Committee Majority Report
Reference
1.1
On 26 November 2009, the Hon Julia Gillard MP, Minister for Employment
and Workplace Relations, introduced the Occupational Health and Safety and
Other Legislation Amendment Bill 2009 (the bill) in the House of
Representatives. On 30 November 2009, the Senate referred the provisions
of the bill to the Senate Standing Legislation Committee on Education,
Employment and Workplace Relations for report by 25 February 2010.
Conduct of the inquiry
1.2
Notice of the inquiry was posted on the committee's website and
advertised in The Australian newspaper, calling for submissions by 29
January 2010. The committee also directly contacted a number of interested
parties, organisations and individuals to notify them of the inquiry and to
invite submissions. Four submissions were received as listed in Appendix 1.
1.3
The committee conducted a public hearing in Canberra on 18 February 2010.
Witnesses who appeared before the committee are listed at Appendix 2. The
committee thanks those who assisted with the inquiry.
Purpose of the bill
1.4
The bill amends the Safety, Rehabilitation and Compensation Act 1988
(SRC Act) to:
- introduce time limits for claim determinations;
- reinstate workers' compensation coverage for injuries arising
from off-site recess breaks;
- allow for medical expenses to be paid where payment of other
compensation is suspended; and
- restore Comcare's access to the Consolidated Revenue Fund (CRF) to
pay compensation claims in respect of certain diseases with a long-latency period.[1]
1.5
The Department of Education, Employment and Workplace Relations (DEEWR) advised
that the measures proposed in the bill are designed to:
...improve the Comcare scheme by increasing benefits for
injured workers; strengthening the focus on rehabilitation and return to work;
and ensuring that long-latency disease claims are funded appropriately.[2]
1.6
The bill also amends the Occupational Health and Safety Act 1991 (OHS
Act) to provide that 'lifts' are interpreted as being within the definition of
'plant' for the purposes of the Act. In addition, it makes technical amendments
to the SRC Act, the OHS Act, the Occupational Health and Safety (Maritime
Industry) Act 1993 and the Seafarers Rehabilitation and Compensation Act
1992 to cater for new arrangements and terminology introduced by the Legislative
Instruments Act 2003.
Background to the bill
1.7
The SRC Act and the OHS Act set the framework for a workers'
compensation and OHS scheme within the Commonwealth's jurisdiction. Known as
Comcare, this scheme provides workers' compensation and occupational health and
safety arrangements for government employees and, since 1992, for the employees
of certain private corporations licensed to self-insure their workers'
compensation liabilities under the scheme.[3]
Self-insurance arrangements
1.8
Self-insurance under the SRC Act allows certain corporations to apply to
the Safety, Rehabilitation and Compensation Commission (SRCC) for a licence to
self-insure and/or manage their workers’ compensation responsibilities.[4]
Self-insurers under the Comcare scheme are subject to the OHS Act as amendments
to the OHS Act in 2007 extended Commonwealth OHS coverage to all self-insurers.
However, some differences in the coverage of the OHS and SRC Acts remain.[5]
1.9
There are currently 29 self-insurers under the Comcare scheme.[6]
Two are Commonwealth authorities, six are former Commonwealth authorities and
the rest are private sector corporations.[7]
The SRCC advised that access to the self-insurance arrangements is limited to:
...Commonwealth authorities, former Commonwealth authorities
and corporations in competition with a Commonwealth authority or a former
Commonwealth authority.[8]
1.10
Organisations that self-insure under Comcare must satisfy the SRCC that
they have in place the necessary health and safety management systems to meet
the standards and requirements set by the Commission. When outlining the mechanisms
to ensure compliance with regulatory obligations, among others, the Commission drew
attention to the unique requirement among regulators to report on the
performance of each self-insurer in its Annual Report.[9]
Review of self-insurance
arrangements
1.11
On 11 December 2007, the government announced a moratorium on
corporations joining the Comcare scheme and a review of the self-insurance
arrangements which provide for the entry of private sector corporations into
the Comcare scheme.[10]
1.12
On 23 January 2008, the Hon Julia Gillard MP, Minister for Employment
and Workplace Relations, announced the terms of reference for the review. The
purpose of the review was to ensure that the Comcare scheme has suitable OHS
and workers' compensation arrangements for self-insurers and their employees.
