Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I table a supplementary explanatory memorandum relating to the government amendments to be moved to this bill. The explanatory memorandum was, I assume, circulated in the chamber earlier today. It was circulated on 27 March. I think government amendments (2) to (4) can be considered together.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

It might expedite things if I could indicate to the minister our view on moving amendments together. Our preference would be that items (5) and (7) on sheet RC321 be moved separately.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

Can I indicate, for the benefit of Senator Wong, that it is my intention to move amendments (2) to (4) together, then amendment (5), then amendment (6) and then amendments (1) and (7) together—if that meets with the concurrence of honourable senators. I seek leave to move government amendments (2), (3) and (4) on sheet RC321 together.

Leave granted.

I move:

(2)    Schedule 1, item 12, page 7 (after line 26), after paragraph (e), insert:

           (ea)    while the employee was travelling between the employee’s place of work and a place of education for the purpose of attending that place in accordance with:

                   (i)    a condition of the employee’s employment by the Commonwealth or a licensee; or

                  (ii)    a request or direction of the Commonwealth or a licensee; or

                 (iii)    the approval of the Commonwealth or a licensee; or

(3)    Schedule 1, item 12, page 8 (line 7), omit “place.”, substitute “place; or”.

(4)    Schedule 1, item 12, page 8 (after line 7), after paragraph (f), insert:

             (g)    while the employee was travelling between the employee’s place of work and another place for the purpose of:

                   (i)    obtaining a medical certificate for the purposes of this Act; or

                  (ii)    receiving medical treatment for an injury; or

                 (iii)    undergoing a rehabilitation program provided under this Act; or

                 (iv)    undergoing a medical examination or rehabilitation assessment in accordance with a requirement made under this Act.

The government is responsive to the concerns about journey claims raised in a number of submissions to the Senate inquiry into the bill and in representations to my colleague the Minister for Employment and Workplace Relations. The scheme continues to cover employees while they are undertaking work related studies or receiving medical treatment or rehabilitation services in connection with a work related injury. The proposed amendments would restore coverage for journeys between work and these places. Amendment (2) would have the effect of extending workers compensation coverage under the SRC Act to any injury sustained in the course of travelling between the employee’s work or place of education in accordance with a condition of the employee’s employment or at the request or direction or with the approval of the employer. The government wishes to continue its support for employees engaged in ongoing learning and education.

Amendment (4) would have the effect of extending workers compensation coverage to any injury sustained in the course of travelling between the employee’s place of work and a place for the purposes of obtaining a medical certificate for the purposes of the act, receiving medical treatment for a work related injury, undergoing a rehabilitation program provided under the act and undergoing a medical examination or rehabilitation assessment in accordance with a requirement made under the act. Retaining coverage for these journeys ensures the Commonwealth scheme remains in line with the seven jurisdictions which cover such journeys.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

I want to make a number of comments in relation to the three amendments being discussed at the moment, which essentially relate to journey accidents. Firstly, we are seeing yet again the government having to put forward some amendments at a reasonably late stage in the debate. I accept the minister’s indication that some of these matters were raised in the Senate committee inquiry. We have a number of amendments and I will comment on these when they are moved, particularly item (7) which deals with changes to the Occupational Health and Safety Act. Yet again we are seeing amendments being moved by the government in relation to a number of issues at a very late stage in the debate. I think these amendments were circulated just after midday. We raise again our concerns in relation to the process by which making legislation is undertaken in this chamber. It appears that, as the government has a majority, some of the good practice associated with making laws has been jettisoned out the window.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

Senator Abetz interjecting—

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

You may chortle, Minister, but, as I recall it, you introduced 334 amendments, or thereabouts, 35 minutes before your Work Choices bill was put into place, and you have subsequently had to amend the legislation again. It is not a sensible way to approach law making and the detail of legislation. I want to make a couple of comments about the journey accidents issue. As we understand the effect of the amendments and what the government is suggesting in relation to them, the amendments to the journey accidents provisions, for want of a better term, are potentially beneficial. Whilst Labor will not be opposing the amendments, we do not believe they are sufficient to remedy the overall problems with the bill itself.

