Wednesday, 29 November 2023
Committees
Economy and Infrastructure Committee
Committees
Economy and Infrastructure Committee
Reference
David DAVIS (Southern Metropolitan) (10:41): I move:
That this house requires the Economy and Infrastructure Committee to inquire into, consider and report, by 5 March 2024, on the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023 and in undertaking this inquiry the committee is required to hold public hearings and is empowered, under the standing orders, to utilise a subcommittee.
It is now understood broadly across the Parliament and across the community that the WorkCover scheme is a basket case. It is a basket case financially, but it is also a basket case in the way it treats workers. We need to have a system, a scheme, that is sustainable and a system, a scheme, that is fair to employers but actually provides proper support for employees when they are injured. Workers should be able to presume and be safe in the presumption that if they are injured at work, they will have their medical needs and other treatments supported and they will have proper replacement of salary for the period that is required. They should also have a scheme that is focused on return to work, and the current scheme is not.
I will say more about that in a moment, but I do want to say that it is important for the context of this debate for the chamber and the community to understand that Labor knew the scheme was careering out of control. They knew that way back at least in December 2020, and they covered up the need for premium increases. We heard questions in this chamber about premium increases. I have seen via FOI requests very clearly that the government did not allow increases in premiums even though the WorkCover board said that for the sustainability of the scheme they needed those increases. It is clear when you look at the tables, and I will come to those in a moment, that the government did need that increase in premiums and the scheme did need to be made sustainable. You have a government that is refusing to be honest, refusing to be clear, refusing to be direct, covering it up or sweeping it under the carpet until after the state election, and then suddenly Danny Pearson and his crew in the department run into a flap about the sustainability of the scheme. Well, the government has sat on all of that information for all those times and has not acted properly and has not acted to make the scheme sustainable.
We heard in the lower house, in the consideration-in-detail stage there, Danny Pearson admit that premiums are going up no matter what. They have already gone up 42 per cent on average, although I must say when I move around and talk to private sector employers everywhere I am yet to meet someone whose premium has gone up 42 per cent. They are all greater, it seems to me. That is an inadequate sample, I accept. But leaving that aside, the official headline figure is that premiums are up by 42 per cent, and Danny Pearson says to us, ‘It will go up no matter what, probably in March, probably in the new financial year as well. No matter what, the premiums are going to increase.’ The public, employers, workers, this Parliament and taxpayers are entitled to ask questions about what is going on.
Meanwhile the claims experience has been terrible. We have seen an explosion in the number of long claims, particularly mental health claims, and they have obviously been mismanaged. They are actually not being managed properly to get the outcomes that are required. The performance of management of these claims has deteriorated in recent years. Before COVID it was clear that there was deterioration, after COVID there has been deterioration, and all of that is translating not just into cost, which it certainly does, but into bad outcomes for employees. Employees do not deserve to be left on the scrap heap; they deserve to have a proper return-to-work arrangement. They actually need early and active intervention to support them, to give them the background supports that are needed. They also need to have a proper outcome where there is a clear focus on return to work, and that is not the case.
The government has begun to talk about a return-to-work authority. We want details about that. None of that is in the bill that has been before the Parliament – none of it. In that circumstance I think it is important that the scheme be made sustainable, it is important that workers be supported and it is important that there is real transparency about this. This is why when the bill came to the chamber last sitting week we sought to move the reporting date to 5 March and to establish an inquiry. It is regrettable that the government did not allow an inquiry to be established quickly, and in fact the inquiry could be two weeks into its activities now. We could be having a short, sharp inquiry, and that is what we are proposing here.
I should say that the government knew about the problems with WorkSafe much earlier. One of the key documents is the financial sustainability review of WorkSafe Victoria from December 2020, the Finity report, which was commissioned by the board. Indeed when the Finity report was tabled at the WorkSafe board the government did not share this with the community but in a panic established an interdepartmental committee, chaired initially by the Premier and later by the Department of Treasury and Finance. The interdepartmental committee has met through that period. Again, the community is unaware of what is happening with the interdepartmental committee and the rising level of panic throughout the government.
It is very interesting to read the financial sustainability review, the Finity review. I am just going to read some short bits, but there are actually massive tables attached to it that show the deteriorating financial position. As I say, this is not just about the financial position. I am going to read the overall conclusions, which are on page 6 of the Finity report, section 4:
In summary, the current financial trajectory is unsustainable over the longer term.
This is December 2020. It is three years ago.
While COVID related impacts have exacerbated this, including through volatility in the investment funds, it is changes in recurrent claim costs that needed to be addressed to fix the issues WorkSafe is facing.
Required changes to ‘right the ship’ –
this is December 2020 –
could include:
• Material increases in premiums: we do not see a pathway back to a BEP of 1.272% (without benefit changes at least)
• Greater work on prevention of mental injury claims –
and I emphasise this –
and understanding of drivers of duration including secondary prevention and even so far as WorkSafe’s role within a system of support: these types of claims are the largest (but by no means the only) driver of the scheme’s recent adverse performance
So they are pointing to the serious deterioration in performance with mental injury claims. It goes on. Return-to-work improvement is one of the recommendations.
… RTW rates have been deteriorating over many years –
Again this just completely squashes the idea that it is COVID, it is COVID, it is COVID. It is not just COVID. It predates COVID, and the Finity report in December 2020 was reviewing material going back much longer than that.
… RTW rates have been deteriorating over many years, and unless these can be improved … the end result is more claimants on benefits for longer
We actually need to listen to what these reports commissioned by the government itself have to say.
We need to work with a return-to-work framework, and I would say, talking to a number of employer groups and a number of WorkCover specialists in the last few weeks, an at-work focus – a support-at-work focus needs to be part of this, not only return to work. It needs to be even earlier up the chain, and that is one of the things that this parliamentary committee should focus on, in my humble view. We should be looking at what the Finity report has said, and we should be understanding what can be done to deal with the return-to-work focus, the at-work focus, and what can be done to manage the large spike in mental injury claims, what can be done to manage the long period that workers, regrettably and very sadly for them, are off work. None of this helps a person in any way with their future, with their family, with their community or with indeed their future professional steps. We need to have that early intervention, and one of the steps that the committee should focus on is doing these points. Unless these can be improved, the end result is more claimants on benefits for longer.