With the expansion of the types of industries covered by the Comcare scheme in
2006, the government was concerned to ensure that all employees covered under
the scheme are protected by appropriate OHS safeguards and workers'
compensation benefits. The review examined a range of issues including safety,
compensation, consultation, financial viability, access to the scheme and
governance arrangements.[11]
Issues raised
1.13
The review received 73 submissions. A number of issues were raised in
submissions to the review and during consultations. These included the
prerequisites for self-insurance licensing, the suitability of the OHS Act for
self-insurers, benefits offered by the scheme, Comcare's performance in OHS
enforcement and claims management practices.[12]
1.14
Some submissions to the review questioned the ability to allow some employers
to self‑insure under Comcare. Andersons Solicitors, for example, stated
that the Australian Lawyers Alliance (which facilitated their response) is
'fundamentally opposed' to self-insurance as an element of workers'
compensation schemes due to what it perceives as a conflict of interest between
the competing interests of an employer and an insurer. The ACTU also indicated
its in-principle opposition to self-insurance and explained that it did not
agree with allowing a group of employers to opt out of a system. It argued that
self-insurance should only be available in very limited circumstances as a
privilege due to superior performance and it should not be a right.[13]
1.15
The Law Society of NSW pointed out that the effect of allowing companies
to self-insure means the employer has effectively removed itself from the state
OH&S systems of regulation which generally impose a higher standard than
the OHS Act.[14]
The ACTU questioned the operational capacity of Comcare to ensure that
self-insurers provide safe workplaces. It argued that companies may join the
scheme to avoid the stricter investigation and enforcement regime, as well as
greater union involvement, in the states. [15]
1.16
Andersons Solicitors also questioned the cost effectiveness of the
arrangements:
Enormous infrastructure currently exists in all the states to
support state schemes, and rather than re-inventing the wheel through a
Commonwealth structure, at significant cost to stakeholders, it would be far
more logical and cost effective to genuinely resolve the common administration
issues in the state schemes and move towards harmonisation.[16]
1.17
The Transport Workers Union of Australia noted that 'there are
significant questions over whether Comcare has the capacity to prosecute
primary contractors for breaches engaged in by subcontractors whereas this is
possible under various state schemes'.[17]
1.18
The Law Council of Australia argued that Comcare is not adequately
designed to provide coverage for workers employed by self-insurers. It pointed
out that Comcare was designed to manage workers' compensation and OH&S
arrangements for Commonwealth public servants and workers in statutory
corporations who work in white-collar, low risk occupations. High levels of
disputation and slow resolution of claims were also raised in submissions.[18]
1.19
However, self-insurers argued that inefficient and inconsistent
arrangements across states and territories made Comcare attractive. The
National Council of Self Insurers Inc claimed that 'the resistance to self-insurance
at the state and territory level is based on unsubstantiated claims about its
impact on premium pools and premium rate stability'. It concluded that:
If these jurisdictions were more accommodating towards self insurance
by reducing the high regulatory compliance and financial burdens, Comcare self
insurance may become less attractive.[19]
1.20
The operational capacity of Comcare to undertake inspections was
supported in submissions such as the one from K&S Corporation which argued
that access to national safety and workers' compensation arrangements has led
to 'dramatically improved workplace safety and injury management outcomes'.[20]
In its submission to the review, the SRCC advised that it believes it has
sufficient resources to ensure that self-insurers provide safe workplaces:
The ratio of inspectors to employees in the Comcare scheme is
comparable with the ratios of state and territory OHS jurisdictions. Comcare's
investigator capacity is capable of being enhanced, when required, by the
engagement of external experts.[21]
Findings of the review
1.21
The review report was published in January 2009. DEEWR found that,
overall, the scheme's range of compensation benefits and approach to OHS
regulation were comparable with other Australian workers' compensation schemes.
