Angus Taylor (Hume, Liberal Party) Share this | Hansard source

I am delighted to speak about the Seafarers Rehabilitation and Compensation and Other Legislation Amendment Bill 2015 because this bill ensures the continued viability of the Seacare scheme by returning the coverage of the scheme to what it has been commonly understood to be since its commencement in 1993—and dating back, in fact, to 1911 under the Seamen's Compensation Act. Importantly, the bill seeks to ensure that all previous claims lodged under the scheme, between 1993 and now, continue to be valid. These claims are currently at risk as a result of a court decision, and I will come back to that in a moment.

Although I may represent a land locked electorate, as a member of the coalition backbench committee on employment I can assure you that this bill is absolutely necessary to secure the rights of workers to workers compensation. It will return those rights to what they had been widely understood to be by maritime industry regulators and participants prior to the Federal Court's decision in Samson Maritime Pty Ltd v Aucote, the Aucote decision.

The Aucote decision has resulted in a profound shift in workers compensation and work health and safety arrangements in the Australian maritime industry under the Seacare workers compensation scheme. Before the Aucote decision, the Seacare scheme was understood to apply to around 330 ships. Following the decision, the Seacare scheme could cover as many as 11,000 ships—from 330 to 11,000—or even more, with potential retrospective effect going back to 1993.

Where the Commonwealth was responsible for regulating workers compensation and work health and safety for a small proportion of the maritime industry before the decision, it now has responsibility for the vast majority of the industry—from 330 to 11,000 or more. This responsibility cannot be supported from existing resources, as the scheme and its funding were never designed to accommodate such costs. It represents a massive cost shift from the states to the Commonwealth—at a time when of course the Commonwealth cannot afford it—and could require the recouping of insurance fees and money from formerly injured workers going back to 1993, which is something we clearly do not want to see.

The bill therefore seeks to restore the distinction between Commonwealth and state coverage of workers compensation and work health and safety for seafarers that has existed—at least, as we understood it—since 1911. To effectively achieve this, the bill applies to any injury, loss or damage suffered by any employee on or after the commencement of the seafarers act in 1993. Critically, this will ensure that past claims will not be disturbed. The approach ensures that there is certainty as to what a seafarer's appropriate workers compensation rights are and have been. The bill does not seek to change pre-existing workers compensation entitlements and work health and safety protections. The bill is about providing certainty and ensuring that seafarers have proper protections without transferring responsibilities from the states to the Commonwealth and therefore threatening the financial viability of the existing compensation scheme.

Unfortunately, Labor's reckless approach in opposing this bill will see workers worse off. It will lead to great uncertainty about the coverage of work health and safety laws in the industry, and it will mean that there is no safety regulator that is equipped to deal with the size and scale of the sector.

The Seacare scheme has been commonly understood to apply to ships and units engaged in interstate or international trade. Ships and units engaged in intrastate trade—that is, those operating solely or primarily within the coastal waters of a single state—were understood to be covered by state workers compensation and work health and safety laws. This approach to coverage was consistent with the coverage of the Seamen's Compensation Act 1911, which established the Australia's first national workers compensation scheme for seafarers. Based on this understanding, the Seacare scheme applied to approximately 33 employers and 7,516 employees, or 4,721 full-time equivalents, in 2013-14—about 20 per cent of the Australian maritime industry.

Submissions received to the review of the Seacare scheme undertaken by Mr Robin Stewart-Crompton and published in 2013 provide evidence that industry participants had a narrow view of the coverage of the scheme. Everyone thought they knew what this scheme covered and what it did, and the industry was happy with that. The joint submission of the Maritime Union of Australia and the Australian Maritime Officers Union called for coverage of the Seacare scheme to be expanded, demonstrating that those unions were of the view that intrastate trade or commence was not at that time covered by the scheme. So they recognised where it stood at the time.

Approximately 12,000 seafarers who were previously understood to be covered by state workers compensation and work health and safety laws are, in the light of the Aucote decision, covered by the Seacare scheme. Under the seafarers act, employers are required to maintain an insurance policy to cover their liabilities. Failure to comply with this obligation is a criminal offence of strict liability. Employers of seafarers on intrastate voyages would have been acting in good faith on the basis that they were covered by state workers compensation laws and fulfilling obligations under those laws. As a consequence, they would have been and most likely still are maintaining insurance policies, whether private or from the relevant state authority, under the state schemes. In addition to expenses incurred in relation to moving between workers compensation schemes, employers will also incur regulatory costs adjusting to the rights and responsibilities under the OHS(MI) Act.

The bill will address the impact on employers by returning their legislative obligations to what they were understood to have been before the Aucote decision. It will address the potential liability of employers for penalties for not maintaining the correct insurance policy under the scheme and for not providing returns to the Seacare Authority for the purpose of paying the fund levy. The amendments in the bill, which have retrospective effect, will prevent employers being found guilty of these strict liability offences.

