Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

When I was required to end my earlier contribution on the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006, I was just entering a discussion about some problems that had been identified within the Australian defence forces as to blame shifting, lack of responsibility, and forum shopping by a range of people as to their choice of venue for resolution of workers compensation and associated legal problems. Fortunately, within defence, this practice seems to be changing and that has become apparent as the new occupational health and safety regime becomes operational.

Shifting costs to others is another theme that is a feature of overlapping jurisdictions. The question becomes one of where the costs ought to fall. Too often it is with the taxpayer in publicly funded schemes. The clearest example of this is with insurance companies. They will naturally try to avoid liability through journey-to-work provisions, especially with third-party accident claims. Despite offsetting rules aimed at defeating double compensation, this game continues to be played. Indeed it is endemic to the system, as the system provides an incentive to do so to reduce costs. Passing costs on to others can also be done by pushing injured people into the public health system. In such instances, the taxpayer again foots the bill.

On the employee side it must be conceded that there are attitudinal problems. Workers compensation is an element at the heart of employment conditions, and unfortunately it is sometimes an opportunity for exploitation. Personal gain occasionally emerges. Social security fraud and fraud against insurance companies is a constant and it requires ongoing attention.

There is a final theme emerging with this type of legislation: it is the continuing and eternal battle—between those seeking benefit and those assessing the benefit—over the written law and its particular interpretation from time to time. Any legislation providing benefits, including compensation, faces changing circumstances beyond those current at the time the original legislation was passed.

The trend in the view of most administrators and governments is that tribunals apply the law and, increasingly, interpret the law. Incrementally, the law becomes more generous, often departing substantially from its original intent. That might come down to a definition of words which can be contested before courts. That can be messy and expensive, but it seems to be preferable to running the political gauntlet of amending legislation.

Each of these themes I have just identified pervades this bill in its entirety. Whether the act needs amending legislation at this time really is a moot point, but many of these problems are indeed longstanding. The view of the Law Council was that the problems had to be resolved and had to be resolved now. Perhaps in that context the government has an ulterior motive in reducing the value of employment conditions. Certainly, a number of my Labor colleagues on the Senate committee inquiring into the bill thought so, which is supported by their dissenting report, and it was a prevalent view in a range of submissions from particular trade unions.

Motives aside, perhaps there comes a time when constant recourse and a procession to the courts is pointless. That is where we are today with this bill. In the judgement of the Safety, Rehabilitation and Compensation Commission, which advises the government and the Department of Employment and Workplace Relations, that time has now come.

Let me turn to some of the provisions of the bill. First, may I commend the government on the most minor point—that is, the increase in funeral benefits to $9,000. It seems that this is a matter which has been poorly dealt with in the past. In fact, it makes the provisions of the Veterans’ Entitlement Act look positively stingy, although that act was amended within the last 24 months.

Next I would like to make mention of the definitional changes to the terms ‘disease’ and ‘injury’. The prime motive in tightening up the definitions of ‘injury’ and ‘illness’ are clear from Comcare’s evidence to the Senate committee—that is, the increasing difficulty in dealing with the emerging mental health problems in the workplace. The key one there is stress. We know the increased number of claims and costs in the past decade is due to this phenomenon. At the heart of this difficulty is determining whether the disability is work related or not. As usual, the worst-case scenario was chosen. In this case, bipolar disorder was nominated. While no doubt difficult, it is hardly typical. It is also unclear whether the cost should be borne within the health system, as opposed to being attributed to the workplace. I suggest it could be both, but the system is not so designed. What we end up with is this tug of war as to who is responsible: who is to blame; where does the fault lie? I suggest it might be some time before we know how these amendments take effect. If workers compensation is to carry reduced social responsibility for the care of workers, there are likely to be serious consequences for those workers as a result of the implementation of this bill.

Associated with this proposed change is a redefinition of management-induced stress. This amendment makes it harder for stress claims to be accepted where the cause is alleged to be management action of a disciplinary or counselling nature. I do not really question this scenario; I do, however, question its frequency. There may well be circumstances where this arises and where management action is unacceptable and over the top. Whether this amendment is a sledgehammer to crack a nut, we will have to wait and see. I do, though, share the unions’ concerns that a definition such as ‘reasonable management action’ could be abused if so broadly defined, but I expect the courts and tribunals will tell us if that is the case.

