Thursday, June 21, 2012


The Hon. PETER PRIMROSE [1.03 a.m.]: I refer to the Workers Compensation Legislation Amendment Bill 2012 and the Safety, Return to Work and Support Board Bill 2012. This is truly disgusting legislation.
I will refer to the legislation that indicates something of the mindset of those who drafted it. I refer to page 37, line 15, in schedule 2 to the Workers Compensation Legislation Amendment Bill, which states:
2.3 Amendment of Civil Liability Act 2002 No 22

Section 26I Non-economic loss damages limited to workers compensation amount

Omit section 26I (2). Insert instead:
(2) When determining the total amount to which a worker would be entitled as compensation under a provision of the Workers Compensation Act 1987, the amount is to be determined under the provision as it was in force when the injury to the offender was received

According to this legislation, workers with injuries are "offenders". That gives us an interesting insight into the mindset of those who drafted this legislation. No longer will non-economic loss damages be limited to the workers compensation amount for a worker, who is described as an "offender" in this legislation. Certainly this legislation is offensive, not the injured worker. The O'Farrell Government will financially and emotionally devastate injured workers and their families with its unprecedented cuts to workers compensation in New South Wales. I have heard nothing but indignation in the past couple of months from so-called family defenders against the marriage equality legislation, and how families will be destroyed by same-sex relationships, yet I have not heard one word of protest from those same family defenders about the draconian changes proposed by the O'Farrell Government to workers compensation.

Mothers and fathers who are injured while they are trying to earn a living will be financially crippled by this legislation. In some cases, families will lose their homes and be placed in poverty. Some mothers and fathers will decide they can no longer cope. The changes proposed by this legislation will apply retrospectively to injured workers and their families. Injured workers currently living week to week on medical benefits and entitlements will be left unable to support themselves and their families. Earlier today we saw the spectacle of Premier Barry O'Farrell claiming that the laws were not retrospective, and as we now know that is plainly wrong. The retrospective application of his appalling cuts is there in black and white in his own legislation. This morning on ABC breakfast the Premier said the changes would not be retrospective:
Angela Catterns: So retrospective changes, how far back?

Premier O'Farrell: No they are not.

This is completely at odds with the legislation. Schedule 12, paragraph 3 (1) clearly states:
(1) Except as provided by this Part or the regulations, an amendment made by the 2012 amending Act extends to:
(a) an injury received before the commencement of the amendment, and

Schedule 12 to the bill also states that an insurer has 12 months to conduct a work capacity assessment of an existing recipient of weekly payments, and three months after the insurer makes that assessment the cut to weekly payment applies. Even workplace lawyers have criticised Premier O'Farrell for suggesting that the retrospectivity of these laws does not apply. On 20 June Mr Ivan Simic, a partner at Taylor and Scott lawyers, stated on the Linda Mottrem ABC show:
The legislation is horribly retrospective. He is absolutely wrong. He is either telling a lie or he doesn't understand his own legislation.

The Premier has misled the public about the fact that these changes will not come into effect until the Governor signs off on them. According to the legislation, that is plain wrong. The legislation provides for some amendments to have operation on and from 19 June 2012. Medical benefits for injured workers will be cut off after one year, forcing those who do not receive surgery within one year of their injury, or those who are forced to endure ongoing treatment, into destitution. The O'Farrell Government will reduce benefits to injured workers from the day after they are injured, with a further reduction after 13 weeks of their injury.

The Premier will completely cut off benefits to large numbers of injured workers after five years, even if the injured worker is permanently injured and cannot return to work. Journey claims will be axed completely, which means a nurse finishing a double shift who is seriously injured in an accident on the way home will receive no assistance and be left completely destitute. Workplace injuries cannot be predicted. They can happen to anyone, at any point in their career, and can devastate families already struggling to keep their heads above water. These are disgraceful cuts that will hurt those who can least afford it—people who are simply unlucky enough to be injured at work, and their families.