The minister has tried to utilise some of the examples in the state legislative schemes. He conveniently ignores New South Wales which, as I understand it, continues to cover journey accidents. Having practised in this jurisdiction in South Australia, I know that there are differences between the South Australian legislation and the legislation that is before us in the formulation of entitlement to compensation for journey accidents.

The minister has also tried to use the fact that the Productivity Commission recommended this change as a basis for articulating a justification for it. I want to make one point which is quite interesting. Referring to the Productivity Commission’s recommendations, the Bills Digest, which is produced for the parliament, makes the point that the commission’s recommendation that coverage for journeys to and from work should not be provided was made on a number of bases. These include lack of employer control, availability of alternative cover in most instances and, presumably, the ability for this issue to be dealt with under enterprise bargaining.

It is interesting, isn’t it? On the one hand we have the government’s industrial relations changes—unfair laws—which essentially put employees in the position of having to go on to AWAs if that is what the employer wants. On the other hand the government tries to use the Productivity Commission’s approach to journey claims, which assumes a right to enterprise bargaining, which is not going to be available as a matter of practicality for a worker on an AWA. So yet again the government are more about spin than substance. They are marshalling facts to suit their own argument and appropriating certain pieces of evidence while ignoring others. The Productivity Commission refers to enterprise bargaining. You are seeking to rely on that as a justification but at the same time you are putting in place laws that make it more difficult for people to enterprise bargain.

Question agreed to.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I thank the Senate in committee for agreeing to those sensible government amendments. I now move government amendment (5) on sheet RC321, which deals with Comcare’s functions:

(5)    Schedule 1, page 14 (after line 9), after item 31, insert:

31A  After paragraph 69(fa)

Insert:

            (fb)    such other functions as are conferred on Comcare by the regulations;

This amendment would enable additional functions to be conferred on Comcare by regulation. The existing functions of Comcare are set out in the legislation. These functions are tightly drawn and from time to time Comcare is constrained from performing various functions that are not specifically provided for in the act. The amendment simply provides a mechanism for additional functions to be conferred on Comcare by regulation to provide some much-needed flexibility in this area. Any conferral of these additional functions would of course be subject to parliamentary scrutiny.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

I want to raise a couple of issues. This is essentially a regulation-making function, and the minister has outlined, frankly, at a very high level—not much detail—the need to have much-needed flexibility and the suggestion that the various functions prescribed in the act limit important Comcare activities. I wonder if we would be able to get a little more information about that, given that this is a new amendment. Firstly, what are the functions that the government says are unable to be undertaken by Comcare as a result of the current structure of the legislation and the current iteration of the functions that Comcare is entitled to undertake? Secondly, why has the government not sought to limit the regulation-making function in relation to this provision by, for example, making reference to the issues which may be covered rather than having what is a quite open-ended regulation power?

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

In relation to the first question, one area that the honourable senator would be aware of, I assume, is that Comcare has now, to use a term, inherited certain asbestos claims and those need to be dealt with. In relation to limiting the regulation-making power, the simple fact is that, if this place or the other place believes that the government is overextending itself or making regulations that are inappropriate, the mechanism of a disallowance motion is always available in either place and therefore there is parliamentary scrutiny in any event of the regulations that may come into force in the future.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Nevertheless there may be an argument about whether or not 69(fa) should still be drafted in these terms, but I understand that is the government’s position. The only function that you have identified for which there is some difficulty because of the current structure of the act is in relation to asbestos claims. Surely you could put in a specific provision. Minister, are there any issues, other than what you have identified, that the government sees Comcare being currently unable to deal with as a result of the structure of the legislation?

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

Before the minister answers that, I wonder if he could also advise us—I do not have the act with me so I don’t know—as to whether functions are defined in the act and are specific. In other words, I am asking whether the functions are already limited or prescribed or are now made completely open-ended by this amendment.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I do apologise. Would Senator Murray repeat the question.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

I need to apologise to the chamber as well because I do not have a copy of the act with me. I wondered how functions were described in the substantive act and therefore how this amendment relates back to them, because if those functions are already circumscribed in some way then this is less open-ended than it appears on the face of it.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I draw the honourable senator’s attention to part 7, section 69 of the act, about functions. There are two-and-a-little-bit pages dealing with the functions, so I will not read out all of those matters that are enumerated or dealt with there. The government’s view is that it would be helpful, and I have mentioned the asbestos example. If honourable senators—or indeed members in the other place—were to consider that the government was doing by regulation things that they disagreed with, then of course the potential for a disallowance motion would always be available to senators.

