NSW inquiry into workers’ compensation illustrates short-termism
Posted on May 28, 2012
UnionsNSW are campaigning strongly on OHS issues during an inquiry by Joint Select Committee on the NSW Workers’ Compensation Scheme into workers compensation. They make the point that a focus on the reduction of injury is the most effective way of rendering a workers compensation scheme “profitable”. By neglecting worker safety, injuries increase and there is a higher demand on compensation and rehabilitation resources.
A major concern in the campaign is that the government is focussing on reducing costs and, in workers’ compensation schemes, that often results in fewer resources for injured workers and their families.
Tim Ayres, Secretary of the Australian Manufacturing Workers Union, was quoted in the Sydney Morning Herald:
“If NSW employers want to save money on workers’ comp premiums, they should focus on reducing their premiums by providing safer workplaces where workers don’t get injured and killed.”
But a draft submission, seen by SafetyAtWorkBlog, by the International Governance and Performance Research Centre (IGPRC) of Macquarie University provides some balance into the rhetoric.
The NSW Workcover issues paper for this inquiry outlines seven “solutions” that they want considered for reform. Improving safety is the first.
- “enhance NSW workplace safety by preventing and reducing incidents and fatalities;
- contribute to the economic and jobs growth, including for small businesses, by ensuring that premiums are comparable with other states and there are optimal insurance arrangements;
- promote recovery and the health benefits of returning to work;
- guarantee quality long term medical and financial support for seriously injured workers;
- support less seriously injured workers to recover and regain their financial independence;
- reduce the high regulatory burden and make it simple for injured workers, employers and service providers to navigate the system; and
- strongly discourage payments, treatments and services that do not contribute to recovery and return to work.”
The draft of that submission of the International Governance and Performance Research Centre (IGPRC) of Macquarie University points out that the issues paper above seems to focus on the reduction of benefits but that
“…improved WHS [Work Health and Safety] performance at an enterprise level translates to less compensation claims and increased financial stability of the Scheme”. (page 2)
Some of the current debate seems to be on a report from PricewaterhouseCoopers (only the Executive Summary is currently available online) which states
“the Independent Scheme actuary projects that an increase of 28% in premium rates would be required if no changes are made to the scheme”.
This is an estimate for a 5 year turnaround but the PwC report also notes that if the timeframe was 10 years, the premium rate rise would only be 8%. The cost impost over the long term sounds much more reasonable, even if it does not fit the political election cycle.
But the IGPRC submission emphasises that these estimates are “if no changes are made to the scheme“. Imagine what could be achieved in cost reduction and control if there was a concerted effort in reducing worker injury and illness!
The submission also questions the push for comparing scheme performance to other Australian States. It states that
“Direct comparisons across jurisdictions are not possible for a range of factors including differences in:
- Number of workplaces and workers,
- Level of coverage and entitlements,
- Scheme management structure (eg central management, use of agents or hybrid models),
- Scheme governance structures, policies and procedures,
- Underlying differences in health & safety regulation, education, training and enforcement.”
The Federal Government has indicated an attempt at harmonising workers’ compensation schemes after it has completed it OHS harmonisation strategy. Although this seems increasingly unlikely, the debate in New South Wales strengthens the argument for reform in the sector.
SafetyAtWorkBlog has discussed the recent figures released by Safe Work Australia on injury and illness costs as a counterpoint to business sector claims of the “burden” of safety but IGPRC submission provides an enlightening comparison with Safe Work Australia’s 2009 data with the earlier 2001 data.
“Between 2001 and 2009 (latest available data) the total cost burden on community stakeholders, such as taxpayers and compensation scheme participants, has reduced by 32% (from 52% to 21%)
- 6% of this decrease shifted to those employers responsible for the workplaces in which these injuries/illnesses occurred
- 94% shifted to the injured workers and their families….” (page 7)
Reducing workplace injuries and illnesses also reduces the need for workers’ compensation so the focus of any review into the economic viability of workers’ compensation schemes must also include strategies for the reduction of illness and injury.
Business concerns about the increased costs to them of injuries and illnesses may be voiced at high volume but there is evidence that the cost burden of poor safety management is increasingly being borne by the worker and their families.
The Joint Select Committee on the NSW Workers’ Compensation Scheme may believe its inquiry has a clear focus on workers’ compensation and economics but the control measures for change may come from well outside its expected area. Sustainable change in the quality of life of workers will come when the political parties and governments plan for change over the long term and not expect quick fixes that fit the political election cycle.
This change is most likely to come from an analysis of work and occupational safety and health in the broader social context and not just in the context of industrial relations. There is no doubt that this path is the harder to travel for society, business and government but it is the most rewarding and the one that supports our international moral obligations.