The provision of self-insurance licences to private sector corporations was not
seen as placing them or their employees at a disadvantage. DEEWR also found no
evidence that licensing posed risks to the scheme's viability or the viability
of state and territory schemes.[22]
1.22
Given the issues raised during the review process, on 25 September 2009,
the Minister announced a number of improvements to the Comcare scheme and
released the DEEWR Report on the Comcare Review. The department made a range of
recommendations to improve the regulation of the scheme, and this bill
implements the government's initial response to the review.
1.23
The committee majority notes that the moratorium on new entrants will be
maintained until 2011, by which time it is intended that uniform occupational
health and safety laws will have been implemented in all jurisdictions.
Following the implementation of uniform occupational health and safety laws,
the government intends to transfer occupational health and safety coverage of
Comcare self-insured licensees to state and territory jurisdictions.[23]
Provisions of the bill
Amendment of the Occupational Health and Safety Act 1991
1.24
Schedule 1 of the bill contains amendments to the Occupational Health
and Safety Act 1991 (OHS Act). The principal amendments concern broadening
the definition of 'plant' to include 'lift'. Lifts are not currently included
in the definition of 'plant' under the OHS Act and they are not covered by any
other relevant regulations. Item 2 of Schedule 1 amends the OHS Act by
inserting a definition of 'lift' in existing subsection 5(1). Item 3 inserts an
example at the end of the definition of 'plant' so that it is clear that any
references to plant in the OHS Act will include a reference to a lift. Item 13
inserts proposed subsection 19(4) to remove the supply of a lift in a workplace
from the operation of that section.[24]
1.25
Schedule 1 also makes a number of technical amendments to the OHS Act as
a result of the commencement of the Legislative Instruments Act 2003.[25]
Reinstatement of claims arising
from off-site recess injuries
1.26
Proposed Item 1 of Schedule 3 will amend paragraph 6(1)(b) of the Safety,
Rehabilitation and Compensation Act 1988 (SRC Act) to allow claims to be
made which arise from injuries that occur off-site during recess breaks. This
type of coverage was removed in April 2007 by the Safety, Rehabilitation and
Compensation and Other Legislation Amendment Act 2007.[26]
The Hon Jason Clare MP, Parliamentary Secretary for Employment, explained the reasons
for this amendment in the second reading speech:
This will realign the Comcare scheme with most jurisdictions
and remove the inequity in coverage for employees whose employers do not
provide on‑site facilities for meal breaks.[27]
1.27
DEEWR informed the committee of the practical difficulties that have
resulted from the 2007 removal of coverage for off-site recess break claims:
One concern was the difficulty in determining what would and
what would not constitute an off-site recess break where, for example,
employees worked off-site or where no facilities were provided for lunch
breaks. Another concern was the inconsistency between the fact that an employee
would be covered when attending employer-sanctioned courses at educational
institutions either within or outside normal working hours but not necessarily
during lunch breaks.[28]
1.28
The majority of state and territory jurisdictions already provide
coverage for off-site recess breaks.[29]
DEEWR reported that the reinstatement of this coverage in the Comcare scheme
would have no net effect on the budget and only a minimal financial effect on
premium payers ($1.7 million per year, which would represent about a 0.7
per cent increase in premiums paid) and self-insurers ($1.5 million per year
and a similar percentage increase for licensees for their self-insured costs).[30]
1.29
While appreciating that the reinstatement of this provision is intended
to realign the SRC Act with state legislation, K&S Corporation
submitted that there is a loss of control over what happens to employees, and
the activities they undertake, while they are off site having a meal break.[31]
1.30
However, in verbal evidence to the committee DEEWR clarified that there
are other provisions in the SRC Act that would limit the circumstances in which
compensation would be payable for injuries incurred during off-site recess
breaks:
The SRC Act currently contains provisions that make it clear
that compensation is not payable in respect of self-inflicted injuries and that
would clearly carry over to recess breaks as well as any injuries that are a
result of serious or wilful misconduct on the part of the employee. There are
other provisions that actually come to bear on this.[32]
1.31
DEEWR further noted:
...there is an additional provision that excludes cases of an
employee sustaining an injury because he or she voluntarily and unreasonably
submitted to an abnormal risk of injury.[33]
Committee majority comment
1.32
The committee majority views this proposed amendment as an important
reinstatement of workers' rights that were removed under the 2007 changes to
the act. Not all workers have access to on-site recess break facilities, and it
is inequitable to deny such workers coverage during their breaks. It is also inconsistent
with the majority of state based workers' compensation schemes.