Question agreed to.

I move government amendment (6):

(6)    Schedule 1, item 47, page 17 (lines 25 and 26), omit “starting on the day after this Act receives the Royal Assent”, substitute “starting on the day on which item 24 of this Schedule commences”.

This amendment, which has a heading for convenience, ‘Technical correction’, makes a minor technical correction to item 47 of the bill as introduced. Item 47 is a transitional provision which would enable the minister to specify a transitional interest rate for the purposes of new section 21(5) contained in item 24 of the bill. As presently drafted, the specified transitional interest rate would have to take effect from the day after the amendments received the royal assent and before the commencement of the substantive provision on proclamation. This amendment would enable the minister to specify a transitional interest rate before the commencement of the substantive provision, but that would take effect from the date the substantive provision takes effect.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Sorry, Minister, I am not clear exactly how that operates. Does this suggest, therefore, that a retrospective operation could be implemented for the revised rate?

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

There is a concern that the original provision will not work as currently drafted. The draftsmen and women who deal with these issues are of the view that this would allow a flexibility which would enable the minister to specify a transitional interest rate and not have to do it on the day that the legislation comes into force.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

So it’s prospective.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

Yes.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Are they only prospective?

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I am getting all sorts of nods from the advisers’ box, so I assume that is a yes. I confirm that it is a yes.

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Does that mean that the transitional interest rate may be different from the interest rate that is specified in the act?

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

The good news is—but I will not wax lyrical about the stable interest rate environment in which the country operates at the moment—that there is the possibility that the transitional rate, say it were to come in in April, might be different to that which would be set. This would be done on an annual basis on 1 July each year. So the transitional interest rate would only apply from when the bill receives the royal assent through to 1 July 2007.

George Campbell (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Just for further clarification, does that mean that the intent is that the transitional rate would be the same as the proposed rate in the bill? I understand what you are saying, that it may finish up being a variation if interest rates shift, but the intent is that it will be the same as what is proposed in the bill.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I think the answer is yes.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

I am just looking at item 47, which this seeks to amend. Can you explain the concerns to which you have alluded about the provision as previously drafted? I am not clear what you are saying it would not enable, such that this amendment is required. Why doesn’t the original item 47, on page 17 of the bill, deal with the issue that you now seek to cover in the amendment? Can you indicate what the rationale is for this?

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

This amendment will allow the government to make a determination between the assent and the proclamation, and that clearly is going to be of benefit to those who would be the beneficiaries under this legislation.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Can I just clarify that the intent of the amendment, and the effect of it in terms of the advice the minister is providing to the chamber, is simply to enable the specification of the rate to occur post assent but pre proclamation. Is that right? That would have been an easy way to have said it first up.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

That is right.

Question agreed to.

by leave—I move government amendments (1) and (7) together:

(1)    Clause 2, page 2 (table item 9), omit “Schedule 2”, substitute “Schedules 2 and 3”.

(7)    Page 22 (after line 2), at the end of the bill, add:

Schedule 3—Amendments relating to occupational health and safety

Occupational Health and Safety Act 1991

1  After section 23

Insert:

23A  Unlicensed operation of major hazard facility

        (1)    A person must not operate a major hazard facility if:

             (a)    the person is required by the regulations to have a licence to operate the facility; and

             (b)    the person does not have such a licence.

Note:   A person who contravenes this provision may be subject to civil action (see Schedule 2).

        (2)    For the purposes of subsection (1), a major hazard facility means a facility that is a major hazard facility within the meaning of the regulations.

2  Schedule 2 (heading)

Repeal the heading, substitute:

Schedule 2—Civil and criminal proceedings

3  After paragraph 2(1)(f) of Schedule 2

Insert:

            (fa)    section 23A (unlicensed operation of major hazard facilities);

4  At the end of subclause 2(1) of Schedule 2 (before the note)

Add:

           ; (o)    a provision of the regulations specified in the regulations to be a civil penalty provision.

