12th National Workers’ Compensation Summit 2011
21-22 February 2011
Palazzo Versace, Surfers Paradise.

Thank you for the invitation to attend and present at this years Summit.  I have attended this Summit on a number of occasions now and am always impressed by the quality speakers and the questions from the floor. 

From my bio you’ll see I’m the Senior OHS and Workers Compensation Officer at the Australian Council of Trade Unions (ACTU).  For those who don’t know the ACTU is the single peak national body representing Australian unionists, it was established in 1927 and has more that 50 affiliates unions with collectively around 2 million members. 

We have 4 people in our workers compensation and OHS team and the majority of our time over the last few years has been taken up with the harmonisation of OHS laws, a matter I understand other speakers at this Summit will present on.

While in 2011, OHS harmonisation will again dominate our time, more of our resources will also need to be devoted to workers compensation policy.  We have been told by the Prime Minister that: ‘While the Safe Work Australia Act 2008, sets out particular functions in relation to workers compensation, including the development of proposals for harmonising workers compensation arrangements, the harmonisation of OHS laws needs to be completed prior to any substantive work occurring in workers compensation arrangements’. 

Safe Work Australia (SWA) however is moving apace and has developed and endorsed a National Workers’ Compensation Action Plan 2010-13.  The preamble to the plan states in part: ‘Workers’ compensation arrangements should be aimed at delivering consistent and improved responses to and management of work related injuries, illnesses and deaths.  Ultimately modifications to arrangements should aim to achieve a reasonable balance between the interests of employers and workers  . . . 

Current inconsistent workers’ compensation arrangements across Australia are seen by many to lead to less equitable, effective, efficient, comprehensible and sustainable outcomes for workers and employers.’
Safe Work has established 6 temporary advisory groups to advise on how arrangements about matters such as death benefits, return to work and self insurance could be improved and the ACTU will be fully a part of these debates.

But I must admit unions are troubled by where the starting point for our discussions on the possible harmonisation of workers compensation arrangements is positioned, and I’d like to take some time now to flesh out our concerns.

In the Report on the Review of the Victorian workers compensation system in 2008 there is a simple line that says: ‘Workers’ compensation schemes are designed to mitigate and, as far as possible, remove the serious disadvantage that is so frequently caused by work-related injury or illness’ , and as a statement of why we have workers compensation I don’t think you could sum it up better. 

We could have an argument about whether all elements of all the Australian schemes are currently designed to mitigate and remove disadvantage, but we should agree that that should be the aim.

In December last year the Australian Bureau of Statistics (ABS) published research that showed in the twelve months to June 2010, 640,700 workers nationally experienced a ‘work-related injury or illness of some kind’ .  That’s around 5.3% of those who undertook paid employment in that period.  Of those injured around 390,000 (~60%) received some sort of financial assistance.  Of those who received financial assistance:

  • Around 230,000 (~60%) received workers’ compensation
  • Around 136,000 (~35%) did not apply for workers’ compensation
  • Approximately 20,000 (~5%) applied for and did not receive workers’ compensation
  • The ABS found that approximately only 40% of those injured, about 265,000 workers applied for workers compensation.  As a policy maker I’m interested in why 375,000 injured workers did not apply for workers compensation.  The ABS found that of those who did not apply for workers’ compensation:

  • Approximately 190,00 (50%) reported that the main reason for not applying  was that their injury or illness was minor/not considered necessary
  • 38,000 (10%) said they were not covered or not aware of workers’ compensation
  • 36,000 (9%) did not think they there were eligible
  • 20,000 (5%) thought it would have a negative impact on current or future employment
  • 20,000 (5%) thought it inconvenient, required too much effort or too much paperwork and 
  • In 12,500 cases the employer agreed to pay the costs.
  • We need of course to compare these figures with the official figures on claims made to the various workers compensation authorities.  We can get these figures from the Safe Work Australia website, however the latest figures currently available are preliminary figures for 2007/08. 

