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Tuesday, 9 May 2006
Page: 87


Senator SANDY MACDONALD (Parliamentary Secretary to the Minister for Defence) (4:43 PM) —I table a revised explanatory memorandum relating to the OHS and SRC Legislation Amendment Bill 2006 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

GENERAL INSURANCE SUPERVISORY LEVY IMPOSITION AMENDMENT BILL 2006

The Government recognises the importance of ensuring that consumers are able to access affordable insurance. Insurance helps individuals, businesses and other organisations deal with a range of unexpected events in their lives, by reducing the disruption that occurs.

The Government is committed to ensuring that the framework for the prudential regulation of insurers is robust and effective.

Insurers operating in Australia are regulated by the Australian Prudential Regulation Authority (APRA). APRA works with all regulated insurers to make certain that they operate within prescribed standards.

These standards typically involve determining whether the financial framework of insurers is sufficiently robust so that they are able to meet their obligations in a sustainable manner.

This framework benefits not only the insurers themselves but all stakeholders that interact with the insurance sector. Consumers, for instance, have greater confidence in the ability of an insurer to make good on claims made.

The costs incurred by APRA for managing the regulatory framework are recovered from the industry through a supervisory levy.

APRA also incurs costs associated with tasks not directly related to its supervisory responsibilities. For example, it incurs costs in operating the National Claims and Policies Database.

The National Claims and Policies Database was commissioned by the Government in the context of concerns in relation to the availability and affordability of public liability and professional indemnity insurance.

Since 2002, the Government has led a range of tort law reforms designed to improve the availability and affordability of insurance. These reforms have been designed to ensure that the lack of affordable insurance does not prevent the community from engaging in normal activities such as hosting a local fete or going to the beach. At the same time, reforms have also been designed to ensure that people who provide a service or advice, such as architects and doctors, are not prevented from practising due to prohibitive insurance costs.

To ensure that the benefits of these reforms are passed on to the community, the Government asked the Australian Competition and Consumer Commission (ACCC) and APRA to examine and report on the market for public liability and professional indemnity insurance.

As a result of this work, members of the community can now access information about the market for these types of insurance. Initial reports reveal good news about the market, with premiums clearly falling.

Specifically, APRA has developed a database designed to capture public liability and professional indemnity information directly from insurers. Information within the database is used to report on the market and to assist insurers, government and other stakeholders in analysing this market. The expectation is that this information will continue to improve the availability and affordability of public liability and professional indemnity insurance.

However, not all general insurers offer public liability and professional indemnity insurance. In line with the Government’s cost recovery principles, only those insurers who contribute to, and thereby can benefit from, the database should contribute towards its cost. Insurers who do not use the database should not be expected to fund it through the general supervisory levy.

The bill provides for a special levy which will allow the recovery of costs from a class of general insurance company. Therefore, the bill will allow the recovery of costs from insurers who are contributing to the National Claims and Policies Database.

The Government considers it important that APRA has a sustainable funding base from which to operate. This bill helps ensure the viability of that funding base by providing the flexibility to recover costs where appropriate.

I commend the bill.


HEALTH AND OTHER SERVICES (COMPENSATION) AMENDMENT BILL 2006

The bill proposes to amend the Health and Other Services (Compensation) Act 1995 (the HOSC Act). The Act was passed to ensure those successful claimants for compensation do not “double dip” by obtaining dual payments for their Medicare, nursing home and residential care payments. When plaintiffs go to court to recover damages for personal injuries, the legislation requires that they repay to the Commonwealth the cost of any Medicare, nursing home and residential care benefits received because of the injury for which they have also been compensated as part of the compensation judgment or settlement.

The bill arises from the need to repeal the sunset clause, section 33AA of the HOSC Act, which will cease as from 1 July 2006. Unless section 33AA of the HOSC Act is repealed before 1 July 2006, compensation claimants will no longer have access to the majority proportion of compensation money at the time of their judgment or settlement. The HOSC Act allows compensation payers and insurers to pay 10 per cent of the judgment or settlement to Medicare Australia and the balance of the judgment or settlement to be released to the claimant by the courts, under Division 2A, Advanced Payment Option to the Commonwealth, under the HOSC Act. This provision will cease if section 33AA is not repealed. Of the 50,000 judgments or settlements reported under the HOSC Act each year more than eighty per cent utilise the Advanced Payment Option.

Other minor technical amendments are also included in this bill. The minor amendments are designed to clarify the original intent of the Act, provide a formal review pathway and make the Act consistent. The other amendments relate to:

  • The definition of fatal injury being removed because currently persons who are fatally injured and incur any Medicare, nursing home or residential care expenses are required to comply with the HOSC Act. The removal of the clause leaves no doubt as to the obligation incurred by compensation payers, insurers and claimants if Medicare, nursing home or residential care expenses have been incurred,
  • Aligns paragraph 17(6)(a) with paragraph 23(3)(b) which uses the date of injury as a trigger for recovery action relating to previous Commonwealth expenditure on Medicare, nursing home or residential care. This allows Medicare Australia a 60 day period to provide a history statement if the date of injury was greater than five years old,
  • Provides a formal pathway to allow claimants to have their notice of claim reviewed by Medicare Australia where an informal system currently exists, and
  • Provides a clarification of the value of a “small amount” to align the provisions of the HOSC Act with the definition of a “small amount” in section 38(2) of the HOSC Act.

