Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Education and Employment Legislation Committee
20/06/2014

CARR, Mr Henry, Branch Manager, Safety and Compensation Policy Branch, Department of Employment

O'CONNOR, Mr Paul, Chief Executive Officer, Comcare

PARKER, Ms Sandra, Deputy Secretary, Workplace Relations and Economic Strategy, Department of Employment

ROSS, Ms Justine, Senior Executive Lawyer, Department of Employment

[14:53]

ACTING CHAIR: Welcome. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I remind witnesses that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. The committee has your submission. I now invite you to make a short opening statement, and at the conclusion of your remarks I will invite members of the committee to put questions to you.

Ms Parker : The department welcomes the opportunity to appear before the committee today. Appearing with the department is Comcare, which is the Commonwealth work health and safety regulator. Comcare has responsibility for the application of the work health and safety legislation. The department has primary legislative responsibility for the development of policy in regard to the Commonwealth Work Health and Safety Act 2011 and the Safety, Rehabilitation and Compensation Act 1998. The department stands by its submission to the committee. The bill supports the government's policy to reduce the cost of the regulatory burden and increase productivity for businesses by enabling employers whose business operates in multiple state and territory jurisdictions to be covered by a single work health and safety regulator and a single set of workers compensation arrangements. This will ensure equity for workers as they will have the same work health and safety and workers compensation arrangements regardless of which state or territory they are working in.

The key amendments introduced by this bill are supported by the recommendations of the review of the Safety, Rehabilitation and Compensation Act 1998, by Dr Allan Hawke AC, commissioned by the previous government in 2012. On self-insurance, the SRC Act currently provides workers compensation coverage for all Commonwealth public servants, ACT public servants and 29 private-sector corporations. Commonwealth agencies and the ACT government pay premiums to Comcare in respect of their workers compensation liabilities. The 29 private-sector corporations all self-ensure, which means that they meet the cost of compensation and manage their own workers compensation claims or are responsible for outsourcing this function, including assessing claims and paying compensation benefits such as income replacement. Private corporations have now been in the Comcare scheme for nine years and, as licensees, have improved their performance under the Comcare scheme. Licensees achieve 95 per cent compliance with the scheme's management systems in work health and safety and 97 person for rehabilitation and claims management. This is an excellent result. Analyses by Comcare and the department show that improvement is also apparent when compared to other schemes in Australia. The serious injury frequency rate for Comcare scheme licensees is 8.8 per 1,000 employees, which is the second lowest in Australia. At the same time, the Comcare scheme licensees' return to work rate of 85 per cent is substantially better than the national rates. The licensees have also demonstrated reductions in the number of claims from their workers.

Under the current arrangements, existing entrants are covered by the Commonwealth Work Health and Safety Act but new entrants will not be. This is an unnecessary cost to employers and maintains inequity and confusion for employers and employees. Reviews over the past decade—including the 2004 Productivity Commission inquiry, the review of self-insurance arrangements in the Comcare scheme 2009 and the 2012 review of the SRC Act—have consulted on and undertaken specific analysis of the issue of multistate employers having to maintain workers compensation arrangements and meet work health and safety requirements across different jurisdictions. The Hawke review of the SRC Act recommended that the act be amended to broaden the range of corporations able to access the Comcare scheme to include national employers. The bill implements that recommendation.

Importantly, this bill will not change the current requirement that the Safety, Rehabilitation and Compensation Commission consider the impact on employees prior to allowing a corporation to become a self-insurer. The bill will allow employers who are required to meet workers compensation obligations in two or more jurisdictions the option of seeking access to one set of national arrangements for workers compensation and work health and safety through the SRC Act—that is, under the Comcare scheme. All employees of a corporation currently self-insured under the SRC Act will have the same workers compensation entitlements regardless of the state or territory in which they are employed.

Tests for eligibility, the provision of incapacity benefits and the duration of payment of entitlements vary between states and territories. Access to a single scheme will ensure all employers have access to workers compensation under one set of requirements. All employers will have access to the same level of compensation benefits and high standards of rehabilitation. The amendments in the bill will provide multistate employers and their employees with the simplicity of dealing with one set of work health and safety requirements and one regulator. Access to coverage under the Comcare scheme will remain subject to existing stringent requirements. The SRC Act requires the commission to consider an applicant's past conduct in complying with Commonwealth, state and territory laws dealing with injury prevention, rehabilitation and claims management so as to be satisfied that the applicant can meet the commission's standards in these three functions. Employers are consulted on the impact of the corporation joining the scheme. Licences are issued for specified periods and performance is reviewed before each licence extension. Licensees are required to meet stringent conditions of licence and performance standards. The commission continuously monitors that licensees continue to meet their prudential requirements and the licensees' performance in work health and safety rehabilitation and compensation. The commission also assesses the level of regulatory oversight required for each licensee annually. The commission also has regard to any penalties issued by Comcare in response to noncompliance by the licensees under the WHS Act.

The bill implements another of the recommendations from the Hawke review to allow the granting of group licences. The regulation impact statement for the bill estimates that these changes will reduce the regulatory burden for national employers by an average of $33 million per annum over the next 10 years. According to recent data from SafeWork Australia that compares the incidence rates of serious disease and injury by jurisdiction, the Comcare scheme is the best performing scheme in Australia for injury prevention. The performance of self-insurers in the Comcare scheme for injury prevention is consistently better than most state and territory jurisdictions.