Finally, I refer to the amendments which propose to amend the journey-to-work rule. That has so many variations in Australian practice. In most jurisdictions, there is clarity about what constitutes an acceptable injury claim incurred through a journey to work, but the point is that there are many different jurisdictions. It would be very useful in this modern age to have some degree of consistency. This amendment seems to move the Commonwealth definition closer to common practice in some of the state jurisdictions, but incompatibilities do remain. As a matter of principle, as I have indicated, I would prefer national uniformity. In every case I would prefer a codified, no-fault approach, free of expensive litigation.

That is just another concern I have about the complete lack of vision and policy content in this bill. It simply does not seem to be taking us anywhere, except on a chase for savings, however worthy that might be—and indeed, based on my own experience in this field, that chase for savings may well turn out to be illusory. So I am not too sure whether this set of amendments takes us very far. The opposition’s dissenting report makes that point quite clearly. The same points might be made about absence from work on entitled breaks. We will face a plethora of litigation over the most minute of details, again with a marginal impact on costs. Labor’s dissenting report also notes that these restrictions take the Commonwealth legislation further away from what is now fairly uniform practice across the states, which is further fuel to the suspicion that the legislation is about reducing employee entitlements. It is not about better workers compensation policy.

The legislation also makes provision for a number of amendments. Labor’s dissenting report deals with the objections to those changes so I do not propose to cover them in detail. But the amendments are incomplete, it must be said in passing. In conclusion, this is a disappointing piece of legislation. It is a stopgap measure that fails to advance any long-term policy for workers compensation. The pity is that we will have to wait for another decade of action in the AAT and the courts before we know.

Kate Lundy (ACT, Australian Labor Party, Shadow Minister for Local Government) Share this | Link to this | Hansard source

Along with my colleagues who have done so, I rise to oppose the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006. As my colleagues have already told the Senate, Labor is opposing this legislation because, like all other government legislation relating to industrial relations, this amendment is not in the interests of working Australians. It is somewhat fitting that, on the first anniversary of the government’s extreme Work Choices legislation, the government is again seeking to use its majority in the Senate to push through legislation that will strip Australian workers of their rights. This time, it is workers compensation entitlements that are under attack.

The principal aim of this legislation is to minimise the cost of work related injury and disease for Comcare. It is a cost-cutting exercise. There is no rational explanation for introducing amendments that will further limit workers compensation entitlements. It represents a blatant cost-shifting exercise that shifts costs from Comcare to private insurance and healthcare companies. I have to say, it will also result in a direct cost to workers themselves. It is unfair and unnecessary.

I am particularly concerned about the effect this legislation has on my constituents in the ACT, a large percentage of whom are Commonwealth employees and, indeed, ACT Public Service employees—thus, they will be affected directly by these amendments. I have already received a number of specific complaints from members of the ACT community about how this bill will affect their daily lives, not just today as they listened to this debate but, indeed, previously as they were alerted to the implications of this appalling piece of legislation. A constituent wrote to me regarding this matter, and I would like to read their concern to outline the sorts of issues that have been raised. I will not mention the workplace that this particular constituent mentioned. The letter reads:

I live in suburban Campbell ACT and cycle to civic each day to work. I enjoy my morning ride as it doesn’t take that long and is frankly easier than driving, dealing with the traffic and paying for parking. I’m also contributing towards my own healthy living with this extra exercise and not creating ... greenhouse burden.

When I started my job—

at a Commonwealth agency—

14 months ago I felt safe in cycling to work in the knowledge that I would have cover if I was involved in an accident. Indeed despite being a very aware and defensive cyclist, in that time I’ve had two near misses.

I think that little story demonstrates a couple of things. First of all, I think everyone would agree that it is terrific to encourage people to cycle to work, but I also think we would all acknowledge that it does come with risks. What we are dealing with today is a piece of legislation that would make the risk to the health of people like this—who are trying to do the right thing by looking after their health and getting to work without burning up more petrol—probably unacceptable or it would force them to take out additional private insurance. This bill will act as a disincentive to many public sector employees to continue to cycle to and from work every day, despite other policy areas at state, territory and federal government level encouraging such practice. We all think that this is a good idea.

