LABOR SENATORS’ DISSENTING REPORT

LABOR SENATORS’ DISSENTING REPORT

Introduction

1.1        The Labor Senators of the committee maintain that all workers have the right to a fair, just and equitable compensation system in the event of a workplace injury. We note that the Safety, Rehabilitation and Compensation Legislation Amendment (SRCA) bill 2014 (the bill) contains a range of amendments to the Safety, Rehabilitation and Compensation Act 1988 and Work Health and Safety Act 2011 (the Acts) that will have a detrimental impact on this right for Australian workers.

1.2        Furthermore, we note that there exists no policy justification for expanding self-insurance under Comcare, as the amendments contained in the bill shift costs from workers' compensation schemes to the injured worker, and therefore eventually, the public health system.

1.3        The bill does not advance the positive amendments proposed by the Hanks Review, which would make the scheme fairer and more effective, and instead imposes the will of the current Government to reduce workers’ rights and entitlements.

The amendments contained in the bill will fail to meet the Government’s agenda of reducing ‘red tape’

1.4        Labor Senators believe that ‘red tape’ is the current pejorative for any form of policy disliked by the Coalition Government. The bill has been caught up in an eradication of supposed red tape at the detriment of workers.

1.5        Claims of any reduction of ‘red tape’ fail to stand up to scrutiny. The Department of Employment failed to identify how the amendments to the bill would contribute to the reduction of ‘red tape’, or even once mentioning the reduction of red tape in either their submission or at the public hearing, failing to justify the claims of the Government.

1.6        As noted in the Australian Council of Trade Unions’ Submission (Submission 13), “Any watering down of the concept of a no-fault compensation scheme would only serve to increase the red tape burden on employers, who will then be required to maintain extensive records and collect evidence,”[1] especially as it relates to claims where serious or wilful misconduct may be involved.

1.7        Examples were presented to the committee demonstrating circumstances that would certainly increase confusion for workers as to what jurisdiction they are covered under should they be injured in the workplace, which will be exacerbated by the expansion of Comcare and the further erosion of common law in work health and safety laws. This could result in people on the same site being covered under multiple jurisdictions, which is in complete contradiction to the Government’s claims that work health and safety regimes cause confusion for employees and these amendments would reduce that confusion.[2]

1.8        The Law Council of Australia gave evidence to this matter at the hearing, suggesting the amendment in fact increased the confusion in the case of an accident:

Mr Redpath: Another concern we have is the inconsistencies in terms of entitlements as national employers perhaps join the scheme. When we last looked at this, in 2009, we saw that about 30 per cent of employees were employed by an employer that is in two or more states so that it is a significant portion of the workplace.

There could be situations on multi-employer worksites, perhaps a resource worksite in the Kimberleys or a building development in Geelong or where there are a series of multiple employers where, say, a group of workers get injured as a result of negligence and some of the employees would be entitled to super negligence, some would be entitled to certain rights, others would be entitled to other rights, even though they are injured in exactly the same way, on the same site, in the same place.

CHAIR: Is that because of who their employer is?

Mr Redpath: Yes, the only difference would be, because you are employed by a national employer, you only have these rights, whereas this person is employed by a Victorian employer or a Western Australia employer and they enjoy the rights of the jurisdiction. That is particularly important as most work rights in terms of access to negligence, the common law, are really state directed. The state laws provide entitlements or whatever to that.

Our view is that if this act goes ahead, we also ought to amend proposed sections 44 and 45 essentially to preserve the status quo—that is to say, we remove the prohibition on common law, but the common law rights should be those of the jurisdiction in which they are injured, so they are no better off than their fellow Victorian worker or their fellow Tasmanian worker who is injured in those—

CHAIR: Because the incident occurs in the same location?