Termination use provisions – the government has got some of those in the bill. These provisions have been the single biggest enabler of low premium rates since the early 2000s because they have acted as a gateway to manage the number of claims going into long-term benefits.
They also talk about potential changes to scheme design. Put simply, pulling one lever will not be sufficient to rectify the current financial trajectory. Compounding the difficulty of managing this, the two biggest response levers, premium change and benefit design, are outside WorkSafe’s direct control. Furthermore, the changes will need to be made in an environment with much distraction: COVID-19, uncertainty about the ongoing role of claims agents and how complex claims will be managed. This is another area – those difficult complex claims. Those people need support and proper buttressing to move things forward. And a need to update IT systems at some point will make it harder to get things done.
If for any reason claims management slips or is disrupted, for example, through any change to the agent model, then things will only get worse, and the financial trajectory is shown in this report. I have circulated this to a number of people in the chamber, and I draw attention to figure 1, also on page 6, which lays out a number of the key points, the summary of key financial drivers and their outlooks on page 5 and the figure 1 projected insurance funding ratio base and break-even point scenarios. For those who are technically and financially minded, in the back of the paper, commissioned by the government itself, is a number of these scenarios, and you can look at these and see where things are heading.
We owe it to Victorians – we owe it to Victorian workers and Victorian employers – to get this on a sustainable footing, to make sure that the scheme is able to go forward in the long term without the massive government hits of money that have happened. Let us go back historically. For 25 years WorkSafe was paying a dividend to government, including through many of the years of this government from 2015 onwards, until the last three years when its financial position has become so parlous that now well over a billion dollars of public money – taxpayers money – has been injected into WorkSafe. There is a question about what is the way forward there. The community I think believe that an employment scheme of this type should pay for itself, and we should be aware of what cross-subsidies and problems there are in the scheme.
As I say, there is this vexed issue of early intervention and supporting workers with proper return-to-work programs, which we do not believe the government has grappled with. They have started to talk about it as a top-line talking point, but there is absolutely no detail in the public domain and there is absolutely no detail in the bill, and we think that that is one of the major things that the committee should focus on. How do you work with workers? How do you work inclusively with them in a constructive way to ensure that less go off sick, that when they do go off sick they get the early support and buttressing that they need and that proper programs are then in place to bring them back to work, because ultimately that is in everyone’s interests. It is the financial basis of the scheme. It is in the competitiveness of the state in terms of premiums being struck. But it is also, frankly, in workers’ interests. Nobody wants to be off work for a long period. Nobody wants to be unable to do their job, so we need to make sure that those workers get the support they need.
One of the key things the committee can do is to understand this and to actually make some recommendations. That is why we have moved this reference, to put WorkSafe on a sustainable position and to say that the Parliament has got to intervene. The government and Danny Pearson in particular are completely and utterly incompetent on this. I was going to use a piece of vernacular, but they have botched the management of WorkSafe, and this is to the detriment of the state’s economy, employers and employees. In that circumstance we need a proper outcome.
Jacinta ERMACORA (Western Victoria) (10:56): I am proud that the Allan government is getting on with new legislation for the future of Victorian workers. We need to modernise the WorkCover scheme, which was established back in 1985. We must refine and modernise the way WorkCover operates. We need to do this so that WorkCover cover can continue to help injured workers return to work now and into the future. That is the purpose of the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023. We believe in the fundamental importance of a fair and well-functioning workers compensation scheme that supports Victorian workers. The introduction of this bill followed months of consultation with unions, businesses and other stakeholders. We have done the hard work and consultation to ensure the scheme is fit for purpose and reflects modern workplaces.
WorkCover is a very Labor thing. For the record, I have always been very proud that the Labor Party has consistently been a staunch advocate for injured workers and always a staunch advocate of workplace safety. This dates back to the significant milestone in 1985 when the Cain Labor government passed the Occupational Health and Safety Act 1985 and Accident Compensation Act 1985. Since then WorkCover has provided financial support to cover expenses during recovery and eventual return to work. However, it must now be acknowledged that the WorkCover scheme conceived in 1985 is no longer meeting the needs of today’s workforce.
The situation on the ground is that since 2010 WorkCover’s claims liability has tripled. There are currently over 30,000 active WorkCover claims in total. There are over 9000 workers already on long tail and a further 8000 workers approaching long tail. WorkSafe supported 98,047 workers in the financial year 2022–23, paying benefits totalling $3.1 billion. In 1986, when this scheme first started, mental health injury claims represented 2 per cent of new claims. That number has now increased to 16 per cent, which was never envisaged when the scheme was originally designed.
In the financial year 2022–23, WorkSafe supported 23,665 workers to return to work after injury. Return-to-work outcomes for physical injuries improved in the 2022–23 year. Return-to-work outcomes for primary mental injuries stabilised. Return-to-work rates are far lower for workers with mental injury, which increases the cost of these claims.
Performance from insurance operations incurred a loss of $1.8 billion in the financial year 2022–23 compared to a $1.6 billion loss in 2021–22. These losses reflect the shortfall between the premium revenues and the claims costs in these years. This is why the Allan government is committed to doing the hard work to keep WorkCover viable in the long term.
The challenges faced have been caused in the large by increased costs of weekly income support and many workers staying on the scheme long term. This increase takes into account that mental injury claims now constitute 16 or 17 per cent of new claims, something that was never envisaged, as I said. The reality is that WorkCover average premiums had not increased in over two decades until July this year, when they rose by 1.8 per cent. This brought Victoria into line with the average premium rates in other states and territories. Premiums have been kept low for employers, even during the pandemic, but now we must take responsible action. If the changes are delayed much longer, the government will simply have no choice but to increase premiums to an average of between 2.4 to 2.5 per cent of remuneration. This would constitute a huge cost on our small business community during a challenging cost-of-living period. This is the reality.