5  Paragraph 2(3)(c) of Schedule 2

Repeal the paragraph, substitute:

             (c)    any provision that the person who contravened that subclause breached or was involved in breaching;

6  Subclause 4(2) of Schedule 2 (after table item 7)

Insert:

7  Subclause 4(2) of Schedule 2 (at the end of the table)

Add:

8  Subclause 13(1) of Schedule 2 (paragraph (a) of the definition of civil penalty proceedings)

After “subclause 2(1)”, insert “(other than a contravention arising because of a breach of a provision of the regulations to which strict liability applies)”.

I thank the Senate for its support of the last amendment. Amendments (1) and (7) relate to occupational health and safety. These amendments would amend the compliance provisions contained in the Occupational Health and Safety Act 1991 in two respects. First, item 1 of amendment (7) inserts a new section 23A that provides that a person must not operate a major hazard facility without a licence if the person is required by regulations to have a licence to operate the facility. Regulations made under the act already impose licensing requirements on major hazard facility operators. The ultimate sanction for a failure to comply with these licensing requirements is suspension or revocation of the licence.

Presently, however, the maximum level of penalties that could be imposed under the regulations for operating a major hazard facility without a licence are substantially less than the costs of complying with the licensing requirements. This may encourage some—we would suspect very few but, nevertheless, some—businesses to continue operating major hazard facilities without meeting their licensing requirements. This would be of concern, given the higher risks posed by major hazard facilities. The amendments address this problem by providing a more appropriate level of penalty for operating a major hazard facility without a licence—a maximum of 2,200 penalty units or $242,000 per offence.

Items 2 to 8 of amendment (7) extend the civil penalty regime in the Occupational Health and Safety Act to breaches of regulations made under the act. The OHS Act contains a dual civil and criminal penalty regime. However, the civil penalty regime applies only to breaches of the act itself and not to breaches of regulations. Currently, the only available sanction for a breach of the regulations is a criminal penalty. This is inconsistent with the scheme of the act, which gives primacy to the civil penalty regime and retains criminal penalties for serious breaches of the act, such as negligent or reckless conduct that may cause or expose an employee to death or serious injury.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

Can the minister confirm that these changes are initiated because persons have been operating major hazard facilities without a licence and that therefore this reacts to a problem that exists?

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

The Commonwealth regime has only been operating, as I have been advised, from 14 March of this year, and no such operator has come to our attention. We hope and pray that no such operator will ever come to our attention. We believe that with these amendments it is going to be even less likely that such an operator will come to our attention.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

On the basis of what the minister has indicated, obviously, we will support what appears to be the principle behind the amendment, which is ensuring that persons operating a major hazard facility must have a licence to operate and inserting appropriate penalties in the event that they do not.

However, I do again want to make a point about this amendment being introduced at this stage. We have previously seen the government tack on amendments to bills through this chamber—particularly in the last year and a half—where unrelated or only tangentially related amendments to other pieces of legislation are tacked onto a bill that is already in the place. One that comes to mind is the Work Choices amendments to the independent contractors legislation, which were really ‘fixing up your errors’ amendments that you tacked onto a bill that was about independent contractors. What we have here is a bill that was originally dealing with amendments to particular acts—the Military Rehabilitation and Compensation Act 2004 and the Safety, Rehabilitation and Compensation Act 1988—and we now have a new set of amendments in relation to another piece of legislation, the Occupational Health and Safety Act 1991. It would be useful, I think, to the chamber if the government could indicate why it is that this amendment has now been tacked onto the end of this bill—a bill that amends primarily the Safety, Rehabilitation and Compensation Act and also some consequential or minor amendments to the Military Rehabilitation and Compensation Act 2004. Why at this stage in the debate do we have another set of amendments to the Occupational Health and Safety Act and why were these not provided previously?

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

This amendment, as I understand it, is supported around the chamber. It will provide extra protection. Therefore, there does not seem to be debate about the actual substance. I think for the want of creating some debate on it, the question was, ‘Why are we tacking it onto this particular bill?’ Because—and we make no apology for this—it is convenient. To bring in a separate bill simply for those two amendments we believe would have been a lot of administrative work to deal with a matter that seems to have unanimous support in this chamber.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

May I indicate from the point of view of process—because the Democrats sometimes tack on amendments, as it were, to bills—that I take a case-by-case approach to these matters. Since the shadow appears not to have been briefed, might I suggest that a briefing prior to this matter might have assisted. It is a courtesy which is extended by ministers in other departments and probably by this department previously on other issues. That generally resolves issues of urgency effectively in my experience.

