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Thursday, 29 March 2007
Page: 25

Dr STONE (Minister for Workforce Participation) (10:26 AM) —I move:

That the amendments be agreed to.

The Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006 amends the Safety Rehabilitation and Compensation Act 1988—the SRC Act—primarily to maintain the integrity of the Commonwealth workers compensation scheme and to facilitate the provision of benefits under the scheme. During the course of the debate in the Senate, opposition senators tried to make much of the fact that Comcare’s actual claims costs have declined over the past few years, saying that the amendments proposed in this bill are all about denying injured workers their basic entitlements and increasing their dependence on the public health and welfare systems. Of course, nothing could be further from the truth.

The decline in Comcare’s actual claims costs is not an accurate indicator of the cost pressures facing the Comcare scheme. The Comcare scheme is a long-tail scheme with incapacity benefits payable to age 65 and medical benefits for whole of life. The total expenditure by Comcare each year in meeting the costs of all claims includes the costs of injuries and diseases which may have occurred several decades ago. The current costs of these old claims is irrelevant in examining the current cost pressures facing the scheme today—costs which must be paid for by employers through their premiums.

The premium rate, which reflects the lifetime costs of injuries and disease that are occurring now, is a much better indicator of current and future cost pressures facing the Comcare scheme. Comcare’s average premium rate has increased by nearly 60 per cent since 2002-03. While Comcare’s premium rate is somewhat lower than comparable schemes, it has been rising at a time when a number of other jurisdictions have been reducing their premiums. Even though the overall number of claims accepted by Comcare has been falling, there has been a significant increase in recent years in the number of high-cost claims, especially those arising from psychological injuries—often known as mental stress claims. The number of accepted disease claims, which are also high-cost claims, has been increasing. For example, mental stress claims account for 7.6 per cent of the total number of all claims in 2005-06 but now represent nearly a third of the total cost of all claims accepted by the scheme.

The costs of accepted disease claims have risen from around $47 million in 2001-02 to nearly $105 million in 2005-06. Many of these claims have occurred in circumstances where work has made only a very small contribution to the injury or disease, contrary to the original intention of the act. The main amendments contained in the bill seek to address these issues by ensuring that only the costs associated with work related injuries are met by Comcare and funded by premium payers and ultimately the taxpayer.

The bill will amend the definitions of ‘disease’ and ‘injury’, which are of central importance in the SRC Act, to strengthen the connection between the employee’s employment and the employee’s eligibility for workers compensation under the scheme. The bill does this in two ways. First of all, the bill amends the definition of ‘disease’ to ensure that Comcare is not liable to pay compensation for diseases which have little if any connection with employment. The amendment requires that an employee’s employment must have contributed in a significant way to the contraction or aggravation of the employee’s ailment before compensation is payable. This replaces a current test which requires a material contribution by employment to the disease before compensation is payable. This amendment is consistent with every other workers compensation scheme in Australia other than that of the Northern Territory.

Secondly, the bill amends the definition of ‘injury’ to expand and update the existing exclusionary provisions to prevent workers compensation being payable in respect of an injury, usually a psychological injury, arising from legitimate administration or administrative action by management. This would include, for example, reasonable appraisal of the employee’s performance and reasonable counselling action taken in respect of the employee’s employment. The reasonableness requirement is not novel; it is a feature of comparable legislation in most jurisdictions across the country, and the term is used in many other laws for the simple reason that there often is not a better alternative. It should be remembered too that the amendment will limit the potential for abuse of the scheme by employees dissatisfied with management decisions.

The bill also amends the provision that sets out the circumstances in which an injury to an employee may be treated as having arisen out of, or in the course of, his or her employment. Specifically the amendments will remove coverage for injuries sustained by employees during journeys between home and work and during recess breaks undertaken away from the employer’s premises—for example, lunch breaks during which an employee leaves the employer’s premises to go shopping. Again, this is not novel. (Extension of time granted) The Victorian, South Australian, Tasmanian and Western Australians workers compensation schemes do not allow journey claims.

These amendments are also consistent with recommendations made by the Productivity Commission in its March 2004 report on national workers compensation and occupational health and safety frameworks. The Productivity Commission recommended that coverage of journeys to and from work not be provided and that recess breaks and work related events should be restricted to those at workplaces and at employer sanctioned events. The fundamental commonsense principle underlying the Productivity Commission’s recommendation was that employers should only be held liable for conduct that they are in a position to control. Employers cannot control circumstances associated with journeys to and from work or recess breaks taken away from their premises, and it is not appropriate for injuries sustained at these times to be covered by workers compensation.

This bill is also about enhancing various entitlements available to employees under the principal act. The bill will amend the method for calculating retirees’ incapacity benefits to take account of changes in interest rates. The change in the interest rate provision would result in increased benefits payable to retirees. The bill will also increase the maximum funeral benefits payable under the SRC Act and its counterpart for members of the defence forces, the Military Rehabilitation and Compensation Act 2004, to bring these benefits closer into line with actual funeral costs.

The bill will also provide a further reference scale for adjusting employee entitlements under the scheme. Where an employee’s normal weekly earnings cannot be updated by reference to the rates contained in those instruments currently referred to in the SRC Act, benefits will be updated by reference to the Australian Bureau of Statistics index, which will be prescribed in the regulation.

Finally, the bill includes a number of minor technical amendments to the SRC Act which correct anomalies that adversely affect the efficient operation of the act or are inconsistent with the original policy intent behind particular provisions. I commend the bill to the House.