Some submissions to the inquiry have raised the issue of the impact on state and territory schemes. The Productivity Commission's 2004 inquiry found that the cost to state and territory schemes of opening up the Commonwealth scheme would be negligible. This was further supported by the Comcare review in 2009 and the recent review of the SRC Act in 2012. This finding by the Productivity Commission was based in part on whether there is cross-subsidisation occurring in state and territory schemes—that is, if good performers in terms of work health and safety are subsidising poor performers. In the department's assessment, the circumstances have not changed over the years, and the impact of allowing additional national employers to join the Commonwealth scheme remains minimal.

Mr O'Connor : Comcare is a federal work health and safety regulator and also underwrites workplace liability. So Comcare has a number of roles within the Comcare scheme. I is important to be able to explain this as we go along because I think some of the evidence this morning is confusing some of the concepts and our roles and accountability. Our work is to prevent workplace harm and support people affected by it. Our work is derived from four statutory charters, and the parliament is considering changes proposed to two of those statutory charters. We are established under federal law. We are a body corporate. We are a Commonwealth company. We are largely self-funded for our three programs of work, which relate, as far as this inquiry is concerned, to the protection of worker health; safety and welfare; and early and safe return to work.

The first thing to note in addition to our submission is that we are in an integrated scheme, and this is different to some states and territories, where there is a separation—for example, in Western Australia—between the work health and safety regulator and the regulation and management of the workers compensation scheme. In the Comcare scheme, it is integrated and, in that sense, the work health and safety, the rehabilitation and the compensation arrangements are all considered under the one model. We believe it is an effective and an efficient system, and it has a number of advantages that were highlighted by the Productivity Commission. It allows the alignment of prevention efforts with the consequences of workplace harm. It creates mutually beneficial outcomes for both prevention and work health and safety and compensation and it aligns the financial performance of employers and duty holders with the social impact of the outcomes of that workplace harm.

Our regulatory work uses federal work health and safety law to focus duty holders on the prevention of workplace harm and to hold them to account where they fail to do so. Our use of federal compensation law ensures scheme employers are clear about their work and their role in an ill or injured worker's recovery, their rehabilitation and their return to work. We are one of several Commonwealth work health and safety regulators, and, under the Work Health and Safety Act, we are called out as the workplace regulator for the Australian Defence Force, the Commonwealth and most of the organisations that are licensed to be self-insured. The latest licensee—their licence will take effect from next week, 1 July—is DHL Supply Chain. We provide this coverage for almost 440,000 Australian people. We regulate a variety of workplaces both in Australia and overseas, some of which are in remote, isolated or dangerous environments and in areas of conflict and unrest. The injury and incident rate that Ms Parker referred to is the lowest of all Australian schemes.

We believe that our regulatory approach is not significantly influenced by occupation type. The scheme's risk and occupation types have always been diverse, extending well beyond low-risk, white-collar occupations and public servants here in Canberra. They include defence; law enforcement; border protection operations in Australia and overseas; scientific medical research operations, including nuclear science; maritime and aviation operations in Australia and overseas; technical manual operations often in remote and challenging locations; telecommunications, including field work and construction; road transport logistics; major hazard facilities; manufacturing, constructing and mining infrastructure services; and banking and financial services.

Our inspectors and our auditors have a wide range of skills and experience, in both blue-collar and white-collar environments. On occasion, if there is a specific skill set that is needed for a difficult issue or a technically challenging issue, we will engage an expert or we will work with one of our colleague regulators in the state and territory or federal systems to be able to get that expertise. Our regulatory model is one that focuses on assisting and supporting duty holders to comply with the law, to encourage and provide advice and guidance to those where there might be accidental noncompliance and to focus our resources on those employers that do not get the work health and safety message.

There is a range of programs and support that our regulatory operations provide—guidance and advice, audits of work health and safety and rehabilitation systems, and campaigns to educate duty holders across the Comcare scheme. We have the new Return to Work Inspectorate to assist agencies with better rehabilitation practices and safe and early return to work, education programs, evidence based tools and practice guides, regulation and supervision of rehabilitation providers, as well as the more usual range of enforcement activity to ensure compliance and strengthen work health and safety and rehabilitation and return-to-work systems. We do that not just through court based outcome but through inspections, improvement notices and undertakings as well as the usual range of justice outcomes.

Our regulatory function is funded by regulatory fees that are recovered on a cost recovery basis. Comcare can, and will, adjust its regulatory workforce to provide the necessary resources and skills as a result of the expansion of any growth in the scheme or a diversity of licensees. For example, if mining companies were to enter the scheme then we would acquire specialist skills in that particular area. We are a competent regulator of nuclear industry, for example, but that does not mean we have got nuclear scientists on board. You do not need to be a builder in order to be an efficient and effective inspector looking at construction workforces.

ACTING CHAIR: Excuse me, Mr O'Connor: is your submission much longer? We are already 15 minutes in.

Mr O'Connor : If I may, let me just wrap up with two other short dimensions. Our audit and inspectorate workforce is comparable in numbers and training standards to state and territory jurisdictions and, based on the national dataset, the coverage per 10,000 employees is solid. We have 53 inspectors, which include nine inspectors who are focused on asbestos-related issues, and they are inspectors. It is not, as was suggested in this place earlier this morning, that that number somehow was bolstered by including administrative staff et cetera. We have nine other auditors, 12 intelligence notification staff, eight authorisation officers, 10 education officers and a range of other administrative and support staff. We operate around most parts of Australia and we also deploy our inspectors overseas. Contrary to what has been suggested in this place, we have only16 per cent of our inspectors based in Canberra and we have numbers spread around other parts of Australia, including several in Western Australia.

ACTING CHAIR: I think it is two, isn't it?

Mr O'Connor : No it is not. There are several as well as an asbestos expert. We deploy people on a national basis. We do not restrict our inspectors in Western Australia, for example, to only intervene there—

ACTING CHAIR: Could be go to questions now?

