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Thursday, 17 December 1992
Page: 5498


Senator CHAPMAN (4.15 a.m.) —Mr Deputy President—


Senator Macdonald —Be a bit brief.


Senator CHAPMAN —I will indeed. We are here for the third time in 12 months debating important workers compensation legislation in the dying hours of a Senate sittings, indeed, at 4.15 on this Friday morning.

  This happened just hours before the Christmas recess began at this time last year. It also happened just before the winter recess on the last sitting day in June. Today, on our last sitting day for 1992, we are here again debating important workers compensation legislation in the form of this Commonwealth Employees' Rehabilitation and Compensation Amendment Bill 1992.

  The Liberal and National parties are opposed to the central purpose of this legislation, which is to extend Comcare's tentacles into providing workers compensation for privatised former government business enterprises and for sections of the private sector, and will oppose those sections of the legislation giving effect to that. In the committee stage we will move amendments to prevent this extension of coverage. We also believe that Comcare should be fully privatised. Separately from those amendments dealing with Comcare's coverage, we will move committee stage amendments to assist the future privatisation of Comcare.

  Given the lateness of the hour, having agreed with the Minister for Industrial Relations and Minister for Shipping and Aviation Support (Senator Cook) to take this course of action, and having stated the position of the Opposition with regard to this legislation, I seek leave to incorporate in Hansard our arguments against the legislation.

  Leave granted.

  The speech read as follows

  The Comcare system as it presently stands, underwent certain reforms in the recent past which have been touted by Comcare as basic reforms.

  Those reforms limit some of the benefits which were available under the system, and modified some of the procedural aspects of the system.

  They have been presented by Comcare as having basically altered the way in which Comcare is administered, and having also basically altered the benefits available under the system.

  The real position however, when looked at in comparison to the reforms which have been made in NSW and which are about to be made in Victoria, is that those reforms can be more properly characterised as tinkering about the edges of the problems which exist.

  The compensation provisions under Comcare are excessively generous in comparison with the State systems.

  Certainly, administrative changes have been made in Comcare in accord with the recommendations of the Brown inquiry.

  However, the cost-saving changes from the Brown recommendations have not seen the light of day.

  The fact is, that the level of benefits is a major part of Comcare's cost structure.

  The benefits provided for the public sector, under Comcare, remain better than provided by other systems for the private sector.

  State governments have a number of problems with this Bill.

  These include that the Comcare proposal was developed without prior consultation with the States. States are concerned at the lack of consultation and major implications for State workers' compensation schemes.

  They made this clear at the Labour Minister's meeting on 30 October 1992, following earlier meetings of officials on 9 September and 1 October 1992 which failed to clarify issues of concern.

  I am told that even Minister Cook's Labor colleague, the Minister of Labour in South Australia, Bob Gregory, gave him a real touch up at the meeting.

  However, all States considered that the extension of Comcare outside privatised Commonwealth organisations is unnecessary and have raised a number of fundamental issues.

  At the recent Labour Minister's meeting, it was noted that States/Territories did not object to the concept behind the Commonwealth proposal of making the administrative burden on major corporations much less across Australia and having much greater uniformity between the States (seen as very sound objectives). But that this needed to be done in a much more considered way and with consultation.

  But the Commonwealth proposal introduces another layer of self insurance which is unnecessary and complicates, rather than simplifies, insurance and benefit arrangements.

  All States are concerned that Comcare has not yet developed self insurance licensing criteria and is unable to clarify how boundaries will be defined between the extended coverage available under Comcare and State legislation.

  The work cover board in NSW does not support the Comcare proposal as currently presented.

  The Government's proposal raises major concerns for Workcover arrangements at State level in regard to the potential cost impact on State schemes and premiums, licensing arrangements for self-insurers, benefit anomalies, and the impact on occupational health and safety and dispute resolution services.

  These concerns are shared by State governments, the administrators of State workers' compensation schemes and employers. The general view of employers is that the proposal is ill-considered in detail and apt to destroy the integrity of State schemes.

  First among contentious issues causing States and employers to oppose this legislation is their questioning of its constitutionality. This persists despite the opinion of the Commonwealth acting Solicitor-General, Dennis Rose Q.C., that the proposed amendments to the Commonwealth Employees' Rehabilitation and Compensation Act 1988 are a valid exercise of powers under section 51 (XX) of the Constitution.

  Secondly, are its benefits.

  The legislation will create two classes of workers and benefit entitlements within an industry, resulting in a further anomaly in workers compensation benefits at an industry level.

  Comcare provides more generous benefits after 26 weeks (70 per cent of normal weekly earnings until age 65).