Pedal Power, a local cycling group, raised some significant concerns about this legislation in its submission to the Senate inquiry into the bill, and I would like to go through some of that. Over the past six years, Pedal Power has run a Ride to Work program to encourage more Canberrans to ride to work more often. As Pedal Power pointed out in their submission, encouraging people to increase their fitness by cycling to work has many tangible benefits to the government in the form of reduced expenditure on hospitals, doctors and medicines. Just to follow through with this point, it is counterintuitive to put in place legislation that acts as an incredibly powerful disincentive to these people to take this particular way to get to work, not least because risk is involved.

That is just one perspective. Of course, the vast majority of people in Canberra still drive and a certain percentage use the public transport system. They will all be affected by this legislation. What we know about this legislation is that, for anyone who is injured on their way to work, despite traditionally always having cover through their workplace, that cover will no longer be there. The vulnerability it creates for many workers is simply unacceptable.

My Senate colleague in the Liberal Party and also from the ACT, Senator Humphries, has met with constituents about this bill. Those constituents have had the opportunity to raise with him some of the issues that I have raised today, so I am pretty keen to see what Senator Humphries’ position is on this, given the disproportionate impact the legislation will have on the residents of Canberra, a high proportion of whom work for the Commonwealth or the ACT Public Service. I will be very interested to see how seriously he takes these concerns and whether he has anything to say on this bill.

Unlike the Howard government, a Labor government will make genuine improvements in the area of occupational health and safety across Australian workplaces, and appropriate compensation is an essential part of that. I would like to add that it will not just affect public servants. I have certainly heard of a couple of building and construction companies who are going to take advantage of the opportunity to opt in to Comcare as their insurer when working on Commonwealth projects. That represents such a diminution of the cover for building and construction workers, who already have a highly risky workplace because of the nature of the hazards across the physical grades. They too will now be, I guess, roped in under this legislation. I know that building and construction workers who work in the private sector are gravely fearful about the negative impact that this will have on them.

What remains to be seen is the Howard government’s real motivation behind this bill. It has historically been the case that we have seen, through the evolution of occupational health and safety policy in this country, the overriding objective being the prevention of workplace injury and illness. This has been a principle that has historically underpinned state and federal legislation in this area. However, we are of the view that the government’s objective with this bill departs from that longstanding approach. Instead, its principal objective is the reduction of cost of the Comcare scheme by narrowing the eligibility criteria for compensation under the scheme. At a philosophical level, I think that is just disgusting. Occupational health and safety has fared poorly under the Howard government and this is a firm example of the lengths that this government is going to to undermine the principles of providing a safe and healthy place to work.

It was always going to be the case, as they bashed up unions and removed unions from workplaces, that occupational health and safety would suffer. My personal experience is that without a strong union in the workplace it is very difficult to maintain reasonable standards for occupational health and safety. This is particularly so for industries like building and construction—where I have worked as an asbestos removalist—and it is even certainly true for the white-collar workplaces that you would expect to find in the Commonwealth Public Service.

Because I have had that experience and worked in occupational health and safety, I think it is quite reasonable to make the observation that, over the last 11 years, this government has systematically wound back all the principles that underpin the quite reasonable and common-sense notion that employers have a duty of care to provide a safe and healthy workplace. Indeed, I believe that is a human right. I do not accept for a minute that journey claims, and the issue of travelling to and from work, should be exempt from that. Employees are required to attend at work and they need cover from the time they leave their home.

With respect to occupational health and safety generally, I have seen first hand, here in the ACT, what happens when pressure is put on to remove unions from the workplace. I have seen what happens when union delegates are intimidated by their employers into not making complaints about health and safety. I will have some more to say about that later in the week. But today I want to focus on the fact that this is another substantive ripping away of the rights of working people in relation to their ability to claim compensation for injuries sustained on their way to and from work—and during lunchbreaks, if they are off the premises.

This dry, cost-cutting approach, this abandoning of the principle of people’s right to be able to get to and from work in one piece and have some cover, stands as all the evidence we need that the Howard government will never be the friend of the working person in this country and certainly never the friend of Commonwealth and ACT public servants.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I stand today to support the Safety, Rehabilitation and Compensation and Other Legislation Amendment Bill 2006 and the subsequent amendments that have been introduced into this chamber. I want to speak to those and also respond to some of the allegations that have been made by the Labor senators about the motivations of our government for this legislation. They accuse us of not being the friend of Australian working men and women. In fact, the exact opposite is true.

