Latest Productivity Commission data on Australia’s OHS costs

On 15 May 2012, Australia’s Productivity Commission (PC) released its findings into  ” the impacts of the Council of Australian Governments (COAG) Reforms: Business Regulation and Vocational Education and Training (VET)”.  The report includes a chapter on Occupational Health and Safety (OHS). That chapter states:

“Uncertainty exists over the implementation of the agreed [OHS harmonisation]reforms by the remaining three jurisdictions.

If implementation proceeds, and the agreed reforms become operational:

  • all employers are likely to face transition costs in the order of $850 million in aggregate (around $75 per worker);
  • multi-state businesses are likely to see compliance costs fall and safety outcomes improve, generating total possible net cost savings of $480 million per year; and
  • for single-state businesses, despite possible improvements in safety outcomes, additional compliance activities are likely to increase business costs in aggregate for this group by around $110 million per year.”

$A75 per worker seems an acceptable impact although, at first view, single-state businesses, the vast majority of Australian businesses, look to be disadvantaged.  However, the report also states that

Without full implementation [of OHS harmonisation], there is a risk that businesses will face significant transition costs without realising the possible cost savings from harmonised laws.” (emphasis added)

Here is the political and economic need to play well with each other.

South Australia’s Industrial Relation Minister, Russell Wortley, told SafetyAtWorkBlog this afternoon that

“The Productivity Commission reiterates what myself and SafeWork SA have said all along, that business and business owners will not be adversely impacted by this legislation…  In fact, it estimates business will be up to $620 million better off under the new arrangements, particularly those operating in more than one state.

Importantly, the report also found that employers are no more likely to be prosecuted under the harmonised legislation than they are under current regulations.

The report dismisses fanciful claims by the Liberals that it will cost Victorian businesses alone $587 million annually to comply, based on the PricewaterhouseCoopers modelling commission[ed] by Ted Baillieu.  What it will do is ensure South Australians have access to the same health and safety standards enjoyed by workers around the country. (link added)

It’s time the South Australian Liberal opposition stop opposing this important legislation.”

Wortley seems to aim his criticism at his political opponents because it is understood that he continues to meet with a range of business associations over the OHS issue.

On the costs of the OHS to business, the PC report noted the Safe Work Australia statistical estimate that in 2008-09 (only):

“…five per cent ($3.2 billion) of the total [workplace injury and illness] cost was borne by employers through lost production, employer funded medical expenses and legal costs” (page 164)

The majority of costs (74%) was borne by injured workers and their families.

The Productivity Commission report needs careful attention as it is the most recent macroeconomic analysis of workplace health and safety costs, even though some of the data may already be familiar.  The significance is that the report is by the Productivity Commission, a body still perceived by all political parties,as able to provide independent economic costings of government initiatives and regulatory change.

Kevin Jones

reservoir, victoria, australia

2 thoughts on “Latest Productivity Commission data on Australia’s OHS costs”

  1. What nobody seems to understand is that the current legisllation imposes almost exactly the same requirements on employers as the proposed harmonised legislation will on PCBU’s. The only difference is that as the publicity around the new legislation has gained momentum, people have become aware of what they will be expected to do. Currently they have to do those things anyway but they are not aware, or choose not to recognise that and the government will not resource a large enough police force to do anything other than take action when a serious breach occurs, usually only when somebody is injured.
    If the new legislation is implemented we will have the same situation, only a few organisations (usually the larger ones who are forced into having a social conscience) will choose to comply unless they are hit with a big stick.
    The problem is that “Risk taking is rarely punished with an injury or even a near miss. Instead it’s consistently rewarded with convenience, comfort or time saved.

    Qualified OHS Professional with >30 Years experience

  2. Well, some “single state businesses” will face greater compliance costs. One would assume that will be for states where compliance becomes more stringent – not Victoria then – eh, Mr Baillieu?

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