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Mr MIKE BAIRD (Manly) [5.37 p.m.]: I lead for the Opposition on the Workers Compensation Amendment Bill 2008. We will not oppose the bill, but we have some concerns that need to be raised in debate and we look forward to hearing from either the Minister or the Parliamentary Secretary in relation to those concerns. The purpose of the bill is to amend the Workers Compensation Act 1987 to make the process of obtaining insurance less arduous for small and domestic employers paying wages under $7,500; it brings New South Wales requirements in line with other States in relation to record-keeping; it provides clarification so each employer is aware he or she should have only one workers compensation policy; and it gives WorkCover the power to recover audit costs from all employers, even if they do not hold an insurance policy, and the power to obtain ongoing payments from self-insurers.
Significantly, the bill proposes to close the class of specialised insurers—and I will touch on that later on. We understand the merits in this proposal, but we have concerns about the impact on industries that are in the final stages of their application to self-insure, and a lack of consultation by the Government on this point. We believe that due consideration needs to be given to these industries, and I will expand on that in due course.
Schedule 1 covers administrative amendments, including an exemption for employers paying less than $7,500 in wages. This provision means there will be no need for small and domestic employers, of which there are around 200,000 in New South Wales, to hold a workers compensation policy if they pay less than $7,500 in wages per annum. For example, a father would not need to hold a workers compensation policy for his daughter or son if he or she were assisting with invoicing for his business. Employers in these situations would still have to meet all workers compensation and injury management obligations. However, if their employees were injured at work they would be covered by virtue of a deemed policy. To lodge a claim, an employer would pay a once-only fee of about $175. As outlined in new section 155AA, this exemption would not apply when employing apprentices or trainees or if the employer is a member of a group. The Opposition is pleased with the amendment because, importantly, it cuts red tape for small business. It would be remiss of me not to say that this Government is choking small business with red tape, but this is one small measure to address that. The Opposition calls on the Iemma Government to listen to what small business is saying about the red tape it is imposing. It is making New South Wales business very uncompetitive compared with other States.
This legislation will also align New South Wales with Victoria with regard to recordkeeping. Employers in New South Wales must currently retain all records relating to wages for seven years, but in Victoria the requirement is five years. The legislation reduces the New South Wales requirement to five years. That is also in keeping with Australian Taxation Office requirements. The bill corrects an anomaly that means WorkCover cannot recover the cost of conducting audits or inspections if the employer has not taken out a workers compensation insurance policy. Employers should not be exempt from paying the costs of ensuring workers compensation standards are followed simply because they have not taken out a policy. The Coalition strongly agrees with that basic principle and is pleased that the bill closes that loophole to allow WorkCover to conduct its processes properly.
The bill extends the power of WorkCover in relation to ongoing claim liabilities and enables it to obtain and manage security deposits from current and former self-insurers to ensure that ongoing workers compensation liabilities are met. This amendment is necessary to ensure that the scheme is protected if a self-insurer or former self-insurer cannot fund its liabilities. The bill also clarifies that each employer should hold only one workers compensation insurance policy. While section 155 of the Workers Compensation Act 1987 aims to do this, some confusion has arisen among employers. The Opposition is pleased that this provision addresses that confusion. It is important that employers understand their responsibilities clearly.
The provisions dealing with specialised insurers are the main issue of contention. The WorkCover board has recommended that the class of specialised insurers be closed, and this bill does that. Currently about 75 per cent of employers are covered by the WorkCover scheme, which offers workers compensation to any eligible employer. Due to the size of the fund and the fact that all employers can receive cover, regardless of risk or claims history, on the whole premiums are affordable. Fear has been expressed that this may change if growth in the number of specialised insurers is allowed to continue. Legislation was passed in 2001 to allow self-insurers to set up their own funds with cover specific to their industry. Unlike WorkCover, self-insurers have the freedom to accept or reject employers dependent on their claims history. If more specialised insurers are allowed to be established to cover low-risk employers, WorkCover will be left with only high-risk employers, and that could well threaten the viability of the scheme.
The Opposition supports the bill but reserves its right to review that provision in respect of the effective monopoly—with the few exceptions that would remain. In opposition or in government, the Coalition is always open to industry views about the ongoing cost and performance of WorkCover. Just because the Government is allowing these schemes to be established and is enabling the creation of this quasi monopoly—that is the best way to describe it—it does not mean they can abuse that position. I state clearly for the record that if industry groups come to the Coalition and say that WorkCover is not doing its job in providing affordable premiums and effective administration of ongoing claims, we will ask this House to amend the legislation dealing with the roles and responsibilities of WorkCover. The Opposition ultimately believes in competition and the provision of services. This measure will be supported, but very much with that caveat.
The bill provides that the closure of the specialised insurers class takes effect from the date on which the bill was introduced—that is, 11 April 2008. The seven specialised insurers already licensed by WorkCover will be allowed to continue to operate. However, the Opposition is very concerned about the handful of industries that have spent considerable time and money on their applications to self-insure and were in the final stages of the process when the Government announced that the law would be changed. The Opposition wants the Minister or the Parliamentary Secretary to explain this point: How can the aged care industry, the printing industry and others who have gone through due process according to existing legislation and spent a considerable amount to become self-insured have the Government shut the door on them?