Question agreed to.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

by leave, I move:

That the House of Representatives be requested to make the following amendments:

(1)    Schedule 1, item 47, page 17 (line 24), after “rate”, insert “and the formula for determining the rate”.

(2)    Schedule 1, page 17 (after line 26), after item 47, insert:

47A  Rate to be applied since 1994

(1)    The Minister must specify a rate according to a formula in an instrument made under subsection 21(5) of the Safety, Rehabilitation and Compensation Act 1988 to apply to all eligible claimants since 1994.

(2)    The Minister must apply the formula mentioned in subitem (1) to each year since 1994 to determine a rate to be applied (the catch-up rate) for each of those years.

(3)    The difference between the rate already paid and the catch-up rate is now due and payable as compensation to all eligible claimants since 1994.

————

Statement pursuant to the order of the Senate of 26 June 2000

The effect of the amendments would be to allow retrospective increased compensation payments under the Safety, Rehabilitation and Compensation Act 1988 to all eligible claimants since 1994. These payments would be met from the appropriation under the Act from the Consolidated Revenue Fund.

This increase in the amount of the payments to claimants would have the effect of increasing expenditure from the standing appropriation, and the amendments are therefore presented as requests.

Statement by the Clerk of the Senate pursuant to the order of the Senate of 26 June 2000

The Senate has long accepted that an amendment should take the form of a request if it would have the effect of increasing expenditure under a standing appropriation in an Act amended by the bill. These requests are therefore in accordance with the precedents of the Senate.

Senator Barnett was right when he spoke about some of the complexity of this particular matter to which these amendments go to and how the committee had been engaged in some rather detailed discussions and given some real-life examples. It required a follow-up hearing in Canberra with Comcare and the department to try and work through some of these issues. My amendments do not go to all the issues of concern, because, while Senator Trood also took keen interest in this matter, I have been advised that, on the bulk of the issues that I have some concerns about, the government is not interested in supporting any changes. That was certainly clearly reflected to me by Comcare and the department. That explains why the amendments go to this issue. They go to this issue because this is the specific issue that is dealt with in this amendment bill.

In my speech in the second reading debate I tabled an example provided by the Law Council of Australia. I have tabled the response from Comcare, which I thought would be useful for senators interested in this debate to have in front of them as I go through the issues, because they are quite complex. This will help the Senate understand the significant disadvantage that has occurred to people who have been effectively superannuated out of the Commonwealth public sector due to ill health or injury through the Comcare scheme.

The object of the act is that people in this situation should be compensated to 75 per cent of normal weekly earnings. The example that has been given and responded to by Comcare is titled ‘Daryl’. Rather than use a real-life example, this is the example that we have been using. Daryl’s normal weekly earnings were $1,038 a week. The amount of compensation, given the objectives of the act, should be 75 per cent of that, which would work out at $778.50. In this scenario, Daryl was paid out a lump sum from his Commonwealth superannuation of $242,399.37. The problem starts at this point.

Up until this legislation, the earnings that that lump sum enabled people to make were taken into consideration in the final calculation of their weekly payments. The deeming rate that has been applied up until now was 10 per cent. That deeming rate is an unreal expectation of what you could earn on that lump sum payment and in any case it is applied to the pre-tax amount. So there are two disadvantages that occur at this point. One is that it is a pre-tax amount so even if it were able to get the rate that is deemed, 10 per cent, it is not a real rate and it would not be a real return because the amount that can be invested is an after-tax amount. So we have two disadvantages there. A deeming rate for many years of 10 per cent is totally unrealistic. People would have no opportunity to invest their lump sum earnings and achieve that sort of interest rate.

We then have another disadvantage where Comcare—or maybe it is the superannuation fund, but it is a mixture of the compensation payments—still requires a five per cent superannuation contribution even though the person has been permanently incapacitated and is no longer on the payroll. So it has been a notional five per cent contribution, which adds up to $52.07 in Daryl’s case. That is another disadvantage.

