Stephen Smith (Perth, Australian Labor Party, Shadow Minister for Industry, Infrastructure and Industrial Relations) Share this | Link to this | Hansard source

Labor opposes the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006. Labor opposes this legislation because, like all legislation on industrial relations matters presented by this government, this legislation is ultimately not in the interests of working Australians. Like the government’s extreme industrial relations legislation more generally, this bill has at its heart the stripping away of the terms and conditions of our workforce. Labor is driven by a desire for genuine improvements in the area of occupational health and safety across Australian workplaces and believes that appropriate compensation is an important and essential part of that. This legislation will erode the compensation component payable to Australian employees.

The Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006 is the latest in a number of amendments made to Australia’s occupational health and safety legislative framework by this government. It follows on from previous legislation introduced by this government since the election in 2004, including: the National Occupational Health and Safety Commission (Repeal, Consequential, and Transitional Provisions) Bill 2005; the Australian Workplace Safety Standards Bill 2005; the Occupational Health and Safety (Commonwealth Employment) Amendment Bill 2005; the Occupational Health and Safety (Commonwealth Employment) Amendment (Promoting Safer Workplaces) Bill 2005; and the Occupational Health and Safety and Safety, Rehabilitation and Compensation Legislation Amendment Bill 2005. Labor opposed these bills for good reason. Each of these bills reduced, compromised or put at risk the occupational health and safety conditions of Australian workplaces. At its heart, this bill is no different.

This bill is the government’s formal response to recommendations made by the Productivity Commission that changes in this area were needed. It follows on from earlier legislative changes also made following Productivity Commission recommendations. Principally, this includes the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006, which amends the Safety, Rehabilitation and Compensation Act 1988.

The bill before us today has as its principal objective minimising the cost of work related injury and disease for Comcare. The principal amendments will change the definition of ‘disease’ to strengthen the connection between the disease and the employee’s employment. In particular, it will require a worker to prove that employment has made a ‘significant’ rather than ‘material’ contribution to a disease for it to be compensable. The amendments will change the definition of ‘injury’ to exclude injuries arising from reasonable administrative action taken in a reasonable manner. The bill also expands the exclusionary provisions for stress claims to specifically include performance appraisals and counselling in relation to performance. The amendments will remove claims for non-work related journeys and recess breaks where the employer has no control over the activities of the employee, such as meal breaks away from the workplace, and they will change the calculation of retirees’ incapacity benefits to take account of changes in interest rates and superannuation fund contributions.

The amendments will update measures for calculating benefits for employees, including the definitions of normal weekly earnings and superannuation schemes. The amendments will mean that all potential earnings from suitable employment can be taken into account when determining incapacity payments. The amendments will enable determining authorities to directly reimburse healthcare providers for the cost of their services to injured employees and increase the maximum funeral benefits payable. In addition, an amendment to the funeral benefit provisions of the Military Compensation and Rehabilitation Act 2004 is proposed to maintain parity with benefits under the SRC Act.

This bill should be seen in the context of associated legislation, particularly the Occupational Health and Safety Legislation Amendment Bill 2005, which allows corporations licensed as self-insured under the Safety, Rehabilitation and Compensation Act 1988 to be covered under the Occupational Health and Safety (Commonwealth Employment) Act 1991, administered by Comcare.

I now address some of these matters in detail. Let me start with item 11 of the bill, which deals with definitions of injury and disease and the proposed change from ‘material contribution’ to ‘significant degree’. The bill changes the extent to which an injury, illness or disease must have been contributed to by an employee’s work before the injury is compensable. At present, the word ‘material’ is used. The bill seeks to replace ‘material’ with ‘significant degree’, which is defined as ‘a degree that is substantially more than material’. So, on the wording of the bill, the government is narrowing the circumstances in which employees may claim compensation. The government argues this is because courts have misinterpreted the meaning of the word ‘material’. However, the government’s true intent is betrayed by the wording of the explanatory memorandum, which argues that the government is seeking to significantly amend the legislation to reflect its desire to decrease the number of injuries covered by the scheme.

