CHAPTER 2
Key issues
2.1
The Safety, Rehabilitation and Compensation Legislation Amendment (Exit
Arrangements) Bill 2015 (the bill) will provide a framework to manage the exit
of a Commonwealth authority from the Comcare scheme and to ensure that
liabilities are fully funded by premiums.[1]
The proposed framework will also enable Comcare to determine and collect
ongoing regulatory contributions from exited employers or successor bodies.[2]
2.2
While the bill sets out the framework that will apply when a
Commonwealth authority leaves the Comcare scheme, it does not provide for the
exit of any employers from the scheme.[3]
This would usually occur through the introduction of specific enabling
legislation.[4]
2.3
The primary purpose of the bill is to ensure a Commonwealth authority
does not exit the Comcare scheme without contributing appropriate ongoing costs
for injured employees that remain in the scheme, and to cover liabilities.[5]
The Comcare scheme
2.4
The Safety, Rehabilitation and Compensation Act 1988 (the SRC Act)
provides rehabilitation and workers' compensation for work related injuries to
the following employees:
-
Commonwealth and Australian Capital Territory (ACT) public
servants;
-
Employees of Commonwealth and ACT statutory authorities and
corporations;
-
Australian Defence Force members for injuries before 1 July 2004;
and
-
Employees of corporations who have a license to self-insure under
the SRC Act.[6]
2.5
Entities and Commonwealth authorities, also referred to as premium
payers, are required to pay regulatory contributions and annual premiums as
determined by Comcare under the SRC Act. Premiums and regulatory contributions
primarily fund the Comcare scheme.[7]
Under Section 4A of the SRC Act, the ACT government has been declared a
Commonwealth authority and is a premium payer in the scheme.
2.6
The SRC Act sets out detailed provisions about responsibility for
rehabilitation of injured employees and for the calculations and payment of
premiums. Comcare has access to income and earnings from the premiums, plus
special appropriations from the Commonwealth, and regulatory contributions from
Comcare members.
2.7
The Comcare scheme's outstanding claims liabilities exceed the funds
available to meet these liabilities.[8]
Comcare has been progressively restoring the funding position of the scheme
since 2013-14. According to the Assistant Minister for Employment's Second
Reading Speech, the bill will support current measures that Comcare has put in
place to restore funds to adequate levels.[9]
2.8
In February 2015, the ACT government announced its intention to leave
the Comcare scheme due to long delays in the scheme, excessive premiums and
ineffective rehabilitation.[10]
The Electrical Trades Union of Australia's submission supports the ACT government's
move to exit the Comcare scheme for these reasons.[11]
Commonwealth authorities exiting the Comcare scheme
2.9
The bill envisages three possible scenarios where a Commonwealth
authority may exit the Comcare scheme. These are when a Commonwealth authority
ceases to be a Commonwealth authority but continues in existence as a body
corporate no longer covered by the scheme, or when a Commonwealth authority
ceases to be a Commonwealth authority but is succeeded in law by another
entity.[12]
The last scenario is when a Commonwealth authority, the ACT government, ceases
to be a Commonwealth authority by virtue of having its declaration under
section 4A of the SRC Act revoked.[13]
2.10
If any of these scenarios arise in the future, the bill will provide a
framework to ensure employees will continue to be supported by a rehabilitation
authority and Comcare's available scheme funds and remaining premium payers
will be protected.[14]
The bill will ensure consistency in arrangements for meeting liabilities by
applying to all future exits of Commonwealth authorities.[15]
2.11
There are three key obligations in the bill that may be placed on a
Commonwealth authority that exits the Comcare scheme after the bill commences.[16]
Exit contributions
2.12
The bill will allow for Comcare to determine and collect 'exit
contributions' from former Commonwealth authorities and successors of former
Commonwealth authorities.[17]
This is to ensure that an exiting Commonwealth authority does not leave the
Comcare scheme without contributing the appropriate amount to cover liabilities
related to the particular Commonwealth authority that are not funded by
premiums paid before their exit.[18]
2.13
Diagram 1.1 outlines the provisions that provide for exit contributions
that mirror the existing process in the SRC Act for the determination of
premiums.
Diagram 1.1—Determination of premiums
Department of Employment, Submission 2, p.7.
