Karen McNamara (Dobell, Liberal Party) Share this | Hansard source

I rise to support the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014. The bill implements a range of measures in line with the government's red-tape reduction program to reduce the cost of the regulatory burden on business. This government is committed to reducing red tape, thereby increasing productivity for Australian business. As part of the red-tape reduction program, the government is expanding the Commonwealth workers compensation and work, health and safety scheme, Comcare, to national employers meeting self-insurance criteria. The recommendations enacted by the bill anticipate a total reduction of regulatory burden for eligible corporations transferring to the Comcare scheme averaging $35 million each year over the next 10 years.

The bill implements recommendations in line with the 2013 Hanks review of the Safety Rehabilitation and Compensation Act 1988, which governs the Comcare scheme. The SRC Act establishes the statutory framework for workers compensation in the Commonwealth jurisdiction and for eligible corporations to self-insure under the scheme. The bill seeks to amend the SRC Act and the Work, Health and Safety Act 2011, inter alia, to expand the eligibility of corporations to self-insure through Comcare. The amendments remove the requirement for the minister to declare a corporation to be eligible to be granted a licence for self-insurance, while maintaining the ability for the minister to issue directions to the Safety, Rehabilitation and Compensation Commission. This will streamline the current two-stage approval process; remove the outdated requirement that a corporation must be in competition with a Commonwealth authority or a former Commonwealth authority to make application to self-insure under the Comcare scheme; broaden the range of eligible corporations to self-insure under the Comcare scheme to 'national employers', which is defined as an employer that is required to meet workers compensation obligations under the laws of two or more jurisdictions; enable the commission to grant group licences to related corporations; extend the coverage provisions of the WHS Act to those corporations that obtain a licence to self-insure under the act; and exclude access to workers compensation where injuries occur during recess breaks away from an employer's premises or where a person engages in serious and wilful misconduct, even if the injury results in death or serious and permanent impairment.

Prior to 2007, certain employers had the option to self-insure for workers compensation coverage through the Commonwealth's Comcare scheme. In December 2007, the Rudd Labor government imposed a moratorium on new entrants to self-insure under Comcare. This was despite evidence from the Productivity Commission's 2004 inquiry into national workers compensation and occupational health and safety frameworks, which found that the cost for multistate employers insuring with multiple compensation schemes was considerable. The moratorium was announced subject to a wide-ranging review of the Comcare scheme by the federal government in consultation with the various state and territory governments and employer and employee groups. In 2008 this review produced 19 recommendations from the Department of Education, Employment and Workplace Relations. The review also included a report by Taylor Fry actuaries and included consideration of the Productivity Commission's 2004 report. In 2009, the Labor government announced a number of changes, including a continuation of the moratorium and, contrary to DEEWR's recommendation, reinstated compensation for off-site recess breaks. Two key recommendations that the government of the time ignored were eligibility to self-insure under Comcare and journey claims. The Hanks review of the SRC Act, released in March 2013, included over 100 recommendations for substantial changes to the scheme, including the lifting of the moratorium. On 2 December 2013, the coalition government lifted the moratorium.

Self-insurance allows an employer to underwrite their own risk. Self-insurers are responsible for the payment of their claim liabilities and for the management of those claims. Self-insurance relieves an employer from accepting a workers compensation policy under respective workers compensation jurisdictional schemes. The bill introduces the concept of a national employer test. This test will provide corporations operating in two or more states or territories the opportunity to be a national employer under the Comcare scheme. Such a corporation, assuming that it satisfies requirements within the act, will be able to obtain a self-insurance licence, bringing all of its employees under a single workers compensation jurisdiction. The SRCC will still determine eligibility for a corporation to become a self-insurer. Concurrent amendments to the WHS Act ensure that the corporation's employees are also brought under a single work, health and safety scheme.

The 2004 Productivity Commission inquiry found that multistate employers faced increased costs of compliance, sometimes amounting to millions of dollars a year, as a result of workers compensation coverage and work, health and safety obligations in multiple jurisdictions. The amendments in the bill are important productivity reforms which are critical for multistate employers. They will provide these employers with the option of continuing to operate under multilayered workers compensation and work, health and safety regimes or to apply to have one set of national arrangements. Multistate employers have always faced challenges in regard to determining correct workers compensation coverage, particularly in determining the state of connection. The lack of national consensus when it comes to state of connection continues to present confusion and uncertainty for these employers. The option for corporations currently covered by workers compensation systems in two or more states or territories to apply to join the Comcare scheme removes this uncertainty. There are significant advantages in being able to operate within one workers compensation framework. Foremost, savings in regard to compliance are likely to be a significant motivation for self-insuring in the Comcare environment, as opposed to self-insuring in multiple jurisdictions. The costs of complying with up to eight separate regulatory frameworks is a significant burden, particularly as each regulator imposes its own set of licensing criteria, reporting arrangements and standards. Corporations self-insuring in multiple jurisdictions are required to comply with prudential requirements as specified by each jurisdiction in which they self-insure. This involves considerable cost replications in meeting financial capability requirements, bank guarantees, security deposits and reinsurance policies to secure claims liabilities. For example, each bank guarantee requires a separate actuarial report with different requirements set by each jurisdiction, and there are numerous differences within jurisdictions in taking out a reinsurance policy. In their submission to the 2004 Productivity Commission inquiry— (Time expired)

Debate interrupted.

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