That is why the Allan Labor government is proactively implementing essential reforms needed to modernise and tailor the scheme to be better and fit for purpose for our times. We know that health outcomes for workers on compensation schemes are four times worse than for those with the same conditions outside these schemes. This can lead to prolonged injury and unemployment. We do not want to see workers languishing on WorkCover for years. Every Victorian worker deserves the dignity of safe and rewarding work, and everybody stands to gain on the resolution of a WorkCover case – the employee, the employer and the broader community – so the government is creating a new entity, Return to Work Victoria, to help people get back into the workforce as part of the new reforms to ensure Victoria’s WorkCover scheme is sustainable and fit for purpose.
Return to Work Victoria will be established as a business unit within WorkSafe. The new entity will centralise the provision and oversight of existing and new return-to-work initiatives. Concurrently, through our track record of investing in mental health for Victorians, we are also investing in growing and supporting our skilled mental health workforce, putting our resources where needed and creating more than 2500 new workers and roles in the system, such as mental health nurses and psychiatrists.
We are putting renewed focus on injury recovery and return to work, because we know that the longer a person spends away from work, the harder it is for them to recover, and there are tangible benefits for people returning to work after a period of injury. We are social creatures by nature, and our social interaction is rated highly for good health and wellbeing. It is good for us to interact with co-workers, clients and customers, and this can help combat feelings of isolation and loneliness that may occur during periods of injury or absence. We also know that maintaining a sense of purpose through work instead of languishing gives many a feeling of accomplishment and belongingness within our society. Having routine and structure is also a well-known strategy used by health professionals to help people recover and boost self-esteem. And of course having financial stability and a sense of control over your own destiny is powerful and helps people get back on track.
The passing of this bill will maintain WorkCover for future generations, and unnecessary delays are totally preventable. This government is not afraid to tackle reforms needed for the long-term wellbeing of Victorians, even when the changes are complex and not necessarily popular and even when it is easy for the opposition to play politics. I support the bill, with no particular position on the motion.
Samantha RATNAM (Northern Metropolitan) (11:06): I rise to speak in support of the motion moved by Mr Davis to refer the WorkCover Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023 to inquiry. The Greens are deeply concerned about this bill. The proposed changes to WorkCover would be a big step backwards in the way that we view and respond to mental health injury in the workplace.
The government is proposing to remove support for workers who have suffered a mental injury as a result of stress and burnout. This is in the face of many unions – including the Community and Public Sector Union, the National Tertiary Education Union and the Health and Community Services Union – and Trades Hall Council overall strongly opposing the changes. For too long mental illness has been stigmatised and ignored. However, in recent years we have finally started to dissolve these misunderstandings through open conversations and mental health system reform. Societally and organisationally, awareness of people’s mental health has meant more people are acknowledging stress and seeking the support that they need. We cannot expect people who are suffering mental injuries to continue working, just as we would not expect people to work while recovering from a physical injury.
The other key change in the bill that deserves much greater scrutiny is the introduction of a whole-person impairment test after someone has been receiving support for 130 weeks. We have heard this test is not an appropriate test and will see people genuinely unable to work thrown off WorkCover. The test applies separately to physical and mental health injury, so a person could have a 15 per cent impairment for physical injuries and a 15 per cent impairment for mental injuries and have their WorkCover payments ended. When that happens, where do they go? Onto the utterly inadequate Newstart – and what does that mean for their life? It is cruel.
We appreciate that reform of WorkCover is needed to ensure this scheme’s sustainability but are deeply disappointed the government is intent on making workers bear the brunt of changes instead of addressing the heart of the issue by focusing on preventing injuries, facilitating rehabilitation and improving the efficiency of the scheme’s operations. This bill instead proposes to cost save by limiting eligibility, throwing people off the scheme and penalising workers. The government have ignored repeated calls for proper reform of WorkCover for years, having underfunded the scheme, and are now proposing workers lose out to cover the government’s mistakes. Meaningful and effective reform requires us to take a broader look at WorkCover and to heed the advice of unions and their members. Numerous reviews of WorkCover have made clear recommendations for improving the scheme. These include, for example, better oversight of WorkSafe agents for improved transparency and to stop profit-seeking behaviours and improving access to support for injured workers by establishing an internal mental health workforce. The focus needs to be on how workplaces can be made safer, how injured workers can get back to work sooner and how they can get treatment sooner.
I would also note that by the government’s own admission one of the drivers in the increasing number of mental health claims is from the public sector – their own workforce. Maybe reforming the workplaces they are responsible for would be a good place to start instead of slashing public sector jobs and deliberately keeping public sector wages low. This bill will have a significant impact on the lives of thousands of Victorian workers. The government has attempted to rush it through the Parliament right at the end of the year. Their engagement with stakeholders has left a lot to be desired. This is exactly the type of bill that the Council should scrutinise in committee. A committee inquiry provides the opportunity for us to hear directly from stakeholders on the implications of the changes contained in the bill and whether there are amendments or other approaches that we as legislators as well as the government should consider. The government’s proposed reforms are hasty and will hurt workers. The Greens are eager to support reform of WorkCover, but we call on the government to rethink its approach. It is the for these reasons that we support the WorkCover scheme modernisation bill being referred to committee.
Nick McGOWAN (North-Eastern Metropolitan) (11:10): Well, what claptrap we have heard from those opposite today. I do not know whether the private office of the Premier can even be bothered doing talking notes of any substance these days or they simply think you are just going to plough on through with these draconian laws – that is what they are; they are draconian. Let us call them what they are. And while I am at it I will also look at the website. I love the website: ‘WorkCover modernisation’. What a joke – ‘modernisation’. And it starts not dissimilarly to some of the contributions opposite there today. Part of that says, in this so-called WorkCover modernisation:
WorkCover was designed in 1985 principally to support workers with physical injuries – but is clearly no longer meeting the needs of the Victorian workforce.
So they are talking about 1985. That was 40 years ago – a couple of years short, but 40 years ago. So suddenly in the history of this government and how they think, we have gone from 1985 to ‘Now it’s not working’. Well, that is just complete garbage – complete garbage. When Cain and Kirner lost in 1992, from memory the scheme then as it was called, WorkCare, because that is what they started, had a $1.8 billion unfunded liability – $1.8 billion. That was equivalent to 48 per cent of the total funding requirement. It was a disaster. They had monumentally cocked it up, absolutely stuffed it. And that is what they left the people of Victoria with in 1992.