Mr O'Connor : Please.

ACTING CHAIR: You might have just explained the difference. At Senate estimates, we were told that there were 44 inspectors. Forty-four plus nine adds up to 53. So those nine inspectors that you said were asbestos experts, sit within your department?

Mr O'Connor : They are sitting within the agency. Correct.

ACTING CHAIR: Within your part of the agency, not within the asbestos eradication part?

Mr O'Connor : Correct.

ACTING CHAIR: So they are your people?

Mr O'Connor : Yes, so those nine—

ACTING CHAIR: So how did we get it wrong at Senate estimates?

Mr O'Connor : I am not sure if it is a matter of getting it wrong. It was just a matter of—

Senator LINES: We were told that there were 44 at Senate estimates.

Mr O'Connor : Yes. I also stand to be corrected about asbestos inspectors, because it is important—

Senator LINES: Did you forget them?

Mr O'Connor : No.

Senator LINES: It is only two weeks ago that we have gone from 44 to 53. Now we have worked out that it was the nine inspectors who were focused on asbestos. So what happened?

Mr O'Connor : The two numbers add up. It is 44 inspectors plus the nine that we have funded—

Senator LINES: I understand that 44 plus nine is 53, but we were told at Senate estimates that it was 44.

Mr O'Connor : By me?

Senator LINES: Yes. So how did you omit the nine?

Mr O'Connor : It was not a matter of omitting the nine. The nine had funded for—

Senator LINES: So why did you give the answer of 44?

Mr O'Connor : Because that is the focus on the work health and safety—like the day-to-day inspections that most of the people regulated by the Comcare community are focusing on. We have received funding in respect of nine additional inspectors to be focused—their work—on asbestos.

Senator LINES: Are these new positions?

Mr O'Connor : That is correct.

Senator LINES: Are they in situ?

Mr O'Connor : A couple are, but not all.

Senator LINES: What we need, Mr O'Connor, is the actual number that you have now—not the projected. Let us be very clear about this. The number that you have now.

Mr O'Connor : That is 44.

Senator LINES: That is 44 what? Heads?

Mr O'Connor : Yes, there might be some who are part-time. I can take it on notice if they are FTE—

Senator LINES: So it is 44, but you are currently funded for an additional nine?

Mr O'Connor : Correct.

Senator LINES: That will work exclusively in the Comcare domain.

Mr O'Connor : Correct.

CHAIR: With asbestos?

Senator LINES: Yes, he said that.

Senator LINES: So you are leaving Comcare at 1 September?

Mr O'Connor : The end of my term is 23 August.

Senator LINES: And you take up your new position—

Mr O'Connor : on 1 September.

Senator LINES: So obviously you have big shoes to fill. When does Comcare expect to have a replacement CEO, and what, if any, are the acting arrangements?

Ms Parker : That is a matter for the government.

Senator LINES: The appointment of a new CEO? Is that normally a matter for government?

Ms Parker : Yes it is.

Senator LINES: Do you have any instructions from government at this point?

Ms Parker : It is a matter for government, so no, I do not have any instructions. It is their decision, and they will make the decision.

Mr O'Connor : Our deputy CEO will act as the CEO—

Ms Parker : if necessary.

Senator LINES: So that is not a matter for government. This is the second time we have to be clear here. I asked you what the arrangements were and what the acting arrangements were, and you said that is a matter for government. Now we have had Mr O'Connor say that there is a deputy who could act.

Ms Parker : Sorry, I will clarify. If the new person is appointed to start the day after Mr O'Connor leaves then they will go straight into the position. If they do not start straight away then somebody will act in the position, and the acting arrangements are as outlined in the act.

Senator LINES: So they are not subject to the minister.

Ms Parker : The minister approves any acting. It is delegated to the Secretary of the Department of Employment where there is an acting, but it is the minister's or the government's decision, yes.

Senator LINES: Okay. Mr O'Connor, when I said you were leaving, you said your term would expire.

Mr O'Connor : Correct.

Senator LINES: Your term expires when? I believe you gave me the date.

Mr O'Connor : I believe it is Friday, 22 august.

Senator LINES: When you were appointed to this position, it came with a term with that end date?

Mr O'Connor : Correct.

Senator LINES: Okay. So it was obvious to everyone that something would have to be done.

Ms Parker : Yes. It is a five-year appointment, and that is normal practice. The Remuneration Tribunal sets the rate and all that.

Senator LINES: Yes. It is normal practice for it to get to this point and not have a replacement?

Ms Parker : Yes. They do take some time. The Governor-General also has to appoint, so it does take some time. There is a process.

Senator LINES: Is that process being undertaken at the moment?

Ms Parker : Yes. We know when the position comes to an end, so we work backwards by months. But you would understand that sometimes the person who is to be appointed is not available immediately.

Senator LINES: Of course.

Ms Parker : So those are all things that are negotiated.

Senator LINES: But there is a process in train.

Ms Parker : Yes, absolutely.

Senator LINES: Thank you. You said in your introduction that Comcare is one of the best schemes in Australia. I am looking at Comcare's annual report. Are those words in the Comcare report?

Ms Parker : Mr O'Connor owns the annual reports. I might get him to answer.

Mr O'Connor : I do not recall using exactly those words, but in my opening statement I did say that the incidence of workplace injury in the Comcare scheme is one of the lowest or the lowest in Australia.

Senator LINES: Yes. It was Ms Parker who said that.

Ms Parker : We get data from Safe Work Australia, yes. It may be in Safe Work Australia's annual report, but I am not sure of that.

Senator LINES: When I look at your annual report, it seems that Comcare's funding ratio would be an issue.

