Bills Digest no. 96 2014–15
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
8 May 2015
of the Bill
Structure of the Bill
Statement of Compatibility with Human Rights
Key issues and provisions
Date introduced: 26
House: House of
1, Part 1 and Schedule 2, Part 2 commence the day after the Act receives Royal
Assent. For other items, see the text of this Digest.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
The purpose of the Safety, Rehabilitation and Compensation
Legislation Amendment (Exit Arrangements) Bill 2015 (the Bill) is to amend the Safety,
Rehabilitation and Compensation Act 1988 (the Act) to provide for
financial and other arrangements for a Commonwealth authority to exit the
Comcare scheme; clarify that premiums should be calculated so that current and
prospective liabilities are fully funded; change the appointment process and
membership of the Safety, Rehabilitation and Compensation Commission; and make
consequential and technical amendments.
The Bill has two schedules. Schedule 1 contains the main
amendments and also some amendments to the Act which
are contingent on another bill to amend the Act that is currently before the
Parliament. Schedule 2 deals with membership of and appointments to the Safety,
Rehabilitation and Compensation Commission, and some technical amendments.
The Safety, Rehabilitation and Compensation Act 1988 provides
for the rehabilitation and compensation of injured employees of the
Commonwealth and its agencies and statutory authorities, and of eligible
corporations. To do this it establishes the Safety, Rehabilitation and
Compensation Commission (the Commission), which makes policy and oversees the
operation of Comcare; it also establishes Comcare, which operates the scheme.
Most of the Commonwealth agencies and statutory authorities pay premiums to
Comcare and are referred to as premium payers, but some Commonwealth
authorities have been granted self-insurance licences. Eligible corporations
which join the scheme are also granted self-insurance licences.
The Australian Capital Territory has been declared a
Commonwealth authority under section 4A of the Act, and is a premium payer in
The Act provides for the exit of bodies from the scheme.
Section 4A(2) provides that the Minister can revoke the declaration of the
Australian Capital Territory as a Commonwealth authority, and section 4A(3)
provides that the Australian Capital Territory can leave the scheme on the
initiative of the Minister for Employment or of the Chief Minister of the
Australian Capital Territory, with a year’s notice, or less by agreement.
The Act sets out detailed provisions concerning
responsibility for rehabilitation of injured employees and for calculation and
payment of premiums. Comcare has access to income from premiums and earnings
from them, plus special appropriations from the Commonwealth and some payments
for special matters including asbestos related injuries, plus regulatory
contributions from members. This income was not sufficient to prevent it from
declaring a loss in 2011–12. Comcare has stated an intention of having assets
equal to liabilities within five to 10 years of 2011–12, and to this end it has
raised its premiums.
The Act does not at present include detailed provisions
for rehabilitation or the calculation of premiums and continuing contributions
for a premium payer which exits the scheme where the scheme retains
responsibility for the rehabilitation of employees of the former premium payer.
In February 2015 the Government of the Australian Capital
Territory announced its intention to leave the Comcare scheme on the grounds
that premiums are excessive, the scheme involves long delays, and its
rehabilitation is ineffective.
The Territory is the fourth largest premium payer in the scheme, so its
departure is significant.
One purpose of this Bill is presumably to prepare for that exit. To provide for
Commonwealth agencies’ exit in the past (for example, when Medibank Private was
sold), the Parliament passed separate enabling legislation.
This Bill would create a general set of provisions.
In March 2014 the Government introduced the Safety,
Rehabilitation and Compensation Legislation Amendment Bill 2014 which would,
among other provisions, extend the licensing provisions to corporations which
operate under two or more state or territory workers’ compensation schemes, and
enable the granting of group licences to related corporations. That legislation
has not yet passed the Senate.
The Bill has been referred to the Senate
Education and Employment Legislation Committee for inquiry and report by 8 May
2015. Details of the inquiry are at the inquiry
The Senate Standing Committee for the Scrutiny of Bills had
no comment on the Bill.
The Parliamentary Joint Committee on Human Rights has not to
date reported on the Bill.
According to the Explanatory Memorandum, the Bill has no
This refers to impact on the Commonwealth budget. As the Department of
Employment’s submission makes clear, the impact of the Bill is essentially
financial: it is intended to secure the Comcare scheme financially, and protect
continuing members of the scheme.
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.
It does not alter existing protections but creates a framework for ensuring
those protections continue after an employer has left the scheme.
Item 4 of Schedule 1 inserts provisions for
continued rehabilitation of employees of bodies leaving the scheme. Proposed
section 41B applies the definition of rehabilitation authority in the Act
to a Commonwealth authority leaving the scheme as if it had not left the
scheme. Proposed section 41C extends this to bodies that are successors
to Commonwealth authorities. The Minister can make a legislative instrument
which makes a body a successor to a Commonwealth authority, and the successor
may or may not be a Commonwealth entity. The successor becomes the
rehabilitation authority. Proposed section 41D specifies that, if the
Australian Capital Territory leaves the scheme, it will retain responsibility
for employees injured while it was in the scheme. The effect of these new
sections is that a body leaving the scheme will retain responsibility for
rehabilitation of workers who were injured while the body was in the scheme.
