Submission on Statutory Review of Workers Compensation Amendment Act 2012 Review by the Centre for International Economics 30 May 2014

Transcription

1 Submission on Statutory Review of Workers Compensation Amendment Act 2012 Review by the Centre for International Economics 30 May 2014 Unions NSW Trades Hall Level 3, 4 Goulburn Street Sydney T: F: Page 1

2 Introduction 1. Unions NSW is a State Peak Body as defined by section 215 of the Industrial Relations Act 1996 (NSW). Unions NSW has over 60 affiliated unions representing members employed across a wide range of public and private sector industries including teaching, local government, retail, distribution, childcare, manufacturing, electrical, health, emergency services, agriculture, engineering, construction, administrative, the public sector and transport. Collectively Unions NSW and its affiliates represent over 600,000 working members employed across NSW. 2. Unions NSW welcomes the opportunity to contribute to the improvement of workers compensation in NSW. The scheme has been developed by unions on behalf of injured workers since the end of the 19 th century through workplace accident provisions and then legislative arrangements. The Workers Compensation Act 1987, and the Workplace Injury Management and Workers Compensation Act 1998 cover over three million workers making it the largest workers compensation scheme in Australia Our submission relies on the following documents that have already been submitted to other inquiries on this subject matter: Unions NSW, Submission to the Joint Parliamentary Select Committee Submission on the NSW Workers Compensation Scheme, Dr Kevin Purse, Central Queensland University, May 2012; Unions NSW, Submission to the Review Of The Exercise Of The Functions Of The WorkCover Authority, January 2014; Professor Ray Markey, Dr Sasha Holley, Dr Sharron O Neill, Dr Louise Thornthwaite, The Impact On Injured Workers Of Changes To NSW Workers Compensation: June 2012: Legislative Amendments Report No. 1 For Unions NSW; and Dr Kevin Purse, Provisions of Fair and Competitive Workers Compensation Legislation, Industrial Health and Research Foundation, Safe Work Australia, Comparison of Workers compensation arrangements in Australia and New Zealand, July 2013, p.21 Page 2

3 Terms of reference 4. The Review has stated its Terms of Reference are broadly set out in clause 27(1) of Part 19H to Schedule 6 of the Workers Compensation Act 1987: a. The Minister is to conduct a review of the amendments made by the 2012 amending Act to determine whether the policy objectives of those amendments remain valid and whether the terms of the Workers Compensation Acts remain appropriate for securing those objectives (emphasis added). 5. The Workers Compensation Amendment Act 2012 (the Act) did not contain a statement of its policy objectives. However, the second reading speech referred to the seven guiding principles of reform contained in the Government s Issues Paper entitled NSW Workers Compensation Scheme Issues Paper published in April Those seven guiding principles are therefore seen by the review to form part of their Terms of Reference. The principles and objectives are: 1. Enhance NSW workplace safety by preventing and reducing incidents and fatalities; 2. Contribute to the economic and jobs growth, including for small businesses, by ensuring that premiums are comparable with other states and there are optimal insurance arrangements; 3. Promote recovery and the health benefits of returning to work; 4. Guarantee quality long term medical and financial support for seriously injured workers; 5. Support less seriously injured workers to recover and regain their financial independence; 6. Reduce high regulatory burden and make it simple for injured workers, employers and service providers to navigate the system; and 7. Strongly discourage payments, treatments and services that do not contribute to recovery and return to work. 7. The two key questions for the review are: a) Do these seven policy objectives remain valid? b) Does the Workers Compensation Act 1987 remain appropriate for securing those objectives? a) Do these seven policy objectives remain valid? Page 3