There has been some significant debate about where that money goes. I am still somewhat unclear. There have been statements made that that amount goes to the benefit of the person—Daryl in this case. But there have also been statements that it simply goes into the superannuation scheme. There is another view that it is simply a notional deduction and does not end up going anywhere. But certainly, it does not go into Daryl’s pocket. Clearly, we would say, and many would argue, that if there is going to be a superannuation deduction from someone’s normal weekly payment, even under this compensatory arrangement, it ought to be made to the benefit of that individual. But again, that issue is not dealt with in these amendments. Given the strong advice I have had from the department and from government senators, the government would not entertain changing those things.

I will just run through the list. Daryl earns $1,038; his 75 per cent would equal $778.50. The amount that is deducted from his payment is the deemed 10 per cent value of the earnings from his lump sum and $52.07, which is the five per cent notional superannuation deduction. That adds up to $518.22, which is then deducted from his $778.50—under the objective of the act, 75 per cent of his normal weekly earnings—leaving him with $260.28 per week as his payment. This is opposed to the stated objective of the act where he should have $778.50.

That is an appalling reduction and of course it realistically could not be met in terms of the deeming arrangements. The government and the department have certainly known about the inadequacy of this deeming arrangement for a long time. But Daryl in this case—and it is the same in every other case—has no way to change that. It is purely in the realm of the government to be able to change the deeming rate, and they have refused to do so. They have left it at an artificially high rate. The disadvantage—and I will go through the size of the disadvantage in a minute—has been going on for years.

Under the proposed legislation, let us again use the case study of Daryl and his normal weekly earnings of $1,038 a week. The 75 per cent objective of the act would give him $778.50 per week. There is no change there and no change to his lump sum of $242,399.37. If the interest rate used is what the department tells us the minister will determine, and that is the 10-year bond rate, that would now be 5.56 per cent. There would also be the deduction of $52.07, which is the five per cent notional superannuation contribution. That means that the total deductions from the $778.50 would only be $311.25, which would leave him better off by $206.97. So he would go from $260.28 a week to $467.25 a week, which is a 79.5 per cent increase in his weekly payments.

There is still the argument about whether the 10-year bond rate is the appropriate rate. Other Commonwealth departments use different rates. That is not necessarily an issue here today; it is whether the government will support the principle of these amendments, which I will now get to.

The extent of this disadvantage has been apparent for a decade. Daryl’s case is not unusual, I am advised by the department. People have been disadvantaged because they were removed from the workplace because they were unfit to work due to injury or illness. They were superannuated out because they were unfit to work. These are the most vulnerable people in our community and they are not being looked after appropriately. They have been expected to live on $260.28 a week, in Daryl’s case, plus whatever investment he may have been able to get from his lump sum. By simply making this administrative adjustment today, or allowing the minister to make it annually, the government would rectify the situation in the first instance and increase his payments by $206.97—and many would argue it is not enough, as I have said.

The concern many of us on the committee had was that this is not a new problem that has just dawned on the government; this has been an ongoing battle for the recipients of these payments for a decade or so. There have been enormous amounts of correspondence sent and enormous amounts of advocacy made to the government to try to redress this imbalance.

What do these amendments seek to do? Rather than just giving the minister the ability to determine a rate on an annual basis in the future, by regulation he should in fact publish that rate in the Senate. He should also publish the rationale for determining the new deeming rate for people in this situation so we can understand it. Once that is done, that same formula ought to be used—and I have said it should go back to 1994; I am happy for some negotiation on this—to determine a new rate to be applied for each year going back to 1994 to compensate those people who ought to have been receiving rates based on the appropriate interest rate at the time, rather than an artificial 10 per cent deeming rate.

I think that is just simple fairness and justice. These people have been disadvantaged over a very long period of time. The government has known about it. The department has known about it. Yet, now, in 2007, the government is actually acting to fix this legislation. Again, we will have all the other arguments about other issues, but we need some indication from the government about whether it is prepared to consider, as a matter of principle, compensating people retrospectively for the disadvantage that has taken place. I am happy to have some discussion about the detail of the amendment if that would assist the government in accepting the principle. That is the position we put. We believe that is a fair and moral position. There are other issues, as I have said, but, if we can get over this hurdle, I think we may get over some of the other hurdles more easily.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

Briefly in response: I hate to disappoint Senator Marshall, because I know he had every expectation that the government might support his amendment. The government will not be supporting the amendment for a number of reasons. I will talk firstly about the technical one. In the first amendment, references are made to item 47, which is in fact the transitional rate. That will only be in effect from about April until 1 July. But we need not labour on that point, because we disagree with the matter on the administrative complexity. Not only would it cost between $3 million and $5 million a year making it retrospective; chances are it would cost in the vicinity of $40 million to $70 million, just in very round terms, backdating everything. And it begs the question: where would that money come from? I suppose the Future Fund could withstand a few more raids from the Labor Party. I do not think it is in the long-term interest to have this sort of profligacy where money is being allegedly committed without any real source for it. But that is what we have come to expect from Labor over the years.