The aged care industry began its application process to obtain a specialised insurer's licence in December 2005. I understand that the Iemma Government has been negotiating with some of these groups and, to date, it has refused to allow the applications to proceed. I am happy to be corrected if I am wrong about that. Since 2005, the aged care industry has spent $1.9 million on this process. That money covers legal fees, actuarial fees, lodgement fees and the establishment of appropriate information technology infrastructure. This did not happen yesterday; it has been going on for more than two years. That is a considerable period and this process involves a contract between government and the industry to establish a scheme. The industry has incurred those costs and the Government should look at the invoices. It would be well aware of how much has been spent, given its involvement in the application process.
The aged care industry believes its specialised insurance licence would enable it to save up to $4 million, which could be reinvested in services for the aged. This Government has led the industry down the specialised insurance path, the industry has complied with all the requirements in the legislation and it has proceeded in good faith, but the door has been shut. Its application to WorkCover was accepted in January 2008 and—this is the cruncher—its fee payment was accepted. From a legal point of view, that constitutes a legal and accepted contract. However, for some reason the industry has been rejected. It was told that its application had been rejected and it received no warning that this bill was being drafted.
We have heard a great deal about transparency and details, but this is basic decency. If relevant legislation exists, it is not too much to ask that the Government uphold it. Clearly the Government was aware that the aged care industry was a long way down the track of setting up its self-insurance scheme and that it had incurred huge costs. Despite that, the Government was drafting legislation to amend the system. It said, "By the way, we know you have been working on this for two years, but bad luck." That is no way to deal with an industry as important to this State as the aged care industry. The Opposition believes it has been hardly done by. This is the most significant issue of concern in this bill. We want the Parliamentary Secretary or the Minister to give assurances to the aged care industry about amending the legislation in this House and to enable its application to proceed.
The printing industry has raised the same concerns. It will be significantly disadvantaged if this bill is passed as it stands. Like many other industries, the printing industry was openly encouraged to apply to conduct a specialised insurance scheme after the law was changed in 2001. That is the other catch: The Government has promoted this wonderful opportunity to industry—it will save money, it is easy to administer and so on. Like the aged care industry, over the past three years the Printing Industries Association of Australia has been engaged in preparing its application and has incurred in excess of $1 million in costs in the process. When hearing of the Government's plans to close the class of specialised insurers, the association said it was only days away from lodging its application for a licence. It has been handed a very raw deal.
As it was with the aged care industry, the Government was aware of the Printing Industries Association's application process. However, the only consultation the Government could manage was a telephone call from WorkCover to the association 30 minutes prior to a media release being issued stating that the legislation would be amended. In what sort of contempt does the Iemma Government hold the printing industry? It knew that the application was being prepared and that huge costs had been incurred. However, 30 minutes before a bill was introduced that would wipe out the huge amount already spent, the association got a call from a WorkCover official saying, "Sorry about that, but we are going to change everything."
A specialised insurer licence will enable the Printing Industry Association of Australia to provide more targeted cover to its members, particularly in relation to occupational health and safety standards. Its proposed scheme professes to lift occupational health and safety standards across the industry, with the mindset of helping employers improve safety conditions for their workers. It was also developed with the aim of helping injured employees to return to work in a capacity appropriate for them. These efforts by the association should not be disregarded. The Printing Industry Association of Australia was operating within the legislation at the time and should not be penalised for doing so.
This is an opportunity for the Iemma Government to show these two industries in good faith that it hears their concerns and appreciates the work they have done, and to acknowledges those costs. That is not a hard thing to do. We are allowing the overall scheme to go through with a caveat on its future performance relative to the industry groups as they use the service. We do not think it is reasonable—remembering how important the printing industry and the aged care industry are to our economy—that millions of dollars are being wasted knowingly by the Iemma Government by not allowing these schemes through. There are other industries as well. The motor traders industry has gone a fair way down the track. The club industry and the meat industry have done the same. The Iemma Government should consider these industries. The process was open, it was within legislation and ultimately it is just pure decency and open and transparent government to enable the people involved in existing legislation to have some retrospective rights.
The administrative amendments in this bill are worthwhile. However, we suggest that new section 176 be reviewed to see if there is the opportunity to acknowledge the industries that have invested considerable time and funds into applications for licences under the existing legislation. Allowing the aged care industry's application to proceed would not have a detrimental impact on the WorkCover scheme as the industry represents less than 2.5 per cent of the scheme. It is also a high-risk industry and is willing to ensure all industry employers. Therefore, it would not threaten the overall WorkCover scheme's viability. We applaud the Printing Industry Association of Australia for the work it has done on behalf of the printing industry in developing a scheme that will lift safety standards across its sector, and we encourage the Iemma Government to work closely with these industries to ensure their efforts are not rendered worthless and the dollars that have been spent are not wasted.
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