Payment of medical expenses
1.33
Proposed Items 2, 3 and 4 of Schedule 3 will amend subsections 36(4),
37(7) and 50(5) to exclude from the suspension provisions a claimant's right to
compensation for medical treatment under section 16. Currently, the right to
compensation under the SRC Act is suspended if a worker refuses or fails
without a reasonable excuse to undertake a rehabilitation program. Under the
SRC Act, compensation includes medical and related benefits.
1.34
DEEWR explained that the suspension of medical benefits under the act
can be counterproductive:
The way the act is currently structured, when those benefits
are suspended it suspends all benefits. It suspends weekly compensation
benefits as well as payments for medical expenses. The rationale is that in
fact that might be counterproductive to a person's recovery and effective
return to work by penalising an employee by also suspending the medical
expenses. So the bill would provide that in such a case it is only the weekly
compensation benefits that are suspended, but a person would continue to have
their ongoing medical expenses paid for.[34]
1.35
The purpose of this amendment is to remove such counterproductive
effects.[35]
It would protect the payment of medical and related benefits to claimants
notwithstanding the suspension of their weekly compensation benefits. DEEWR
indicated that similar arrangements are already in place in Victoria, Tasmania
and the ACT and that 'the financial impact of this measure on the Comcare
scheme would be negligible'.[36]
1.36
K&S Corporation supported this amendment to ensure that there is
continuing medical progression on suspended rehabilitation cases. It noted that
this is in line with the values of K&S Freighters of supporting injured
employees in their recovery.[37]
Committee majority comment
1.37
The committee majority believes that rehabilitation of an injured worker
should be a clear priority of the Comcare scheme and welcomes this amendment,
which will promote ongoing medical recovery even in cases where a claimant's
compensation benefits are suspended.
Time limits to determine a claim
1.38
Proposed Items 5 and 6 would allow for the setting of time limits for
the determination of a claim and for the making of a reconsideration of a
determination. The actual time limits will be set by regulation.[38]
DEEWR noted that currently under the SRC Act there is no requirement for
workers' compensation claims to be acted on within a specific time. However, all
state schemes apply statutory time limits for claims to be determined. DEEWR
reported that submissions to the Comcare review were concerned that this
absence provided scope for delays and argued that claims which are determined
quickly tend to be shorter in duration and less costly because injured workers
are able to commence their medical treatment and rehabilitation more quickly.[39]
1.39
Data from the SRCC Annual Report 2008-09 indicated that the average time
taken by Comcare to determine new claims is 24 days for injuries and 65 days
for disease, which is longer than most state schemes.[40]
1.40
The committee majority notes that the actual time limits and how they
will be applied are still under consideration.[41]
The Bills Digest pointed out that there is no indication regarding the length
of the proposed period in the Explanatory Memorandum or the second reading
speech.[42]
However, it noted that in the review report DEEWR envisaged that statutory
limits could be imposed along the following lines:
Time would start to run from lodgement of a claim with the
determining authority, with scope for extension of that time frame to accommodate
later lodgement or supporting evidence (say, 20 business days for injuries). A
longer time frame (to be determined after consultation) could apply to the
determination of disease claims, bearing in mind that these can be more
