Christopher Back (WA, Liberal Party) Share this | Hansard source

I am very pleased to continue my remarks on the Safety, Rehabilitation and Compensation Legislation Amendment (Exit Arrangements) Bill 2015. I remind those who are present and those listening that this bill proposes to amend the act to provide for financial and other arrangements for a Commonwealth authority which might care to exit the Comcare scheme. This has been prompted by the fact that the ACT government indicated in February that it might so move. It consulted and it has concluded its consultations. Therefore, why is it necessary that we do it and why now? I would like to reflect on that for a few moments if I can.

Firstly, the framework will enable Comcare to determine and collect exit contributions from former Commonwealth authorities and successors of former Commonwealth authorities. What does this ensure? That the employer does not leave the Comcare scheme without contributing an appropriate amount of money to cover any current or prospective liabilities that are not funded by premiums the employer has paid before exit. I go back to the comments made by senators Rice and Cameron, in which they were expressing, quite rightly, concern for the interests of employees. That brings me to the point that the framework will ensure that employees injured before an employer leaves the scheme continue to be supported by an appropriate rehabilitation authority. That is the primary objective. It goes on to enable Comcare to determine and collect ongoing regulatory contributions from exited employers or the bodies that succeed them. These are entirely appropriate and reasonable factors. Why do we need to be dealing with it now? Because, indeed, the ACT government has flagged the likelihood that it may want to exit the scheme. What we will then do through this legislative amendment is to clarify that premiums for current Commonwealth authorities and entities, such as a government department, should be calculated having regard to the principle that current and prospective liabilities should be fully funded by Comcare retained funds and so much of the Consolidated Revenue Fund as is available under section 90C of the act. That is what the wider community and particularly those likely to be affected would be expecting us to do.

The framework will allow Comcare to agree to instalments of an exit contribution being paid over a period up to seven years from the day on which the determination is made to allow for run-off liability estimates. Furthermore, in terms of fairness, the framework will provide for Comcare to refund all or part of an exit contribution if the assessment reveals that the amount of the available scheme funds attributed to the exited employer exceed Comcare's liabilities. If indeed there has been an over-estimate, they get the money back. Determinations of a refund will only be made within that seven-year period after the employer exits the scheme. It also, on the other side, provides for Comcare to remit the whole or part of an unpaid instalment of an exit contribution if a later assessment reveals that the amount of the available scheme funds that is attributable to the exited employer exceeds what Comcare's liabilities are.

Why are these amendments so important now? Because we have the ACT government contemplating the likelihood of exiting. Indeed, we are fortunate to have the recent Chief Minister of the ACT now in the chamber, and I am sure she could further advise colleagues as to what the thinking of the ACT government was, certainly up until the time she ceased being Chief Minister. The amendments are important for two major reasons: firstly, to protect injured employees who remain in the Comcare scheme and, secondly, to make sure the future viability of the Comcare scheme is protected.

Since 2013-14, Comcare has been progressively restoring the funding position of the scheme. I know people would be very pleased to learn that. This bill will support existing measures now put into place by Comcare to restore funds to adequate levels to meet estimated liabilities. Surely there can be nobody in this chamber and nobody listening to this discussion who would have any argument with that sound philosophy. The bill will also ensure that Commonwealth authorities do not exit the Comcare scheme without paying an appropriate amount to cover any unfunded liabilities arising from claims that will continue to be managed by Comcare into the future. This protects premium payers who remain in the scheme, and this is what we want to see happen.

If I can recap. This bill amends the Safety, Rehabilitation and Compensation Act to provide for financial and other arrangements when a Commonwealth authority exits the Comcare scheme. The frameworks established by these amendments I have outlined. It is important to have such arrangements in place in the context of the ACT, because the ACT Labor government has indicated that it is looking at a potential departure from the Comcare scheme, citing it as being 'quite burdensome, not only for claimants but for their employers as well'. It is essential that this amendment is passed so that any liabilities the ACT government may have in consideration of existing or prospective employees will indeed be adequately funded so that those people are protected. Employees injured before a Commonwealth authority leaves the Comcare scheme will continue—I repeat, will continue—to receive compensation and rehabilitation under the SRC Act. The bill will ensure stability for workers, employers and the Comcare scheme when a Commonwealth authority exits the scheme. I cannot be more clear than that. The bill goes on to amend the act to clarify that premiums for current premium payers should be calculated having regard to the principle that current and future liabilities should be fully funded by Comcare retained funds and so much of the Consolidated Revenue Fund as would be available under the relevant section of the act, section 90C. So I come back to that commentary again about protecting injured employees who remain in the scheme, as well as ensuring the future viability of the scheme itself.