Mr Redpath: If it all occurs in the same location, in terms of that access to common law they ought to be in exactly the same place as their fellow employees and it ought not to depend on the accident of employment or in fact the accident as to whether they are an employee of a national employer who has joined this scheme. We would say that is easy enough to do and that that would not create any greater detriment to licensees joining the scheme having to live with the law of the jurisdiction. That is an aspect of the legislative package that we do not think has been thought through. So it would require that amendment.[3]

1.9        The Regulation Impact Statement (RIS) released with the bill cites only minor savings for employers as the rationale for the bill, but the total cost of work-related injury and disease are spread across employers, workers and the community. Safe Work Australia estimates that:

  1. employers bear 5 per cent of the total cost – this includes loss of productivity from absent workers, recruitment and retraining costs and fines and penalties from breaches of
  2. work health and safety regulations, injured workers bear 74 per cent of the costs – costs include loss of current and future income and non-compensated medical expenses, and
  3. the community bears 21 per cent of the total cost – this includes social welfare payments, medical and health scheme costs and loss of potential output and revenue.[4]

1.10      It is the view of the Labor Senators of the committee that any shift enacted by these amendments would see the relatively small burden on employers transferred onto injured workers and the community.

It is not appropriate for Senators to consider the bill without detail of the extent of the legislation

1.11      The bill introduces a series of exclusions to the entitlements of injured workers covered under Comcare. It paves the way for further expansion of the scheme, lowering the threshold for private sector employers to enter the scheme following the lifting of a moratorium in December 2013, opening the way for private employers to leave state-based schemes.

1.12      Evidence presented at the hearing by Slater & Gordon, the Law Council of Australia, the ACTU and the CFMEU confirmed that the Department’s consultations on the extent of proposed changes to Comcare are ongoing, the details of which has been disclosed under confidentiality to potential self-insurers and employers, but not to the Parliament. All noted parties also gave evidence confirming that although they had been in consultation with the Government, they were effectively gagged from discussing the proposals outlined in the consultations.

1.13      The Department admitted in the hearing that a ‘second tranch’ of amendments to the Act was currently under consultation with the Government and stakeholders, outside of the amendments contained in the bill,[5]  and failed to provide answers to questions placed on notice regarding the extent of consultation or proposed amendments.[6]

1.14      Ms Parker of the Department also stated in the public hearing that a reduction in benefits and other additional exclusions from compensation for injured workers was currently being canvassed, but had failed to be costed prior to consultations.[7]

1.15      The Department also gave evidence that the Government was yet to hand down a decision as to whether the recommendations contained in the Government’s Commission of Audit relating to the operation of Comcare would be implemented.

1.16      Labor Senators assert that it is an outrageous proposition for the Government to ask the Parliament to vote on a bill to widen the Comcare scheme without knowing the extent of the changes the Government is planning, especially given that the Government is already in active consultation of further amendment to the scheme.

The amendments undermine the workers' compensation scheme as a ‘no fault’ scheme

1.17      The amendments contained in the bill erode the concept of a no-fault workers compensation system by excluding compensation for all injuries alleged to be caused by the “serious and wilful misconduct of the employee”.

1.18      Prior to the amendment, compensation for injuries caused by serious and wilful misconduct of the employee would be approved, assuming it was not intentionally self-inflicted, if the injury resulted in death, or serious and permanent impairment. No other workers' compensation jurisdiction contains such a clause.[8]  Should the amendment be fulfilled the Commonwealth will be a cruel outlier. 

1.19      Furthermore, this amendment stands in complete contradiction of the implementation of the National Disability Insurance Scheme (NDIS) and a National Injury Insurance Scheme (NIIS), which would allow injured workers excluded from Comcare benefits to apply for taxpayer funded NDIS for care and support services, shifting the burden from the employer back to the taxpayer.

1.20      Serious concern was raised in the hearing regarding the loss of the ‘no fault’ basis of workers' compensation, particularly where the injury causes death. In effect, despite the characterisation of the misconduct as “wilful”, where death has been caused, the deceased’s actions should not be considered “wilful” without the victim having been able to provide an opportunity to respond to the claim.