If the government were simply concerned about wording and interpretation, it could have inserted a clarifying statement into the bill. However, by its own admission it is seeking to significantly amend the legislation for the purpose of decreasing the number of injuries covered by the Comcare scheme. Regrettably, the government is not concerned about injury prevention, employee protection or care. The one aim of the government, as we have seen in all of its occupational health and safety and Comcare legislation, is to lower levels of protection for employees and workplaces covered by the Commonwealth jurisdiction, and now it wants to further reduce the sorts of injuries for which employees may be eligible for compensation.

Let me move to the ‘reasonable administrative action’ provision of the bill. The proposed section 5A includes a new definition of injury. Labor has two concerns about this proposed change. Firstly, Labor is of the view that there should be no difference between how different sorts of injuries are treated. The broadening of the exclusions from the definition of injury, or aggravation, purports to apply to all injuries covered by the act. However, Labor is of the view that in practice it is likely to be a restriction on the ability of employees to make claims for compensation relating to stress related illnesses. These sorts of injuries are particularly relevant to the demographics of workers covered by the Comcare regime. Labor is of the view that where an injury arises in the course of or as a result of an employee’s work then they should be eligible for appropriate compensation.

Secondly, the bill sets out what is a reasonable administrative action as actions in relation to appraisals, counselling, suspension and discipline of employees. The only way the bill provides that these are reasonable is to say ‘reasonable appraisal’, ‘reasonable counselling’ et cetera. It provides no steps or guidance as to what is reasonable. Here the government is trying to make what will be in practice a broad exclusion sound innocuous by including the word ‘reasonable’. The wording of the proposed section 5A betrays this intention. It requires that a reasonable administrative action be conducted in a reasonable manner. It might sound harmless, but in practice I fear there will be grave difficulties. At its best, this is poor drafting which will not assist employees to determine whether or not they have a valid claim for compensation.

Let me now move to item 12, which deals with injuries occurring at work during temporary absences or when travelling. This is yet another example of the government trying to reduce its expenditure in workers compensation. The proposed new section 6(1)(b) represents another attempt by the government to narrow the range of circumstances in which an injury sustained is covered by Comcare. Firstly, by removing almost all journey claims from the coverage of the legislation, the government is engaging in a significant cost shift back to state governments to cover through CTP claims. Labor notes that not all state jurisdictions have excluded journey claims from their state workers compensation systems: for example, New South Wales still covers workers when they are injured on their way to or from work.

Secondly, although the proposed section has five subsections detailing various circumstances in which an injury may occur, the bill is unclear about injuries arising in a number of respects. For example, how will an injury be treated when an employee is out of the workplace on work business but diverts for personal business? Will an injury they sustain be covered by Comcare under these amendments?

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

Let me move to item 15, the index formula in the regulations. Labor notes that item 15 provides where the normal weekly earnings of an employee must be increased for the purposes of determining appropriate future payments. Whilst the new subsection 8(9D) refers to ‘the index prescribed by the regulations’, no indication has been given as to the methodology, relevant factors or appropriate formula the government intends to use to calculate these wage increases.

Labor is concerned about the government’s recent tendency, particularly in relation to industrial relations and occupational health and safety legislation, to include important matters in the regulations, to be released only after the relevant bill has passed through the parliament.

Let me move to item 18, Comcare payment of medical bills directly to service providers. Item 18 changes the rules relating to when and where Comcare is to direct payments for medical and other services and that Comcare can later recover the amount from any damages awarded to the employee. In that context, items 30 and 31 of the bill are relevant. Labor is concerned that difficulties may arise in practice as a result of these amendments: the bill does not require Comcare to inform employees when payment to a provider, and not to the employee, is made; secondly, it is unclear whether Comcare or the employee will bear the burden of fees and charges arising from accounts paid outside the due date; thirdly, it is unclear from the bill whether there is a mechanism for employees to receive information about the quantum of payments Comcare has made on their behalf, so that they can monitor that information against the assessment of likely damages.

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

It has historically been the case that we have seen through the evolution of occupational health and safety policy in this country the overriding objective of preventing workplace injury and illness. This has been a principle that has historically underpinned both Commonwealth and state legislation in this area. The government’s objective with this bill departs from that longstanding approach. Instead, it has as its principal objective the reduction of the cost of the Comcare scheme by narrowing the eligibility criteria for compensation under the scheme. This in turn would decrease the number of injuries covered by the scheme. This is the wrong approach for the simple value proposition that it places a premium on cost over rehabilitation. For those reasons, Labor opposes the legislation.