Mr Acting Deputy President, let me make the point strongly that the Safety, Rehabilitation and Compensation Legislation Amendment (Exit Arrangements) Bill 2015, the one we are debating at the moment, is not in any way related to other reforms that passed the House of Representatives on 26 November last year and are currently before the Senate. Let me make it clear, again, that the matter we are considering at this moment is not in any way related to these reforms. I am not going to go back and rehash the commentary of Senator Cameron in this particular space, except to emphasise again: they are unrelated. But it is unfortunate that the opposition, in opposing any meaningful reform in this space, is not encouraging, allowing or agreeing to reasonable dialogue and discussion in this area.

The Comcare scheme generally operates effectively. There are four areas that I want to focus on. Firstly, achieving high safety—and surely, that would be commendable. Secondly, return-to-work outcomes—and all of us, whether we are on the employer side or the employee side, know very well that speed of return to work is surely the highest priority, when it is safe to do so. The third area is the provision of income replacement through to retirement age, and the statement is made, 'it is almost the only scheme left in Australia which actually provides income replacement right through to retirement age'. The fourth area—and equally importantly for all people who are covered under these protections—is medical support for life.

It falls to people like ourselves, law-makers in this place, to make sure that each of those four high ideals remains permanent, remains current, and remains affordable. But there are signs that the scheme is coming under pressure. For example, while Comcare's return-to-work rates are better than average, they are falling. They are not where we want them to be. If this is to be the benchmark, we want the benchmark to be set higher. And the current experience is that return-to-work rates are falling; they are still better than average, but they are falling. Secondly, some medical treatments are not making people better in the long term. And thirdly, employers are facing rising premiums and other costs. So what do we need to do about this? The amendments that are proposed and are sitting here in the Senate are aimed, in fact, to address those issues. They are aimed to improve the return-to-work outcomes for injured employees and injured workers. They are aimed to put focus on early intervention and health outcomes for injured workers. And they are, thirdly, aimed at improving the operation of the system by excluding injuries sustained in non-work activities outside the workplace; excluding, of course, secondary psychological injuries, and removing payment for non-traditional treatments.

Mr Acting Deputy President, let me make the point very strongly: reference has been made of course to the fact that if somebody is outside their workplace, during their lunch hour or whatever, they cease to have any coverage; if they go across the road, or if they go into a cafe or whatever—but such of course is not the case. We in Australia know very well the circumstance in which, if somebody is injured, for example in a road-related accident, they are adequately insured under third-party provisions. Indeed, if somebody was in an eating establishment and injured themselves, we know the law requires that the operator of that facility must have adequate insurance to protect customers. So there is a circumstance in which there is still adequate cover under the provisions for which we seek.

The package of reforms which will be considered here in the Senate in due course is important in providing a strong and sustainable scheme into the future to ensure that Australia's only remaining long-tail workers compensation scheme exists, is adequately funded, and ensures that the employees of any organisation who leave Comcare in fact have still got adequate financial funding. I want to stress if I may the fact that this package of reforms has been supported by departmental secretaries and heads of agencies. It has been supported by licensees and has broad support in the community.

Concerns have been expressed in this place and elsewhere—and I am sure they will be raised again—about the question of the viability of state and territory work, health and safety workers compensation schemes in relation to the potential exodus of employers, particularly large employers, from the schemes. The information that is available suggests that this is, at most, a minor issue, if indeed it is an issue at all. The 2004 Productivity Commission inquiry suggested that the volatility in premium rates that might occur in the event of such exits are not supported by evidence. Actuarial assessments commissioned by the Productivity Commission and a 2008 review of self-insurance arrangements under Comcare both indicated that the impact of exits of corporations from state-based schemes on those schemes or on remaining employers would be minimal; and Taylor Fry, in their actuarial report to inform the 2008 Comcare review, concluded that the financial impacts of the exits to the Comcare scheme from other Australian jurisdictions had been insignificant.

To conclude: will the bill adversely affect any employee entitlements to compensation? The answer is no. An employee who is injured before an employer exits the scheme will continue to be compensated under the Safety, Rehabilitation and Compensation Act. The bill will ensure that employees injured before an employer's exit continue to be supported by appropriate rehabilitation authority, protecting the rehabilitation rights of employees. Let me finish, if I may, with these two brief observations. The bill will ensure that Commonwealth authorities exiting the Comcare scheme cover the costs of their liabilities. This will protect premium payers remaining in the scheme and ensure that injured workers continue to be supported. And I make this final observation. Anybody in this place voting against this bill is, indeed, voting against ensuring that injured workers have a safety net should their employer leave the scheme.