Mr O'Connor : The appropriate funding of Comcare's public sector workers compensation liabilities remains a priority. The funding ratio for those underwritten claim liabilities is not strong but is strengthening. Comcare is solvent. Injured workers' entitlements are secure, but that relates only to the underwritten part of our Comcare scheme, which is for Commonwealth workers and ACT public sector workers.

So none of those financial issues affect the world of licensees or their financial viability, what we charge them. It is quite a self-contained balance sheet issue that relates to my work as the underwriter of the public sector claims liabilities. As was explained in a recent meeting with all of the self-insurers, there is no cross-subsidy here between Comcare's insurance business and the cost of regulating the licensees for other work health and safety or return to work and rehabilitation. It does not impact the regulatory charges, and nor does it have anything to do with the prudential efficacy of the liabilities that each of the licensees has separate guarantees in place. They are two quite distinct systems within the Comcare scheme.

ACTING CHAIR: Yes, sure. So in you annual report, under fiscal challenges, similar to what you have just said, you say:

Currently, Comcare’s funding ratio for its underwritten workplace liabilities is not strong. While Comcare is solvent and injured workers’ entitlements are secure, we need to strengthen our financial resources in the long term. My goal is to return the scheme to a fully funded position—

so 100 per cent presumably—

while continuing to deliver certainty for workers’ entitlements and minimising the financial impacts on employers.

What is the plan there? When would we expect it to be back to a fully funded position?

Mr O'Connor : We would expect the public sector workers compensation liabilities to be returning to a fully funded position within a 10-year time frame. We are working on a prudential framework that is being prepared with the advice with the Australian Government Actuary, and which is published. Comcare, in setting its premium, has to comply with guidelines that have been issued to it by the Safety, Rehabilitation and Compensation Commission—the SRCC. We need to meet those guidelines, but also be prudent in our underwriting. So where the cost and complexity of claims is leading to erode that liability or funding position, then we would look to increase, as we have done, the premiums levied on those employers in the Comcare scheme who pay premiums—that is, the Commonwealth and the ACT government.

ACTING CHAIR: Just so it is clear here—I am certainly not an actuary; I am not an expert—but you have been very careful to say 'in relation to the public sector and the ACT'. So are there different arrangements for the licensees?

Mr O'Connor : Correct.

ACTING CHAIR: What are those ratios?

Mr O'Connor : It is not an underwritten scheme. We have to understand that with regard to the SRCC, the commission's licensing of each of these licensees, there is an element of prudential control and supervision that is exercised by the commission under the terms of the licence. And that will be that each of the licensees has to have an independent actuarial report that estimates annually its outstanding claims liability, provides reserve, there are bank guarantees that are in place, plus reinsurance, plus the statutory guarantees for each of those licenced entities.

ACTING CHAIR: So you do not use a ratio, or do you use a ratio to describe—

Mr O'Connor : No, it is a completely different concept.

ACTING CHAIR: Okay. I think you have agreed—I do not want to put words in your mouth, but what funding ratio should a worker's compensation scheme aspire to?

Mr O'Connor : Ideally, whether it is workers compensation or not, any accident compensation scheme would probably be looking at a normal or target funding ratio that is between 90 and about 110 per cent. Sometimes workers compensation schemes in Australia, their funding rations get much higher—in Queensland and in Victoria occasionally—and so that becomes, in a sense, an embarrassment of wealth.

ACTING CHAIR: Yes.

Mr O'Connor : Then it is up to the government to decide how it will return those excess funds—to either employers or to workers, or as reduced premiums or to fund extra benefits. Where there is a funding deficit and it is not at that ideal range, other measures are in place. That recovery is funded through premiums and also an explicit recovery margin that is levied on both the Commonwealth premium-paying agencies and the ACT government, a margin that was endorsed by the SRCC unanimously, including from all employer and employee representatives on that commission.

Senator LINES: You have a 10-year plan to improve the position, which you outlined before. You said that part of that plan might be increasing premiums, but is Comcare considering reducing liabilities to return the scheme to fiscal health—for example, by cutting benefits?

Mr O'Connor : No, that is not an available option unless federal law changes. We have to operate and get towards that target funding ratio within the constraints of federal law.

Senator LINES: In relation to the private sector, could you cut benefits there?

Mr O'Connor : That is not for us. That is a matter for government. That is a policy matter. The Comcare scheme and the SRC Act entitlements, the Safety, Rehabilitation and Compensation Act entitlements, apply to all scheme participants, like the ACT and the Commonwealth—not the Australian Defence Force after 1 July 2004, because the SRC Act does apply to non-warlike injury for members of the ADF before that period of time.

Senator LINES: It is very technical.

Mr O'Connor : It is, and it is important to understand. I think it is quite appropriate to your questions. It is important to understand that, when we talk about the Comcare scheme, language is important so that we know exactly which part of the pie we are talking about.

Senator LINES: Can you provide the committee with the comparable funding ratios of Australia's biggest workers compensation jurisdictions? I would be looking at Queensland, New South Wales, Victoria and WA.

Mr O'Connor : I am happy to take that on notice. For Queensland, if you look at, say, the underwritten scheme, which would be WorkCover Queensland—not all, because it also has organisations licensed to be self-insurers—WorkCover Queensland probably has one of the strongest funding ratios in Australia, although I stand to be corrected on the exact figures.

Senator LINES: So it is up around 90 or 100 per cent?

