Union protest is a dry run for Workcover Review and Workers’ Memorial Day

The next stage of a union campaign over the management of workers’ compensation premiums in Victoria occurred in late March 2012.  Trade unions are angry that the Liberal Government of Premier Ted Baillieu has chosen to remove almost $A500 million from the Victorian Workcover Authority (VWA) fund to be allocated to general revenue.  On the steps of Parliament several hundred union members and interested parties were told to “keep their hands off workers’ money”.  Some of this hyperbole needs a little analysis.

Several unionists stated that the workers’ compensation fund is “workers’ money”.  Yes and no.  Yes in that almost revenue created by business comes from labour but when workers’ compensation is required, by law, to be paid to the Workcover Authority by employers, the ownership is a couple of steps away from workers.  Also Workcover takes the premiums as an economic base to invest in the hope of increasing the total fund through dividends and other returns.  The total fund includes premiums and returns on investment, over which workers have no influence.

The 2011 Annual Report for the VWA (trading as WorkSafe) states

“The organisation is primarily funded by insurance premiums paid by Victorian employers who are covered by the WorkSafe injury insurance scheme. In 2010/11 this totalled $1.80 billion.”

The fund amount according to the 2010 Annual Report was $A1.712 billion.  Given that the removal of almost half a billion dollars is scheduled to occur over several years and the fund has been in surplus for several years, it is reasonable for the government to say that the action will have little impact on “worker’s premiums or compromise workplace safety”, as reported on Skynews.  But if there is little impact to the removal, it also means that the $A500 million was sitting in the fund doing nothing but generating a financial return.

WorkSafe’s annual reports state that it:

“… provides a range of benefits to injured workers, including:

  • weekly payments
  • medical and allied health treatment
  • ambulance transport
  • hospital treatment
  • personal and household help
  • impairment lump sum
  • common law damages (where certain criteria are met).”

Wouldn’t the injured workers of Victoria have a better standard of living, or better chance of returning to work, if more money was spent on the provision of the services and benefits listed above?  Could not the “spare” $A500 million have been better used to serve Victoria’s injured workers, to improve injury prevention strategies and to increase OHS enforcement activities?  These questions were not asked at the protest rally in Melbourne.

If we take that employers are also “owners” of the Workcover premiums, why have the business and industry associations not been similarly annoyed at this “cash grab”?  It was put to the protest crowd by a union speaker that the Baillieu government decision has turned workers’ compensation premiums from a purposeful business cost into a business tax, an accusation that seems to have some validity by being similarly described by a former VWA Chairman, James MacKenzie.  The only business opposition to the redistribution of money to date has come from Tim Piper of the Australian Industry Group.  According to the Australian Financial Review on 29 February 2012, Piper said:

“…the government would now have a reason not to use surpluses in the WorkCover fund to pay for future premium cuts to business but instead keep it to boost the dividend. “That creates an obvious conflict. They will have to decide whether to lower premiums or give themselves money,” he said.

Mr Piper said he recognised the government had revenue difficulties at the moment but the dividend policy would be very hard to unwind in the future. He said he had written to the Premier Mr Ted Baillieu raising these concerns.”

The majority of business opposition is not on the removal of the half a billion dollars but on the Victorian government’s “secret” review of VWA and the Transport Accident Commission.

SafetyAtWorkBlog had the opportunity to ask Victoria’s Opposition Leader, Daniel Andrews (pictured right) why he thought business was not complaining about the government’s “cash grab”.  He said that many companies and business leaders were disappointed with the general performance of the Baillieu government but he did not refer to the removal of WorkCover funds as part of the list of disappointments. (Audio available HERE)

Of course, the Victorian Government is in an enviable position on its WorkCover fund.  New South Wales Premier Barry O’Farrell stated on 26 March 2012 that “over the past six months the WorkCover deficit has been $9 million a day” and his Workcover fund is over $A4 billion in deficit. Perhaps Victorian businesses would only be concerned if the fund was as badly in deficit as the NSW Workcover fund.

The protest rally on the steps of Parliament House was less of a protest than an information session.  Unionists spoke about their general dissatisfaction with the Baillieu Government with the Workcover fund removal as the latest issue of dissatisfaction.  In the past SafetyAtWorkBlog has written about the inappropriateness of political posturing during Workers’ Memorial Days but there is likely to be more posturing in a month’s time at the memorial outside Trades Hall, particularly if the review of Workcover and the TAC, recently completed by PricewaterhouseCoopers, is released by the government or leaked to the media.  It’s one thing to take part of the fund, it is another to combine two regulatory authorities. Then the unions may have something more substantial to protest about.

Kevin Jones

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