And here we are again: same party, same story. And what is worse is – and I would encourage those opposite to engage on this on any level with the workers of Victoria – that you are going to stare the workers of Victoria in the face and tell them, as the Greens have rightly pointed out, ‘We’re going to cut you off when you need it most, because your injury is not an injury that we can see.’ And Labor members of Parliament run around this state talking about the need to support people and their mental health, virtue signalling everywhere. And why do I say it is virtue signalling? Because it is if what you are going to do is then use the mechanisms of this Parliament and the laws of this state to actually cut them off at their knees when they need it the most. It is draconian, and I cannot believe those opposite are actually abiding by this.
And it is retrospective. It even gets worse – it is retrospective. So if you have got a claim now and you are still receiving a benefit, if this legislation goes through as is proposed – and this is what the committee will look at – for those who are sitting there waiting there is 130 weeks retrospectivity. That is 2½ years almost. That is just grotesque. You know, if the government wanted to go away – and I know they want to save money – then they could talk to the committee and they could talk to the crossbench, they could talk to the Greens, they could talk to the Nats and they could talk to the Liberals. But this is not the way to do it. This is an attack on workers.
And for the record, life did not begin in 1985, boys and girls and anyone in the public who ever dares to look at this Hansard or look at the video. It just simply did not. Despite what the government website says, despite the contributions from those opposite today, there were schemes in this country, it is true to say, probably before 1914. But 1914 was the first time we actually had some sort of cover in the state of Victoria, and it was not dissimilar across the rest of the country at that point in history. It was then followed later on by what was a workers compensation board that came in 1937. So step one was the Workers’ Compensation Act 1914. Step two, 1937, was the Workers’ Compensation Board. That was expanded in 1953, and then it went all the way to 1974. By 1974 we had 69 providers plus the State Accident Insurance Office, and the State Accident Insurance Office was formed all the way back in 1914. But let us not worry about history. Let us not worry about the facts. Let us not let them get in the way of a cracking yarn by the Labor Party, who are here to save the day on their horse – white knight, shining armour, all this sort of stuff – and it is just complete nonsense.
They even talk about bringing in a motion today or tomorrow or having us stay on Friday to rescind this Parliament’s very wise decision through Mr Davis’s motion – with the support of the Greens and the Nats and the crossbench and the Libs – to look at this properly and actually try and understand the damage they are about to do to Victorian workers, the contempt they have for those who already have a claim that has been accepted. The claim has been accepted, so you want to make it retrospective and rip their rights away. And do you know what the minister refers to them as? The long tail – what a disgusting, despicable term. I hope I do not hear that term again, because what you are actually talking about is humans, and you want to cut their benefits off (a) because you cannot see their injury and (b) you have determined that it costs too much. Sorry, Victorians, it costs too much. We do care about your mental health, blah, blah, blah. But sorry, we do not want to foot the bill.
It was interesting. Last week we had a Public Accounts and Estimates Committee hearing, and in that hearing I actually asked for a breakdown by department of mental injury claims, because what we were told in the bill brief some weeks ago was that the majority of the claims in this space – wait for it – are coming from the government sector, not the non-government sector. So we cannot blame the employers in Victoria, other than the single biggest employer, which is the state. Here is the complete irony: the worst offender, being the state and the way it obviously clearly treats its employees, is now seeking to limit the claims of those very employees it is treating so badly or has oversight of and responsibility for.
I do not know whether the other members of caucus and the members of the government are listening in their offices as we speak, but are they seriously going to stand by and let this happen to workers in Victoria? You need to rename the party. It is not the labour party; that is a joke. I know we spell it differently in this country, but thank God you do not have the ‘u’ in Labor in this country, because that is clearly not the case.
Let us go through this list, because I got a response to this, a timely response, today. The department of education and training, let us start with them – teachers, principals, those educating our future generations. In 2022–23 they had 337 mental injury claims. That is the worst in the last five years: in 2018–19, 267; in 2019–20, 254; in 2020–21, 244; in 2021–22, 266; and as I have already said, in 2022–23 there were 337 claims. That is just one department. The department of environment, land and water, 16; the Department of Families, Fairness and Housing, 43 – so much for fairness; the Department of Health, 13; the Department of Justice and Community Safety, 117; the Department of Premier and Cabinet, two – this touches on the Premier’s own department; the department of jobs, precincts and regions, 12; and the department of transport, 11.
Those are the government’s figures, and that does not include the statutory bodies. They are not represented in the data we have been provided, so I have gone back and said, ‘We need that data,’ because we are not even scratching the surface. We are not looking at nurses. We are not looking at police. You can be sure there will be a lot more to come. We are not looking at our firefighters. Who cares about all these people? Where are those figures? As Mr Davis has already pointed out today, just for the record, the government sector has 43 per cent of claims, the non-government sector 38 per cent. The greatest offender here is the state government of Victoria. The greatest offender here is the Labor Party, the people running that government.
What a disgusting turn of events. They wanted to sit here and push this legislation through this week, in the last week of Parliament. And do you know why? Because they are so concerned about the money it is going to cost them, not the individuals, not the workers – not their rights, not their claims, not their mental health, God forbid. No, they are worried about how much it is going to cost them in December and January until they come back in February or March. That is what they are really worried about – the dollars. It is all about the dollars, because they have mismanaged this now for the better part of a decade, and they know it. They know they have. Successive ministers have been asleep at the wheel. In caucus I would encourage you to get up and talk about those ministers and their failings. They have put you and the rest of Victoria in this terrible position, because yet again you have a scheme which is unmanageable.
Recall, despite the mess you left us with in 1992, by the time the Kennett government was defeated we actually left you with a scheme that was financially sustainable. They are the facts. We can argue about its coverage. We can argue about whether parts of it were good or bad – I think that is a good and constructive argument to have – but it was financially sustainable. How in such a short period of time have you already managed to cock it up to such an extent that you are now cutting off the payments to workers, the very people we are supposed to represent and defend at their most vulnerable? I honestly hope the backbench of the Labor Party and the caucus overturn this ridiculous attack on workers.
Then, as Mr Davis has already given his attention to today, there is this report which they tried to keep secret. They knew before the last election. This is a dark day for this place. I would encourage everyone to support the motion and to support the workers of Victoria. I only hope the Labor Party comes to its senses.