Jackie Kelly (Lindsay, Liberal Party) Share this | Link to this | Hansard source

It is very interesting that the previous speaker is standing up for the New South Wales Workers Compensation Act 1987 over the proposals put here before the parliament in the Howard-Vaile government’s Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006. The design of the New South Wales occupational health and safety legislation is completely flawed. It creates very dangerous work cultures in New South Wales because it is based on the presumption of guilt for some parties and minimal application of liability for others. The law applies a different measure of work safety responsibility and liability to different persons in the workplace and encourages unsafe work cultures. It distorts rather than applies the internationally accepted principles of occupational health and safety legislation where parties are held liable for what they control within bounds of what is reasonable and practicable.

I know the previous speaker, the member for Perth, had a lot to say about what is reasonable. The courts have adjudicated reasonableness for centuries, but it does change. What was reasonable in 1901 is clearly going to be different from what is reasonable in 2006. ‘Reasonable’ has a very reasonable definition within the judicial system in Australia. It is an entirely appropriate description to be used in any legislation. I think the previous speaker needs to go back to basic drafting principles. You do not have to describe reasonableness, but you know it when you see it and so will the courts in any litigation under this bill.

Specifically, the laws in New South Wales breach notions of justice by creating presumptions of guilt for certain parties and presumptions of innocence for others, even though the offences in question are identical. They deny full rights of appeal. Under the New South Wales occupational health and safety legislation, prosecutions can be done in a jurisdiction—namely the Industrial Relations Court—which is not competent for that purpose and allows parties, particularly unions, with conflicts of interest to conduct those prosecutions. I believe that it is a conflict of interest to allow unions which prosecute occupational health and safety breaches to collect up to half of the resulting fines.

I have been personally subject to this type of intimidation by the unions since my vote in this House on the Work Choices legislation. Let me tell the residents of Lindsay that I voted for that bill because Work Choices works. We have seen a dramatic rise in full-time employment positions and we have seen a 30-year low in unemployment—down to 4.2 per cent in Lindsay. Yet the unions are standing over anyone, particularly 20 members on this side of the House. Just check out the union websites. We are being targeted personally in our capacity as members of parliament for voting for the Work Choices legislation, and one of the things they use is the New South Wales occupational health and safety legislation.

The unions, on a vague complaint from the community—and I have FOIed who that complaint was from but understand it was from people in the community; read ‘unionists’—then assumed the right to enter my worksite at seven o’clock in the morning before any construction was underway, bring with them a Current Affairs crew and try to intimidate and bully, ostensibly under the guise of safety, saying, ‘We are here to ensure safety.’ Not even WorkCover believed that load of codswallop.

The legislative structure in New South Wales supposes employer guilt and breaches the very key notion of justice that you are presumed innocent until proved guilty. The New South Wales legislation of 2000 has predetermined an employer to be guilty, built on the way he has designed his workplace. Employers and the self-employed in New South Wales are charged with an absolute OH&S obligation under the act which is not measured against what they control or contained within the parameters of what is reasonably practicable.

I think that would be fair. It is codified in international treaties that we have signed under this subject heading. New South Wales has really just caved in to union pressure to encourage unions to have more power than the parliament and the judiciary and for the unions to have all sorts of intimidatory factors—to what I believe is basically contributions to their Christmas fund rather than having a genuine interest in workers’ safety. The normal processes of justice are distorted and in some cases removed, including in situations where not only fines but potential jail terms can be imposed.

Work safety is too important an issue for games to be played. Laws cannot make people behave safely. Laws can set the framework within which work cultures, systems and behaviours are formed, but the laws must imbue people with confidence that obligations and responsibilities are going to be applied equitably, fairly and with commonsense. The principles of justice must apply. If laws fail people in these areas, people will conspire to avoid their obligations for fear of unjust laws. This will set in place very unsafe work cultures and workers will be placed at risk.