Mr O'Connor : No, it would be possibly 140-plus per cent. In Victoria, that funding ratio has altered because the government in Victoria has applied what is called a dividend policy—not without its perspectives and views about the appropriateness of that. For example, in my previous work as CEO of an accident compensation scheme that had a very strong funding ratio, we also had a dividend policy so that we would return—in that case, to the Victorian government—50 per cent of any surplus funds by way of a dividend. That applies in the Victorian WorkCover Authority, as it will be known from 1 July, to its arrangements, but there are different arrangements in other schemes. In Western Australia, for example, where there is no central public underwriting of all workers compensation, those funding ratios are matters for the individual licensed insurers who participate in that scheme. So it depends on the structure of the scheme, whether it is centrally underwritten, privately underwritten, integrated with work health and safety et cetera. We can provide the funding ratios around the country on notice.

Senator LINES: Thank you.

CHAIR: Can I go to the Hanks-Hawke review, to the documentation that was given to us. I think you heard me ask a previous witness about this, and I am quoting here. I do not know who prepared this for us. It says: 'The bill seeks to implement the recommendations of the review of the act by Peter Hanks and Allan Hawke, which was commissioned by the former government in 2012.' They reported, as I understand, in February 2013. 'The final report of the review made 100 recommendations aimed at improving the operation of the Comcare scheme as well as its financial and governance framework.' Could you tell me how many, if any, of those recommendations have actually found their way into the amendment bill that we are considering at the moment?

Ms Parker : This bill is largely about opening up access to Comcare for self-insurers. And that is certainly one of the recommendations from that review.

CHAIR: Now, were there any areas where the Hanks review either did not make recommendations or specifically did not want to see change where proposed change has been implemented?

Ms Parker : In this bill?

CHAIR: Yes. The recess provisions is one that I think was asked about. Was that something that came about as a result of them?

Ms Parker : No.

CHAIR: Or were they not of a mind to do that?

Ms Ross : The amendments regarding recess and employment provisions and the serious and wilful misconduct.

CHAIR: They were not covered in the review?

Ms Parker : They were not covered in that review.

Ms Ross : The Hanks review.

Ms Parker : Yes, that is right.

CHAIR: Thank you. There has been quite a lot of discussion with previous witnesses about the consultation process. Have you remained consistent with the consultation processes with governments of the past? Is it you who have actually conducted the consultations? Let me ask that in the first instance.

Ms Parker : There has been extensive consultation in the sense that there was a review in 2012. There was very comprehensive consultation in the 2012 review.

Senator LINES: That was under the Gillard Labor government.

Ms Parker : That is right, yes. And so the particular amendment here about self-insurance, for example, was consulted on very broadly. We have also undertaken consultation on this particular bill, in exactly the same way. So we have a process where we consult with relevant stakeholders. So we consult with unions and with employers. Because this bill impacts on self-insurers, it impacts on employers who are public sector bodies, such as the ACT government—as Mr O'Connor mentioned—they have been consulted. We believe we have undertaken significant consultation. Comprehensive consultation, yes. There is no reduction in any way from previous consultations.

CHAIR: I have two questions in that area. Ms Devine from the ACTU, in a response to a question asked by my colleague—I think was Senator Lines—described it as more of an information presentation than a consultation. I got the impression from her evidence that the participants were listening more than being invited to comment or consult. Would that be, in your mind, a reasonable comment or criticism?

Ms Parker : That is not how I would describe it. You can see how complex the legislation is. Part of what we do in consultations is always to say, 'Here's how it works now. Here's what the government's proposing. What that will mean is this. Here's the impact.' So of course a part of it is always information provision. And then we invite feedback. People are providing feedback in a range of ways. Colleagues have undertaken consultations and so on. It depends on how people view consultation.

CHAIR: Sure. But your belief is that there is an opportunity for those to respond.

Ms Parker : Absolutely. Yes, definitely.

CHAIR: To turn to the confidentiality deed again, is that consistent with behaviour from the past, or is this something new that you introduced with this particular round of consultation?

Ms Parker : We always consult in confidence. That is because the government is still considering options. That is completely standard practice.

CHAIR: Would the Law Council of Australia have been a participant in the process?

Ms Ross : Yes, they said they were.

CHAIR: It was them. I recall asking, I think Mr Redpath, whether he had he sought any authorisation to be able to expand—while still honouring the confidentiality clause—to actually be able to consult with his associates from other states. What is the circumstance? Is the confidentially signing personal to that person? Or indeed, after some degree of discussion with you, they are able to seek information from their colleagues before responding?

Ms Parker : No. It does allow them to consult with colleagues in their organisation. What it does not allow them to do is go and talk to the broader community—

CHAIR: Make public statements or go to the media?

Ms Parker : Exactly. It is designed to have them—of course, we know they need to talk to their colleagues.

CHAIR: Yes. That is what I would have thought and hoped. But it just concerned me that there did not seem to be clarity about that.

Senator LINES: But it excludes them from informing the Senate inquiry?

Ms Parker : Of what they have said in the consultation? Yes, that is right.

CHAIR: Does that process have a concluding date or is it just a—

Ms Parker : In the confidentially?

CHAIR: No. Their capacity to be able to respond.

Ms Parker : No, we always have time lines. I think there are two things here. There is this bill in front of us, which has three main amendments. The other discussion that has been happening is about consideration of further amendments to the SRC Act, outside the ones we are considering here. For example, the Hawke and Hanks recommendations are being considered so—

Senator LINES: Hence the need for confidentiality—not around the current bill.

Mr Carr : Correct.

Ms Parker : I think that is where people are getting slightly confused. So there are two tranches if you like. There is this piece you have in front of you, which you are all familiar with. There are, potentially, further amendments to the act. The government has looked at the Hawke and Hanks recommendations and said, 'What parts of those recommendations do we want to take forward?' They have asked the department to undertake further consultations. Some states and territories have amended their acts recently. We have been asked to look at what amendments they made and whether they might be useful for consideration in 2014. Of course, 2012 is two years ago. And of course when Hawke and Hanks were consulting it was in 2011 and 2012. We are now in 2014. What has changed since then? Are there things we can learn from the other state amendments and also would our stakeholders make other suggestions, having seen what is happening in the states and having to administer and be a part of the act? It is a normal process and confidentiality is part of that because it is a work in progress.