Sonja TERPSTRA (North-Eastern Metropolitan) (11:20): I rise to make a contribution on this motion in Mr Davis’s name, which is effectively seeking a referral for the Economy and Infrastructure Committee to inquire into and report on the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023. I have had the benefit of listening to Mr Davis’s contribution and also other members’ contributions in this place.
What I wanted to do was start my contribution on the basis of being someone who represented workers, before coming to this place, for about 25 years. I have sat with workers who have suffered physical and mental injuries as a consequence of their employment. It is a really difficult thing to listen to workers talk through what they are experiencing with their physical injuries. One case that certainly stuck with me as a young union official was a man who was a plant and equipment operator and was suffering a degenerative condition in his back. Despite all of his best efforts at rehabilitation and his willingness to return to work, the reality was that being able to return to that job was just not possible for him.
The reason why I put that story in my contribution is that what we are hearing from those opposite is a glossing-over of how complex workplace injuries often are and can be. There is no cookie-cutter approach to this. There is no silver or magic bullet to say that an approach to someone’s recovery from injury could be the same as somebody else’s, and oftentimes people’s recoveries are quite unique. The other part to this is as a union official I would often say to employers, ‘Can we please negotiate around reasonable adjustments? This person may not be able to do the job that they were doing, but they’re still ready, willing and able to work for you as the employer.’ Guess what would often happen: ‘No, we can’t do that.’ Honestly, the rhetoric from those opposite is quite breathtaking.
Sonja TERPSTRA: I want to take up the interjection from Mr McGowan, because I sat in silence and let him continue his contribution in silence, and I am fed up to the back teeth with the constant stream of interjections from Mr McGowan. I would ask that I be allowed to continue my contribution in silence.
The ACTING PRESIDENT (Michael Galea): Ms Terpstra to continue without interruption.
Sonja TERPSTRA: Thank you. This is a very sensitive matter. It is a very serious matter. I am concerned about the tone of this debate where people are talking about people as if they do not matter. There has been a lot of focus on –
Tom McIntosh: On a point of order, Acting President, I think Ms Terpstra has made clear that she would like to be able to make her contribution without being interrupted, and you have asked for that to occur, so I think that could be respected.
The ACTING PRESIDENT (Michael Galea): Ms Terpstra to continue without assistance.
Sonja TERPSTRA: Thank you. As I said, there are people involved in these claims. You can talk about the finances, the money, the structure of the claim and all those sorts of things, but what we have all got to remember is we have got to try and assist people to get back to work, and in some cases, as in the example that I gave, it is just not possible. As I said, my role as a union official would be to try and negotiate with the employer to say, ‘Well, what other options are there? This person wants to continue working for you, wants to make a contribution, is capable, ready, willing and able to continue to make a contribution for your business, it just requires a little bit of adjustment.’ It would not happen. I highlight that as somebody who has been a practitioner in this space for 25 years. It frustrates me to hear those opposite and members of the crossbench talk about this in a very academic sense, because they are pretty light on some of the intricate detail about what actually goes on and how workers are affected.
I will talk about another sector that I was engaged in representing workers in. I would like to hear from anybody in this place – I know I certainly could not do it – about some of our workers in the healthcare sector who work with some of the most vulnerable people in our state, some of our people who have very severe and lifelong mental health conditions or disabilities. Working with people like that in a healthcare setting can actually put your life at risk. What do you do when somebody threatens your life or you are physically attacked? Are you saying that somebody like that should not go on workers comp? I know I would. I know I would absolutely have to have time out of the workplace and have treatment for psychological distress or injury.
This is what we are dealing with. There is no cookie-cutter approach to how somebody may deal with and be confronted with a traumatic injury in the workplace. These are some of the most complex and complicated roles that Victorians do in the workplace – in the healthcare setting, in our juvenile justice setting, in our corrections facilities. Then we also have people who work in construction, for example. You might think, ‘Oh, construction.’ Well, construction has inherent dangers in it. Mr McIntosh was a former electrician. I reckon Mr McIntosh can talk about many things that he might have seen in his workplace where people were working with electricity – 240 volts. If you touch it, you are either going to die –
Tom McIntosh: All the dangers through construction.
Sonja TERPSTRA: All the dangers through construction. Again, there is no cookie-cutter approach to this. There are many and varied and a range of ways in which people can be injured. I have got 3 minutes on the clock, but the point of this is that the referral to the committee will just mean that we are going to hold this up for workers. Workers actually need our assistance right now. Obviously there is an issue around mental injury claims, and the point I make about it is this: everyone’s recovery from mental injury can be quite different and unique, from one person to the next, but at some point though there needs to be an end point, I accept that, and that can be difficult for some people. I know that under the New South Wales scheme, a scheme that I worked in a long time ago, there was an opportunity where, once you had gone through the payment system and you could demonstrate that you had recovered from your injury or illness, you could actually ask to have your job back – two years later. What we are dealing with here is financial assistance and the treatment of an illness or injury, but under the scheme there are opportunities where someone can say, ‘Actually, it’s two years later. I’ve now recovered and I want my job back.’
We are only talking about certain things here, in a vacuum, and not talking about how the whole scheme operates and the assistance available, but having a committee referral is not going to help workers; it is actually not. That is why it is heartening to see that the government is looking at Return to Work Victoria, because that is what we need to focus on – getting people back to work. But there are weird structural impediments to some of this. For example, say I was a teacher and I had a bullying complaint in the workplace. I may not want to go back to that workplace, I might want to go somewhere else, but there may be structural impediments to why I cannot go somewhere else, and these might be related to industrial arrangements. Part of Return to Work Victoria can go into looking at some of those things and facilitating appropriate return-to-work arrangements for workers that are negotiated with workers.
Mr Davis, I listened to your contribution and you saying ‘Oh, we’ve just got to get back to work’ and all this sort of stuff. It is not that simple. I have heard this before; I have been a union official when we have had Liberal governments in power. You are not the workers’ friend, because I will tell you right now, whenever –
The ACTING PRESIDENT (Michael Galea): Order! Mr McGowan!
Tom McIntosh: On a point of order, Acting President, as –
Tom McIntosh: I cannot even get a point of order in.