4 8. Unions NSW submits that the seven guiding principles were incorrect in the first place. There is no mention of fair compensation for injured workers which should be the central tenant of workers compensation legislation. Workers who suffer an injury or illness due to their work should receive fair compensation, particularly wage replacement and medical costs. 9. Even before the 2012 Act came into operation, Safe Work Australia had estimated that only 5% of the cost of workplace injuries were being borne by employers, with the remaining 95% being borne by the worker and the community 2. In terms of the burden to economic agents, 5 per cent of the total cost is borne by employers, 74 per cent by workers and 21 per cent by the community. The trends over the three iterations of this report are for an increasing proportion of costs borne by workers and a decreasing proportion of costs borne by the community The cost of workplace injuries has been estimated to be $60.6 billion ( dollars) or approximately 5%- 6% of GDP by the Industry and Productivity Commissions and Safe Work Australia The 2012 Act resulted in significant cost shifting from employers (who enjoyed reduced premiums 7 ) to injured workers and taxpayers through an increased reliance on Medicare and Centrelink 8 9. Unions NSW is concerned that this situation is unfair and that it creates a significant disincentive for employers to take care of safety when someone else will bear the cost. b) Does the WC Act remain appropriate for securing those objectives? 2 Safe Work Australia, The Cost of Work Related Injury and Illness for Australian Employers, Workers and the Community: , (2012), p. 3 3 Safe Work Australia, The Cost Of Work- Related Injury And Illness For Australian Employers, Workers And The Community: (2012), P.3 4 Ibid, page 3 5 Industry Commission, Work health and Safety: an Inquiry into Occupational health and Safety, Volume 1: Report, Industry Commission, Report No. 47, 11 September 1995 pp Productivity Commission 2004, National Workers Compensation and Occupational Health and Safety Frameworks, Australian Government, p Michael Playford, Workers Compensation Nominal Insurer Scheme, Valuation results as at 31 December 2013, Price Waterhouse Coopers PWC, page 10: tabled to NSW Parliament Law and Justice Standing Committee, p.9 8 Transcript Standing Committee on Law and Justice, Inquiry into review of the Exercise of the functions of the WorkCover Authority, Monday 12 may Pp4-5 9 Letter from Minister Constance to Emma Maiden Unions NSW Assistant Secretary, 4/2/2014 Page 4

5 12. Unions NSW submits that the measures contained in the current Act (including but not limited to the Amendments) fail to meet these objectives. 13. We question the appropriateness of an economically focussed analysis of workers compensation as contained within several of the objectives. Workers compensation s has a history of reducing benefits in order to pay for lower premiums. 10 It shows a failure to value the lives of workers and their families through suitable compensation while participating in the economy through work. Competitive federalism has seen the reduction of premiums and then compensation benefits across the country in a perverse Dutch auction, as states apparently compete for capital. As premiums have been reduced and with fluctuations in the financial markets, the different jurisdictions continued to fine tune any compensation downwards. This Dutch auction is despite any evidence of price elasticity/ interstate capital mobility based on workers compensation premiums. 14. Independent research conducted by Macquarie University has dealt with the moral hazards posed by the cuts to workers compensation in NSW The following section addresses each of the seven objectives. We have included relevant references to the Unions NSW 2014 Workers Compensation Survey. This survey is currently underway but has already reached a statistically significant cohort. Objective 1: Enhance NSW workplace safety by preventing and reducing incidents and fatalities 16. The 2012 Act has failed to meet this objective because the changes in the 2012 Act do not address work health and safety at all. Our submission to the Law & Justice Committee outlines how WorkCover is dropping the ball on prevention of illness/injuries with a plateauing of fatalities, fewer interventions from prosecutions and fewer workplace visits. 17. Research from Macquarie University suggests that there may be a moral hazard created by a reduced focus on safety, combined with the cuts to workers 10 Purse, K. (2011). Provisions of fair and competitive worker s compensation legislation, University of South Australia. Research funded by the Industrial Health and Research Foundation, pp Professor Ray Markey, Dr Sasha Holley, Dr Sharron O Neill, Dr Louise Thornthwaite, The Impact On Injured Workers Of Changes To NSW Workers Compensation: June 2012: Legislative Amendments Report No. 1 For Unions NSW pp Page 5