This bill ensures the continuation of an effective mechanism for recovering funds where a person would otherwise “double dip” while still allowing compensation recipients access to the majority of their funds.


OHS AND SRC LEGISLATION AMENDMENT BILL 2006

This bill implements the Government’s response to a recommendation of the Productivity Commission in its report—National Workers ‘ Compensation and Occupational Health and Safety Frameworks of June 2004. In that report, the Productivity Commission recommended extending coverage under the Occupational Health and Safety (Commonwealth Employment) Act 1991 (the OHS(CE) Act) to eligible corporations which are licensed under the Safety, Rehabilitation and Compensation Act 1988 (the SRC Act).

The SRC Act establishes a premium-based workers’ compensation scheme for Commonwealth employees but also enables former Commonwealth authorities and eligible private sector corporations to obtain a licence to self insure under the scheme. The OHS(CE) Act provides the legal basis for the protection of the health and safety of Commonwealth employees. It does not, however, apply to former Commonwealth authorities and private sector corporations that become licensed self insurers.

At present, therefore, former Commonwealth authorities and licensed private sector corporations operate under the Commonwealth workers’ compensation regime but are covered by State and Territory occupational health and safety legislation in the jurisdictions in which they operate. This makes it unnecessarily difficult for many firms to develop a national approach to occupational health and safety and may result in the requirement that they comply with eight separate and quite distinct OHS jurisdictions.

The bill includes an amendment to section 4 of the OHS(CE) Act. This amendment will exempt employers and employees under the Commonwealth Act from the operation of state and territory occupational health and safety laws unless these are specifically prescribed in regulations under the Commonwealth Act. This amendment is necessary to clarify the legislative requirements for employers and employees covered by the Commonwealth Act. The amendment is supported by licensees, as it will reduce duplication of occupational health and safety laws which apply to them. Without the amendment, those employers and employees can be subject to both Commonwealth and state and territory laws on the same subject matter.

When this Act was first made, section 4, as currently drafted, had a role to play. The Commonwealth Act, like all other Australian occupational health and safety laws, adopted the Robens approach of imposing general duties of care on employers, employees and others. Prescriptive provisions on particular issues were to be dealt with by regulations. As the Commonwealth had not at that stage drafted regulations on specific occupational health and safety issues, section 4 enabled state and territory regulations to address relevant issues for employment covered by the Commonwealth act in a more detailed manner. Since that time, however, the Commonwealth has implemented its own comprehensive regulations on a range of occupational health and safety issues. This has led to a situation where both Commonwealth and state and territory laws on the same issue can apply to employers and employees covered by the Commonwealth Act. This is clearly unsatisfactory, as it causes unnecessary complexity and confusion.

The Commonwealth will continue to develop new regulations on specific occupational health and safety issues where this is necessary. The amendment will in no way diminish occupational health and safety protection for employees covered by the Commonwealth Act. The Government remains committed to the promotion of injury prevention, and best occupational health and safety practice is a key priority for the Australian Government.

The amendments in this bill will provide all licensees under the SRC Act with the benefits of operating under one occupational health and safety scheme together with integrated prevention, compensation and rehabilitation arrangements. This will produce better health and safety outcomes all-round, including for the employees of the affected bodies. The amendments will enable greater coordination and feedback between the workers’ compensation and OHS arrangements.

The time and resources currently expended in addressing jurisdictional and boundary disputes caused by multiple compliance regimes can be redirected to achieve greater overall efficiencies. Importantly, savings can be devoted to further improving health and safety at the workplace.

The bill contains other amendments. The name of the Act is being changed to the Occupational Health and Safety Act 1991 to reflect its extended application beyond Commonwealth workplaces. Consequential amendments are being made to other Acts which contain references to the OHS(CE) Act to reflect the new name of the Act.

The remaining amendments are mainly technical in nature.

Some amendments correct a drafting oversight in amendments to the SRC Act and OHS(CE) Act in 2001 which rationalised scheme funding and placed the provisions for regulatory contributions for both Acts in the SRC Act. However, because of differences in the definitions of Commonwealth authority in both Acts, a regulatory contribution towards the cost of administering the OHS(CE) Act cannot currently be charged to some Commonwealth authorities covered by the OHS(CE) Act, but not the SRC Act.

The amendments will correct this oversight and validate payments already made for the year 2002-03.

The 2001 amendments also rationalised the licensing arrangements under the SRC Act and introduced one generic licence. Some licensees were charged, and paid, licence fees for the year 2002-03 under the wrong licence provisions. While the amounts were later recalculated under the correct provisions and reconciled, the amendments will also validate the licence fees as originally paid.

Debate (on motion by Senator Sandy Macdonald) adjourned.

Ordered that the bills be listed on the Notice Paper as separate orders of the day.