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Workers’ compo conundrum

WORKERS’ compensation is such a minefield that it rarely raises a wrinkle on the public’s brow until there is a major catastrophe.

We saw that last decade, when legislation introduced by the Court Government in 1993 proved to be a debacle – fuelling a cost blow-out of around $160 million, well beyond the expectations of those behind the change.

The result was huge cost to industry and the spectre of future, litigation-driven blow-outs hung heavily for a long time.

To the Court Government’s credit it found a solution in 1999. It is worth noting that the necessary changes were supported by the then Labor Opposition and the union movement was generally accepting as well.

The system we have is clearly not perfect but has worked well for several years – which is important because most people involved reckon it takes a few years for flaws to be found.

Which brings us to 2004, and the plans of the current State Government to make some fairly big changes to the system.

Consumer and Employment Protection Minister John Kobelke announced last week that draft legislation was available for a brief final consultation before the bill is put to parliament in March.

While not entirely sweeping, the proposed changes will prove to be yet another cost for industry, adding an estimated $100 million (in the first year) on to the existing cost of around $520 million a year.

And while that cost is a one-off due to the retrospective nature of the legislation, it will still amount to around $50 million extra a year, bumping current premiums from an average of 2.4 per cent of payroll to more than 2.6 per cent.

That’s if the Government has got the legislation right. As I have already suggested, no-one really knows until the lawyers have had a few years to test the system and expose any weaknesses there might be.

The insurance industry is generally accepting of the changes but admits it can’t really say for sure until they work through the system.

Insurance Council of Australia regional manager WA and Northern Territory, Daryl Cameron, said the industry welcomed the new legislation, most particularly a shift in line with other States to a definition of impairment rather than the current concept of disability.

“You should be able to send the same injured person to 10 different doctors and get the same answer,” Mr Cameron said regarding the impairment definition.

The industry is hoping that this big change will net off against the other two significant measures the legislation is set to introduce – the increase in statutory benefits for those involved in workplace injuries and the admittance of lawyers into the dispute resolution system.

The first change doubles the time period for the minimum statutory benefit to eight weeks before an automatic reduction known as step-down cuts in.

It also raises the cap for those benefits to $1,362 a week from $1,021. This area is where business, such as the WA Chamber of Commerce and Industry, feels that the incentives to return to work have been reduced.

Along with the fear that bludging will take place is the concern that costs will spiral because workers will now be allowed legal representation at conciliation and arbitration hearings.

In addition, the workers will have twice as long as the previous six months to decide whether they wish to pursue a civil action in the courts.

Clearly, that is another way that may increase legal involvement and costs.

Risk taker that it is, the insurance industry won’t wear all the increased costs, some of which will be immediate and, even worse, retrospectively enacted because the State Government appears to believe that insurers have done a little too well in recent times.

Mr Cameron begs to differ, pointing out that premiums are largely below those listed by the Government’s Premium Rates Committee due to the competitive nature of the industry.

Understandably, CCI is a little less appreciative of changes because business can’t pass on the cost as insurers can.

CCI chief executive Lyndon Rowe rightly points out that there is no public clamour for these changes, which add yet another cost to business at a time when Geoff Gallop’s Government has been trying to promote its business-friendly attitude.

“As well as blowing out the costs, the more generous weekly benefits and the longer election period for common law actions would encourage a compensation mentality among workers, rather than that of an early return to work – a central principle that the Government itself is promoting,” Mr Rowe said in statement.

It never rains ...

JUST when I was burying myself in John Kobelke’s workers’ compensation legislation, along comes a letter from the very same minister.

The letter, published below, takes a pot shot at a report of ours about occupational health and safety legislation.

Well, apart from being wrong about naming the lawyers involved, which we did, both the said lawyers stand by facts of the story we published.

The point is that there is no contributing (if you want to nit-pick, the legal word is “contributory”) negligence when an employer is charged under this act. That means there is no apportionment of blame, as exists in areas such as claims in motor vehicle accidents.

Yes, there is a separate section that allows employees to be charged for their own actions – but it seems that has hardly ever been used.

 

“You should be able to send the same injured person to 10 different doctors and get the same answer.”

- Daryl Cameron

 

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