6 compensation. The reduction Act s in liability and capping of payments is likely to reward poor safety practice with minimal consequence for the employer NSW retains a higher rate of injury than Victoria (13.7 vs 9 claims/ 1000 employees ) which is why Victoria should have lower premiums: as a reward for better safety initiatives. 19. With the employer only contributing 5% of the cost of workplace injuries and the true cost exceeding over $60 billion, the greatest emphasis from an economic and social point of view should be on encouraging greater safety in the workplace by the employer, who has the primary duty of care for workplace safety 14. The parties with the most influence over workplace safety are the employer and the regulator (WorkCover). The Act has done nothing to change workplace safety and has in fact reduced incentives to prevent injuries by reducing liability coverage for workers compensation and reducing the cost of injury and illness to employers and WorkCover. 20. Anecdotal evidence from the Unions NSW 2014 Workers Compensation Survey shows some perverse safety outcomes. Emergency response personnel, carers and law enforcement officers who are not exempted from the changes, indicated they would be less likely to intervene in incidents where their own safety is put at risk. Objective 2: Contribute to the economic and jobs growth including for small businesses by ensuring that premiums are comparable with other states and there are optimal insurance arrangements 21. The amendments have failed to meet this objective. Unions NSW submits there is no evidence that competing with other states for lower premiums will boost the state s economic and jobs growth. In fact, by artificially changing premiums so they do not reflect the level of injuries in NSW, economic incentives are actually distorted. 22. Employers have enjoyed a 12.5% reduction in premiums since the workers compensation cuts. The average target premium rate for NSW is now 1.47% 15 of 12 Ibid. pp Safe Work Australia, Comparison of Workers compensation arrangements in Australia and New Zealand, July 2013P Safe Work Australia, The Cost of Work Related Injury and Illness for Australian Employers, Workers and the Community: , (2012), p Michael Playford, Workers Compensation Nominal Insurer Scheme, Valuation results as at 31 December 2013, Price Waterhouse Coopers PWC, page 10: tabled to NSW Parliament Law and Justice Standing Committee Page 6

7 wages which when compared to Queensland ( ) and Victoria ( ) would make NSW appear to be marginally less competitive than Victoria. However, a number of factors indicate that the NSW premiums are more than competitive. 23. NSW does not have an excess as Victoria does. In Victoria there is a requirement for the employer to pay the first 10 days wages as an excess and also the first $642 in medical and related expenses. If this system was adopted in NSW, the NSW scheme would not be required to pay weekly benefits for up to 90,000 injuries a year and the first $642 of every claim would be paid by the employer 18. In Victoria employers can opt to buy out the excess and this then brings the premium to % target premium rate 19. This indicates that there is virtually no difference between the target average premium rate between NSW and Victoria. 24. Victoria also has a lower reported workers compensation claim rate than NSW. There are many reasons for this, including the industry profile of NSW and the greater cohort of people who are considered (deemed) workers in the NSW scheme compared to Victoria. 25. There are also less injuries in Victoria per person covered by the scheme 20. Unions NSW submits that efforts should be focused to reduce the number of workplace injuries which will intern reduce the costs to workers, the community, employers and the economy. The multiplier effect is enormous. Preventing injuries saves the economy up to 20 times the cost of workers compensation The scheme s viability has, on the majority, been generated by the changes to the underwriting provisions caused by the removal of benefits. The cuts to benefits saw changes to the scheme viability of $3.9billion in the 2012 calendar year Queensland Law Society, Operation Of Queensland s Workers Compensation Scheme Additional Submission, 22 March reference. 17 Safe Work Australia, Comparison of Workers compensation arrangements in Australia and New Zealand, July 2013P.21 refers to premium 18 WorkCover Authority of NSW, Annual Report , page 17 See employment injuries for and just under major employment injuries (one week or more whereas the Victorian excess is for two weeks) 19 Queensland Law Society, Operation Of Queensland s Workers Compensation Scheme Additional Submission, 22 March Safe Work Australia, Comparison of Workers compensation arrangements in Australia and New Zealand, July 2013, p Safe Work Australia, The Cost of Work Related Injury and Illness for Australian Employers, Workers and the Community: , (2012), p Letter from Mr Michael Playford (PWC) to Mr Gary Jeffrey, Acting General Manager, NSW WorkCover, 20 March 2014, page 2 Page 7

