Injured People

InDaily: WorkCover and the Great Silence

SA’s labour movement was strangely silent when Labor and the Liberals combined to remove workers’ rights, writes Morry Bailes for InDaily.

SA’s labour movement was strangely silent when Labor and the Liberals combined to remove workers’ rights, writes Morry Bailes for InDaily.

It was perhaps the least reported legal story of 2014 – the repeal of our existing Workers’ Rehabilitation and Compensation Act and enactment of the Return to Work Act and accompanying South Australian Employment Tribunal Act.

Whereas federal elections have been won and lost over industrial relations, workers compensation reform seems to be a poor cousin by comparison. Workers compensation is of course a state not federal issue, and it has had a chequered history in this state. This change is not the only time we have had what feels like a conspiracy of silence over reform in this area.

It was the Bannon Government, before the State Bank collapse when economic times were (seemingly) good, that passed the current Act. It was well and truly a Rolls Royce version of ‘workers comp’. Not only was an injured worker potentially entitled to a lifetime of benefits, she or he also had the right to sue an employer for negligence at common law. Unlike some codes, there was no requirement to elect between statutory benefits and a common law action; a worker could potentially have both.

It was a pivotal moment for the legal profession and insurance industry in South Australia. Insurers left the state in droves as the WorkCover Corporation became the only underwriter. It was government-owned so its fortunes were inextricably linked to the economic fortunes of the state. Law firms could no longer act for plaintiffs and insurers, but were forced to either tender for the corporation’s work or act solely for injured workers. The old balance was gone. Our firm, as an example, moved to act for plaintiffs only, a decision which remains with us to the present day.

As is often the case with well-intentioned social policy, it failed the economics test. The first casualty was common law. Without so much as a sigh from the trade union movement, the Labor Government of Lynn Arnold amended the Act on one fateful Friday. No-one rose to fight the repeal of a fundamental right that had existed in law at that point in time for the better part of the 20th century.

However, that was not enough. When the Liberal Government handed the reins to Labor in 2002, the unfunded liability of the WorkCover Corporation was reckoned in the 2001/02 WorkCover annual report to be $192.4 million. By 2012/13 it topped $1.4 billion.

The Labor Government had completely lost control of the situation.

In 2008 Kevin Foley amended the Act to attempt to make it easier to remove workers from the system. Again there was lukewarm opposition from the trade union movement. The loudest voice was that of Janet Giles, then head of SA Unions, but to no avail. Unfortunately for the Government the reform was too little too late. It failed to achieve much, if anything.

What happened to the public debate? Where were the media? Why did one of the most significant legal reforms of past years draw so little analysis?

Further, the management of the WorkCover Corporation was suspect. Exempt employers such as the Local Government Association, applying the same piece of legislation, were managing their liabilities perfectly well. The state-owned WorkCover Corporation was doing anything but.

To add to their woes, the corporation’s then board adopted a hare-brained policy to prohibit redemptions for injured workers. A redemption is the process of trying to cheaply buy off a worker’s future liabilities. Every person has their price, and it was an effective means of ridding the corporation of its future liabilities while giving an injured worker something. It relied on the presumed success of the 2008 amendments to discontinue workers entitlements, but that was not to be.

When the Deputy Premier and Attorney-General John Rau was assigned the Industrial Relations portfolio, he famously told InDaily the workers compensation system of this state was “buggered”. Few would disagree. What he failed to admit was that it was buggered due almost entirely to successive Labor Governments.

So what was in store next for our ‘buggered’ scheme? In short it was out with the old and in with the new. The current Act was repealed wholesale and a new Act introduced. It was a difficult balancing act. John Rau is pretty ‘old school’ and believed in common law. Common law to everyone’s surprise was back in the mix. The scourge of the old scheme was the inability to get injured workers off the system in a timely way and back to work. No problem now. All entitlements to weekly payments for a workplace disability end after two years unless your impairment is 30 per cent or more (a very serious impairment). Workers under the current Act get a grace period and then the new Act applies.

On the upside levies are predicted to drop dramatically. On the downside there are many injured workers who are unable to return to pre-injury duties even after two years, and for those people the future is bleak and unkind. As to common law, originally contemplated to be available to an injured worker with a permanent impairment of 10 per cent or above, the threshold became 30 per cent and requires an election to forgo statutory benefits. Few injured workers will reach the required threshold, fewer still will choose to relinquish their lifetime statutory entitlements which comes in at the 30 per cent impairment level, so the re-introduction of common law is ‘Claytons’ at best.

One would not have expected the Liberal Opposition to have said much, and they did not. As one Liberal member remarked: “If the Libs put up this amendment Trades Hall would be on the steps of parliament, so when a Labor Government puts it up we just say ‘yes’ “.

So where then was the public face of the labour movement? While the blue collar unions would have preferred a lower threshold for common law, the white collar unions did not. They won the day. To be certain there was plenty of discussion behind closed doors but there was no murmur of public debate.

The employer groups largely got what they wanted – a lowering of levies and a harsher workers compensation scheme than we have had for nearly 30 years.

What happened to the public debate? Where were the media? Why did one of the most significant legal reforms of past years draw so little analysis? One answer is that the primary Act was a remarkably weighted price of legislation that disappointed everyone to an extent but did not grossly offend any one of the major players.

It is a valuable lesson in how to get the parliamentary business done. Perhaps more significantly, it attracted bipartisan support of the Labor Government and Liberal Opposition; the Greens and minor parties the only ones who cried foul.

Finally, history tells us that when the identical reform is carried out by a Liberal Government, the labour movement is usually up in arms. Not so when the reform is enacted by a Labor Government. Little wonder there is cynicism regarding the relationship of Labor governments and the broader labour movement. Remind me who precisely is supposed to be looking after the workers again?

So ends the least reported reform to workers compensation law in this state’s history, where everyone is a winner except, of course, the injured worker.

Morry Bailes is managing partner at Tindall Gask Bentley Lawyers, Member of the Executive of the Law Council of Australia and immediate past President of the Law Society of SA.

His column appears in InDaily every second Thursday.

Tindall Gask Bentley is South Australia’s largest workers compensation law firm. For a free intitial interview, contact your nearest TGB office or register for an appointment online.