The ACTING PRESIDENT (Michael Galea): Mr McGowan, please stop interjecting.
Tom McIntosh: Can I continue with my –
The ACTING PRESIDENT (Michael Galea): Thank you, Mr McIntosh. I know what your point of order was going to be.
Sonja TERPSTRA: In the minute that I have left – because Mr McGowan deliberately ran down my clock with the constant interjections, and I think Mr McGowan should be called to account for reflecting on the Chair and not upholding your orders – what I will say is that the point that Mr Davis made about making sure people return to work was nastiness cloaked in concern, because what we see is a cut-off and then people are left to languish. They say, ‘I need more assistance and attention.’ That is why we often have a personalised plan for workers, which is done in consultation with them and the return-to-work rehabilitation provider and is tailored to account for their particular needs, and they are not just cut off at the end of that plan and told, ‘Well, that’s it. You’re out’, and then left to languish on their own.
The point I make is that it is not simple. This committee referral is really not going to help one worker one bit, and I know it is about the opposition and Greens working together to cause us maximum political pain. Shame on all of you. We should be focusing on workers and their return to work.
David LIMBRICK (South-Eastern Metropolitan) (11:30): I have spent much of the last five years since I got elected railing against this government’s excessive spending, waste, increased taxes and increased debt, and all of a sudden I get presented with a bill from the government basically acknowledging that one of their schemes, the WorkCover scheme, is financially unsustainable. I do not think anyone here agrees that it does not need reform. It is running on a trajectory which will see it turn into a financial catastrophe. The government has recognised this, and they have done something which I think is actually quite modest: they have said for the spiralling mental health claims the main feature is that they need to be diagnosed by a doctor and be recognised under the Diagnostic and Statistical Manual of Mental Disorders,the DSM-5. This seems like a quite reasonable thing to get these claims under control. I am absolutely certain that the government is not doing this for popularity. They are copping a lot of heat from the union movement. They are copping a lot of heat from the left. They are sort of being forced into this by financial reality, which sooner or later is going to bite you on the bum when you spend too much money and let things run out of control.
I welcome what I see as a financially responsible decision. I am highly supportive of these changes. I was hoping that the bill would go through this week, and it will not, but what has surprised me the most is the opposition’s reaction to this. Rather than support it, what they have done is team up with the Greens and kick it out to March next year. I am very, very concerned about the consequences of doing this, because it is my understanding that there needs to be a new premium order around April next year. If the government does not have certainty on this, I am very concerned that there have been massive premium rises already that are sending businesses under, that the businesses that can survive will have to absorb those costs and push up inflation or they will have to sack workers. None of these are good for the Victorian economy. We cannot let these premium rises run out of control. I will not be responsible for delaying these changes that are going to potentially help these premiums not be as high as they otherwise would have been.
I have said to the opposition and I have said to the government I am very supportive of some sort of inquiry to look at more changes to WorkCover, things that can be improved and this sort of thing, but the problem I have got with this inquiry is it is specifically related to this bill. Let us say that the inquiry comes up with all these wonderful recommendations and wonderful things that are going to be good for this state. There is no way that they can be implemented in time. The idea that the inquiry is going to come back in March and somehow we are going to draft amendments and things to pass it in March in time to be rolled out – the government is going to need time even for the existing bill to be able to roll out these changes. I just do not think that it is feasible. I do encourage the government to look at further reforms to WorkCover, and I hope that the opposition and the rest of the crossbench will be also interested in doing that, because I do not think that this bill fixes all the problems in WorkCover. I do not think that anyone is claiming that it will, even the government, but it is a fairly modest and financially responsible change. I do not want to be held responsible for these potentially massive increases that are going to push up business failures, push up inflation and send workers onto the dole queue. I do not want to be responsible for that.
Georgie CROZIER (Southern Metropolitan) (11:34): I rise to speak to the motion that we are debating today. Mr Limbrick has spoken about what the inquiry is about. I mean, we need this inquiry for this piece of legislation. That is what we are in here for, reviewing legislation, and if it is not right, then we fix it. That is what we have been elected to do. That is why this inquiry is so important.
Mr Limbrick referred to the date of 6 March. The government has come to us and said they want it to be 6 February. The government could have got this inquiry up and running two weeks ago and decided not to. They voted against that. Two weeks ago we could have had this inquiry set up. We could have started the process of getting the issues around this legislation fixed. This is too important not to get fixed.
Nick McGowan: We could have done it in 2020.
Georgie CROZIER: I will come to that, Mr McGowan. You are absolutely right; in 2020 we had the Finity report. Mr Limbrick has got legitimate concerns about driving up premiums, but let us not forget who is responsible for that. That is the minister Danny Pearson himself. He is the man who has been responsible for overseeing WorkCover and this scheme where the premiums this year have risen on average 42 per cent. You and I both know that that is not right. There are businesses that tell us that they have got premiums that are up 70 or 80 per cent. This minister has absolutely failed every single business in this state in overseeing this WorkCover scheme. He has broken it. Just like the state is broke, this scheme is broke, and this is all at the hands of the Labor government.
Mr McGowan referred to the Finity report Financial Sustainability Review WorkSafe Victoria December 2020. Mr Davis referred to this. What the hell has the government been doing for three years? Sitting on this report that has some very alarming findings around what needs to be done. Importantly it talks about the issues around what we are very concerned about, and that is the return-to-work improvement. The report states:
• RTW rates have been deteriorating over many years, and unless these can be improved then the end result is more claimants on benefits for longer
It goes on to say a whole range of other things around what is wrong and what the government needs to do to fix the issues that WorkSafe is facing. This report has been with government for three years, and now the government comes in here and expects us to rubberstamp this legislation when we still have concerns about it.
This is an important referral to the Economy and Infrastructure Committee so they can do a couple of days’ hearings, but the government knows and Danny Pearson knows, and everybody in Victoria should know, that in the lower house he said premiums will rise again. That is not because we are delaying this legislation; that is because of what is already built in. He has already stated that in the Assembly, so do not blame us. Every single business and everybody in this house should be very concerned about the useless way in which the minister has managed this, and now we are finding that businesses are paying enormous penalties.
Nick McGowan: And that costs jobs.
