Bridget McKenzie (Victoria, National Party) Share this | Hansard source

As Chair of the Senate Education and Employment Legislation Committee, I too rise to speak to the Seafarers Rehabilitation and Compensation and Other Legislation Amendment Bill 2015. The Federal Court's decision in Sampson Maritime Pty Ltd and Aucote—know as the Aucote decision—has resulted in a profound shift in workers compensation and work health and safety arrangements in the Australian maritime industry under the Seacare workers compensation scheme. This bill protects the viability of the Commonwealth Seacare scheme by restoring certainty about the historical coverage of the scheme for all participants, including seafarers and their representatives, employers, insurers and regulators. Importantly, this bill seeks to ensure that all previous claims lodged under the scheme between 1993 and now continue to be valid. These claims are currently at risk as a result of the court decision.

Successive governments at both Commonwealth and state and territory levels, maritime regulators, employers and seafarers have operated on the basis that the Seacare scheme generally applies to ships and units engaged in interstate and international trade or commerce. It was also widely understood that state and territory workers compensation and work health and safety laws apply to employees on ships engaged in intrastate voyages. The court's decision has effectively expanded coverage of the Seacare scheme to intrastate voyages. Before the Aucote decision, the Seacare scheme was understood to apply to around 330 ships. Following the decision, the Seacare scheme could cover as many as 11,000 ships and maybe more, with potentially retrospective effect going back to 1993. Whereas the Commonwealth was responsible for regulating workers compensation and work health and safety for a small proportion of the maritime industry before the decision, it now has the responsibility for the vast majority of the industry. This responsibility cannot be supported from existing resources as the scheme and its funding were never designed to accommodate such costs. It represents a massive cost shift from the states to the Commonwealth and could require the recouping of insurance fees and moneys from formerly injured workers going back to 1993.

For historical purposes, the bill seeks to clarify the distinction between Commonwealth and state coverage of workers compensation and work health and safety for seafarers that was understood to exist since the commencement of the Seacare scheme. To effectively achieve this, the bill applies retrospectively to any injury, loss or damage suffered by any employee on or after the commencement of the Seafarers Rehabilitation and Compensation Act in 1993. Critically, this will ensure that past claims will not be distributed. This approach ensures that there is certainty as to what a seafarer's appropriate workers compensation rights are and have been. This bill does not seek to change pre-existing workers compensation entitlements and work health and safety protection for seafarers. This bill is about providing certainty regarding past actions for maritime industry employers and employees.

This bill will amend the Seafarers Rehabilitation and Compensation Act to address a recent Federal Court decision and expand the scope of the act from what it was understood to be, which could have had impact on historical claims under the scheme. To put this into perspective, as I mentioned, the scheme was never actually designed to cover the number of ships that this court decision obliges it to do, potentially expanding it to 11,000 ships. We do not have those resources. The states are very quick and comfortable to cost shift towards the Commonwealth, and it has been quite productive, I think, for both the opposition and the government to come to a position where we put the Commonwealth's future and the Commonwealth's perspective first. I congratulate all involved in coming up with that outcome. I also want to thank the unions, the employer groups and the Seacare authority for working with the government to reach a consensus approach on this bill. As you know, amendments to the bill are being circulated in the chamber.

The Seacare scheme is, effectively, relatively confined in scope, only applying to employers and employees in the defined part of the broader maritime industry. The Seacare scheme has been commonly understood to apply to ships and units engaged in interstate or international trade. Ships and units engaged in intrastate trade—that is, those operating solely or primarily within the coastal waters of a single state—were understood to be covered by state workers compensation and work health and safety laws. This approach to coverage was consistent with the coverage of the Seamen's Compensation Act 1911, which established Australia's first national workers compensation scheme for seafarers. Based on this understanding, the Seacare scheme applied to approximately 33 employers and 7,516 employees, or 4,721 full-time equivalent employees, in 2013-14—about 20 per cent of the Australian maritime industry. Submissions were received to the review of the Seacare scheme, and that review was undertaken by Mr Robin Stewart-Crompton and published in 2013. The submissions that were received provided evidence that industry participants had a narrow view of the coverage of the scheme.

I want to turn briefly to the decision which precipitated the construction of this bill. In the Aucote decision an alternative broad interpretation of the coverage provision of the Seacare scheme was upheld. The Full Court of the Federal Court held that the Seacare scheme applies to all seafarers employed by a trading, financial or foreign corporation on a prescribed ship and to operators of prescribed ships that are trading financial or foreign corporations.

The majority of employers and operators within the maritime industry are either trading or foreign corporations and, as such, the practical consequence of this broad interpretation is that the Seacare scheme extends to most of the Australian maritime industry, including ships and units that primarily operate within a single state. It was understood that these ships and units were covered by state workers' compensation and work health and safety laws. It is estimated that the Aucote decision's broad view of coverage could mean that the Seacare scheme would apply to 11,000 vessels and approximately 20,000 employees. As a short-term measure, the Seacare Authority has granted a broad exemption, under section 20A of the Seafarers Act, aimed at addressing the expanded coverage of the Seacare scheme resulting from the Aucote decision.

As stated by the Seacare Authority on its website, this exemption is intended as a transitional measure that aims to provide certainty to industry participants on their workers' compensation arrangements while the parliament considers the bill. Exemptions granted under section 20A have only a prospective application and there is no ability for the Seacare Authority to exempt ships from coverage of the Occupational Health and Safety (Maritime Industry) Act. We have also issued declarations under the Seafarers Act and Occupational Health and Safety (Maritime Industry) Act.

The government acknowledges that there are longstanding issues regarding the coverage of the Seacare scheme; however, these issues concern the application of the Navigation Act 1912 as it relates to the coverage under the Occupational Health and Safety (Maritime Industry) Act and not to the coverage matter dealt with by the Federal Court. The bill does not seek to address all issues with the coverage of the Seacare scheme. It only seeks to address issues raised by the Aucote decision.

It is important to consider the impact on employers and operators. Approximately 12,000 seafarers who were previously understood to have been covered by state workers' compensation and work health and safety laws are, in light of the Aucote decision, covered by the Seacare scheme. Under the Seafarers Act, employers are required to maintain an insurance policy to cover their liabilities under the act. Failure to comply with this obligation is a criminal offence of strict liability. Employers of seafarers on interstate voyages would have been acting in good faith on the basis that they were only covered by state workers' compensation laws and were fulfilling obligations under those laws.

As a consequence, they would have been—and most likely still are—maintaining insurance policies, whether private or from a relevant state-government authority under state schemes. In addition to expenses incurred in relation to moving between workers' compensation schemes, employers will also incur regulatory costs adjusting to rights and responsibilities under the OHS (MI) Act. We have expanded the coverage of the Seacare scheme's impact on the regulation of safety. Comcare and the AMSA are not funded or resourced to immediately take on the role of administering a substantially larger Seacare scheme—from approximately 4½ thousand seafarers to potentially 20,000. The resources simply are not there.

The government supports the bill—once amendments are circulated. It is important to note, for historical purposes, the bill restores the coverage of the Seacare scheme to how it is understood to have been prior to the Aucote decision. Having conducted an inquiry on the papers and having brought that before the chamber, I congratulate the unions, employers, employees and the opposition for coming to a suitable outcome that will ensure the Commonwealth is not overly exposed in this area. I commend the bill.