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

I thank senators for their contributions to the debate. The Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006 amends the Safety, Rehabilitation and Compensation Act 1988 primarily to maintain the integrity of the Commonwealth workers compensation scheme and to facilitate the provision of benefits under the scheme. Opposition senators have tried to make much of the fact that the Comcare scheme is in excellent financial shape and that Comcare’s actual claims costs have declined over the past few years. They have argued that Comcare is not facing any cost pressures and that the amendments proposed by this bill are all about denying injured workers their basic entitlements and increasing their dependence on the public health and welfare systems. Senator Wong suggested that the $20 million saving estimated for this bill would be paid for by workers and their families.

Let us just inject some facts into this debate. The decline in Comcare’s actual claims costs is not an accurate indicator of the cost pressures facing the Comcare scheme. The fact is that the Comcare scheme is a long-tail scheme, with incapacity benefits payable to age 65 and medical benefits for whole of life. The total expenditure by Comcare each year in meeting the cost of all claims includes the cost of injuries and disease which may have occurred several decades ago. The current cost of these old claims is irrelevant in examining the current cost pressures facing the scheme today and which must be paid for by employers through their premiums—and, of course, in this scheme the vast majority of employers are government departments, therefore we could read it as the taxpayer bearing the cost. The premium rate which reflects the lifetime costs of injuries and disease that are occurring now is a much better indicator of current and future cost pressures facing the Comcare scheme.

Comcare’s average premium rate has increased by nearly 60 per cent since 2002-03. Whilst Comcare’s premium rate is somewhat lower than comparable schemes, it has been rising at a time when a number of other jurisdictions have been reducing their premiums. Even though the overall number of claims accepted by Comcare has been falling, there has been a significant increase in recent years in the number of high-cost claims—especially those arising from psychological injuries, often known as mental stress.

The number of accepted disease claims, which are also high-cost claims, has been increasing. For example, mental stress claims accounted for 7.6 per cent of the total number of claims in 2005-06 but now represent nearly a third of the total cost of all claims accepted by the scheme. The cost of accepted disease claims has risen from around $47 million in 2001-02 to nearly $105 million in 2005-06. Many of these claims have occurred in circumstances where work has made only a very small contribution to the injury or disease, contrary to the original intention of the act. The main amendments contained in the bill seek to address these issues by ensuring that only the costs associated with work related injuries are met by Comcare and funded by premium payers and, ultimately, the taxpayer.

The bill will amend the definition of disease and injury, which are of central importance to this legislation, 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, 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.

Opposition senators, not surprisingly, have tried to beat up this issue. In fact, the amendment restores the original legislative intent. 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 in the contraction of the disease. However, since 1990, 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. Although more recent decisions of the Federal Court, particularly the full court’s decision in the case of Canute—I like this bit that has been provided to me; somebody knows their history—have stemmed the tide, the fact remains that there is conflicting judicial authority on this point. Moreover, this amendment is consistent with every other workers compensation scheme administrator other than that of the Northern Territory.

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 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. Again, opposition senators have suggested that the reasonableness requirement will enable employers to bully and harass employees under the guise of reasonable managerial or administrative action. As Senator Murray correctly anticipated, the government’s view is that the reasonableness requirement is not novel. It is a feature of comparable legislation in most jurisdictions around the country and the term is used in many other laws for the simple reason that there often is not a better alternative. It should be remembered as well that the amendment will limit the potential for abuse of the scheme by employees dissatisfied with management decisions.

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. Specifically, the amendments will 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. Interestingly, the Victorian, South Australian, Tasmanian and Western Australian workers compensation schemes do not allow journey claims. So I am sure some of the matters that were addressed by opposition senators will also have been addressed to their state Labor governments. I suggest that they have not been.

These amendments are also consistent with the recommendations of the Productivity Commission report that has been referred to. The government amendments have been adequately outlined by my colleague Senator Barnett. The bill will amend the method for calculating the incapacity benefits for retirees 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 Military Rehabilitation and Compensation Act 2004. Finally, the bill makes a number of minor technical amendments to the legislation. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.