This is the anniversary of the birthday of Work Choices and we have seen that deliver—together with the strong economy, and the legislation and policies of the Howard government that support a strong economy—the creation of over 263,000 new jobs in the last 12 months. We have seen a 1.5 per cent increase in real wages in the last 12 months, not to mention the 19 per cent increase in real wages for Australian working men and women since the Howard government has been in office. You now have over 10 million Australians in the workforce. These are all attributes that really should be applauded. And the members of the Labor Party on the other side, instead of throwing brickbats, accusations and innuendo with respect to the false and negative motivations for this legislation, should think again. The legislation is driven by this government’s policy of continual improvement—

Kate Lundy (ACT, Australian Labor Party, Shadow Minister for Local Government) Share this | Link to this | Hansard source

Continual ripping off!

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Lundy, you say it is a ‘continual ripping off’, but that is exactly what it is not. The only party in this Senate chamber that wants to rip off or rip up is the Labor Party. They have a plan to rip up AWAs. That is the plan you have.

Kate Lundy (ACT, Australian Labor Party, Shadow Minister for Local Government) Share this | Link to this | Hansard source

And we’re proud of it!

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Yes, you’re proud of it, Senator Lundy. You want to rip up AWAs—

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

Order! Senator Barnett, you will address your remarks through the chair. Senator Lundy, I ask you to remain silent.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President; I am very happy to address my remarks through the chair.

We have seen well over one million AWAs signed since 1997 when they came into being. And in my home state of Tasmania, for example, those on AWAs are earning 48 per cent more than those on award conditions. So there is only one party that wants to cut wages in this country, and that is the Labor Party. There is only one party that wants to remove choice and dud small business by reintroducing the unfair dismissal laws, and that is the Labor Party.

We have had, I think, seven speakers from the other side now get up and wax lyrical with respect to the motivations of the Howard government for this legislation and for the Work Choices legislation which has delivered so much. Remember that the Labor Party, with the unions, said that Work Choices would cut wages and lower the number of jobs available. That is exactly what they said. And what has happened? As I have said previously in this place, the government has delivered. The economy is stronger. You have a higher number of jobs and you have increased wages. Through you, Mr Acting Deputy President, to Senator Lundy: the facts are on the table, and, please, consider the facts before you speak in the chamber on these matters and attribute motivations to the government which are false—entirely false. And I would say that to all the senators from the other side who have spoken in this debate and attacked the government with respect to this bill.

We in the Howard government have a policy of continual improvement, and we respond to community concerns. We respond to reports like the Productivity Commission report of March 2004, which specifically recommended that coverage for journeys to and from work not be provided and, for recess breaks and work related events, should be restricted to those at workplaces and at employer sanctioned events. None of this has been said by the other side—not even acknowledged. Why would you not acknowledge it and then rebut it and say, ‘That is wrong; they said the wrong thing’?

The motivation behind this legislation is one of continual improvement. I want to speak a bit further to that. It is consistent with our policy of running a very strong economy and doing the best we can to ensure that working men and women have higher wages and more jobs and opportunities to be the best that they can be and to care for their kids and provide them with the best possible opportunities for their future.

I have happily taken some of the responses from the other side but I want to address the primary reasons for this amendment bill, which is to maintain the integrity of the Commonwealth workers compensation scheme and to facilitate the provision of benefits under the scheme.

With you, Mr Acting Deputy President Marshall, as deputy chair of the Senate Standing Committee on Employment, Workplace Relations and Education, under the chairmanship of Senator Judith Troeth, we considered this legislation at two hearings in Melbourne and one in Canberra. As a government senator, together with Senator Troeth and other government senators on that committee, I reported on and recommended support for the bill. There were some administrative and technical matters that needed to be considered and at times there were complex discussions and debate, but let us have a look at the fundamentals.

The scheme has come under pressure in recent years from increasing numbers of claims, longer average claim duration and higher claim costs. This is in part—and this was put to our committee by the department—as a result of court rulings that have expanded the scope of the scheme beyond what was initially intended by the previous government and agreed to by parliament. The main amendments contained in the bill seek to address those particular issues.

Two main definitions are amended in the bill. These are, firstly, the definition of disease and, secondly, the definition of injury. They are of central importance to the Safety, Rehabilitation and Compensation Act and they have been amended 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. Firstly, it 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.

When originally enacted—by the previous Labor government, I might say—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, in particular the full court’s decision in Canute v Comcare, have stemmed the tide, the fact remains that there is still conflicting judicial authority on this point. The amendment restores the original legislative intent. That is a key point.