The expanded coverage of the scheme impacts on the regulation of safety. Comcare and AMSA are not funded or resourced to immediately take on the role of administering a substantially larger Seacare scheme. As a result of Aucote, state work health and safety regulators do not have the power to continue enforcing state work health and safety laws on ships for intrastate voyages. This lack of enforcement potentially jeopardises safety in a high-risk industry. The decision also raises questions about the validity of enforcement action taken by state work health and safety regulators.

Further, the OHS(MI) Act has not been substantially amended since its enactment in 1993 and now reflects an outdated approach to work health and safety regulation in comparison to the majority of other Australian jurisdictions. The act requires revision to align it with the model work health and safety laws developed by Safe Work Australia. The majority of states and territories have updated their laws to align with the model.

The model work health and safety laws contain several improvements including broader duties of care, broader obligations for worker consultation and representation, graduated measures for securing compliance, positive officer duties and higher criminal penalties for non-compliance.

The Seacare scheme has the highest rate of serious injury of any Australian work health and safety jurisdiction. In the 2011-12 period the Seacare scheme had a serious injury rate of 36.6 serious injuries per 1,000 employees. While this was a reduction on previous years, it is still markedly higher than the national rate of 11.1 per 1,000 or with the performance of other dangerous industries such as: agriculture, 20.9; mining, 17.1; and construction, 17.5. In comparison, the Seacare scheme is at 36.6.

The Aucote decision impacts on seafarers in terms of which workers compensation scheme—Commonwealth, state or territory—covers them. Workers' compensation schemes across Australia vary substantially, making it difficult to assess whether one particular scheme is better or more generous than another.

To determine if an injured seafarer would receive greater benefits under the Seacare scheme, a number of factors need to be considered including: the injured seafarer's wages; their level of impairment; their subjective preferences for weekly compensation payments or a lump sum payment; and their ability to return to work.

In some circumstances, the Seacare scheme does provide more generous benefits to injured workers, in comparison to other Australian workers' compensation schemes. For example, the scheme pays an employee 100 per cent of pre-injury weekly earnings for the first 45 weeks they are unable to work, a high rate and substantially longer period of maximum benefits than most other workers' compensation schemes in Australia.

However, the Seacare scheme's rehabilitation and return to work performance is substantially worse than other Australian workers' compensation schemes. The average durable return to work rate across all Australian workers' compensation schemes for 2013-14 period was 79 per cent, while the Seacare scheme saw only 64 per cent.

Another impact of the Aucote decisions for seafarers is the likelihood of calls on the fund increasing. This is both because there are now more seafarers in the scheme and because previously injured employees could make claims under the scheme for old injuries against an employer that no longer exists or is unable to pay.

We have actuarial advice that the fund contains sufficient money to meet expected future liabilities, although its current levels are based on expected future liabilities for a scheme covering ships which are directly and substantially engaged in interstate and international trade and commerce, not including intrastate. If the fund is depleted, seafarers who are injured will face significant delays in receiving compensation for injuries or may not be able to obtain any compensation at all, so we are faced with a very grave situation and a very grave risk from this massive expansion of the scheme as a result of the Aucote decision.

The bill restores the coverage to how it was understood to be, prior to the Aucote decisions. Employees on intrastate voyages will remain covered by state workers' compensation and work health and safety laws. This is absolutely central to understand. They will still be covered by the state workers' compensation schemes. The bill will ensure the effective regulation of work health and safety by regulators which are resourced to undertake compliance and enforcement action, and it ensures that no seafarer will lose any workers' compensation payments they have received nor will they face a reduction in workers' compensation payments they are receiving By returning the operation of the Seacare scheme to the status quo, the previous understanding, the bill prevents significant funding impacts on regulators and agencies, which are not equipped to deal with those impacts.

One of the effects of the Aucote decisions was to put the validity of paid premiums by employers to state workers' compensation schemes along with claims made to and payments made by those insurance schemes in doubt. Given that payments under state or territory workers' compensation laws are arguably invalid due to the overriding operation of federal workers' compensation law there remains the ability, unless the amendments are made, for claims to also be made under the Seafarers Act and for insurance funds to be drawn on to finance these claims.

The effect of this bill would be to return coverage to what it has always been understood to be thereby preventing claims for past injuries on insurers that they could never have anticipated. The Commonwealth will continue to work with the states and territories to address the validity of past claims made under state or territory workers' compensation schemes. To effectively achieve this, the bill applies to any injury, loss or damage suffered by any employee on or after the commencement of the Seafarers Act in 1993. That will ensure that past claims will not be disturbed and will also ensure that there is certainty as to what a seafarer's appropriate workers' compensation rights are and have been. This bill is about providing certainty and ensuring seafarers have proper protections without transferring responsibilities from the states to the Commonwealth and threatening the financial viability of the existing compensation scheme.

I call on all in this chamber to support the bill and to allow urgent passage through the parliament to ensure that the safety of the workers in the sector is not compromised. Any delay will see chaos in the sector for workers and for regulators.

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