The philosophy that has always underpinned workers compensation schemes is straightforward: someone who is injured at work and cannot work should be compensated for as long as they cannot work; and that compensation should include payment of their medical treatments and medical bills for as long as they cannot work. This philosophy includes the view that employers who have been negligent should be required to contribute their fair share to that payment of compensation so that the burden does not fall on taxpayers. Yet, ironically, the amendments in this legislation will put a greater impost on the taxpayers of New South Wales.

Premier O'Farrell's argument that workers compensation premiums will have to rise by 28 per cent if members do not allow these amendments to pass is, frankly, untrue. In the WorkCover New South Wales executive summary "Actuarial valuations of outstanding claims … to 31 December 2011", Michael Playford and David Wright from PricewaterhouseCoopers, the Government's own actuaries, say on page 2 that the buffer between the collection of premiums and payouts is not sufficient to return the scheme to surplus within a reasonable time. The question then becomes: What does "reasonable time" mean? Turn to page 3:
The projections indicate that (with no other changes)—

and that is the key
—aspiring to return to full funding by 5 years would require a premium rate increase in the order of 28%.

Full funding in five years "with no other changes"—but no-one is proposing that. They go on to say that aspiring to return to full funding by 10 years "would require a premium rate increase in the order of only 8%." Opposition members asked Mr Playford in evidence before the Joint Select Committee on the NSW Workers Compensation Scheme, "What would be a reasonable time?" He indicated between five and 10 years would be a reasonable time. And the premium increase is in the order of only 8 per cent, not 28 per cent as the Premier keeps claiming.

Premier O'Farrell also makes no mention of the fact that in New South Wales in the past five years premiums have been discounted by 33 per cent. The threat of a 28 per cent rise in premiums is just a myth. What is true is that premiums have been discounted by 33 per cent—in the order of $7 billion—in the past five years.

We all have to acknowledge that there are problems with the workers compensation scheme. But what are they, and what should be done to remedy them? The select committee heard from witness after witness, from submission and oral evidence right across the industrial spectrum, from people such as Garry Bracks through to Mark Lennon and from all the injured workers and insurance companies themselves, that there were problems with the scheme's agents and claims management. But not even one recommendation embodied in this legislation before us today goes to those pieces of evidence. Insurance companies were getting paid more for processing fewer claims. Allianz Australia Workers' Compensation (NSW) Limited said this about the government guidelines:
While there are guidelines and procedures available to Agents to return workers to full health and back into the work place, they are far from effectual as they are:

· Ambiguous and open to variable interpretation

· Not enforceable

· Inconsistently applied

· Not used by all parties involved in decision making regarding claims
In our experience, many claims are extended beyond the treatment of the original injury and regularly encompass related physical conditions, pre-existing or degenerative conditions, and secondary psychological conditions (such as depression and anxiety).

This is one of the insurance companies in the scheme saying that the process is difficult and untenable. But nothing in this legislation goes towards fixing up any of these problems. There were repeated instances of evidence about the difficulties in returning people to work; that employers would not give people a job after they had been injured; that people who were trying to get back to work were having quite some difficulty doing so. All of those problems have been ignored by the O'Farrell Government. There are many instances of matters that were given in evidence but which remained ignored. For example, Ernst and Young in its 2012 peer review report, while acknowledging the changes implemented in 2011, recommended that WorkCover review its overall approach to management of the scheme, and in particular the management of agents, including their remuneration, and conduct a back to basics review of that remuneration. Nothing in the legislation we have before us today addresses this concern either.

The final report of the select committee ignored the evidence that had been presented to the committee. The sham report was presented by a sham committee, stacked with four Government members and two other members who voted with Government members on 95 per cent of the recommendations, and only two Opposition members. Yet even it recommends further and ongoing review of the workers compensation scheme; in fact, it wants a joint select committee to be established to look at the way the scheme is working; and wants the New South Wales Government to review the functions, powers and behaviours available to the scheme agent. If it is so important that a joint select committee be established to extensively review WorkCover and the workers compensation scheme in New South Wales, what is the reason for the Government's headlong rush to do one thing, and only one thing—to cut benefits to workers? All that evidence was ignored by the Government in its mad rush to reduce benefits to New South Wales workers. In submission 131 the NSW Self Insurance Corporation, the Treasury, says very clearly:
Our main recommendation is that the Committee seek to have the impact of any proposed reforms scenario tested and actuarially costed to understand the implications on the TMF [Treasury Managed Fund] before deciding on the package of reforms to be implemented.