Senator LINES: Just so I am clear. Ms Ross just said in relation to a question that Senator Back asked that wilful misconduct and recess breaks were not from the Hanks review.

Ms Parker : That is right.

Senator LINES: But can you clarify that none of the exclusions from benefits were recommended by the Hanks review?

Ms Parker : When you say 'exclusion,' I think one of the terms of reference was not a reduction in benefits.

Senator LINES: Yes.

Ms Parker : Yes, that is right, if that is what you mean.

Senator LINES: So where have they come from?

Ms Parker : These new ones? They are government proposed amendments. Just one more thing, the recess breaks recommendation came from the Productivity Commission. And so the government has picked that up from the Productivity Commission, which strongly recommended that employers are not responsible when they cannot have control of a workplace.

Senator LINES: But wilful misconduct has come from the government?

Ms Parker : I will just check. Yes, that is right.

Senator LINES: You said that there had been broad consultation, that you had consulted under the Labor government and now you have got the confidential consultations going on. When you use that term 'broad consultation,' are you including that whole period from when you consulted under the Labor government to these confidential ones?

Ms Parker : Yes. We are not so much doing a tally. But Peter Hanks and Allan Hawke did a lot of consultation and the government is looking at: what did they recommend from that consultation?

Senator LINES: Yes.

Ms Parker : We are saying that that was fairly extensive. We are now doing further consultation.

Senator LINES: So these new pieces: wilful misconduct, the recess breaks and so on—

Ms Parker : The current ones, yes.

Senator LINES: which were not part of that Hanks review The consultation with this group would have to be confidential?

Ms Parker : Yes.

Senator LINES: How big is that group? I think the ACTU said there was a list and they were allowed to talk to people on the list. Because ACCI said this morning they were not on the list or they did not think they were on the list.

Ms Parker : It depends how you call that. We are talking to employers. In the act, the main employers are Commonwealth government agencies, ACT government and the 29 self-insurers. So ACCI will be consulted. We have a process for consulting them. For example, there is a meeting in a couple of weeks that the minister chairs. ACCI is on it. Ai Group is on it.

Senator LINES: That is that other confidential group we have talked about before?

Ms Parker : Yes. And ACTU is on it and others, and that is one of the topics always on the agenda.

Senator LINES: But have they been part of the confidential consultations to date?

Ms Parker : ACCI?

Senator LINES: Yes.

Ms Parker : I need to check that. They may not have been.

Senator LINES: Can you table a list?

Ms Parker : Of people we have consulted? We will table a list of groups we have consulted.

Senator LINES: Can you also table the propositions put forward by the government at the consultations—

Ms Parker : The?

Senator LINES: The government propositions, such as wilful misconduct.

Ms Parker : I will need to take that on notice. They are, as I said, confidential.

CHAIR: I want to be very clear about some elements within the scenario where corporations with obligations under two or more laws of a state or territory apply for approval to be a self-insurer. The term 'self-insurer' is what it means?

Ms Parker : Yes.

CHAIR: So those 29 organisations are literally self-insured?

Ms Parker : In my opening statement, I said—

CHAIR: I apologise; I was not here before.

Ms Parker : and Mr O'Connor helped me with this—that they can also outsource their insurance.

CHAIR: So the term 'self-insurer' means what?

Ms Parker : Perhaps, Mr O'Connor might answer, because I may be confusing you.

Mr O'Connor : It is not insurance. They are licensed to be responsible for their own workers compensation liabilities. Some licensees have approval from the SRCC, the commission, to outsource the claims determination function to what we call third-party administrators—it might be an insurance company; it might be a claims manager—not a large number do, but some do. But that does not mean that that licensee is not accountable for it; it is just that it is having people outside its employment scope, but within its contractual scope, manage those claims.

CHAIR: Of itself, should that be a cause of any concern to employees covered under such schemes?

Ms Parker : Absolutely not.

CHAIR: Does it improve or does it adversely affect the integrity of their cover into the future or for those who are currently—

Mr O'Connor : No. We do not believe so. In fact, that is an explicit decision and consideration by the commission, which includes experts as well as employer and employee representatives. For example, just last week, when the commission made its decision to allow a new entrant, DHL Supply Chain, to be licensed, it had to evaluate whether it was in the interests of the workers of DHL Supply Chain around Australia as to whether or not that stacked up, whether it made sense, whether it was in their interest.

CHAIR: And, if it did not, the commission would not adjudicate in that direction?

Mr O'Connor : Correct, and it was a unanimous decision of the commission to grant that licence.

Ms Parker : We talked about their performance. As I said, they are achieving 95 per cent compliance with management systems in work health and safety and 97 per cent for rehab and claims management. That is a very good result. So they are strong performers. We have been tracking and mapping them for nine years in the scheme, and they do perform better than the public sector.

CHAIR: In terms of the liabilities—I think someone quoted 64 per cent; I do not know if that was in relation to yourselves—

Ms Parker : Yes, it is.

Mr O'Connor : Yes, it is.

CHAIR: It was ACCI that quoted that. Then you mentioned the Queenslanders. They are up over 100 per cent. Can you just give the committee some understanding of the governance and the prudential arrangements in place to oversee the investment of those funds? Again, I am asking it from the viewpoint, naturally, of people who are likely to be affected by any sort of deterioration, let us call it.