Amendments to the legislation before us today were announced earlier this year as part of the 2006-07 budget and are intended to maintain viability and improve the administration and provision of benefits. These amendments reinforce the Commonwealth’s commitment to workplace health and safety. As I have said before, Work Choices works. I believe that if the states do not get their act together in this area of occupational health and safety then there is room for the Commonwealth to move in this area. WorkCover in New South Wales is seeing a lot of small businesses go under as a recession looms. Some relief from WorkCover costs would provide a major incentive for small businesses in New South Wales to keep going and to offset a few of the difficulties they are experiencing, given the recession that the New South Wales government is intent on imposing on the residents of New South Wales.

The Safety, Rehabilitation and Compensation Act 1988 is administered by the Safety, Rehabilitation and Compensation Commission and Comcare, including the provision of advice and assistance to encourage compliance and enforcement of obligations under the act. The Department of Employment and Workplace Relations advise the minister on policy matters arising under the act and are responsible for advancing any legislative changes required. That is why I always say that we need to keep on with our Work Choices program. It has worked to date. We will not shy away from any future legislative changes that are required, and we are here today moving forward again.

Significant amendments have been made to emphasise a focus on prevention and compliance. The previous speaker was worried about some ancillary matters, but these amendments have inserted very strong enforcement regimes based on criminal and civil sanctions for situations where duties are not met. Those obligations are within employers’ control and within what is considered to be reasonably practicable—and we all know what that means. They also ensure that employers and employees covered by the Commonwealth OH&S act are not liable for prosecution under the industrial manslaughter laws introduced in the Australian Capital Territory or under any similar industrial manslaughter laws enacted by a state or territory.

Do beware that the ALP governments of the states are under significant pressure from the union movement to introduce these manslaughter laws. They are disastrous for any small business person who has tried to do the right thing—to comply with the regulations, move ahead and stay up to speed with what is reasonably practicable for things within their control. Under these automatic manslaughter laws someone without any direct control, except ownership, can be held liable for extremely unfortunate accidents in the workplace. And these accidents should not be happening. As a nation, we should be moving towards ensuring that there are no further accidents of this kind. For example, the mining industry in Australia has come a long way in 100 years, not from mandating that you will be guilty of manslaughter for dereliction in this area but from really enforcing what is considered reasonable in this day and age: this is what you must achieve and this is what you must do in order to keep your workforce safe. It should be pointed out that the overall aim of any occupation health and safety legislation should be directed towards preventing workplace deaths and injuries and providing a safe workplace environment for all rather than towards applying punishment to offenders after an accident or an event has occurred.

In Australia, work safety laws are primarily the responsibility of the state governments. In March 2005, Australia assumed an obligation to adhere to the international OH&S principles under an international treaty. The international treaty obligations are set out in convention No. 155 of the International Labour Organisation, and signatory countries are required to adopt OH&S laws that apply liabilities and responsibilities according to what people control within what is reasonably practicable for them to do. That is in accordance with the Roben principles, the guiding principles that impose obligations on all parties involved in all aspects of work situations, and no-one is exempt.

This legislation is under our international obligations under that treaty. There is room to move in this area, but I would like to see a more responsible position taken by the state governments. They should cease caving in to the union movement and stand up to them for once. They should curb the power of the unions to intimidate owner-builders, small business men and even multinationals, and particularly to intimidate companies subject to a major closure. A large firm doing a concrete pour or something like that can be closed down over a safety breach by a union with a vested interest. This is the type of legislation that has caused the recession we are having in New South Wales. Other states, with legislation that is not so draconian, are going ahead. I for one support the bill. I am totally opposed to the previous speaker’s suggestions about the direction in which occupational health and safety in Australia should go.

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

Over the years I have had an ongoing interest in workers compensation matters, particularly in workers’ safety and in rehabilitation and compensation for those persons who suffer some injury while at the workplace. I come from a farming background, as members would know. That industry has an appalling record of accidents and deaths. So I personally am very aware of the issues involved and have done everything possible to make sure that workers’ safety is a top priority. I remember the Snowy Mountains scheme. Mr Hudson was the managing director of that whole operation. He put an emphasis on safety. He forced all employees to wear seatbelts during that major project, and the safety record in the late 1940s and early 1950s was remarkable, given the prevailing attitude towards safety.

