Robust analysis of Work Health Safety laws shows considerable economic benefits

Recently SafeWorkSA released its “Regulatory Impact Statement: Model Work Health and Safety Regulations in South Australia“.  This report presents radical different economic data compared to the (increasingly discredited) OHS business cost analysis undertaken by PricewaterhouseCooper (PwC) for the Victorian government.

The South Australian report, conducted by Deloitte, found the following economic and social impacts of new work health and safety laws:

“Our analysis indicates that adoption of the work health and safety reforms is the preferred option because it achieves the objectives of work health and safety harmonisation as determined by COAG. Moreover, the safety benefits of harmonisation exceed the compliance costs, and the long-term return to the SA economy significantly exceeds the one-off cost of implementation of the new laws, even without taking into account the expected productivity benefits of the reforms.”

The Executive Summary provides a good level of cost data with far less equivocation than does the PwC report and therefore provides an impression of greater validity.The Victorian Government made much of the cost of implementation, even though the Work Health and Safety laws are closest to the existing Victorian OHS laws of all the States, yet Deloitte took the longer term view, a view more consistent with laws that will exist beyond the political election cycle.  Deloitte said that:

“Government regulators, and society in general, will face initial adjustment costs but the ongoing benefits, largely as a result of expected lower costs associated with workplace injury and illness, are likely to offset these costs.” (page iv)

The Deloitte report clearly states its parameters:

“This Decision RIS provides an assessment of the impacts of adopting the model WHS Regulations (Option 2) relative to retaining the status quo (Option 1).”

It settles on Option 2 because:

  • “it achieves the objectives of work health and safety laws harmonisation as determined by COAG;
  • the safety benefits of harmonisation exceed the compliance costs; and
  • the long-term return to the national economy significantly exceeds the one-off cost of implementation of the new laws, even without taking into account the expected productivity benefits of the reforms.”

Politically, the report is also significant.  Many State politicians began referring to the Victorian PwC report as if it was a valid analysis that could be extrapolated across jurisdictions.  This was nonsense.  South Australia has a report that analysed that State’s impact but followed many of the analytical tenets of the report produced nationally as part of the OHS harmonisation process.

The West Australian Government announced its own State analysis in the May 2012 Budget papers (page 462).  The direction that this review will take is uncertain but most economic analyses from the West are skewed because of the dominance of the minerals resources sector.  However, the mining sector often crows about its world’s-best safety record and it is almost all large corporations, many with a national and international presence.  If the safety record claim is genuine new OHS Laws should have minimal cost impact.

The SafeWorkSA report and the recent Productivity Commission report on OHS costs both emphasise the short-term political strategy of the Victorian Government towards workplace safety.  A longer-term view of the economic and social impact of new Work Health and Safety laws would have done much to improve the reputation of the current Victorian conservative government.

The Productivity Commission report stated that

“…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 [under the new Work Health and Safety laws]”

Missing out on that level of savings is another one of the costs of operating a business in Victoria.

Kevin Jones

reservoir, victoria, australia
Categories business, economics, evidence, government, law, OHS, politics, research, safety, small businessTags , , , ,

5 thoughts on “Robust analysis of Work Health Safety laws shows considerable economic benefits”

  1. Really increasing safety measures, helps in many way to improve our society, first of all, it provides safety and this is secondary that it also helps in increasing economy too.

  2. It really just goes to show that whatever outcome you want the report writer to reach can be reached. VIC had an agenda and got PWC to write a corresponding report to back that agenda up. SA had a different agenda and got a diferent result. The betting man would wager that the SA report is the most objective one.

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