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Tuesday, 27 March 2007
Page: 1

Senator WONG (12:31 PM) —I rise on behalf of the Labor Party to indicate that we will be opposing the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006. We oppose this legislation because, like all legislation on industrial relations brought forward by the Howard government, this legislation is ultimately not in the interest of working Australians. Like the government’s unfair, extreme industrial relations legislation more generally, this bill has at its heart the stripping away of the terms and conditions of our workers.

Labor is driven by a desire for genuine improvements in the area of occupational health and safety across Australian workplaces and we believe that appropriate compensation is an important and essential part of that. However, this legislation will erode the compensation component payable to Australian employees.

This bill is the latest in a number of amendments made to Australia’s occupational health and safety legislative framework by the Howard government and follows on from previous legislation introduced by the government since the 2004 election. These include the repeal of the National Occupational Health and Safety Commission, a bill in 2005; the Australian Workplace Safety Standards Bill; the Occupational Health and Safety (Commonwealth Employment) Amendment Bill 2005; the promoting safer workplaces bill; and the occupational health and safety bill, and the safety, rehabilitation and compensation legislation bill in 2005. Labor opposed each of these bills for good reason. We opposed these bills because each of them reduced, compromised or put at risk the occupational health and safety conditions of Australian workers, and this bill is no different.

The bill before us is the Howard government’s formal response to recommendations made by the Productivity Commission that changes in this area were needed. It follows on from earlier legislative changes also made following the Productivity Commission recommendations, and principally this included the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006.

The principal objective of the bill before us today is to minimise the cost of work related injury and disease for Comcare. The explanatory memorandum to the bill confirms that the savings to the scheme are substantial with an estimated $20 million per annum to be saved as a result of the measures being debated in the chamber. One has to question the real object and timing of these measures in light of these savings. At a time when private sector firms are being encouraged to migrate to the traditionally white-collar scheme, it is clear that these savings will be shared by self-insurers under the scheme. We need to ask the question in this place why these savings are being pursued, why coverage is being undermined and why the foundations of a beneficial scheme appeared to be reformed for new entrant self-insurers to this scheme.

The bill changes the extent to which injury, illness or disease must have been contributed to by an employee’s work before the injury is compensable. It does so by changing the definition of ‘disease’ to strengthen the connection between the disease and the employee’s employment. In particular, it requires the worker to prove that employment has made a significant rather than a material contribution to the disease for it to be compensable. This rewording of the bill has this effect: the government is narrowing the circumstances in which Australian workers may claim compensation. The government argues that this is because courts have misinterpreted the meaning of the word ‘material’; however, the government’s intent is betrayed by the wording of its own explanatory memorandum to the bill, which states:

... the Government is seeking to significantly amend the legislation to reflect its desire to decrease the number of injuries covered by the Scheme.

The EM makes clear what the government’s agenda is. If the Howard government was concerned about wording and interpretation, it could have inserted a clarifying statement into the bill. By its own admission, it is seeking to significantly amend the legislation for the sole purpose of decreasing the number of injuries to workers which are covered by the Comcare scheme. The government is not concerned about injury prevention, employee protection or care. The one aim of this Howard government, as we have seen in all its occupational health and safety and Comcare legislation, is to lower levels of protection for employees in workplaces covered by the Commonwealth jurisdiction, and now it wants to further reduce the sorts of injuries for which Australian employees may be eligible for compensation.

Another amendment contained in the bill changes the definition of ‘injury’ to exclude injuries arising from reasonable administrative action taken in a reasonable manner. The bill also expands the exclusionary provisions for stress claims to specifically include performance appraisals and counselling in relation to performance.

Labor has two concerns in relation to these specific proposed changes. First, we are of the view that there ought not to be a difference between how different sorts of injuries are treated. The broadening of the exclusions from the definitions of ‘injury’ or ‘aggravation’ purports to apply to all injuries covered by the act. However, Labor is of the view that in practice it is likely to be a restriction on the ability of employees to make claims for compensation relating to stress related illnesses. These sorts of injuries are particularly relevant to the demographic of workers covered by the Comcare regime, which is predominantly white-collar employees. Labor is of the view that where an injury arises in the course of, or as a result of, an employee’s work then they should be eligible for appropriate compensation.