But Premier O'Farrell is not stopping to wait for that. Treasury in New South Wales is being ignored.

Under this legislation "seriously injured worker" means a worker whose injury has resulted in permanent impairment and the degree of permanent impairment has been assessed for the purposes of division 4 to be more than 30 per cent. During the select committee hearing Michael Gliksman, Vice President of the Australian Medical Association, and Peter John Burke, a medical-surgical specialist representing the Australian Medical Association and the Australian Association of Surgeons delegate to the Medico Legal Committee, the Law Society of New South Wales, were asked what their opinion was of increasing the threshold to 30 per cent. They were asked how many would make it through the 30 per cent threshold. Dr Gliksman replied:
Very few. In my experience of those I see who I feel have a genuine work-related injury less than one in 100 people would get to the 30 per cent threshold. In my opinion it would shut the system down as a means of support.

Dr Burke replied:
I agree with that. It is one in 100. It would severely damage the average person who is genuinely injured at work.

Roshana May and Timothy Concannon, members of the Injury Compensation Committee of the Law Society of New South Wales, and Justin Dowd, President of the Law Society were asked the same question: What would happen if the 30 per cent impairment level suggested in the issues paper—and now this legislation—was imposed? Mr Concannon replied:
In my experiences of working under the scheme, I have had two or maybe three workers, amongst thousands of workers I have acted for over that period, who would satisfy that requirement.
                   Ms May was asked whether it was true that only 100 claimants or so in the scheme were currently receiving ongoing care.

Ms May replied:
Yes, I think it is more like 110; I am sorry, I do not have the figure.

She was then asked whether there were not thousands, and she replied:
There are not thousands ... The best estimate of the Injury Compensation Committee is that it would reduce lump sum payments, if you are talking about that, to more than 95 per cent of the current injured population

I will provide the House with a few examples in the time that I have left. A 35-year-old man sustained a crush injury and had a below-knee amputation. He lost his leg and was assessed as having a 28 per cent impairment. A 25-year-old man who suffered back and thigh pain while twisting underwent a discectomy three months after the injury. He still has back pain but has been assessed as having a 10 per cent impairment. A 35-year-old man had a surgical discectomy three months after an injury and has persistent back and thigh pain, numbness along his foot, is unable to do his usual recreational activities and some household activities and has restricted lumbar motion and chronic back pain. He was assessed as having a 13 per cent impairment. Premier Barry O'Farrell has a simple message for him: No more benefits. When people experience back pain, instead of having their medical benefits paid the New South Wales Government is now telling them to sit in the emergency department at a public hospital and wait.

Many people's injuries do not reach the 20 per cent threshold, and certainly not the 30 per cent threshold. To impose those sorts of thresholds is simply cruel to them and their families. One of the cruellest provisions in this legislation is that, as I said, it will be retrospective. Those people who have been injured for 10 years who cannot work because they are in pain, even though they want to, and who have structured their lives around the benefits they receive to put a bit of money away each week for the mortgage and bills will be smashed by this legislation.

There is absolutely no justification whatsoever for that. Mr Ivan Simic, a lawyer with Taylor Scott, said in his evidence to the select committee:

I think everyone has forgotten that the most important purpose of the scheme is to provide insurance for injured people so their families are not left in family ruin.If we are going to live in a free market society, one of the great things in a free market society is insurance. WorkCover has totally forgotten it is supposed to be an insurer and look after people's families when tragedy strikes. They have just totally forgotten it and lost the plot.

Premier Barry O'Farrell has also lost the plot, as has anyone who votes for this legislation today.