Zed Seselja (ACT, Liberal Party) Share this | Hansard source

I am pleased to speak to the Safety, Rehabilitation and Compensation Amendment (Exit Arrangements) Bill 2015. This bill is a technical one dealing with how Comcare is funded when premium payers under the scheme exit. The ACT government announced in February this year that it is consulting its workforce on plans to leave the Comcare scheme. The ACT government has been a premium payer and the exit of a body of this size would have a detrimental impact on Comcare's capacity to continue providing cover for workers under the scheme. It is vital we continue to ensure Comcare has the resources to deal with the claims of employees under the scheme and is not held hostage by the whims of various premium-paying bodies.

The bill proposes to make amendments to the Safety, Rehabilitation and Compensation Act 1988 to provide for financial and other arrangements for a Commonwealth authority to exit the Comcare scheme. The framework will enable Comcare to determine and collect 'exit contributions' from former Commonwealth authorities and successors of former Commonwealth authorities. This will ensure that an employer does not leave the Comcare scheme without contributing an appropriate amount to cover any current or prospective liabilities that are not funded by premiums the employer has paid before exit. It will also ensure that employees injured before an employer leaves the scheme continue to be supported by an appropriate rehabilitation authority, which is very important. It will enable Comcare to determine and collect ongoing regulatory contributions from exited employers or successor bodies. It will 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. It will allow Comcare to agree to instalments of an exit contribution being paid over a period of up to seven years after the day on which the determination is made to allow for run-off liability estimates. It will provide for Comcare to refund all or part of an exit contribution if an assessment reveals that the amount of available scheme funds attributable to an exited employer exceeds Comcare's liabilities; determinations of a refund may only be made within the seven-year period immediately after an employer exits the scheme. It will provide 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 available scheme funds that is attributable to the exited employer exceeds Comcare's liabilities.

This is a very straightforward bill that simply ensures the ongoing viability of Comcare whenever any large premium payer or licensee decides to leave the Comcare scheme. It is important to have such arrangements in place, especially given that the ACT Labor government have indicated that they are looking at a potential departure from the scheme, claiming it is burdensome for claimants and for their employers. Employees injured before a Commonwealth authority leaves the Comcare scheme 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.

The bill also amends 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 section 90C of the act. These amendments protect injured employees who remain in the Comcare scheme and ensure the future financial viability of Comcare.

Since 2013-14, Comcare has been progressively restoring the funding position of the scheme. The bill will support existing measures put in place by Comcare to restore funds to adequate levels to meet estimated liabilities. 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 will protect premium payers who remain in the scheme from having to cover these liabilities with larger premiums.

The Safety Rehabilitation and Compensation Legislation Amendment Bill 2014 passed the House of Representative on 26 November 2014 and is currently before the Senate. That bill is focused on expanding the coverage of the Comcare scheme for national employers as self-insurers. The bill excludes coverage for recess breaks where a person is injured during an ordinary recess break away from their employer's premises unless the injury arises from employment. The bill also excludes an injury arising from serious and wilful misconduct where it results in death or serious and permanent impairment.

The Safety, Rehabilitation and Compensation Legislation Amendment (Exit Arrangements) Bill 2015 is not in any way related to these reforms. That said, given Labor's inability to do any of the hard work of meaningful reform in this space, I do want to briefly touch on the other bills that are currently being considered. The Comcare scheme generally operates effectively. It achieves relatively high safety and return-to-work outcomes, and it is almost the only scheme in Australia to provide income replacement to retirement age and medical support for life. The legislation underpinning the scheme has not changed much since it was introduced 27 years ago.

Workplaces and working conditions, healthcare and rehabilitation practices, technology and social behaviour and expectations have all changed in that time. Various court decisions have also affected the way the act is applied in practice. To keep pace with the modernisation of work and health practices, the scheme needs to be updated. There are also signs that the scheme is coming under pressure. For example, whilst Comcare's return-to-work rates are better than average, they are falling; some medical treatments are failing to make people better, in the long term; and employers face rising premiums and other costs.

The proposed amendments aim to do the following things: improve return-to-work outcomes for injured workers; put the focus on early intervention and health outcomes of injured workers and improve the operation of the system by excluding injuries sustained in non-work activities outside work; exclude secondary psychological injuries; and remove payment for non-traditional treatments. That package of reform, which will be considered by this place 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 is able to continue. Further, in an unprecedented submission to the Senate committee, that package of reform has been supported by departmental secretaries and agency heads, it has been supported by licensees and it has broad support in the community.

The Education and Employment Legislation Committee examined this and the associated Comcare legislation in the first months of 2015. Submissions from stakeholders, which were picked up by the opposition in its additional comments, also related to a different bill—falsities that have been repeated by the opposition that this bill will impact on state and territory workers' compensation schemes. This bill has no impact on states and territories as it only applies to Commonwealth authorities if they exit the Comcare scheme, and it has no impact on premium payers under the state schemes.

Concerns have been raised, however, about the impact of another bill currently before the parliament—the Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014—on the viability of state and territory work health and safety and workers' compensation schemes due to the potential exodus of employers, particularly large employers, from those schemes. The concern is that if large employers with better safety records move to the Comcare scheme, premium rates will increase for employers remaining in the state and territory schemes.

The 2004 Productivity Commission Inquiry into National Workers' Compensation and Occupational Health and Safety Frameworks specifically noted that the concern that exiting premium payers from state schemes would lead to volatility in premium rates was not supported by the evidence. Actuarial assessments commissioned by the 2004 Productivity Commission inquiry and for the 2008 review of self-insurance arrangements under the Comcare scheme—the Comcare review—indicated that the impact of the exit of corporations from state based schemes on those schemes or remaining employers would be minimal.

Taylor Fry—in their actuarial report to inform the 2008 Comcare review—concluded that the financial impacts of exits to the Comcare scheme from the other Australian jurisdictions had been insignificant. Actuarial assessments commissioned by the Productivity Commission concluded: 'The larger the employer, the closer the premium is to the true cost of claims and expenses, such that the exit of such large employers would be relatively neutral to the state and territory schemes.' The percentage of exiting employers from state schemes would represent less than 10 per cent of scheme revenues and probably less than five per cent of scheme revenues.

In the government's assessment, the circumstances have not changed since 2004 and the impact will remain minimal. I call on those opposite to focus on the bill at hand and do the right thing and provide certainty for workers under the Comcare scheme. 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 are supported.

Any senator voting against this bill is voting against ensuring that injured workers have a safety net should their employer leave the scheme. I therefore commend this bill to the Senate.