Georgie CROZIER: That will cost jobs, as Mr McGowan is interjecting. They are already losing jobs in Victoria. Why are they losing jobs? Because confidence is being sapped out of this state.
The taxation impediment not only on business but on families is driving confidence and investment down. That is very bad for our state. Look at the number of taxes that this government has imposed on hardworking Victorians – just mammoth amounts. You talk about the deals. They have just done a deal with the Greens to increase taxes. The taxes that this government is responsible for are strangling this state and causing so much harm. That is what is going to cause job losses.
We have to get back to a return-to-work scheme. I am alarmed about a report that has just come out this morning from Bendigo Health. A Bendigo Health staff survey has revealed safety concerns over electronic patient records. Now, this was contentious some time ago, and we understand that technology is part of the issue, but alarmingly this story says that up to 50 per cent of clinicians reported plans to leave Bendigo in the next two years, with nurses and allied health professionals reporting high levels of burnout. We cannot have that. Our health system cannot afford to have 50 per cent of their nurses and allied health clinicians leaving the system because of burnout. We need support in place, and we need a return-to-work scheme. We need to have that in place so that our health system remains up and running.
We have seen the debacles that are happening and the disasters and the catastrophic stories that happen every few days. It just alarms me to no end, what is happening in this state in 2023 under this government. And this is important. We have to get this return-to-work scheme right. We have to understand exactly the impost on business, there is no question about that, but the government’s consideration of various stakeholders was just not even undertaken. They did not even consult with the mental health sector. In my last few minutes I just want to again quote from this report:
In our view, while there has been a significant reassessment of the costs of the scheme at June 2020, unless WorkSafe is able to improve a number of aspects of return to work and terminations, we would expect these assessments of claims costs to continue to increase.
This is in the report from back in December 2020. What has the government done about that? Absolutely nothing. Nothing. And we had those huge premium increases last year of an average of 42 per cent. That has cost business. That has cost jobs. And they expect us, in short, to say, ‘Well, you’ve got it right this time.’ We know they have not got it right, and that is why this referral is incredibly important – to get this inquiry to do the work it needs to do to fix the government’s flawed legislation so that we can get a better system in place on behalf of business and workers in the state.
Ryan BATCHELOR (Southern Metropolitan) (11:41): I am pleased to rise to speak on the motion in Mr Davis’s name seeking to refer the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023 to the Economy and Infrastructure Committee. The contributions across the course of the debate today and more broadly in the public domain have underlined how important the modernisation of the WorkCover scheme is here in Victoria. There has been considerable pressure placed on the scheme through a range of factors, many of which have been canvassed by other members in the debate. The impact that doing nothing will have on business and workers in this state is potentially quite devastating, which is why the government, led by the relevant minister, has been so proactive in engaging and in coming up with policy solutions to find a way to ensure that the workers compensation scheme that has existed with such strength in this state since this statutory scheme was introduced by the Cain Labor government in 1985 can continue to provide the necessary support to workers who are injured at work.
I think as others have said, including Ms Terpstra so eloquently in her contribution, we absolutely must remember who WorkCover is designed to support, who WorkCover is designed to assist, and that is Victorian workers. It is to ensure that when they go to work they come home safe, they come home alive, and that in the unfortunate set of circumstances where they are injured at work, there is a statutory insurance scheme that is viable and able to meet their demands so that they have got certainty about what their future looks like. Because nothing could be worse than having a loved one injured at work and then facing the uncertainty in the future about what should confront them. We must all ensure that the supports that are available to injured workers are sufficient to meet their needs. That is why the WorkCover modernisation bill is so important to be considered by this chamber. The government has obviously sought to examine the issues confronting us. We know that premiums had to rise. We made the difficult decision earlier this year to increase the premium rate to 1.8 per cent of remuneration to better align Victoria with other comparable jurisdictions, but raising premiums alone is not going to solve all of the issues and the pressures that our statutory workplace compensation scheme is facing.
We have had a tripling of liabilities since 2010, and the long-term nature of many of those claims, the rise of mental injury claims, has created a set of circumstances that fundamentally was not envisaged when the scheme was first designed and created. We do need to do the work to ensure financial sustainability, but more importantly because of the nature of the timing of scheme arrangements we have got to make sure that legislation to fix some of these issues – not just paper over the cracks but fix some of these issues – is passed by the Parliament before scheduled premium rises, and the notices of premium rises are due to be made early in the year.
This brings us to the nature of this motion, which seeks to further consider these issues, because there has been an acknowledgement in the debate that they are important, and we agree – that is why the government wants to pass legislation to fix them. We think they are serious; we want to fix them. We do not want delay, and we do not want business to face the uncertainty of potentially quite significant premium increases as a result of this Parliament’s inability to pass legislation because of the obfuscation that we are seeing from certain members of this place – refusal to deal, kicking the can down the road, kicking it into the long grass, hoping it is a problem for next year. That is also what this motion before us seeks to do – it seeks to push consideration of the legislation designed to fix the problem beyond March. We do not think that that is in the interests of Victorian workers, and we do not think that that is in the interests of Victorian businesses. We think that should the Parliament, should this Council, decide that it is an issue that is worthy of consideration by the Economy and Infrastructure Committee, that consideration should be concluded before the Parliament resumes in the new year. I am happy to have circulated the amendment relating to omitting the words in the motion ‘by 5 March 2024’ and replacing them with ‘by 6 February 2024’. That amendment will be circulated now. I move:
That the words ‘by 5 March 2024’ be omitted and replaced with ‘by 6 February 2024’.
The effect of this amendment is to change the final date for reporting of the committee – to bring forward the final date – so that should the Parliament, should this Council, agree to refer the bill to committee, that committee work can be done over the next several months to ensure that we have a report with recommendations from that committee before us before we meet again and so that when we rise at the end of this week we will know that in our next sitting week that investigation will have been completed and the debate on whether this law should pass can occur as soon as possible once the Parliament resumes in the new year.