    The National Online Statistics Interactive (NOSI) webpage shows that in 2005/06 there were 135,951 accepted workers’ compensation claims that resulted in a fatality, permanent incapacity or temporary incapacity with an absence from work of one working week or more, in 2006/07 there were 134,106 and in 2007/08 – 131,108 . 

    My feeling, after years of keeping an eye on these figures, is that the 2009/10 figures will be about the same or maybe a little lower than 131,108.  

    Now compare that figure back to the ABS finding that in 2009/10 – 230,000 injured workers received workers’ compensation.  Again my feeling is that difference can maybe be explained by injured workers accessing their personal insurance or superannuation insurance cover that provides weekly income replacement and considering these arrangements to be workers compensation. 

    We could also throw in the many employee wellbeing schemes now provided by large companies that provide income replacement and cover medical costs for a limited period so long as workers don’t also apply for workers compensation.  A figure of 100,000 injured workers accessing these arrangements each year would seem a little on the high side though.

    What is more flabbergasting from these figures though is that 40% of injured workers don’t get any financial assistance – no sick leave, no Medicare/Centrelink or other social security payment, no income protection payment.  

    Additionally astonishing is that there are more workers receiving financial assistance as a result of injury from sources other than workers compensation than those who receive workers compensation – 136,000 compared to 131,108.

    As I said earlier, we would all likely agree with the tenet that ‘Workers’ compensation schemes are designed to mitigate and, as far as possible, remove the serious disadvantage that is so frequently caused by work-related injury or illness’.

    So my first concern: Our current schemes don’t capture all workers they should be designed to cover.

    The ABS survey I’ve just mentioned has been done a couple of times now and Safe Work Australia gets economists to make some economic predictions based on the figures supplied by the ABS.  The most recent figures haven’t been analysised so the most recent estimates we have are based on the 2005/06 figures. 

    Based on those figures the Australian Safety and Compensation Council (as SWA was then known) reported that the costs of occupational injury and disease in Australia in the 2005/06 was $57.5 billion or 5.9% of GDP .

    The ASCC estimated that:

  • 3% of the total cost of workplace injury and illness is borne by employers;
  • 49% is borne by workers and their families; and,
  • 47% is borne by the community, mostly in social security benefits and health subsidies.
  • The ASCC also utilised a 1995 Industry Commission study that estimated that only 25 per cent of the total cost of work-related injury and disease was due to the direct costs of work-related incidents.  The remaining 75 per cent was accounted for by indirect costs such as lost productivity, loss of income and quality of life.

    Using those estimates that ASCC found that the average cost associated with each severity category (short absence, long absence, partial incapacity, full incapacity and fatality), as well as the breakdown of the average cost to either an injury or a disease.  Typical unit costs for injury and disease incidents were estimated at $113 450 and $160 150 respectively.

    Typical indirect costs ($ per incident) for work-related incidents, Australia 2005-06

    These figures show overwhelmingly that short absences are predominately paid for by the community and as injuries and disease become more severe, its workers and their families who are burdened with the costs.

    I also highlight the costs of full incapacity against fatality.  

    Late last year I became aware of the personal circumstances of a women I had had dealings with 10 years ago and it rocked me back on my heels.

    I won’t use her real name.  Maggie was involved in a workers compensation campaign I was part of in 2000 and about 12 months prior to that she had a workplace accident that left her with terrible injures, constant pain and horrific visible scarring.  The day before her accident she had a young healthy and happy family, a loving partner and a successful career with great future prospects. 

    When I meet her twelve months later, her children, while they still obliviously loved their mum were frightened of the way she looked, her partner was still supportive and she had not returned to work. 

    Maggie helped out in our campaign, spoke with other workers about her situation, addressed countless meetings and visited MPs with us.  Ultimately our campaign was only partially successful and overtime I moved on to other matters and we lost touch.

    In the ten years since I’ve spoken to Maggie, my wife and I have had 3 healthy kids that are blossoming, we’ve bought a house, we’ve had a couple of holidays abroad, I have a job that brings me great satisfaction and keeps me and my family in frugal comfort.