1.21      The majority of submissions to the committee disagreed with the proposed amendments,[9] and argued the implications of this exclusion of access to workers' compensation where an employee sustains an injury that is caused by their own serious and wilful misconduct, even if the injury results in death or serious and permanent injury, arguing that such an amendment would shift the burden of proof on to the employee, their colleagues or their family.[10]

1.22      In a question on notice to Comcare, Labor Senators requested clarity about research that had been undertaken to justify such an amendment.  Comcare’s response demonstrated that they have no awareness about whether any of the claims previously accepted involved allegations of serious and wilful misconduct of the employee, as data is not collected. The response noted that:

Comcare is not aware whether or not any of these claims have involved allegations of ‘serious and wilful misconduct of the employee’ as there is limited scheme wide data available regarding if any of these claims are subject to allegations of ‘serious and wilful misconduct’ given this exclusion under the Safety, Rehabilitation and Compensation Act has no application where the worker dies or is seriously or permanently impaired. Where there is an allegation of ‘serious or wilful misconduct’ and the injury results in death or serious or permanent impairment, the claim is accepted because the protection in subsection 14.3 of the Safety, Rehabilitation and Compensation Act applies.[11]

The amendments introduce increased risk to workers undertaking their duties as employees

Recess exclusion leaves workers at risk

1.23      When the SRCA was enacted in 1988, compensation was provided for workers who were absent from their workplace during ordinary recess breaks – i.e. a lunch break. In 2007, recess claims were removed from the scheme.[12] In 2011, they were re-instated.[13] The amendment under schedule 4 proposes to remove entitlement to workers' compensation for injuries sustained when an employee is temporarily absent from the workplace during a recess.[14]

1.24      It is the view of the Coalition Senators of the committee that employees injured in these circumstances should claim compensation from the person or organisation that owed them the duty of care during a recess, rather than from their employer. Labor Senators stand in opposition to this matter, and note that this was not presented in evidence, in fact, there was evidence presented that claims during recess breaks were a small proportion of overall claims.[15]

1.25      The committee heard extensive evidence relating to the possible implications of this proposed amendment on workers. Issues were raised concerning situations where employees must travel between worksites during a recess, or where it is necessary for employees to leave work to obtain food or drink.[16] Specifically, some submitters argued that the proposed amendment failed to accommodate the obligations of police and emergency service workers.[17]

1.26      Labor Senators disagree with the majority committee view stated in section 2.48 of the majority report that “[It] is the view of the committee that employees injured in these circumstances should claim compensation from the person or organisation that owed them the duty of care during a recess, rather than from their employer.” Recess breaks are part of almost every worker’s employment, for if it were not for the worker’s employment, the employee would be unlikely to take recess in the locations prescribed by their workplace, be it on site or off site, and as such recess breaks should be covered under every workers compensations scheme.

We come to work but we organise our lives around work. We have a break for lunch. We go to the Post Office to pay a bill. We are there as part of our working day. There really ought not to be a difference in those circumstances where someone has a staff cafeteria or canteen and can say that they are still in the building and that they are still with the employer at that point, and circumstances where they cross the road to obtain a sandwich.[18]

Abnormal risk of injury

1.27      The bill proposes to amend section 6(3) of the SRCA, which would extend the exclusion of injuries sustained whilst a worker is undertaking their usual duties, if they submit to an ‘abnormal risk of injury’.[19]

1.28      There also exists no protection for workers who are persuaded to undertake tasks in a dangerous manner at the behest of their employer or manager. This makes young and inexperienced workers particularly vulnerable. Slater & Gordon presented situations where a worker may need to weigh up submitting themselves to abnormal risk against disobeying an order of a superior and risking their employment.[20]

Another example might be—particularly in a situation where we are looking at casual workforces where you have somebody that really wants to ensure that they continue in their current job—where an employer asks a worker to do a certain task, which they feel is very dangerous, but they also feel that if they do not do it they might be sacked. They go ahead and do it, and in doing so they may well be excluded from liability.[21]

1.29      Labor Senators disagree that the legislative response with regard to abnormal risk of injury is proportional or reasonable. There is no definition provided for what would be considered an abnormal risk, therefore it is impossible to define what would constitute argument to allow a claim to be rejected on the basis that a worker voluntarily chose to undertake a task in a way that presented an abnormal risk of injury.