Mr O'Connor : The funding ratio, the funding challenge that relates to the underwritten claims liabilities for the Commonwealth and the ACT government, is separate and distinct entirely from the financial accountability and responsibilities of licensees—

CHAIR: That is right. You made it clear to us.

Mr O'Connor : who are licensed by the insurer. Each of those—their prudential efficacy or standards are very tightly regulated by the commission, the prudential control. In terms of the governance for the licensees, an approved actuary would need to provide an annual evaluation of those outstanding claims liabilities. There is guidance and standards from the Actuaries Institute about that. That is then submitted to the commission. It is reviewed, in many cases. There are also reinsurance arrangements that are approved as well. And there are bank guarantees that underpin each of the assessments of those liabilities. For the public sector underwritten scheme, completely separate and different, which the 64 per cent relates to, which was last year's—at that point in time, 30 June—funding ratio, the governance around that is: as the CEO and sole director of Comcare as a Commonwealth company, I am the person who is accountable for those liabilities and for our balance sheet. That is why I have the accountability to determine premiums with regard to that underwritten sector of the Comcare scheme. In making those premium determinations, under federal law as it currently stands, I make those determinations in the best interests of Comcare, even if, under federal law as it currently stands, it says that that is not in the best interests of the Commonwealth. That is the provisions of what we call the CAC Act that apply to me, as the sole director of Comcare as a Commonwealth company.

CHAIR: And nothing in this proposed amendment bill impacts at all on the process or the governance arrangements that you have just explained to me?

Mr O'Connor : No. The strengthening and improvement of the governance and financial framework of the Comcare underwritten system are not covered by these proposed amendments.

Senator McKENZIE: I just want to briefly go to an issue that the Law Council raised this morning, and it was around employees with different employers working in the same geography, in the same physical space, being subject to an accident and having a variety of compensation arrangements within the one workplace. Could you give me your perspective on that? If you cannot, please look at the Law Council's evidence in the Hansard and then do that on notice. I am happy either way.

Ms Parker : Sure. We were asked some questions around that at the Senate estimates committee as well, and it is certainly currently the case that, for national employers who have employees insured in a range of states and territories, the differences between those schemes can be significant. We have been doing some analysis of various injuries and what might happen, and it is incredibly complicated. It is not easy. One of the senators asked, 'If I have a particular injury, what is the difference between if I have it in Queensland or in the ACT,' or something like that. It is very, very difficult for us to answer that question, because the claim assessment will be different, the actual payments will be different, the weeks at which payment is made and whether it is a step down—in other words, whether the person's replacement income changes at a certain time, after 26 weeks or after another period of time—whether it becomes a common-law claim or whether there is a different arrangement, the medical treatment that is available and how that is assessed, how they will return to work, under what circumstances. It is very complicated.

Some of the employers who spoke to the Productivity Commission said that it costs millions of dollars for them to administer the very different arrangements. Of course they do not want to get it wrong. They are very worried about worker health and safety; they take it seriously, most of them, and therefore it requires larger companies to have whole teams of people. There is no question about that. So the advantage of this system is not just for the employers coming into the Comcare; it is for the employees. It seems, certainly to the department and to the Productivity Commission, a very odd outcome where you can have the same injury in a different state working for the same employer and get a very different outcome from that. We would say that there is a lot to be gained from a single arrangement.

Senator LINES: Could I table this document? It is the email sent to legal practitioners inviting them to meetings and talking about the confidentiality. I did not know if the department had it, so I thought it was worth tabling.

Ms Parker : It does not look very confidential.

Senator McKENZIE: Quite a wide distribution list by the look of it.

Senator LINES: It says, 'I invite you to a meeting with other legal practitioners to discuss a possible government response to the recommendations of the Safety, Rehab and Compensation Act'. I noted, in response to a previous question from my colleague about the need for confidentiality, you said it was in relation to possible future changes. I am just wondering: if the future changes have not been considered by the cabinet, I am grappling as to why we have this confidentiality and why, when I asked if we could get a list of what the government was recommending, you said that it could not be disclosed. I do understand in the normal course of events that if it is a cabinet discussion—

Ms Parker : No, I did not say it could not be disclosed, Senator; I said I would take it on notice I believe.

Senator LINES: Did you? I thought you said—

Ms Parker : No, I think I said I would take it on notice.

Senator LINES: I asked you for the list of participants—

Ms Parker : Of the membership.

Senator LINES: which you said you would give us, and then I asked you if you would also give us the government proposals. Did you say you would take that on notice?

Ms Parker : I did.

Senator LINES: I beg your pardon, Ms Parker; I thought you said no. In any event, if these changes have not been considered by the cabinet, why is there this secret confidentiality at this point?

Ms Parker : Senator, it is how the department has always consulted on legislation, including under the previous government. The view is that we want to have consultations with those who are going to be impacted or have an interest in it and that people will come along and speak openly, if they can speak, without thinking that someone is going to leave the room and talk to the media or provide it publicly and so on.

Senator LINES: The legal practitioners?

Ms Parker : A consultation does not mean that the government has a considered view; it is asking people's view. We want that to be in confidence so that people will speak openly and not feel intimidated and not feel that their words are going to be misquoted or used outside the meeting.

Senator LINES: So was it the legal practitioners who wanted confidentiality?

Ms Parker : No, we do this for every meeting. Every consultation on the legislation is caveated in exactly this way.

Senator LINES: When you spoke before about the consultations that you undertook under the previous Labor government, were those done in the same way?

Ms Parker : This is standard practice for us, yes.

Senator LINES: But were they done in the same way for those consultations?

Ms Parker : For Hawke and Hanks?

Senator LINES: Yes

Ms Parker : I might take that on notice. I believe so, but I will take that on notice.