    I don’t deal directly with any workers compensation claims, I’m a policy person but by chance last year I was made aware of Maggie’s current circumstances.  My life since 2000 has gone on in leaps and bounds and only for the better, Maggie’s has stagnated at best and from what I now know has gone backwards. 

    She is now described as a single mother, she is in constant pain and undergoes frequent treatment to arrest her complex regional pain which require hospital admission and is in constant financial trouble.  Over her time as a workers comp recipient her claim has been handled by a number of different claims agents.  

    Maggie did nothing different on the day of her accident to anything she had done on any work day.  She had no idea on that day that ten years later she would be in struggling for money, be in constant pain and would require an OK from someone she had never meet and who changed every couple of years to seek relief from her pain. 

    When I knew Maggie she knew her life would be difficult but she thought hope was on the horizon.  We have all moved on – Maggie’s employer, me, our campaigns, but she seems to have remained in the same place.  The support that she needed to keep moving forward hasn’t been there.

    What affected me most from hearing where Maggie’s life was at was that in the last ten years I’ve more or less glided through without a care and that ten years seems to have flown.  For Maggie, a person whose situation I could just as easily be in, everyday must seem like ten years.  We really have got our priorities wrong.

    So this is my second concern: If we agree that workers’ compensation schemes are designed to mitigate and, as far as possible, remove the serious disadvantage that is so frequently caused by work-related injury or illness the current schemes don’t seem to be doing a good job of it.  Fewer and fewer injured workers are accessing workers compensation while more and more need financial assistance following a workplace injury or disease.  It is workers and the community that pay for workplace injuries.

    This coverage and compensation issue is highlighted when we look at death claims.  We don’t know how many Australians die each year due to their work.  Safe Work Australia reports that in 2008/09, 387 workers died at work or commuting, more than 1 each day of the year . 

    In The cost of work-related injury and illness for employers, workers and the community 2005-6 report, Safe Work Australia utilised figures from a number of sources and detailed that: ‘Estimates of injury fatalities for 2005-06 are sourced from ASCC publications.  Disease fatalities estimates are assumed to be a similar level to the previous study (2 210 total work-related disease fatalities).  Disease fatality estimates are considered to be a conservative estimate, with studies estimating that as many as 7 000 fatalities may occur each year as a result of work-related disease ’.

    Using these figures to estimate who got compensation and who didn’t Safe Work found:

    Our current schemes do not come close to compensating the families of dead workers.  In fact Safe Work Australia has reported that of 2603 fatalities our schemes only compensate in around 12% of cases.  Please remember that these are by Safe Work’s own admission, conservative figures.

    Why do we so lightly accept the rates of death from work in this country?

    Consider this from a Federal Government Report in 2004: ‘The white crosses that can be seen on the side of Australian roads are poignant reminders of the fact that many people die and are injured every year on highways and city streets.  Just how many is shocking. From July 2000 to June 2001 there were 1775 road fatalities.  On a calendar year basis, the lowest number of road fatalities from 1986 to 2000 was 1755 in 1998.  In 1996 the estimated total financial cost of road crashes was $15 billion’.

    It may be crass to say but a toll of only 1755 is one the workers of Australia should envy.  

    In 1970 the national road toll was 3,798 people which was 30 deaths per 100,000 people.  It is generally accepted that it was at this time someone said enough is enough and this can’t go on and Governments set up enquiries to investigate how to improve road safety .  With the subsequent introduction of mandatory wearing of seatbelts, random breath tests, changes in car design etc the toll has steadily been reducing.

    The conservative 2603 workplace related fatalities reported by Safe Work represent a rate of 24 deaths per 100,000 workers.  The 7,000+ death upper limit reported by Safe Work would raise the rate to 64 deaths per 100,000 workers.

    I was at a meeting late last year just after the Pike River mine tragedy in New Zealand.  It was a meeting of health and safety and workers compensation policy people who in their working life deal daily with the issues we are discussing here today.  At the meeting there were representatives from all the governments, employer groups and unions. 