Essentially, this item provides continuity for workers who are injured,
whatever their employer’s status in the scheme.
Section 69 of the Act sets out the functions of Comcare.
These include the determination and collection of premiums and regulatory
contributions. Item 5 inserts proposed paragraphs 69(eca) and (ecb)
to give Comcare the function of determining exit contributions and applying
those contributions and the interest on them to its activities. Item 6
inserts proposed paragraph 69(eda) which gives Comcare the power to
determine and collect regulatory contributions. Item 8 provides that
exit contributions and the interest on them will be included in
Comcare-retained funds as defined in subsection 90C(5).
According to the Department of Employment the method of
calculating exit contributions mirrors the existing method of determining
Item 9 inserts proposed section 96A which
provides for Comcare to make reasonable assumptions and estimates in
calculating what part of the available scheme funds are attributable to a
Item 10 makes explicit that the amount of funds in
the scheme attributable to a particular entity or Commonwealth authority should
be sufficient to meet any liabilities of that entity or authority, and requires
Comcare to take this into account in determining premiums. Item 11 provides
that those liabilities include future liabilities (for example, for an injury
that occurs while the entity or authority is a member of the scheme but for
which liability is not established until after it leaves the scheme).
Item 12 inserts proposed sections 97CA, 97CB, and
97CC which provide for Comcare to reassess exit contributions for up to
seven years after an entity or authority leaves the scheme. Any additional
contribution cannot be more than the excess of the liabilities attributable to
the entity or authority over the available scheme funds attributable to it.
Item 14 inserts proposed section 97DA. It
makes a similar provision with respect to regulatory contributions, which cover
the entity or authority’s share of the cost of running the scheme.
Section 97E allows the Commission to issue written
principles in relation to determining regulatory contributions to be paid by
entities and Commonwealth authorities. Item 17 enables the Commission to
issues similar guidelines applying to bodies corporate and the Australian
Capital Territory, and specifies that such principles will be a legislative
instrument. Similarly, item 18 extends to entities and authorities that
have exited the scheme, the requirement under section 97F to give Comcare
information that it requires to determine exit contributions and regulatory contributions.
Section 97J provides for reviews of determinations of
premiums or regulatory contributions by Comcare, and section 97K provides for
further review by the Commission. Items 22 and 26 extend these rights of
review to bodies corporate and the Australian Capital Territory. Similarly, item
32 inserts proposed section 97MA to mirror the provisions for
variation of a determination that are set out in section 97M. Item 39
provide for penalties on non-payment of exit contributions or regulatory contributions
and item 40 provides for refunds of excess premiums. Paragraph
(8) of government amendments to the Bill provide similarly for refunds of
excess exit contributions.
The amendments in Part 2 of Schedule 1 will be
required if and when the Safety, Rehabilitation and Compensation Legislation
Amendment Bill 2014 is passed. Their purpose is to ensure that the amendments
in Part 1 of Schedule 1 are not affected by that legislation.
They will take effect on commencement of the provisions in Part 1, or
after commencement of Schedule 2 to the Safety, Rehabilitation and
Compensation Legislation Amendment Bill 2015 if that is later.
Section 89E sets out the
membership of the Commission. Items 1 and 2 in effect replace the
existing representative of the Australian Capital Territory with a second
representative of the Commonwealth, nominated by the Minister for Employment. Item
3 provides for appointments to the Commission to be by the Minister rather
than the Governor-General.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
Rehabilitation and Compensation Act 1988, accessed 16 March 2015.
Hawke, Safety, Rehabilitation and Compensation Act Review: report of the
Comcare scheme's performance, governance and financial framework,
Commonwealth of Australia, 2013, p. 11, accessed 19 March 2015.
ditches troubled insurer’, The Canberra Times, 26 February 2015, p.
1, accessed 23 March 2015.
of Employment, Submission
to the Senate Standing Committee on Education and Employment, Inquiry into
the Safety, Rehabilitation and Compensation Legislation Amendment (Exit
Arrangements) Bill 2015, p. 5, accessed 15 April 2015.
are available at the homepage: Parliament of Australia, ‘Safety,
Rehabilitation and Compensation Legislation Amendment Bill 2014 homepage’, Australian
Parliament website, accessed 19 March 2015. The amendments in Part 2 of
Schedule 1 to the Bill relate to this legislation.
. Senate Education and Employment Legislation Committee, Inquiry into the Safety, Rehabilitation and Compensation Legislation
Amendment (Exit Arrangements) Bill 2015, The
Senate, 2015, accessed 5 May 2015.
Standing Committee for the Scrutiny of Bills, Alert
Digest No. 3 of 2015, 18 March 2015, p. 40, accessed 23 March 2015.
Rehabilitation and Compensation Legislation Amendment (Exit Arrangements) Bill
23 March 2015.
of Employment, op. cit., p. 4.
Statement of Compatibility with Human Rights can be found at pages iii–v of the
Explanatory Memorandum to the Bill.
of Employment, op. cit., p. 6.
the Bill’s homepage: Parliament of Australia, ‘Safety,
Rehabilitation and Compensation Legislation Amendment (Exit Arrangements) Bill
2015 homepage’, Australian Parliament website, accessed 1 April 2015.
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