  Employers who swap jurisdictions will have to administer both Workcover and Comcare benefit systems, because of existing Workcover claimants, and bear any consequent increase in administrative costs.

  The legislation envisages there will be one scheme for workers in large national corporations and one scheme for those who work in locally based companies.

  The consequence of such a proposal is that two workers in the same industry, within the same State or Territory, would receive different financial burdens, in terms of premiums and compensation payments.

  Given that it has been a very strong point of contention that commonwealth government employees have been treated differently from the rest of the Australian workforce for many years, it would seem a grave mistake to exacerbate that sort of situation throughout every State and Territory.

  Thirdly, is the potential impact on the cost and financial viability of State schemes.

  The likely cost impact on State systems cannot be assessed until Comcare can provide a clear definition in regard to competing industries and licensing requirements.

  However if many large employers leave the State system to take up the Comcare option this will reduce the premium pool remaining to fund certain industry sectors in the States' schemes and could increase premium levels for employers remaining in that sector.

  There would also be pressure on the State schemes to match the higher benefits provided by Comcare, with a further consequent increase in State scheme premiums.

  It is my understanding that the Federal government has failed to undertake any research into this aspect of the proposal.

  Fourthly, are concerns regarding occupational health and safety.

  Under the legislation, occupational health and safety will remain a State responsibility which will create an anomaly in the administration and funding of occupational health and safety services.

  Employers fund the administration of occupational health and safety services via the Workcover levy.

  The Commonwealth proposes that licensing arrangements will require corporations to contribute to State occupational health and safety programs. However it will be the responsibility of States to legislate for and collect such monies.

  This is administratively cumbersome and likely to be unenforceable by the States.

  The proposal in effectively separating compensation and rehabilitation away from occupational health and safety, heads in exactly the opposite direction of State systems, which recognise the importance of integrating occupational health and safety, rehabilitation and compensation services basic to prevention and rehabilitation objectives.

  Certainly employers want a single regulator of occupational health and safety, rehabilitation and compensation.

  Fifthly is the issue of transferability.

  The Commonwealth proposes that organisations will be able to transfer to national coverage, through Comcare self insurance, and revert to the State system if they choose. The mechanism for achieving transferability and administering outstanding claims has not been clarified. States are concerned that Comcare fully supervise any self-insurer they license and the resulting claims run-off.

  The legislation does not appear to absolve State systems of responsibility for the past.

  But practicality demands that there be only one regulator.

  It is essential to look at the totality of any particular individual's claims.

  A State system would be very wary of accepting anyone back from Comcare coverage.

  Sixthly, is the matter of licensing.

  Criteria for licensing self-insurers have yet to be developed. It appears that this will be left to Comcare and regulated under a ministerial discretion, as criteria are not specified in the legislation.

  Comcare has advised it will consult with States on the licensing policy which is proposed to be finalised by early 1993.

  It is not acceptable for this legislation to pass with such an important matter unresolved.

  It is important to know where the boundary lies between the State and Comcare systems.

  This remains unclear, with Comcare either unable or unwilling to say what the self-insurance rules will be.

  Where indeed do the boundaries lie for the private sector to come under Comcare?

  If Ansett joins because it is allowed to as a competitor with the privatised, former Government business enterprise, Qantas, can the rest of the TNT Group?

  And what about Compass?

  If Australia Post joins, what about private career firms?

  So there is real concern about the uncertainty relating to the boundary definitions of industry competitors of present and former, now privatised, Government business enterprises.

  Related to this is the inconsistency of the `all in or all out' condition of coverage with the so-called level playing field, which this proposal purports to create.

  `All in or all out' prevents competition between the States which is essential to maximise any benefits, achievable from a level playing field.

  `All in or all out', prevents some State branches of national enterprises being under State compensation systems, while other branches are under Comcare.

  For example, Qantas in Queensland could not remain under the State scheme there, while Qantas elsewhere moved in under Comcare.

  This entrenches a lack of competitive efficiency.

  It also raises the question of what happens to smaller companies operating in only one State, who nevertheless compete with national firms.

  Will Comcare take them on?

  This in turn raises possible constitutional problems.

  If the proposal to offer self-insurance does not extend to smaller companies operating within States, nor to some trading between States, then the claim to be producing a level playing field is fundamentally flawed.

  This proposal will not create a `level playing field' as claimed. A level playing field should provide uniformity in benefits which strike a rational balance between equity for workers and affordability for employers and allows States to compete against the Commonwealth for coverage of other Government national enterprises.

  At the present time, a genuinely level playing field would see coverage move from Comcare to the State systems.

  As I said earlier, benefits under Comcare are more generous than under most, if not all, State systems. Thus lower costs would be achievable through the State systems.