8 27. Unions NSW submits that small business must be reeling from the effects the cuts to workers compensation on their local economy. In the Unions NSW 2014 Workers Compensation Survey over 60% of all injured workers indicated that they have had to make changes to their financial outgoings, including reduced family and social outings, reduced holidays, downsizing residence, and increasing debt. Page 8

9 28. With over 100,000 workers injured every year in NSW, there will obviously be long term effects on microeconomic buying power. 29. The survey also indicated that a number of generous employers are paying for employees leave and medical costs when the scheme cuts off those entitlements. This is a direct shift of costs to small business, for which they were previously insured. Objective 3: Promote recovery and the health benefits of returning to work 30. Unions NSW submits that evidence points to a failure of the 2012 Act to achieve this objective. 31. Much of the reform to the workers compensation schemes in the 1980s was driven by the idea of introducing occupational rehabilitation with a view to restoring the injured workers to their fullest capacity for gainful employment. 32. Purse 23 has reviewed the contribution of the NSW workers compensation scheme to the recovery of injured workers through the provision of rehabilitation. NSW came out poorly : In the case of New South Wales, a study commissioned by the Australian Rehabilitation Providers Association covering the four year period to June 2010 reported extensive delays in rehabilitation referrals. Only 33% of workers deemed as requiring rehabilitation services were referred within three months of their date of injury. Another 12% were referred over the next three months and another 24% during the ensuing 18 months. The remaining 31% were not referred until two years or more post injury There is nothing in the workers compensation cuts that addresses improving the above situation. In fact, rehabilitation expenses have declined significantly since the cuts, with a $72 million reduction in rehabilitation spending Purse K. Dr., Workers Compensation and the impact of Institutional Barriers on return to Work Outcomes, Journal of Health, Safety and Environment, Volume 29 (4), Australian Rehabilitation Providers Association. Inquiry into NSW Workers compensation Scheme, Sydney 2012:4, in ibid p Michael Playford, Workers Compensation Nominal Insurer Scheme, Valuation Results as at 31 December 2013, Price Waterhouse Coopers PWC, page 10: tabled to NSW Parliament Law and Justice Standing Committee, p. 6 Page 9

10 34. The scheme s actuary reports that the scheme spends more on investigations (in order to get people off the scheme or to identify whether to pay medical expenses or rehabilitation) than the scheme pays on rehabilitation. The scheme spends $411 million per year on investigations, while it pays $259million on rehabilitation Despite a recommendation from the Joint Parliamentary Committee, the 2012 Act does not promote return to work. However, the NSW return to work rate was competitive prior to the cuts. 36. The Safe Work Australia: Return To Work Monitor suffered from a change of sample size, methodology and consultant research company in the financial year after the 2012 Act. The responsible agency was also transferred from Heads of Workers Compensation Agencies (HOWCA) to Safe Work Australia. This led to large variations in the reported figures pre and post the workers compensation cuts. The two main variables reported longitudinally are: Returned to Work Rate 2012/13 by country and Australian jurisdiction (%) 27 Jurisdiction year (Pre cuts) year (Post cuts) Difference NSW % Victoria QLD % Comcare % The Returned to Work Rate is the proportion of injured workers who had returned to work for any period of time at some stage since their first day off work. Was known as the RTW Rate. Current Return to Work Rate (durable RTW) % 28 Jurisdiction Year Year Difference 26 Ibid. p The Social Research Centre, Return to Work Survey, 2012/2013 Summary Report (Australia and New Zealand) November 2013, p. 14 and Campbell Research. Australia and new Zealand Return to Work Monitor 2011/2012, prepared for Heads of Workers Compensation Authorities, July 2012,p.4 28 The Social Research Centre, Return to Work Survey, 2012/2013 Summary Report (Australia and New Zealand) November 2013, p. 16 and Campbell Research. Australia and New Zealand Return to Work Monitor 2011/2012, prepared for Heads of Workers Compensation Authorities, July Page 10

