A busy week in Victoria – politics, reviews and common law

Victorian Workcover Authority (VWA),was in the pages of the Australian Financial Review in July 2013 over several issues –

  • CEO Denise Cosgrove told staff of her wonderful holiday in  Daylesford in the same email in which she advised of a review of operating budgets “including people costs” and of job losses,
  • Former Minister for Workcover, Roger Hallam, has been appointed to undertake a review of the Victorian Workcover Authority ,
  • Hallam is said to have been on the panel that appointed Cosgrove recently to the CEO post,
  • Cosgrove has pushed for a change in common law (Common law was controversially dropped during Roger Hallam’s time as Minister).

There seems to be many issues bubbling away at VWA – common law, declining profitability, “dividends” and a secret review.

Common Law

On the issue of common law, the current Workcover Minister, Gordon Rich-Phillips, has responded to reports about Cosgrove’s interest in common law by saying:

“we have got no plans to change common law….. for Workcover.” (AFR 12 July 2013)

Yet the need to do something about common law is increasing. In March 2013 the AFR reported Cosgrove’s concerns as

“…the major reason for the reversal [in profits] was a spike in already rising levels of common law claims that added about $150 million to liabilities for the half year.”

Extracting a dividend

On top of this the Victorian Government took a “dividend” of $A190 million in  2012.  It is unclear whether this was part of the $A417.5 million the government has legislated itself to take from Workcover through till 2016.

It is surprising that Victoria’s business community is not outraged by the removal of funds generated by its workers compensation premiums into consolidated revenue.  The potential of the removal of funds from their original intention (to provide payments to workers in the event of a work-related injury or disease) is that such premiums are seen as a tax on business.

The unions should be similarly outraged but one should ask how an insurance scheme for injured workers should ever make a “profit”.  Shouldn’t such a scheme be cost neutral? And if there is a profit or surplus, should this not be directed at worker health, safety and welfare, instead of to consolidated revenue?

Of course a profitable workers compensation scheme is a luxury that not all Australian States have. But should a “successful” scheme be used as, what Emily Anderson of the Australian Lawyers Alliance calls, a cash cow?

So many reviews

In early 2012 The Age newspaper reported on a quiet but sweeping review of the VWA and Transport Accident Commission (TAC).  The AFR expanded on this report in May 2012.  The Victorian government released its response to this secretive review in June 2013.  Most recommendations concerned increasing the governance and transparency of the TAC and VWA schemes but the track record of the Victorian Government on transparency is not great and conservative governments always trumpet their skills in economic and corporate governance but the trumpeting, in this case, is more muted.

In the government’s response to the review Gordon Rich-Phillips writes:

“Implementing these recommendations will not only benefit these organisations and their clients but Victoria’s business competitiveness and the cost of living.” (page 1)

But not all the recommendations are fully supported and the Minister also writes the review recommends:

“a greater focus on ‘customers’ (employers and vehicle owners), not just ‘clients’ (injured workers/motorists);” (page 1)

This does not augur well for injured workers.

Given that such a review has only just been completed, it is important to understand the purpose of the next review into VWA being undertaken by Roger Hallam.  The Minister has said that Hallam will “undertake some work for them around efficiencies..” but what does this mean?  More detail could have been obtained if Hallam’s contract had been tendered for but this did not occur as the contract was less than the $A150,000 threshold.  It seems that greater transparency is a good thing but only in some circumstances.

Media Attention

The concerns about the future of VWA were aired by Emily Anderson in an interview with Jon Faine on ABC Radio (not available online).  Both acknowledged that Cosgrove’s time in New Zealand’s Accident Compensation Commission was an important element in the debate as New Zealand does not have common law in this area.  They suggested a New Zealand-type scheme may be being considered.

In the context of media attention, it is significant that the local daily for Victoria from the same company as the AFR, Fairfax Media, hasn’t reported on any of this manoeuvring.  This may be due to internal politics but it is not serving the local readers in Victoria.  Quiet and secret (?) reviews?  Workers compensation premiums as a new tax? The potential for the removal of common law?  These are issues bigger than OHS and workers compensation but The Age is ignoring them.

What is missing from all this recent discussion on Workcover, WorkSafe and State politics is the welfare of the worker.  No one seems to be asking how all these reviews will decrease the risk of workers being injured at work or increase the likelihood of injured workers returning to work and good health.  If the government explained their reviews and changes in these terms, the community would be less suspicious and, just maybe, the support for the reforms would generate a quicker implementation.

Kevin Jones

2 thoughts on “A busy week in Victoria – politics, reviews and common law”

  1. Neither the reviews nor the system are designed nor intended to highlight deficiencies or opporunities to make the workers safer – if they did this the entire system would implode.

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