1.30      The RIS identified that the exclusions of access to workers' compensation outlined in the bill respond to community expectations concerning personal accountability.[22] Adherence to work health and safety requirements and employee misconduct do not always go hand in hand. This clause specifically targets young and inexperienced workers who will at times submit to an ‘abnormal risk of injury’ whilst undertaking their usual duties at the workplace under the direction of a superior, and Labor Senators failed to be convinced that any community expectation of personal accountability exists in such instances.

The amendments proposed are easily exploitable by employers

1.31      The bill seeks to amend section 100 of the SRCA by introducing a definition of a “national employer” for the purposes of licencing. Labor Senators were persuaded by evidence presented with the submissions from Slater & Gordon, The Law Council, and the ACTU regarding the exploitable nature of these amendments. The proposed amendments significantly extend the ability of private sector employers to become self-insurers under Comcare. Labor Senators were not persuaded that this is appropriate.

1.32      State workers' compensation schemes are significantly more supportive of injured workers in key areas such as return to work, and as such achieve better outcomes for workers than Comcare.[23] This would result in private employers who wish to lower their costs utilising the Comcare scheme to the detriment of their work force.

1.33      The definition of National Employer does not specify a minimum number of employees required in a particular Australian jurisdiction, therefore there is room for abuse by employers whose business is in one state or territory. An example is a mining corporation whose location is in Western Australia, but who offers a Sydney office with one employee, to be determined as a National Employer.

1.34      The Government cites cost savings for companies as the rationale for allowing this, despite refusing to answer whether it is within Comcare’s capacity to monitor and regulate these inexperienced self-insurers, or increase the limited powers and resources of the Administrative Appeals Tribunal (AAT).

1.35      Workers currently under state workers' compensation regimes will be disadvantaged by a loss of critical rights and the loss of common law protections. There is no requirement for employers to inform workers of their changing rights and entitlements, nor any education provided to workers about what these changes will mean for them.

1.36      Comcare provides little, and in most regions, no active health and safety monitoring. This will allow companies with a poor health and safety record, or with a high-risk workforce to avoid scrutiny at the detriment of workers. The Department failed to provide answers as to whether an increased health & safety inspectorate would be introduced, therefore Labor Senators assert this is unlikely.

1.37      Unlike other state schemes, the legislation provides no timeframes under which Comcare must come to a decision on a claim. Similarly, there is no requirement for any provisional liability to be provided while Comcare or an employer determines ongoing liability.

Ms James: The Safety Rehabilitation and Compensation Act does not have any enforceable time frames for a decision maker to make a decision. There is reference simply to the decision maker needing to make a decision within a reasonable time. What constitutes reasonable time is obviously up for dispute. We have had a number of clients who have waited an extensive amount of time for a decision. We have one at the moment who has been waiting six months and continues to wait and that person has had their leg amputated, so what happens to the medical benefits? The public system pays whilst the decision maker is trying to make a decision.

Senator LINES: To be clear here: I have had some experience and it was a long time ago, so I am certainly rusty on all of the details of the workers compensation system in WA. Under that system, the employer has a 14-day time frame to accept or reject the claim. Are you saying that this person who has had their leg amputated and other people can wait six months not knowing if the claim is accepted or not?

Ms James: Correct.

Senator LINES: So that is six months without income potentially?

Ms James: Correct; that is absolutely right.[24]

1.38      Labor Senators cannot support amendments which increase the cost for workers in the guise of decreasing costs for employers. 

Comcare is a poorly performing agency

1.39      Comcare confirmed in evidence a current funding ratio of 64 per cent, which is comparatively poorly performing, with all centrally funded jurisdictions except South Australia and Comcare having funding ratios above 100 per cent, and Queensland, Victoria and Tasmania operating schemes well in excess of 100 per cent.[25]

1.40      The Australian Chamber of Commerce and Industry (ACCI), who were otherwise generally supportive of the amendments, outlined the volatility of such a low performing scheme during the hearings:

Senator LINES: ... is it fair to say or assume that schemes aspire to be 100 per cent funded?