11 Pre cuts Post cuts NSW % Victoria % QLD Comcare The Current Return to Work Rate is the proportion of injured workers who were working at the time of the survey. Was known as the durable RTW Rate. 37. The above table indicates that New South Wales had above average return to work rates prior to the cuts. All jurisdictions improved or maintained as high return to work rates in the sample year, even those that did not make cuts to their scheme. 38. Unions NSW agrees that providing a sustainable return to work is one of the best mechanisms to assist recovery and rehabilitation. However, the so called crisis in return to work prior to the cuts was not real when compared to other states. The scheme actuary referred to a decline in claims management experience, which is essentially the responsibility of the scheme agents. Unions NSW submits that the emphasis on a return to work crisis was part of a public relations program to shift blame onto injured workers to pave the way for cuts to scheme benefits. 39. The 2012 Act created a moral hazard whereby it becomes cheaper to medically retire an injured worker, rather than return them to work. This is because for a large number of small sized policy holders (small business) the workers compensation premium is not sensitive to claims history to account for tail claims once the worker has left their employment. The moral hazard is extended for scheme agents in that it becomes cheaper to dismiss a worker rather than making workplace adjustments to facilitate return to work. With much of the research indicating that returning a worker to their previous work is the most successful outcome for durable return to work, any system that discourages the provision of return to work will adversely impact on the ability of those injured workers to rehabilitate. 40. Unions NSW has consistently argued for greater incentives for employers to hire long term injured workers and make it easier to find suitable work and harder to terminate workers who are injured. 41. In our 2014 Workers Compensation Survey over 35% of all workers who have taken time off for their workplace injury have indicated that they have encountered difficulties returning to work in relation to the provision of suitable duties. Page 11

12 42. There is no evidence to support the fact that cutting off injured workers from weekly and medical payments improves sustainable or durable return to work rates. No studies have been conducted in a peer reviewed format that we are aware of. The evidence seems to be anecdotal. Insurers have been able to cut off payments when a person is not complying with their return to work since the 1980s. The old scheme already addressed the small minority of claimants not willing to do the right thing. 43. The Work Capacity Assessment (WCA) and Work Capacity Decision (WCD) process in the 2012 Act is not related to the reality of return to work. The section 32A definition of suitable employment enables scheme agents to claim the injured worker has returned to work, they then cut off their weekly payments however in some circumstances the worker is not in any work. This creates a moral hazard for scheme agents claims managers to close files by assessing vocational and medical capacity without the worker having any work or medical capacity to undertake the hypothetical type of work contemplated by Section 32A. 44. Despite the Parliamentary Joint Select Committee recommendation to implement a specialist return to work inspectorate at WorkCover, this has not yet occurred and only a single digit cohort have been recruited and trained at present. When the Return to Work Pilot was undertaken by existing inspectors, there was evidence that inspector intervention reduced medical retirement (which would lead to a reduction in the scheme tail). 45. Return to work would be better targeted by: i. Strengthening the obligations on employers to return to work (such as reverse onus for suitable duties, no ability to terminate unless the doctor recommends different job with a different employer); ii. Real incentives on employers to hire long term injured workers; iii. Implementing a resourced and active return to work inspectorate to assist workers in their return to work process. Objective 4: Guarantee quality long term medical and financial support for seriously injured workers 46. Unions NSW submits that the workers compensation cuts have failed to meet this objective. Page 12

13 47. A 30% Whole Person Impairment (WPI) threshold is not seriously injured. 30% WPI is catastrophically injured. Only people have qualified as 30% WPI since the scheme s inception in 1987, in a scheme that has over claims per year. 48. This threshold for serious injury is too high and should be lowered to at least 15% WPI. However, any threshold is problematic as there are a number of people with less than 15% WPI injuries who find it hard to find work that could accommodate them without significant adjustments. 49. Unions NSW estimates 60,000 workers were cut off medical payments on 1 January A number of these people will be unable to work again due to the extent of their injuries or due to non- access to timely medical procedures. Most will never reach a technical requirement for 30% WPI. Objective 5: Support less seriously injured workers to recover and regain their financial independence 50. Cutting off the majority of injured workers from any weekly or medical payments is not about supporting them to recover. 51. The Unions NSW 2014 Workers Compensation Survey supports the idea that this objective has failed to be achieved from the 2012 Act. Just under half of all injured workers have had their financial situation worsen since they made their claim. 52. The main problem many injured workers face is their inability to find work, especially with the stigma and adjustment requirements of an injury or illness and possible unreliability as they manage their disability. 53. The cuts to workers compensation do nothing to support this objective and simply cut most people off from their medical and financial support. 54. The Unions NSW 2014 Workers Compensation Survey has indicated that about 44% of respondents who had made a workers compensation claim had either had their payments cut off, or were about to have them cut off. Of this group of workers, 69% have suffered from an additional injury and 67% had their financial situation worsened. 29 Page 13