2.14
Diagram 1.1 demonstrates multiple opportunities for a request to review
Comcare's calculation of an exit contribution by an exiting Commonwealth
authority. The Department of Employment (the department) envisages that after a
series of consultation with the relevant exiting Commonwealth authority and
expert advice from an appointed actuary, a determination would be made.[19]
Rehabilitation obligations
2.15
According to the department, there can be a lack of clarity for an
employee about which organisation is responsible for providing rehabilitation
support to an injured employee once a Commonwealth authority ceases to be
covered by the scheme, either because it has been abolished or because it has
transitioned to a new Commonwealth authority or entity.[20]
This may contribute to a delay in providing rehabilitation support, and may result
in poor return to work and health outcomes for injured employees.[21]
2.16
Part 3 of the SRC Act places a number of obligations on rehabilitation
authorities and relevant employers to support employees in their
rehabilitation.[22]
Relevant employers are required to take all reasonable steps to provide
employees with suitable employment, and the SRC Act establishes a framework for
review that allows employees to challenge decisions made by their
rehabilitation authority.[23]
2.17
Item 4 in Schedule 1 inserts provisions for continued rehabilitation of
employees of bodies leaving the Comcare scheme. The bill will ensure that
arrangements are established for the most appropriate entity to continue to
perform the role of rehabilitation and relevant employer under the SRC Act
where a Commonwealth authority has exited the Comcare scheme.[24]
Regulatory contributions
2.18
The bill will enable Comcare to determine and collect ongoing regulatory
contributions from exited Commonwealth authorities or successor bodies.[25]
The department's submission outlines that while determinations may continue to
be made for a number of years, the amount must reflect estimated costs incurred
by Comcare, resulting in reduced costs over time as injuries are resolved and
investigations are completed for that employer.[26]
2.19
The amount of regulatory contributions to be paid by the ACT or a body
corporate if either ceased to be a Commonwealth authority, must not exceed the
sum of the estimated cost incurred by the Safety, Rehabilitation and
Compensation Commission (the Commission) and Comcare in carrying their
respective functions under the following Acts: the SRC Act, the Occupational
Health and Safety Act 1991, the Work Health and Safety Act 2011 and
the Work Health and Safety (Transitional and Consequential Provisions) Act
2011.[27]
For example, Comcare will incur costs in providing support to exited Commonwealth
authorities who continue to support the rehabilitation of employees and may
incur costs in the early years following the exit as work health and safety
investigations for incidents that occurred before the exit had been finalised.[28]
2.20
Section 97E of the SRC Act allows the Commission to issue written
principles in relation to determining regulatory contributions to be paid by entities
and Commonwealth authorities. Comcare must determine the estimated costs in
accordance with these principles to ensure that estimated costs are referrable
to the body corporate or the ACT.[29]
An effected Commonwealth authority would be able to seek a review of a
regulatory contribution in the same manner that a review of an exit
contribution would occur (see diagram 1.1).[30]
Impact on employees
2.21
The committee notes concerns raised about the effect the bill may have
on workers and their entitlements. The Australian Council of Trade Unions (ACTU)
noted in their submission that as the ACT government has yet to finalise the
details of their proposed replacement scheme, it is unclear whether workers
would be better off under the Comcare scheme or replacement scheme.[31]
2.22
The committee notes the ACTU's views but stresses that it is not the
intention of the bill to look at the ACT government's proposed replacement scheme.
2.23
The Victorian Government supports those provisions that will ensure
injured employees will continue to receive rehabilitation from employers
exiting the scheme:
The Victorian Government welcomes the provisions in the Safety,
Rehabilitation and Compensation Legislation Amendment (Exit Arrangements) Bill
2015 in so far as it ensures that Comcare is able to set sustainable premiums,
and that injured employees of existing premium payer entities will continue to
receive appropriate rehabilitation treatment facilitating their early return to
work.[32]
2.24
The bill does not provide for the exit of any particular employers from
the Comcare scheme, as this would occur through specific legislation. The bill
therefore does not affect any employee's existing entitlement to compensation,
other than to provide for rehabilitation obligations and arrangements to
continue.[33]
2.25
As outlined in the department's submission, any employee who is injured
before an exit, will remain entitled to compensation and rehabilitation under
the SRC Act, with the employee's entitlement to compensation not being affected
in any way.[34]
2.26
The bill will provide for the preservation of rehabilitation
arrangements to ensure that there is continuity for injured employees and that they
continue to be supported by their employer or another appropriate body.[35]
Committee view
2.27
The committee notes that maintaining the financial sustainability of the
Comcare scheme through appropriate exit contributions for ongoing claims
management and liabilities is integral to ensuring the long-term sustainability
of the scheme to pay claims and support injured employees.
2.28
The committee notes concern on the potential impact on employees. The
committee is satisfied that the bill will not change any existing benefits or
entitlements for injured workers. It will ensure that employees injured before
a Commonwealth authority exits the Comcare scheme will continue to receive
compensation and rehabilitation under the SRC Act.
2.29
The committee is persuaded that the bill will ensure stability for
workers, employers and the Comcare scheme when a Commonwealth authority exits
the scheme.
Recommendation 1
2.30
The committee recommends that the bill be passed.
Senator Bridget
McKenzie
Chair
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