The second point is that 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.

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, lunchbreaks during which an employee leaves the employer’s premises to go shopping.

At this point I will refer again to the Productivity Commission report of March 2004, National workers’ compensation and occupational health and safety frameworks. I will not go through it, but I alert the Senate to that report because it recommends change in accordance with the government’s policy and in accordance with the legislation before us in the Senate. This is something that has totally escaped the knowledge or understanding of the other side in their discussions and debate.

The fundamental, common-sense principle underlying the Productivity Commission’s recommendations was that employers should be held liable only for conduct that they are in a position to control. That is what the commission said. Employers cannot control circumstances associated with journeys to and from work or recess breaks taken away from the employer’s premises, and it is not appropriate for injuries sustained at these times to be covered by workers compensation—that is, the employer.

Again, the other side in this debate have not even mentioned—it has escaped my attention if they have—the positions of the various state governments around Australia with respect to their workers compensation schemes. You will recall, Mr Acting Deputy President, that at the hearings we had a matrix prepared for our committee which set out the positions of the various state Labor governments with respect to covering journey claims. This is referred to on page 6 of the Senate committee report, which states:

Half the states and territories cover journey claims within their workers compensation schemes, even though there is no obligation to provide such coverage.

We then saw which states provided the coverage and which did not. The compensation schemes of Victoria, Western Australia, South Australia and Tasmania do not cover travel to and from work; those of New South Wales, Queensland, the ACT and the Northern Territory do cover it. So in this chamber we cannot put to the Australian people that this is a one-off and that it is motivated by ideas of stripping away rights and entitlements when we are following through on a Productivity Commission report and we are consistent with many of the state and territory Labor governments.

If you have your views, and you are so fixed in your views, then I would like to know what those senators in this place from Victoria, Western Australia, South Australia and Tasmania have said to your state Labor governments about your positions and whether you debated this matter with them before you walked into this chamber and debated it with us. It is a little bit like the pot calling the kettle black. Some people would call it hypocrisy.

This government, as I said before, has a policy of continual improvement and a policy to listen. The government has listened and it has indicated that it will support certain amendments as a result of listening to the Senate committee inquiry—and I am sure you will be pleased to hear that, Mr Acting Deputy President Marshall—and reading the submissions that were put to that inquiry. We had 28 submissions put to the committee. I just want to flag the amendments now. They will ensure the continuation of workers compensation coverage for certain work related journeys—in particular, travel between an employee’s place of work, but not his or her residence, and a place of education or a place for the purposes of, or association with, treatment or rehabilitation connected with a work related injury.

The bill will amend the method for calculating retirees’ incapacity benefits to take account of changes in interest rates. The change in the interest rate provision would result in increased benefits payable to retirees. I know this is a matter that the good Acting Deputy President had a particular concern about, and I think that has been taken on board. The department responded to many of the questions put by Senator Marshall at the Canberra hearing, as I recall, and the government no doubt considered those matters together with the submissions that had been received and the views of the department and of others. It is a tricky area, and I certainly do not profess to be an expert in it, but I want to draw that to the Senate’s attention. I thank those who made submissions and also thank the government for listening and being willing to improve it even further.

In terms of the proposed amendments, 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, and a proposed amendment will restore coverage for journeys between work and these places. That is consistent with the theme that there is a connection to the work, so why would you not want to support such an approach? Amendment (2) would have the effect of extending the workers compensation coverage under the act to any injury sustained in the course of travelling between the employee’s place of work and a 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. Again, there has to be a connection: the employee, at the direction of the employer, undertaking such education or training and going to the particular facility or place to fulfil those requirements. So in a sense it continues our government’s support for employees engaged in ongoing learning and education.

Amendment (4) is also an important one. It will 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 particular place for a number of purposes, which I will outline. Firstly, the purpose is for obtaining a medical certificate for the purposes of the act. This came up during the course of our inquiry, there was some debate about it and there is clearly merit in that matter being covered. We certainly support that. The other purposes are: secondly, receiving medical treatment for a work related injury; thirdly, undergoing a rehabilitation program provided under the act; and, fourthly, 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. So, again, the state Labor governments have similar conditions in place, and our conditions under the Commonwealth are consistent.

I will conclude my remarks there and thank the Senate for its time. The government’s policy of continual improvement is being acted out in this chamber today. We have listened and we have acted. That is exactly what we are doing.

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