14 55. On- going access to medical treatment is necessary for many injured workers to keep working or remain job ready. Timely access to affordable hearing aids, knee and hip replacements or arthroscopies can all lead to less time off work or continuation of employment if in a manual job. 56. The requirement in the 2012 Act for pre- approval of medical expenses has seen a number of reported cases where the insurer denies medical expenses to reduce scheme costs, or delay past the one year cap on medical treatment. 57. The more stringent definition of causation has also resulted in a number of workers being refused medical assistance when a traumatic injury has deteriorated with the natural ageing process. This has required a number of workers to wait to access Medicare elective surgery lists or pay for timely medical procedures caused by a workplace injury. Objective 6: Reduce high regulatory burden and make it simple for injured workers employers and service providers to navigate the system 53. The system remains a nightmare for injured workers. 54. Depriving legal representation for WCA and WCDs has made the system even harder for injured workers to navigate. At the same time, insurers have retained access to legal representation for the very same processes by using in- house counsel. 55. Service providers are finding it difficult to get pre- approval for rehabilitation/medical related services as insurers attempt to reduce claim costs. 66. A number of medical practitioners have indicated an unwillingness to continue to take workers compensation patients due to the increased regulatory burden and interference since the 2012 Act. This is of concern as the Nominated Treating Doctor remains a gatekeeper for a workers compensation claim. Objective 7: Strongly discourage payments treatments and services that do not contribute to recovery and return to work 58. Medical payments have been cut off completely. There has been no quality assessment process. In fact treatments and services that do assist recovery, return to work and working have been systematically cut off with no consideration of illness, injury or personal need. This is often conducted by clerks without any medical skills. The surplus Page 14

15 59. Much of the justification for the 2012 Act was the so called deficit of $4 billion of the workers compensation scheme. However, the evidence is that the deficit was not $4 billion as the Government alleged when the cuts were introduced. 60. The Government s own analysis shows it was closer to $2 billion In fact Mr Playford admitted to the WorkCover Review that in the current market conditions the deficit would have turned around by 2023 without any of the cuts being made. 61. In less than one year, this deficit was a surplus. This shows the severity of the cuts and the lack of a rigorous actuarial underpinning of what the cuts would save. The Government simply did not expect the deficit to be turned around so quickly. The turnaround has been stated by PWC to be a $3.9 billion saving due to reductions in workers benefits Far from being a reason for celebration, the surplus is evidence of the cruel and savage nature of the workers compensation cuts and how much injured workers are hurting. 63. The surplus is now about $1.8 billion and growing by $500 million every six months. Employers have enjoyed a 12.5% premium reduction. The pendulum has swung too far. The surplus needs to be used, not for more premium reductions, but to restore benefits to injured workers. Action Plan- Things to change in the short term 64. With the scheme now in surplus at approximately $1.8billion, it is time that balance is started to be restored to the workers compensation system so that those who fall victim of poor work health and safety can live with dignity and retain work. 65. Unions NSW submits that in the short term, the following changes should be made to the workers compensation scheme: a. There should be a greater focus on injury prevention. The Industry Commission, Productivity Commission and Safe Work Australia have indicated 30 Letter from Mr Michael Playford (PWC) to Mr Gary Jeffrey, Acting General Manager, NSW WorkCover, 20 March 2014, page 2 31 Transcript Standing Committee on Law and Justice, Inquiry into review of the Exercise of the functions of the WorkCover Authority, Monday 12 may Pp18 32 Letter from Mr Michael Playford (PWC) to Mr Gary Jeffrey, Acting General Manager, NSW WorkCover, 20 March 2014, page 2, and Michael Playford, Workers Compensation Nominal Insurer Scheme, Valuation results as at 31 December 2013, Price Waterhouse Coopers PWC, page 10: tabled to NSW Parliament Law and Justice Standing Committee, p.9 Page 15