The bill also seeks to remove coverage for non-work related journeys and recess breaks where the employer has no control over the activities of the employee, such as meal breaks away from the workplace. In our view, this is yet another example of the government trying to reduce its expenditure on workers compensation. The proposed new section 6(1)(b) represents another attempt by the government to narrow the range of circumstances in which an injury is covered by Comcare. Firstly, by removing almost all journey claims from the coverage of the legislation, the government is engaging in a significant cost shift back onto state governments—generally to cover through compulsory third party claims. Labor notes that not all state jurisdictions have excluded journey claims from their state workers compensation systems. For example, New South Wales still covers workers when they are injured on their way to or from work.

Our second area of concern also relates to this issue. Although the proposed section has five subsections detailing various circumstances in which an injury may occur, the bill is unclear about injuries arising in a number of areas. For example, how will an injury be treated when an employee is out of the workplace on work business but diverts for personal business? Will an injury they sustain be covered by Comcare under these amendments?

Lastly on this point, Labor believes that where an employee is injured during travel for the purpose of attending work or returning home from work then there is a policy argument that the travel is for work purposes. This bill automatically excludes from coverage injuries arising in these circumstances. This is of concern. Labor believes the government has not established a case to depart from the general principle that injuries sustained during work related travel should be compensable unless broken by a substantial deviation. These aspects of the bill before the chamber leave gaps in coverage and lead to uncertainty which will create problems for the Commonwealth, other federal employers, employees and administrators in the future.

The bill also changes the calculation of retirees’ incapacity benefits to take into account changes in interest rates and superannuation fund contributions. It updates measures for calculating benefits for employees relating to the definitions of ‘normal working earnings’ and ‘superannuation scheme’. This means that all potential earnings from suitable employment can be taken into account when determining incapacity payments. It enables determining authorities to directly reimburse healthcare providers for the cost of their services to injured employees and increases the maximum funeral benefits payable.

The bill sets out what is a ‘reasonable administrative action’ in relation to appraisals, counselling, suspension and the disciplining of employees. The only way the bill provides that these are reasonable is to use that word as a descriptor—for example, to say ‘reasonable appraisal’ and ‘reasonable counselling’—but it fails to provide appropriate steps and guidance as to what actually constitutes ‘reasonable’. The government is trying to make what will be in practice a broad exclusion sound innocuous by including the word ‘reasonable’. The wording of the proposed section 5A betrays this intention; it requires that a ‘reasonable administrative action’ be conducted in ‘a reasonable manner’. This is poor drafting which will not assist employees or administrators to determine whether or not there is a valid claim for compensation.

There are other areas of the bill where Labor fears poor drafting will lead to compromising the scope of the scheme. For example, item 15 provides that the normal weekly earnings of an employee must be increased for the purposes of determining appropriate future payments. Whilst proposed section 8(9D) refers to ‘the index prescribed by the regulations’, no indication has been given as to the methodology, relevant factors or appropriate formula the government intends to use to calculate these wage increases.

Labor is concerned about the government’s recent tendency, particularly in relation to industrial relations and occupation health and safety legislation, to include important matters in the regulations, to be released only after the relevant bill has already passed through the parliament. We have seen problems with government bills. In fact, some 300-plus amendments to the Work Choices legislation were introduced in the Senate—that is, the government worked out what needed to be changed between voting for the legislation in the House and putting it into this chamber. We have also seen, under Work Choices and other legislation, the government including in the regulations and other delegated legislation a significant amount of detail that should have been in the primary legislation.

Another area of the bill which may present difficulties in practice is item 18, which changes the rules relating to when and where Comcare is to direct payments for medical and other services and says that Comcare can later recover the amount from any damages awarded to the employee. We are concerned that difficulties may arise in practice on three grounds as a result of these amendments. First, the bill does not require Comcare to inform employees when payment to a provider, and not to the employee, is to be made. Second, it is unclear whether Comcare or the employee will bear the burden of fees and charges arising from accounts paid outside the due date. Third, it is unclear from the text of the bill whether there is a mechanism for employees to receive information about the quantum of payments Comcare has made on their behalf so that they can monitor that information against any assessment of likely damages.