As honourable members would know, workers compensation is basically a prerogative of state governments. There have been a number of changes. It has been alleged that in some cases workers compensation at the state level was rorted by employees and that premiums were too high. Some states have remedied that situation and have ensured that premiums became more reasonable and that industries with different categories of risk suffered a premium relative to their industry. In the timber industry, which I have been fairly close to, the premium for workers compensation was the wage, plus 25 to 50 per cent.

The Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006 is particularly concerned with travel to and from work and psychological injury. I note from the outset that cases involving psychological injury or stress, in the case of the Commonwealth, constitute seven per cent of the claims but 27 per cent of the costs. Turning to some of the more technical details, the bill seeks to reintroduce common sense into the Commonwealth occupational health and safety legislation and to cut down on potential opportunities for people to rort the workers compensation system. I say that in view of some of the state legislation I referred to which sought to address some of these problems. In particular, the bill seeks to exclude employees’ journeys to and from work from coverage under the Commonwealth workers compensation scheme and also to exclude recess breaks where the employer has no control over the employee.

Another important reform is that the amendment bill strengthens the connection between eligibility for workers compensation and work such that work must have contributed ‘in a significant degree’ to the injury claimed. In particular, the amendment will mean that employees cannot claim ‘stress’ for failing to receive a promotion or for receiving reasonable disciplinary action by an employer. I think most members of this House and most employees would regard that as reasonable. I note over the years some of the claims for stress leave in the teaching profession in Victoria, both at the Commonwealth level and the state level.

The National Occupational Health and Safety Commission estimates that the total economic cost of workplace accidents to workers, employers and the community is in excess of $31 billion annually. That is a huge figure which concerns all of us in this House greatly. The 2004 Productivity Commission report National workers’ compensation and occupational health and safety frameworks discloses that workers compensation schemes across Australia collected more than $5.8 billion in premiums from employers in 2001-02 and paid out more than $3.4 billion to injured workers, $1.26 billion in medical and other costs and $1.23 billion for administration. These figures are huge. That is why some of us have taken so much interest in workers compensation, both from a humanitarian point of view and because of the ongoing costs to everyone involved. The changes to be brought about by this bill will improve the long-term affordability of the Commonwealth workers compensation system by reducing claims against Comcare and providing an estimated saving of $20 million to Comcare’s annual premium pool.

Turning to the specifics of the bill in regard to journeys to and from work, many Australians would be aghast to learn that, under current Commonwealth workers compensation arrangements, employers can be held responsible for injuries sustained by workers while travelling to and from work. An age-old debate at the state level for the last 30 years has been the legal liability of employers for employees travelling to and from work, what time they started at, what injuries they incurred and whether the injuries were bona fide. This is an important issue of relevance to constituents living in my electorate of Corangamite. Thousands of people live in the Geelong region, in Grovedale, Belmont, Highton, Barwon Heads and Torquay, and drive their cars daily to and from work in Melbourne. The trip takes an hour or longer each way on a very busy freeway.

Madam Deputy Speaker, you will be aware that $120 million was provided by the Commonwealth to upgrade the Melbourne to Geelong road to make it safer for travellers. I was pleased that I advocated funding for that road just on the basis of safety. There was also a public campaign. Since the highway from Melbourne to Geelong has been upgraded, I think only one life has been lost. In the situation where an employee lives in Geelong and works in Melbourne, it is their choice that they travel to and from work; it is not their employer’s choice. I think it is unreasonable to expect an employer to be responsible for an employee who has an accident while travelling from their place of residence to their place of work.

The bill also seeks to exclude from coverage injuries sustained during lunch breaks and events held outside of work, where the employer cannot control the safety conditions. Again, time only permits me to provide one example. In Colac, some employees—and this is on the public record—got themselves into difficulties during their break and found themselves in court. They had been skylarking, and as a result sustained some serious injuries. It was possible that their case came under workers compensation.