Senator LINES: Thank you.

Ms Parker : It was 2012, so I am not quite sure.

Senator LINES: Ms Parker, can you tell me whether you have been exploring proposals that could result in additional exclusions from compensation for injured workers and reduce some benefits—for example, impairment benefits.

Ms Parker : We are undertaking consultations on the Hawke and Hanks recommendations and then asking people if they have other suggestions for changes, and we are looking at state and territory legislation.

Senator LINES: But you also said there were some government changes, which I think is where the wilful misconduct came from.

Ms Parker : These are the ones that are in front of you now. The two that are open there; they are out in the public.

Senator LINES: Yes, but there is also this second tranche that you have been consulting on.

Ms Parker : That is right.

Senator LINES: So in relation those, are you exploring proposals that could result in additional exclusions?

Ms Parker : We are exploring a whole range of things.

Senator LINES: So is that a yes to that question?

Ms Parker : It might be. I do not—

Senator LINES: Maybe I should ask Mr Carr and Ms Ross, because I understand they have been doing the consultations.

Ms Parker : No. Can I just say that we are not going with a view. When you do consultations—

Senator LINES: No, I am not asking if this is an exclusive list.

Ms Parker : We are not going in front of people and saying, 'Here's the list of things that will take away workers benefits'.

Senator LINES: But are there proposals in the broad range of discussions that you are having that could result in additional exclusions from compensation for injured workers and a reduction in some benefits—for example, impairment benefits? Have they been part of it—

Ms Parker : Have they been canvassed?

Senator LINES: Yes.

Ms Parker : They may have been. And the reason I am hedging is because we have not costed anything. So what we are looking at is—

Senator LINES: That is fine, but—

Ms Parker : The answer is there may be.

Senator LINES: So why is it 'maybe' and not 'yes' or 'no'?

Ms Parker : Because each of them is different. For example, this group here that you have put in front of us, the legal practitioners, they are going to have a very specific focus. It will be only on certain things.

Senator LINES: Yes, of course. So in relation to the legal practitioners—

Ms Parker : There may be, Senator. We can take it on notice. We are trying to keep these consultations confidential, so, again, if we start to say, 'A legal partitioner said why don't you do something that takes the benefit away—

Senator LINES: I am not asking you to ascribe a particular point of view to a legal practitioner—

Ms Parker : I would think the answer would be, 'Yes, in some cases some suggestions will have been made that may reduce'—

Senator LINES: Thank you, Ms Parker. Can you advise the committee when senators will be informed in relation to further changes to Comcare that the government is considering?

Ms Parker : To Comcare the organisation?

Senator LINES: Yes.

Ms Parker : There are not any changes, apart from the CEO, that I am aware of.

Senator LINES: And what about in relation to Comcare and the way it operates or benefits to injured workers or more broadly?

Ms Parker : There is nothing that I am aware of, Senator. You may be referring to the Commission of Audit that had some recommendations around Comcare. The government has made no decision on that.

Senator LINES: Senators are being asked to vote on this bill that proposes to expand the Comcare scheme, which is what the current bill is doing—

Ms Parker : Yes.

Senator LINES: but certainly some of the senators would want to be confident to know what the government intends to change or expand into the future.

Ms Parker : It is difficult to answer that, but Comcare the organisation—I do not know anything about that, Senator, I am sorry.

Senator LINES: Okay. I presume, Mr O'Connor, if you are the lead I will put the questions to you or to Ms Parker. In relation to Western Australia, this issue of inspectors, we were told two. We may have been told this at Senate estimates, so I cannot hang my hat on that, but I am certainly of the view there are two field inspectors in Western Australia, but in your evidence you said 'several'. Can you tell me what the current situation is for WA please, of actual bodies.

Mr O'Connor : I believe there are six approved positions and five individuals filling them. I would be speculating as to the status of recruitment for the sixth. I was there and visited the Perth office just a few weeks ago. I met with them. I can assure you these are people—

Senator LINES: Yes; that is fine. So there are five actual heads there now—

Mr O'Connor : Yes, and I believe there is a sixth—

Senator LINES: employed by your department?

Mr O'Connor : Correct.

Senator LINES: Are they all in the Perth office or are they in—

Mr O'Connor : They are in the Perth office.

Senator LINES: Do these include some asbestos inspectors or are these—

Mr O'Connor : There may be one additional—I will not say inspector, because Comcare took on, from the asbestos authority, some of the monitors, and one of them might be there. But I would need to take that on notice.

Senator LINES: If you could, that would be good. So there might be one who is an asbestos person, but the other four are inspectors of the actual bodies?

Mr O'Connor : If there is one of the people that we have taken on short-term contract who was an asbestos monitor, they will not be an approved inspector; they will not be authorised as that. So that would be separate to that. My understanding is that there are six—

Senator LINES: Positions?

Mr O'Connor : Within the establishment, six positions. And I understand that there are five—

Senator LINES: Of which you think one is not qualified?

Mr O'Connor : No. In addition to that, there would be possibly an asbestos monitor, but I am wanting to focus on those who are—

Senator LINES: Maybe you need to take that on notice then and tell the committee, in relation to Western Australia, how many actual numbers of bodies, actual real people, there are who are inspectors in Western Australia currently.

Mr O'Connor : And I believe that is six, with five people appointed to that, with one position that is vacant at the moment. I will verify that in—

Senator LINES: So that is five.

CHAIR: And the asbestos situation is No. 7?

Mr O'Connor : It is separate and different.

Senator LINES: Thank you. I do not have any further questions.

CHAIR: I thank you all very much, you and the other witnesses who have appeared. I thank Hansard, the secretariat and anyone who has been in the gallery.

Committee adjourned at 16:01