WHAT S HAPPENING WHS & WORKERS COMPENSATION SYSTEM. Greg Pattison 17 May 2012

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1 WHAT S HAPPENING WHS & WORKERS COMPENSATION SYSTEM Greg Pattison 17 May 2012

2 WHAT S HAPPENING WHS

3 WHS HARMONISATION- SORT OF MAYBE SOME DAY? IN Commonwealth Queensland Northern Territory ACT NSW ( with changes) Coming - but not until 2013 Tasmania Trying South Australia Never were in fully - and still waiting WA Changed our minds Vic COAG Lets take another look in 2014

4 WHS HARMONISATION NSW Jurisdiction with the most to gain Best prepared of all jurisdictions Transition team moving back to BAU Focus on help not enforcement?

5 ENFORCEMENT ACTION BY WORKCOVER NSW 20,000 18,000 16,000 14,000 12,000 10,000 8,000 infringement notices improvement notices prohibition notices 6,000 4,000 2,

6 WHAT S HAPPENING WORKERS COMPENSATION SYSTEM

7 IT DOESN T BALANCE Assets $14,719 m Liabilities $18,802 m Deficit -$ 4,083 m Funding ratio 78% Source; WorkCover NSW ; Executive valuation of outstanding claims liability for NSW Workers Compensation Nominal Insurer as at 31 December 2011

8 WHY NOT? Impact and flow on from GFC - reduced yields on investments - 50% Deteriorating claims management experience 50%

9 PICK A WAY TO GO Increase premiums and/or Reduce benefits and/or Improve injury management

10 BLUE NEEDS TO BE > THAN RED Collected Rate (% Wages) Break Even Rate(% Wages) 0.0 Source; WorkCover NSW ; Executive valuation of outstanding claims liability for NSW Workers Compensation Nominal Insurer as at 31 December 2011

11 WHAT WILL IT COST TO BALANCE THE BOOKS? Within 5 years 28% Within 10 years 10% BUT NSW already lags Victoria and Queensland. Vic premiums down another 3% from 1/7/12 Premium increases might balance the books but do not address the cost drivers

12 AND WHAT MIGHT THAT MEAN FOR YOUR INDUSTRY SECTORS? WIC Number WIC Description $M Nursing Homes Community Health Centres Accommodation for the Aged Residential Care Services nec Home Care Services Non-Residential Care Services nec 10

13 PREMIUM INCREASES NOT ON 28% premium increase 84% said there will be job opportunities lost 12,600 jobs 10% premium increase - 59% said there will be job opportunities lost 8,120 jobs Reductions will be achieved by termination, natural attrition and not filling vacancies

14 WHERE DO THE COSTS LIE? $M Weekly 5912 WID 1771 Legal 433 Permanent injury & pain & suffering 827 Medical 3339 Commutations 290 Investigation 383 Rehabilitation 236 Death 81 Asbestos 155 ULIS 106 Other 144

15 $m WHERE IS THE MAIN ACTION? Weekly Workplace Injury Damages Legal 800 S66/ Medical 400 Commutations 200 Investigations 0 Asbestos -200 Source; WorkCover NSW ; Executive valuation of outstanding claims liability for NSW Workers Compensation Nominal Insurer as at 31 December 2011

16 WHAT CAN BE DONE - WORKCOVER Benefit Levels Improved assistance/benefits for workers with >30% WPI Simplified definition of pre-injury earnings Access Remove journey claims Prevent nervous shock claims from relatives/dependants Exclude strokes/heart attacks unless significant work connection Strengthen WID Efficiency/service providers One WPI assessment for WID, statutory lump sum,& commutations Stronger regulation of health providers Remove pain & suffering as a separate compensation category

17 WHAT CAN BE DONE - WORKCOVER Utilisation Provide earlier step downs to encourage RTW for totally incapacitated workers Stronger financial disincentives for partially incapacitated workers who do not increase hours Work capacity testing for longer term claimants Cap weekly payment duration Cap medical coverage duration Targeted commutations

18 WHAT ELSE? WorkCover performance/structure/management of agents Agent performance Effective injury management support for employers and injured workers Premium system design & communications (premium notices that can be understood) Data collection/quality & impact on scheme management (a centralised computer system) Other?

19 WHAT NEXT? Joint Parliamentary Committee Submissions by 17 May Hearings commence 21 May Report 13 June Union campaign Legislation this financial year? Non- legislative changes PY Starts 4 pm 30 June

20 PROGNOSIS THINGS WILL GET WORSE BEFORE THEY GET BETTER BUT IT CAN BE WIN/WIN