On the more technical side, referring to the speech of the Minister for Employment and Workplace Relations, the Commonwealth workers compensation scheme has come under growing pressure in recent years from increasing numbers of claims, longer average claim duration and higher claim costs. This has been reflected in workers compensation schemes at the state level. This, in part, is a result of court interpretations of the legislation, some of which have departed from the initial intent of the legislation. The principal amendments contained in the bill are intended to maintain the financial viability of the scheme. The amendments will also improve the administration and provision of benefits under the scheme. This reflects some of the changes that have been administered by Labor state governments, and the Commonwealth—I notice the Minister for Employment and Workplace Relations is seated at the table—has probably been a bit tardy in making some of these changes so as to ensure that the national system was compatible with state jurisdictions.

The definitions of ‘disease’ and ‘injury’ are of central importance in the Safety, Rehabilitation and Compensation Act. These definitions will be amended to strengthen the connection between the employee’s employment and the employee’s eligibility for workers compensation under the scheme. The act currently requires a material contribution by employment to a disease before compensation is payable. When originally enacted, this provision was meant to establish a test—and I quote from the then minister’s second reading speech in 1988—requiring that an employee:

... demonstrate that his or her employment was more than a mere contributing factor in the contraction of the disease.

The issue being addressed—and again I quote from the then minister’s 1988 second reading speech—was:

... the Commonwealth being liable to pay compensation for diseases which have little, if any, connection with employment.

Notwithstanding this clear expression of legislative intent, the courts have read down the expression ‘in a material degree’ to emphasise the causal connection between the employment and the condition complained of rather than the extent of the contribution itself. The bill therefore includes an amendment to restore the initial legislative intent by requiring that an employee’s employment must have contributed in a significant way to the contraction or aggravation of the employee’s ailment. Put in simple language, it means that there needs to be a genuine problem caused to the employee at the workplace, not a technical, legal interpretation of the act.

The current definition of ‘injury’ contains exclusionary provisions which prevent compensation claims being used to obstruct legitimate administrative action by management. These provisions ensure that compensation is not payable in respect of an injury, usually a psychological injury, which arises from reasonable disciplinary action taken against an employee, or a failure by the employee to obtain a promotion, transfer or benefit in connection with employment. The exclusionary provisions are being updated and expanded to include other similar activities which are also regarded as normal management responsibilities—provided, of course, that they are reasonably undertaken. I am very confident in the Minister for Employment and Workplace Relations undertaking these matters at the Commonwealth level. These matters include a reasonable appraisal of the employee’s performance and reasonable counselling action taken in respect of the employee’s employment. These amendments to the definitions of ‘disease’ and ‘injury’ seek to restore the operative effect of the legislation to what the parliament and the then government intended in 1988.

The bill also amends the provisions that set out the circumstances in which an injury to an employee may be treated as having arisen out of, or in the course of, his or her employment. In its March 2004 report National workers’ compensation and occupational health and safety frameworks, the Productivity Commission recommended that coverage for journeys to and from work not be provided and that recess breaks and work related events should be restricted to those at workplaces and at employer sanctioned events. The fundamental common-sense principle underlying the Productivity Commission’s recommendations was, of course, that employers should be held liable only for conduct that they are in a position to control.

Consistent with the Productivity Commission’s approach, the SRC Act will be amended to remove coverage for injuries sustained by employees during journeys between home and work and during recess breaks undertaken away from the employer’s premises—for example, lunch breaks during which an employee leaves the employer’s premises to go shopping. Employers cannot control circumstances associated with journeys to and from work or recess breaks away from employer premises, and it is not appropriate for injuries sustained at these times to be covered by workers compensation. I make the observation that sometimes in the courts there can be some interesting interpretations of what I call ‘extraneous events’ that have been covered by workers compensation at the state and federal levels.

The bill also enhances various entitlements available to employees under the principal act. The bill will amend the method for the calculating of retirees’ incapacity benefits to take account of changes in interest rates and superannuation fund contributions since the time the act was first introduced. The change in the interest rate provision would result in increased benefits payable to retirees. Amending the notional superannuation deduction would restore the original policy intent by providing for benefits to affected retirees to be set at 70 per cent of pre-injury normal weekly earnings.

The bill will also increase the maximum funeral benefits payable under the SRC Act and its counterpart act, the Military Rehabilitation and Compensation Act 2004, for members of the defence forces, to bring these closer into line with actual funeral costs.

Finally, the bill includes a number of minor technical amendments to the SRC Act which correct anomalies that adversely affect the efficient operation of the act or are inconsistent with the original policy intent behind particular provisions.

