fraught with hazards.

Premiums and Politics – SA

Usually workers compensation schemes get increased political attention during election campaigns, unless there is a major cost blowout.  The election pledges on workers’ compensation are barely mentioned in the press as the pledge is almost always the same and clearly aimed at the business target – reduced premiums.

The latest to mention workers’ compensation on the election campaign was South Australian Liberal MP Iain Evans.  According to the ABC, Evans has said that if the Liberals win power they will

“… appoint an independent regulator to oversee WorkCover operations and more businesses would be encouraged to self-insure.”

He also noted

“South Australia has the highest levy in Australia.  Every other state has a levy less than 2 per cent….. We don’t see any reason why with proper management South Australia’s workers’ compensation scheme can’t deliver the same result.”

His media releases clearly identify the political purpose behind his campaign.  The South Australian government has already been reviewing the scheme for some time.

The MP’s second release discusses the removal of a bonus/penalty scheme.  Evans pledges that a Liberal government will

“…will include the scheme in the review of WorkCover required under the Act in 2011.”

So Australia is in for several reviews of the same issues at the same time in different locations!!

New South Wales WorkCover offered such a premium discount scheme for a few years in the last decade.  The principle should be supported by OHS professionals as it provides funding for safety improvements.

Workcover New South Wales’ annual report for 2002/03 spoke glowingly of the program

“The Premium Discount Scheme has been very successful, with 2,200 employers qualifying for $67.5 million in premium discounts since the inception of the Scheme in June 2001 to 30 June 2003. These employers have continually improved their occupational health and safety and injury management systems to the benefit of 324,000 workers.”

IN 2003/04, the cumulative total is again used, perhaps annual returns were beginning to decline:

“The Premium Discount Scheme rewards employers that improve their occupational health and safety and injury management systems. Since its inception in 2001, over 3,400 NSW employers have entered the discount scheme, which has returned more than $117 million to them in workers compensation premium discounts.”

The 2004/05 report says that the scheme will undergo a staged closure following the 2004/05 premium review.  A program that is spoken so glowingly of in one year and is closed three years later illustrates a major program fault.  It is curious why the program was started at all if it had such a short life.

WorkCover in Victoria has had the authority to apply a scheme but did not follow WorkCover NSW.

Such schemes have promised to increase the level of workplace safety by providing a model for funding improvements and training.  So far, it does not look like such schemes succeed in their OHS aims, but perhaps the aims were never really about improving safety but about improving businesses’ bottom line through a government pseudo-subsidy.

Premiums and Politics – Queensland

The Australian newspaper reported on 24 February 2010 (not available online) that the Queensland WorkCover scheme was “on the brink of collapse” due to the Labor Party pledging  to keep premiums low.  Similar to the Victorian WorkCover scheme, Queensland’s premium investments lost around $A800 million value through the global economic problems since 2007.  On top of that the newspaper reports the scheme itself had a shortfall of $500 million.

Queensland Workcover’s annual report for 2008/09 says:

“We have maintained our low average premium rate of $1.15 per $100 of wages for 2009–2010”.

The Queensland Premier, Anna Bligh, is reported to be considering a recommendation for an increase in WorkCover Premiums and limits to payments.

The Courier-Mail reports on 26 February 2010 that an undated report by Deloitte:

“….. has recommended to the Government that the access to courts be severely restricted and that employer premiums are increased by more than 20 per cent, which has outraged both unions and employer groups.”

Queensland is in for a torrid time as the Queensland Council of Unions has indicated a concerted campaign on workers’ rights and common law

Massage “beat-up”

On 25 February 2010, The Australian also reported on the second job of  an executive in WorkCover Queensland.  It is very difficult to see the public interest in a story about a public servant who also provides massage services outside of business hours.  The story supports many of the suggestions by media analysts that The Australian is running a campaign against the Australian Labor Party.

Future

In most circumstances it is good to see workers’ compensation issues being reported in Australia’s daily media.  The salacious reports are disappointing but important in the context that workers compensation is to be nationally reviewed in Australia over the next couple of years.  The reports indicate that the political antennae are receptive to any issues related to workers’ compensation insurance, be they second jobs of public service executives or political naivety.

What is not being discussed, at least not yet, is the core elements of workers’ compensation which include, among others, – Is it needed?  Should this be administered by private insurance firms or as a government service?  What is the  relationship between workers’ compensation and injury prevention?

If there any clues to the proposed national review of workers’ compensation in the harmonisation of OHS laws, they would have to be that the review will not be a questioning of the basis for workers’ compensation.   The review will be looking at refining the processes rather than reforming.

It may also be the case that the review will be a legal review run by lawyers for lawyers.  Although the complexity will come from the maneuvering of insurance companies which promises to be far more active than what we saw by the unions and the employer groups through the OHS process.

Kevin Jones

2 thoughts on “Workers comp becomes political but not in a nice way”

  1. When Bruce Carter -the then Chairman of the South Australian WorkCover Board introduced EML to the Stakeholders of the WorkCover industry, I asked the question \”when the experiment of the solo claims agent fails, is there a clause in the contract to allow other claims agents in to the system?\” Bruce Carter was not very pleased with the question -but then I am quite used to people within the WorkCover system not being happy with me-, however Bruce Carter admitted that there was a clause within the contract that could be enacted if it became clear that the need was in place.

    Since then Bruce Carter has resigned as Chairman of the WorkCover Board to be replaced by Philip Bentley, and there has been a behind closed doors renegotiation of the contract between South Australia WorkCover Corporation and Employers Mutual SA.
    No explaination given as to why the contract was signed in April \’09 but back dated to July \’08 givng Employers Mutual SA an extra $17.2million on top of what they had already been paid.

    On top of that South Australian WorkCover Corporation gifted \”for no reason\” another $2million.

    And still there has been no indication of anyone even considering the clause that was in the orignial contract to open the claims contract up to other claims agents.

    I am not privvy as to the workings of the South Australian WorkCover Board or any direction that the South Australian WorkCover Board gives to care-taker Minister Caica.
    What I do know is that the current system is simply not working and it needs to be overhauled very quickly for the benifit of injured workers and employers who have no say what so ever into the workings and day to day management of the WorkCover process.

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