16 that the true cost of workplace injury is about 5-6% of GDP. With employers contributions only 5% of this total cost to the economy, a greater emphasis on workplace safety could improve economic efficiency by a multiplier of 20 fold. These prevention expenses will have a productivity dividend for the state of NSW and will reduce the incidence of workplace injuries thus helping the scheme s bottom line. b. Restore journey claims. The cost of this change is about $35 million net per annum with recoveries 33 c. Restore coverage of medical costs. By removing the cap, pre approval requirements and causality changes. The cost of this change is about $ million. 34 d. Reduce the threshold for serious injury and permanent impairment. The cost of this change is about $756 million. 35 e. Strengthen the obligations on employers in relation to return to work. This change would deliver positive cost reductions for the scheme by reducing the tail. f. Give real incentives for employers to hire injured workers. This change would deliver positive cost reductions for the scheme by reducing the tail. g. Replace the WCA and WCD process with a fairer system that properly defines suitable duties and includes the right to legal representation. This change would reduce the cost of investigations (currently approximately $1700 per claim 36 ) as well as reduce scheme agent bonuses for conducting investigations, reduced insurer doctor shopping and less adversarial investigations. h. Reverse the retrospectivity of the changes. The cost of restoring claims subject to the decision on appeal in Goudappel is about $346 million Australian Lawyers Alliance, Submission to the Joint Parliamentary Select Committee Submission on the NSW Workers Compensation Scheme, 2012, p Michael Playford, Workers Compensation Nominal Insurer Scheme, Valuation results as at 31 December 2013, Price Waterhouse Coopers PWC, page 10: tabled to NSW Parliament Law and Justice Standing Committee, p.5 35 Ibid. page 8 36 Ibid. p Letter from Michael Playford PWC to Mr Chris Koutoulas Acting Director of Claims, WorkCover NSW, 14 April 2014 Page 16

17 i. Remove Age Discrimination. The new Act imposed provisions that cut off weekly payments at 65 and medical expenses after one year after. Remove age based caps on weekly payments. This cost is minimal as there is a small cohort, and a small period of income replacement. The main ongoing cost is the continuation of medical expenses, which is accounted for above. 66. The above changes can all be achieved under $1.5 billion which is within the current surplus. A Thorough Review 67. While Unions NSW welcomes the opportunity to make comments on the statutory review, we would like to voice our frustration regarding the process and the short time period provided to review the workers compensation cuts. 68. The Government has known the scheme was in surplus since mid 2013 and yet is now conducting a very rushed review process over a matter of weeks. 69. The review of a social justice policy has been delegated to an economic consultancy firm. The consultancy has disclosed that they were only given limited time to review a limited number of documents. A number of relevant documents that have been developed over the years with significant policy, research, health, economic and stakeholder input from a national and state perspective, were indicated as not having been presented to the consultants in the briefing. 70. Despite the internet calling for public submissions, a number of stakeholders were only provided with written notice up to two weeks later. The terms of reference appeared after this, with little to no fanfare in the form of a media release from the Minister. 71. The consultations have occurred in private without verification or cross referencing and without formal minute taking, as occurs through a process such as a Parliamentary Committee. 72. Unions NSW submits that immediate changes are needed to restore balance to workers compensation but in the longer term, a more thorough review is necessary. 73. Unions NSW calls on the NSW Parliament to undertake a branch and root thorough evaluation of the 2012 workers compensation cuts in NSW. The review should place not limits on the personal, social, health and economic impacts that have been imposed on the working people of NSW. Page 17

18 Page 18