I support the thrust of the bill and the philosophical interpretation of what the government and the minister are trying to achieve with it. This debate has been ongoing for the last 30 years. I am delighted that the Commonwealth is now addressing these difficulties so that genuine employees who suffer injury at the workplace will be compensated but court interpretations of the act that allow the system to be rorted will be prevented. The system cannot sustain such rorting, and to allow it to continue is an indictment against those employees who should be receiving their proper payments as well as those good employers who are doing their best to maintain a safe workplace. I strongly support the bill and commend it to the House.

Kevin Andrews (Menzies, Liberal Party, Minister Assisting the Prime Minister for the Public Service) Share this | Link to this | Hansard source

in reply—I thank the member for Corangamite for his contribution and other members for their contributions to this debate. The Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006 amends the Safety, Rehabilitation and Compensation Act 1988, primarily to maintain the financial viability of the Commonwealth workers compensation scheme and to facilitate the provision of benefits under the scheme. The scheme has come under added pressure in recent years from increasing numbers of claims, longer average claim duration and higher claim costs. This is, in part, a result of court rulings that have expanded the scope of the scheme beyond what was initially intended by the previous government and agreed by this parliament.

The main amendments contained in the bill therefore seek to address these issues. The bill will amend the definitions of disease and injury, which are of central importance in the SRC Act, to strengthen the connection between the employee’s employment and the employee’s eligibility for workers compensation under the scheme. The bill does this in two ways: first of all, the bill amends the definition of disease to ensure that Comcare is not liable to pay compensation for diseases which have little, if any, connection with employment. The amendment requires that an employee’s employment must have contributed in a significant way to the contraction or aggravation of the employee’s ailment before compensation is payable. This replaces the current test, which requires a material contribution by employment to the disease before compensation is payable.

When originally enacted by the previous Labor government, it was understood that the material contribution test required an employee to demonstrate that his or her employment was more than a mere contributing factor to the contraction of the disease. However, the courts have read down the expression in a material degree to emphasise the causal connection between the employment and the condition complained of, rather than the extent of the contribution itself. The amendment therefore restores the original legislative intent.

Secondly, the bill amends the definition of injury to expand and update the existing exclusionary provisions to prevent workers compensation being payable in respect of an injury, usually a psychological injury, arising from legitimate administrative action taken by management. This would include, for example, reasonable appraisal of the employee’s performance and reasonable counselling action taken in respect of the employee’s employment.

The bill also amends the provisions that set out the circumstances in which an injury to an employee may be treated as having risen out of, or in the course of, his or her employment. Specifically, the amendments will remove coverage for injury sustained by employees during journeys between home and work and during recess breaks undertaken away from the employer’s premises. These amendments are consistent with the recommendations made by the Productivity Commission in its March 2004 report on national workers compensation and occupational health and safety frameworks. The Productivity Commission recommended that coverage for journeys to and from work not be provided and coverage for recess breaks and work related events should be restricted to those at workplaces or at employer sanctioned events. The fundamental common-sense principle underlying the Productivity Commission’s recommendations was that employers should only be held liable for conduct that they are in a position to control. Employers cannot control circumstances associated with journeys to and from work or recess breaks taken away from employer premises, and it is not appropriate for injuries sustained at these times to be covered by workers compensation.

The bill is also about enhancing various entitlements available to employees under the principal act. The bill will amend the method for calculating retirees’ incapacity benefits to take account of changes in interest rates. The change in the interest rate provision would result in increased benefits payable to retirees. The bill will also increase the maximum funeral benefits payable under the SRC Act, and its counterpart for members in the Defence Force, the Military Rehabilitation and Compensation Act 2004, to bring these benefits closer into line with actual funeral costs.

The bill also provides a further reference scale for adjusting employee entitlements under the scheme. Where an employee’s normal weekly earnings cannot be updated by reference to the rates contained in those instruments currently referred to in the SRC Act, benefits will be updated by reference to an Australian Bureau of Statistics index, which will be prescribed in the regulations.

Finally, the bill includes a number of minor technical amendments to the SRC Act which correct anomalies that adversely affect the efficient operation of the act or are inconsistent with the original policy intent behind the particular provisions. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.