We know that if we delay further we will place injured workers under more stress, strain and uncertainty, because it will place serious questions over how the scheme will continue. And we know that the Victorian WorkCover Authority, in making its decisions about premium rates that it needs to make ahead of the premium rate increases that are due to be notified in April, will need to be thinking about these things in the weeks prior to the issuing of those notices. Whilst we would prefer obviously for these matters to be dealt with as soon as possible, the government strongly thinks that to provide the sort of certainty about premiums that business requires and to provide the sort of peace of mind that injured workers require this house should ask – should require in fact – that the consideration by the Economy and Infrastructure Committee be concluded by 6 February so that when we return next year we can debate the merits of the legislation, informed quite possibly by any recommendations that the committee deems necessary to make. I am sure that given how important this issue is for so many in our community, both businesses and workers, the committee will be able to avail itself of the 10, 12 or so weeks that will be available to it to efficiently conduct its business.
This is a matter which has been the subject of a lot of debate, a lot of discussion. There have been many consultations undertaken by the government, led by Minister Pearson, with relevant parties. This is a topic that key and interested stakeholders know very, very well – very, very well – and in the context of that extensive consultation we believe that the committee process, should the Parliament, should the Council, agree to conduct the committee inquiry, can be done reasonably efficiently and that consideration can be given to all of the issues that are on the table but that we can provide the certainty we need to give to injured workers and to businesses so that, come March or April, when premium rises are due, they can have certainty that this legislation will be considered. I strongly urge all members to support the amendment to change the reporting date to 6 February. It is the best way, should this motion get up, that we can ensure that the necessary considerations are done by the committee and that businesses and injured workers are provided with certainty, because what we cannot allow to happen is that our workers compensation scheme is placed in further jeopardy. It is too important to injured workers here in Victoria to allow that to occur, and I urge all members to support the amendment that has just been moved in my name.
Bev McARTHUR (Western Victoria) (11:51): I am very pleased that the government has obviously conceded that an inquiry is necessary. That is a breakthrough. But I will be circulating an amendment shortly. After discussion with the crossbench it has been decided that the most suitable date for the conclusion of the inquiry would be 22 February, and that is what we will be proposing. I move:
That the words ‘by 6 February 2024’ be omitted and replaced with ‘by 22 February 2024’.
We have got to remember that this is a problem of Labor’s own creation. You have completely stuffed up a system that should ensure that workers are compensated but businesses are not left languishing in this whole area – and you admitted that, because in your press release of 19 May you actually said that ‘WorkCover is fundamentally broken’. So you have admitted you have completely mucked up the scheme. Under Labor’s watch over the past decade there has been a tripling of claims liability and longer times on average spent on the scheme. Recent analysis by Victoria’s independent budget watchdog the Parliamentary Budget Office confirmed that businesses will be slugged an additional $17.8 billion over the next 10 years – $17.8 billion coming out of their bottom line. We know this government loves taxing businesses. You actually hate business, and you are forever taxing them, but businesses create wealth and they create employment. You should never forget that. We can actually say that this government has failed Victorians and failed businesses with these premium hikes.
During the term of the coalition government, 2010 to 2014, WorkCover premiums went down by more than 5 per cent. Victoria currently has the lowest rates in Australia for return to work post injury, and the longer a person is on WorkCover the less likely they are to return to work. Victoria currently has the lowest rates in Australia for return to work post injury; that is an indictment.
I want to go to a local constituent in my electorate, Glenn Carroll from the Horsham Sports & Community Club, who wrote to me to say:
Many thanks to the Victorian Labor government for increasing our WorkCover Premiums by 80% –
80 per cent, no less, because in 2022–23 the premiums were $19,386.20 but in 2023–24 they have risen to $35,205.66 –
So much for the mooted 43% increase which was exorbitant anyway.
This is an 80 per cent increase in premiums. My constituent goes on to say that they are not sure what extra services are being provided. Well, there are clearly none. The increases are to compensate for your extraordinary mismanagement of an important system. The increase in the cost of providing WorkCover is a symptom, but the cause is the mismanagement of the whole system. Just increasing premiums at the cost of business treats the symptoms, but how does Labor plan to treat the actual cause – or are they just relying on businesses to bear the cost of their gross mismanagement? That is why a short, sharp inquiry concluding by 22 February is vital. We cannot process legislation in this place which is flawed. We need to get it right. This is an extraordinarily short time frame, actually, for an inquiry, but I am on that committee, as is Mr Davis, and I am sure we can get the job done, learn what the real problems of the scheme are and get it sorted.
Your legislation is flawed and it needs to be made better. Labor’s claim that small businesses could be hit with additional costs as high as $6500 a year to prop up WorkCover if we do not pass these changes is nothing other than blackmail. Why should small businesses have to pay for Labor’s failures? The changes to this scheme were initially proposed due to mental health claims making up 16 per cent of all WorkCover claims. Is this thanks to the pandemic and the lockdowns that occurred in this state or Labor’s general mismanagement of our economy and indeed the whole state? We need to move that the amendment be adopted, so I move that the amendment to Mr Batchelor’s amendment be proposed.
Sheena WATT (Northern Metropolitan) (11:57): President, you honour me with this opportunity to address the chamber on the motion before us today just before question time. I understand that there are two amendments to the piece before us today. Thank you to those members who have moved them, and I note them with great interest. I will join other members of this chamber by noting that WorkCover is of course a very critical part of our worker landscape, providing such a critical service to workers when they need it most. People do not go to work thinking, ‘At the end of the day I think I’ll need to make a call to WorkCover,’ but unfortunately that happens for altogether too many people.
We know the extraordinary growth of WorkCover is something that deserves our attention and reflection, and that is why I am really proud to be part of the Allan Labor government, which has worked with a range of stakeholders over a great number of months to put forward a suite of proposed changes to the WorkCover scheme and see how it can best support workers in our fine state. We have – I myself am included in that – been very clear with our brothers and sisters in the unions about what this means and where the situation is with our WorkCover scheme here in our state. We have also talked to businesses and business leadership about this and been very clear with them about the upcoming changes that we are proposing and of course having to make some very, very difficult decisions – very difficult but of course necessary decisions. It is a necessary decision, I must say, to increase the premium rate to 1.8 per cent of remuneration, bringing us in line with the average premium rate in other states and territories.
I will just say, though, that I have indeed a great deal of remarks that I would like to make on this motion, and if I could be afforded the opportunity after question time to return to this, I would certainly appreciate that.
Business interrupted pursuant to sessional orders.