Mr Pattison: I If we are talking about the centrally managed schemes here—New South Wales, Queensland—I think it would be fair to say they would aspire to operate within a band plus or minus around 100 per cent to allow for the natural volatility that occurs so that you are not going back every year with adjustments to premiums and the like.

Senator LINES: So were you aware of the funding ratio of the Comcare scheme?

Mr Pattison: When I looked it is fairly low.[26]

1.41      The Department of Employment conceded that the funding ratio was a cause for concern.

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.[27]

...

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.[28]

1.42      Labor Senators were not persuaded that a scheme so underperforming in terms of funding ratio comparative to state jurisdictions should be expanded into the private sector to be underwritten by employers.

1.43      Slater & Gordon presented evidence in their submission noting that Comcare is also one of the few jurisdictions to record a drop in its durable return to work rate over the last five years, whilst Australia wide, return to work rates in other jurisdictions have remained relatively steady.[29]

1.44      In addition, Slater & Gordon presented evidence that injured workers under the Comcare scheme wait significantly longer for resolution of disputes than injured workers in any other scheme. For example, in 2011/12, 51.6 per cent of injured workers with claims disputed under Comcare failed to have any resolution within nine months. This compares with 4.9 per cent in NSW, 12.3 in Victoria and 4.7 in Qld.[30]

1.45      Some submitters argued Comcare lacked the capacity to monitor performance, regulate and hold to account self-insurers on a national basis, for example, where a self-insurer fails to meet return to work obligations.[31]  In response, Comcare explained that on its assessment of applications for self-insurance licences, the Commission applies stringent standards and regularly monitors licensees' performance, with regard to such issues as:

the resources of the corporation applying for the licence...; (b) financial and prudential information...; (c) the claims management systems information of the corporation...; and (d) the past performance of the applicant corporation in complying with and conforming to applicable laws or statutory guidelines in relation to the health and safety of employees, rehabilitation of employees, premium payment and claims management obligations.[32]

1.46      Labor Senators question the response from Comcare, especially with consideration that the Parliament has yet to be provided with any plan for how the Comcare scheme will be extended or have the capacity to employ more staff to provide an adequate level of monitoring. In answers to Questions on Notice submitted expressing concern at the lack of appropriately skilled inspectors, Comcare stated that while aged care, the health industry and mining sectors are not currently in the Comcare jurisdiction, '[s]kills in this area will be acquired when/if companies in these fields enter the Comcare scheme.'[33] 

1.47      Labor Senators agree with the majority committee view expressed at the commencement of point 2.25 that ‘the committee recognises that Comcare will need to adjust and increase its workforce accordingly’. This would need to be adequately outlined by the Government before expanding the scheme.

Labor Senators’ summary view

1.48      Amendments to the Acts in the bill fail to consider the economic impacts of injury, disability and death by implementing a plan allowing self-insurance without adequate assessment of the details, by an agency without adequate resources and oversight.

1.49      Workers’ compensation schemes should be designed to provide a safety net for workers injured in workplace accidents, not as a business model to reduce costs for employers that chips away at no-fault benefits and common law trade-offs.

1.50      Labor Senators wish to particularly stress that the implementation of the amendments contained in this bill stand in complete contradiction of the implementation of the National Disability Insurance Scheme (NDIS) and a National Injury Insurance Scheme (NIIS) and would see a shift of burden from the employer back to the taxpayer, nullifying the cost-saving aims of the Government.

1.51      Further to the voting down of the bill, Labor Senators suggest that the government assess key recommendations of the Hanks Review to improve the Comcare Scheme as follows:

Recommendation 1

1.52             Labor Senators recommend that the Senate reject the bill.

Senator Sue Lines
Deputy Chair

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