In relation to the administrative difficulties, since 1994 a lot of potential beneficiaries will have, unfortunately, deceased or whatever. Senator Marshall, with his legislation, would give them an entitlement, and we would then need to pursue the estate and the beneficiaries of the estate to somehow allocate the moneys. It would be a huge administrative nightmare for not much benefit. On the advice that I have been given, under our proposed legislation, this so-called Daryl—to whom Senator Marshall refers and to whom the Senate report also refers, and who I think was first used by the Law Society—would in fact be $206.97 a week better off. There is no doubt that people will be better off as a result of our proposal. Senator Marshall’s amendment, whilst I am sure it is well motivated, unfortunately is technically flawed and would be an administrative nightmare to implement.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I should just respond. In terms of the technicality, again, the minister said he is not going to support the principle of the amendment anyway and so it really does not matter whether it is technically correct. I disagree, because it is about the formula being published. Whether it is a transitional formula and a transitional rate, if the transitional formula is there it can be applied retrospectively. It does not matter that it applies to the transitional rate; it is simply the formula. While I am of course disappointed that the minister has taken that attitude, the people who will really be disappointed are the people who have been artificially disadvantaged in the past.

I acknowledge, Minister, and I said so at the outset, that fixing this problem will make Daryl $206.97 a week better off. But Daryl has been disadvantaged over the last decade or so by the same amount. The amount will differ depending on what the interest rates were and what formula would have been applied. So, for the minister to say, ‘It’s a matter of money—how much it is,’ means he fails to see that the object of the act was that people should be compensated by the amount of 75 per cent of normal weekly earnings. Leaving the deeming rate where it was and at 10 per cent—which could never be achieved in real terms—disadvantaged people and absolutely physically stopped the objective of the act being applied to people who had to leave work through illness or injury. So it is not a matter of giving them a gift or finding the money; this is money that they were entitled to, that the act said they were entitled to. But the way it was interpreted, the way that the lump sum superannuation payouts were treated—simply applying 10 per cent, which the government had known for many years was unrealistic and therefore inappropriate—deprived all the recipients of this benefit of getting what the objective of the act was meant to achieve.

So it is not a matter of me wanting anyone to get a gift. It is not about me wanting to make it administratively difficult for you, Minister. All I am saying is that these people had an entitlement and that, if their estates had it, their estates still have it and it ought to be paid. Those were the objectives of the act in the first place. It was completely the government’s responsibility to change the deeming rate in line with the current returns’ current interest rates. The government failed in that responsibility and therefore stopped the objectives of the act being applied to these people. So the government do have an obligation, in my view, to fix this. I am glad they are fixing it now, even though we could still argue about the appropriateness of the rate, but the fact is that it ought to be fixed and people ought to get what they were entitled to get for the last decade or so.

Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

It seems to me in a sense that the government and the opposition are talking past each other, because the amendment that the government is making to the act in fact recognises that there was a problem. So, if you accept there is a problem and you are dealing with it, that means you are already halfway there.

I would suggest and request that the minister and his department think about an alternative route to resolving this issue of retrospective compensation. As the minister is aware, there is a process for ex gratia payments for individuals who have suffered loss, not as a result of their own circumstances but as a result of particular misadventures with respect to legislation or bureaucratic process, and it falls under the department of finance to make those ex gratia payments—I think there is a particular term for them.

All I am suggesting is that, if the minister and the department and the advisers are not inclined to accept Senator Marshall’s solution, at least a different form of compensation for past injustice should be examined, because I think Senator Marshall has clearly made the case that there was injustice—and, what is more, the government, by changing the act, has recognised there was injustice. So together you are halfway there, and perhaps the solution needs to be of a different kind.

Debate interrupted.