I want to touch briefly on superannuation, which is dealt with in clause 20(3). This sets out a formula for payment. The new formula provides that the weekly amount of compensation payable in accordance with clause 19 is reduced by the combined superannuation amount and five per cent of the employee’s normal weekly earnings. Those in the military are required to pay five per cent super contributions, so the reduction in relation to such employees is understandable, but many other Commonwealth employees are only required to pay a minimum two per cent contribution. As such, this could be considered unfair if they are only paying the minimum two per cent but are then deemed by this legislation to forfeit five per cent compensation. In our view, a fairer option would be to determine a person’s average contributions over their Comcare covered working career.

The Senate Standing Committee on Employment, Workplace Relations and Education, which considered this bill, had three days of hearings and received 28 submissions on the changes being considered in this bill. I note that my colleague Senator Marshall, who is the deputy chair of that committee, will be making a contribution in this debate shortly. The majority of those submissions expressed concern at the changes being made. The Howard government has linked these changes to future viability of the scheme and the explanatory memorandum to the bill states that the scheme is increasingly under pressure. But, as the dissenting report noted, the Comcare annual report 2005-06 reveals that the types of claims to be reduced or eliminated by this bill are not financially significant and are also decreasing. But, while they will have little impact upon the scheme’s viability, there is no doubt that their impact on employees will be potentially devastating.

The committee also heard and received evidence which supported the scheme’s ongoing and future viability. One of these sources was the 2006 Comparative performance monitoring report, the CPM report, which found:

  • The Commonwealth jurisdiction has one of the best Assets to Liabilities Ratio;
  • The Commonwealth jurisdiction has the lowest premium rate of any Australian jurisdiction;
  • The scheme does not have escalating claims numbers or costs;
  • The incidence rate and frequency rate of compensated claims in the Commonwealth jurisdiction is decreasing; and
  • An actual analysis of claims costs for the Commonwealth jurisdiction shows little overall change.

From these statistics, the scheme appears to be operating on a perfectly acceptable cost basis and it is hard to understand why the government continues to assert that the scheme is in financial jeopardy.

In conclusion, I want to reiterate Labor’s concerns about the motivations behind this legislation. The bill before us today has as its principal objective the minimisation of the cost of work related injury and disease for the Comcare scheme. As I mentioned previously, the EM for this bill confirms that the savings to the scheme are substantial, with an estimated $20 million per annum to be saved as a result of these measures. These savings will not be reinvested in the scheme to ensure that its coverage is not compromised, nor will they ensure that cost shifts and gaps will not arise and leave workers under the scheme unprotected. Let us be clear who is contributing the $20 million: it arises out of workers who would otherwise have got the protection of this compensation scheme.

As I said at the outset, we question the government’s motivations behind this bill. We need to ask why it is that the foundations of a beneficial scheme appear to be reformed for new self-insurer entrants to the scheme. It has historically been the case that, through the evolution of occupational health and safety policy in this country, the overriding objective has been preventing workplace injury and illness. This principle has historically underpinned state and federal legislation in this area. The government’s objective in this bill departs from that longstanding approach. Instead, the government’s objective is to reduce the cost of the Comcare scheme by narrowing the eligibility criteria for compensation under the scheme. This in turn would decrease the number of injuries covered under the scheme.

Let us be clear: we are talking about not just abstract numbers but also workers who suffer injury and who will receive no or less compensation as a result of the bill which this government will push through this chamber. The $20 million that the government says it will save comes out of the compensation that would otherwise have been extended to employees. We consider the government’s approach to be wrong. It is the wrong approach to take a simple value proposition that places a premium on cost over rehabilitation. I indicate that at the committee stage Senator Marshall will be moving an amendment on behalf of the opposition in relation to the formulation of the rates.