Business braces for compensation change

WITH the State Government’s industrial relations changes to become law this month the business community expects imminent action with regard to another pre-election platform – workers’ compensation.

Among the changes industry groups expect from Consumer and Employment Protection Minister John Kobelke is a re-opening of the ‘second gateway’, which could lead to increased premiums

A report by Robert Guthrie commissioned last year by the minister outlined key changes for reform, but according to Chamber of Commerce and Industry WA director of Health, Safety and Workers’ Compensation, Anne Bellamy, the reforms will break an election promise and increase premiums by 31 per cent.

“There is no doubt that the minister will look for reform, but if they are based on the Guthrie Report it will mean nothing else than cost increases for employers,” Ms Bellamy said.

The Government’s direction statement on workers’ compensation says: “A Labor Government will open up greater access to common law for injured workers. This will be in a measured way and based on the cost savings derived from reform of the system to prevent it causing upward pressure on premium rates.”

A spokesperson for Mr Kobelke said the majority of feedback from the report was positive and the Government was currently assessing a package of measures and reform proposals based on Mr Guthrie’s recommendations and the subsequent public consultation. An announcement was expected in the near future.

The Guthrie Report suggests re-opening the second gateway, closed by the previous government, which will allow employees to seek damages at common law if they can show a loss of more than 50 per cent of their weekly earnings.

According to SGIO State manager Garry Moore, the closure of the second gateway by the Court Government in 1999 has reduced workers’ compensation premiums.

“Before 1999 there were two ways to claim at common law. The first was to show a 30 per cent or greater bodily disability. The second was by showing a future pecuniary loss of $100,000 or more,” Mr Moore said.

The 1999 changes removed the second gateway and replaced it with a provision for people incurring between 16 per cent and 30 per cent disability to pursue at common law, provided they elected to do so within six months of the incident.

“It has been effective in reducing common law claims and getting premiums down,” Mr Moore said.

The number of workers’ compensation claims has decreased by 23 per cent since 1999 and the latest Premium Rates Committee of Western Australia Actuarial Report outlines a further 6 per cent reduction for the 2002-2003 period.

Mr Moore said premium rates currently sat at 2.46 per cent, a figure that has dropped substantially since 1999.

“There is a potential for it to drop further but if you don’t continue to hone in cost pressures the costs rise again. It’s hard to imagine that they would get lower than that,” Mr Moore said.

Workcover executive director Harry Neesham said the system has been very stable for the past two years.

Ms Bellamy said there could be greater efficiencies in the system, particularly with the way the insurance system was administered and the medical and associated costs aspect to workers’ compensation claims.

Both of these issues were independently reviewed by the previous government and have not been implemented.

Mr Moore said a key area for reduction would be injury management.

“Trying to get workers back as soon as possible is an important aspect. If we can reduce the length of time workers are off work we can reduce the cost of the system and reduce the cost of premiums,” he said.

“One problem we found is the average delay from reporting a claim.”

It’s a view shared by Mr Kobelke, who raised the issue in the Workers’ Compensation and Rehabilitation Commission Annual Report 2000-2001.

“There is, however, continuing cause for concern in the persistence of long duration (60 days or greater) claims as a major cost factor in the workers’ compensation scheme. While the overall number of claims is reducing, the number of long-term claims is increasing. Latest figures available show that while long term duration claims represent just over 15 per cent, they account for almost 76 per cent of the cost of claims,” the report says.

Ms Bellamy said if the package was close to recommendations made by the Guthrie Report, CCI WA would have concerns.