  A level playing field should be achieved by the Federal Government working with the States to achieve national consistency in benefits, premiums, occupational health and safety, and subsequently opening up competition for service delivery to the States.

  It is a question of the most appropriate way to get to a level playing field or uniformity in benefits. A far better way than this Government's back door method through this legislation is to bring the systems together cooperatively, as is already happening.

  Employers are not convinced of Comcare's competitiveness based on average premium rates. They need a comparison of industry rates being offered for targeted industries.

  Seventhly, there is concern about claims management.

  There is widespread belief that self-insurers under Comcare should remain responsible for claims management. But under this Bill, Comcare will offer a claims management service under its self-insurance arrangements.

  This is contrary to, for example, New South Wales Workcover's licensing policy which requires employers to manage claims effectively as a necessary component of operating as a self-insurer.

  Several large NSW self-insurers have informally indicated their opposition to this aspect of the proposal. It is an important matter of principle that self-insuring employers manage employees claims and deal directly with those employees.

  Only if employers insure with an external organisation should their claims be managed externally.

  With regard to the eighth matter, liability, all States are apprehensive at a failure of a Comcare self-insurer could affect State employers and some financial contribution could be required from insurers/employers in each State. This would not be acceptable.

  Employers are concerned about the failure of the Federal Government to check its unfunded liability in workers' compensation. This is reinforced by earlier qualification of Comcare's accounts by the Auditor-General regarding whether past claims are fully funded. The annual report presents claims rate figures that are quite horrendous.

  Claims in Australian Airlines and Australian National Railways have been worse than the Newcastle dockyards.

  Despite Comcare's claim that it is fully funded against liabilities, there appears to be no provision for the future. Premiums only reflect past claims paid. It is virtually impossible to assess the organisation's efficiency.

  The ninth issue regards dispute resolution.

  The question of which jurisdiction will determine workers' compensation claims and disputes has yet to be resolved.

  Honourable senators should also be aware that this legislation extending Comcare coverage effectively pre-empts the outcome of the proposed Industry Commission inquiry into workers' compensation.

  Treasurer Dawkins has referred workers' compensation arrangements in Australia to the Industry Commission as part of its 1992-1994 forward works program. The Commission is required to report within 15 months.

  Under the Commission's terms of reference, the Commission is required to report on the `institutional, regulatory, financial or other arrangements of governments in Australia which affects the efficient provision of workers compensation and rehabilitation services for injured workers'.

  Under term 3(C) the Commission is also required to report on the relationship between workers compensation and other related arrangements such as accident liability insurance, remedies available in common law and the regulation of workplace safety by governments.

  Territories have cooperated with the Federal Treasurer in refining the draft terms of reference for the inquiry. Clearly, any changes to Comcare should await the outcome of that inquiry. Indeed, it would be appropriate for the proposals contained in this legislation to be referred to the Industry Commission for examination under terms of reference 3(B) instead of this Bill proceeding.

  Furthermore, I understand that an alternative proposal was recently put at a meeting of senior officers in Canberra. As I understand it, this proposal was premised on the assumptions of furthering the objectives of micro-economic reform and improving the competitiveness of Australian industry.

  There is certainly some merit in considering a proposal for workers' compensation arrangements that are consistent across the nation. This alternative proposal would seem to alleviate the major concerns of the Government, in that it would neither create different classes of employers and employees, nor would it have a significant impact on the financial viability of State and Territory schemes.

  Investigation and development of this alternative proposal would involve all States, Territories and the Commonwealth in a joint and cooperative approach. This is a far more palatable approach than the current one which is an unwanted incursion by the Commonwealth into State jurisdictions.

  I also understand that under the heat of opposition to the legislation, the Government has agreed not to implement its proposals regarding private sector coverage by Comcare until a Commonwealth-State working party has reported.

  So we have a Government asking this Senate to pass legislation the implementation of which has been referred to a working party which is to report back to the Departments of Labour Advisory Committee.

  But this Government has lost the trust of the Australian people.

  It does not deserve the trust of this Senate.

  Legislation should not be passed prior to that working party report or the Industry Commission report.

  There is absolutely no community demand for the major proposals enshrined in this Bill.

  On the contrary, there is fierce opposition—opposition from State governments and their workers compensation agencies and opposition from employers.

  The only support seems to come from Comcare, seeking to expand its scope, size and power and Minister Cook's mates in the trade unions, who will undoubtedly seek to use their industrial muscle, to intimidate employers into the Comcare system because of the higher benefits it may provide for union members.

  This piecemeal and divisive approach should not proceed and that will be the intention of our committee stage amendments.

  The ultimate solution to workers compensation issues is to privatise Comcare.

  Our other amendments will keep clear the path for that in the future, under the next Liberal National government.