difficult to assess.[43]
1.41
The Bills Digest also noted the lack of sanctions for failure to meet
the proposed statutory time limits and commented:
As the primary focus of the Comcare scheme is rehabilitation
and return to work, the absence of sanctions for a failure to meet statutory
time limits for decision making may detract from the achievement of this goal.[44]
1.42
Regarding statutory time limits to determine claims, K&S Corporation
reported that it currently monitors the performance of its claims manager in
determining claims and ensuring that claims are determined within the targeted
time frames set down by the SRCC. It is concerned that the proposed amendment
does not indicate a possible timeframe or penalties for non-performance. It
cautioned that for specific claims, such as stress, the evidence of a
psychiatrist is best practice and it can be difficult for people to obtain an
appointment with specialists in a short time frame.[45]
1.43
DEEWR confirmed to the committee that the government is still
considering the length of the time limits to be set. Officials explained the
reason why it is preferable not to put these limits in the act:
The time limits will be set out in regulations rather than in
the act itself. This will provide flexibility to modify time limits in the
future in response to ongoing improvements in the jurisdictions' claims
determination process.[46]
1.44
DEEWR also provided a rationale for why it is unnecessary to include
sanctions for failure to meet statutory time limits:
...there are other levers which will encourage compliance. Once
adopted, the time limits will set the standard against which the scheme
regulator, the Safety, Rehabilitation and Compensation Commission, the SRCC,
will monitor the performance of Comcare and the self-insurers in relation to
the timeliness of determining claims. The SRCC will report on performance
against that benchmark through its annual report. As well, for those workers
compensation claims which are processed by Comcare, it will be necessary for
Comcare to provide information yearly, in its annual report, on its compliance
with statutory obligations. Comcare’s chief executive officer will be
accountable for ensuring that Comcare meets its obligations with regard to
statutory time limits for processing claims. For those workers compensation
claims which are processed by the self-insurers, the SRCC has a tier structure
for regulating self-insurers whereby failure to meet their obligations results
in stepped-up regulatory requirements. The ultimate sanction against a
self-insurer for failure to meet their obligations would be not to renew their
licences, which come up for renewal every three years.[47]
Committee majority comment
1.45
The committee majority supports the intent of this amendment to accelerate
rehabilitation and return to work. However, the committee majority notes that
the time taken to determine claims will vary from case to case—for example, due
to unavoidable delays in obtaining appointments with specialists. Therefore,
the process of setting time limits must take into consideration that some claims
will necessarily take longer to resolve than others.
Access to the Consolidated Revenue
Fund
1.46
Proposed Item 7 of Schedule 3 of the bill contains the amendment to
enable Comcare to access the Consolidated Revenue Fund (CRF) to pay
compensation claims in respect of diseases with long latency period (such as
asbestos related disease) where the employment period was pre-1 December 1988
but where the condition did not manifest itself until after that date.[48]
Background
1.47
The Commonwealth Employees Rehabilitation and Compensation Act 1988
(later renamed as the SRC Act in 1992) included provisions to deal with claims
pre‑dating the introduction of the premium system in 1988. It established
funding frameworks for 'premium' claims[49]
and 'pre-premium' claims[50].
DEEWR advised that it was the intention that, where Comcare was liable for
pre-premium claims, it would have direct access to the CRF, 'thus preserving
the integrity of the premium system'.[51]
1.48
Section 128 of the SRC Act:
...transferred undischarged pre-premium liabilities and deemed
them to be Comcare's liabilities or the liabilities of the relevant licensee
under a corresponding provision of the SRC Act. These section 128 liabilities
were understood to cover both actual and contingent liabilities attributable to
employment before 1 December 1988 and were to be payable by Comcare through
access to the CRF.[52]
1.49
In 1992 sections 90A, 90B, 90C and 90D were inserted into the SRC Act to
provide that Comcare would have access to the CRF to pay for its section 128 liabilities
(liabilities that would have arisen under the Acts repealed by the SRC Act).[53]
This occurred between 1988 and 2006 but, due to a court finding (see paragraph
1.50), since 2006 Comcare has had to draw on premium funds to pay for
long-latency disease liabilities.[54]
1.50
As an indirect result of references to section 128 by the Full Federal
Court in Comcare v Etheridge [2006] FCAFC 27 (15 March 2006), Comcare's
access to the CRF under section 90B to discharge its liabilities for
long-latency injuries claims was closed off. The amendment in new paragraph
90B(ab) would restore Comcare's access to the CRF to pay for these claims.[55]
DEEWR emphasised that the proposed amendments restore funding arrangements that
the SRC Act intended to authorise and that, but for the Etheridge decision,
would have continued.[56]
1.51
The Senate Standing Committee for the Scrutiny of Bills provided the
following comment on this proposed amendment:
Although paragraph 90B(ab) appears to have retrospective
effect, in fact it merely enables liability to be met upon commencement of the
bill. The explanatory memorandum clearly explains (at page 6) the need for
Comcare to have access to the CRF to pay for all of its undischarged
liabilities, and associated expenses, for claims attributable to employment
before 1 December 1988. New paragraph 90B(ab) would simply restore
Comcare's access to the CRF to pay for these claims (its access to the CRF
under section 90B was indirectly closed off following a decision by the Full
Federal Court in 2006).[57]
1.52
To address the invalidated drawings, item 10 sets up a mechanism for the
recovery and off-setting of these drawings. The Alert Digest explained the
mechanism:
Item 10 provides for money that was previously invalidly paid
to Comcare to be recovered as a debt to the Commonwealth (subitem 10(2));
Comcare will then be paid an equivalent amount from the CRF (subitem 10(3)).[58]
1.53
The Standing Committee for the Scrutiny of Bills drew attention to the
lack of a limitation on the amount of funds that may be so appropriated and the
lack of a sunset clause which would ensure the appropriation cannot continue
indefinitely without any further reference to parliament. The Scrutiny of Bills
Committee has sought the Minister's comment on any limitation to be placed on
the appropriated amount and on how parliamentary scrutiny of the appropriation
will be secured.[59]
1.54
DEEWR noted the query raised by the Scrutiny of Bills Committee and
provided the following explanation:
Item 10 sets up a mechanism to validate certain CRF drawings
by Comcare between 1989 and 2006 which were retrospectively invalidated as a
result of a Federal Court decision. As unauthorised drawings these constituted
debt owed to the Commonwealth. The validation mechanism works in this way: it confers
on Comcare a notional one-off entitlement to CRF moneys equivalent to Comcare’s
unauthorised CRF drawings between 1989 and 2006 which is then offset against
the debt owed to the Commonwealth. Because the two amounts are the same, the
debt is reduced to zero. This mechanism precludes the need for an actual
recovery of the unauthorised drawings by the Commonwealth.
It is not possible to estimate reliably the drawings from CRF
that have been retrospectively invalidated, and thus it is not possible to quantify
the amount appropriated by item 10(5) of the bill. This is due to the
difficulty in identifying the relevant payments over an almost 20-year period.
Comcare has therefore disclosed the drawings as an unquantifiable contingent
liability in its annual report 2008-09, and these amendments have been drafted
on legal advice from the Australian Government Solicitor.[60]
1.55
In further evidence to the committee, DEEWR characterised this mechanism
as a 'one-off notional transaction' which will not actually require any
exchange of moneys.[61]
Conclusion
1.56
Noting DEEWR's explanation of the mechanism to validate Comcare's CRF
drawings, as well as DEEWR's evidence that the proposed amendments in relation
to coverage of off-site recess injuries and payment of medical expenses will
have minimal financial impacts on the Comcare scheme, the committee majority is
satisfied that the amendments contained in this bill will lead to affordable
and useful improvements to the Safety, Rehabilitation and Compensation Act
1988. The committee majority therefore recommends that this bill be passed.
Recommendation 1
1.57
The committee majority recommends that this bill be passed by the Senate
without amendment.
Senator Gavin Marshall
Chair
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