    At the start of the meeting it was suggested that we stand for a minutes silence in remembrance of the 29 miners who had been killed, which I willingly participated in.  Following the meeting and reflecting on the minutes silence it occurred to me that the group I was with convenes quite regularly and never before have it been suggested that we stand in honour of dead workers even though Safe Works official traumatic dead toll shows us that more workers are killed at work each and every month in Australia than the 29 that were killed at Pike River .  

    I’m not saying that this group is blaze’ about workplace deaths but do think as a society we consider Pike River a tragedy and the Safe Work figures a toll and it is a none to subtle difference.
    It has been said that: ‘As a community we can have any level of road safety that we are prepared to pay for.

    I’ll twist those words and say as a community we can have any level of workplace related death we are prepared to pay for’

    Sadly as a community at the moment we are willing to pay a pretty hefty price.

    Families also pay a different price depending on which part of Australia they live in.  If this roof fell in now my family would received more than $500,000 in compensation for my work-related death because I’m from Victoria.  If you are in this room and you are from Canberra your family would get $185,000.  That’s neither fair, reasonable or logical.

    So that’s my third concern:  we could harmonise the benefit levels and ensure that the family of each worker who dies due to work-related reasons receives the same entitlements and this would be a good thing. 

    However it would only service the few cases where benefits are actually claimed.  If we concentrate only on the harmonisation we miss the bigger point which is the appalling carnage of work related death.  We need leaders to stand up and say enough is enough and to force change.

    You may be aware that we are not satisfied with the outcome of the harmonisation of OHS laws.  Rather than establishing new and improved standards or bringing all jurisdictions up to the same higher level, the model Act as it is currently drafted makes compromises on existing standards in all States and Territory’s.  

    Early on in the process we saw that what was happening was that a line was going to be fixed where some standards would be above and some standards would be below and harmonisation meant that the standards above and below would be amended to meet the line. 

    Our task then became one of trying to get the line fixed as high as we could so that we lost the least.  The process to develop the package of model laws, regulations and codes of practice has become for unions not harmonisation but harm minimisation.  We haven’t given up on the content of the model laws and will continue to campaign to seek amendment so that we don’t lose any protections as the proposed laws are introduced into the various parliaments this year.

    We don’t want the same situation to arise with any proposed harmonisation of workers compensation arrangements.  In fact if we are true to our first instincts and our agreed position that workers’ compensation schemes should be designed to mitigate and, as far as possible, remove the serious disadvantage that is so frequently caused by work-related injury or illness and for the for the reasons I have outlined above the process for workers compensation should be recalibration not a simple equalisation process.

    It is the position of the ACTU that improvements and consistent arrangements are needed for all injured workers in terms of rehabilitation, return to work programs and compensation.  The ACTU has a long standing aim of establishing a national scheme to deliver these outcomes.

    This is not the only way to achieve this objective and as such the ACTU position is that achieving national consistency and world’s best practice in these areas is of paramount importance.

    To inform and aid our participation in future discussions we have engaged the Melbourne School of Population Health at the University of Melbourne to provide us with an independent study into the core elements of workers compensation arrangements in Australian in order to determine what constitutes ‘best practice’. 

    We have received an initial findings Report from Melbourne Uni and the final report will be released at our annual OHS and Workers Compensation Conference this year in Brisbane in April.

    Our forward plan, following the launch of our research, is that we will develop a rehabilitation and
    compensation system of the highest possible standard to be used as the benchmark for national and state based negotiations and campaigning including the discussions we will be involved with at Safe Work Australia.  We will then start lobbying to raise standards in each jurisdiction in line with the plan we have developed.

    I’m not going to preempt today what will be in our preferred scheme but I can assure you that it will be designed to mitigate and, as far as possible, remove the serious disadvantage that is so frequently caused by work-related injury or illness.

    In the time I have taken to address you this morning 25 workers have been injured, 5 will receive compensation from a workers compensation Authority, the rest will either have a minor injury or use sick leave and long service leave for any time they need off pay for their own medical and other expenses out of their savings or put it on credit or rely on the assistance of the community and it is a disgrace and it needs to change.

    Thank you.

    Jarrod Moran is the Senior OHS/Workers Compensation Officer for the ACTU.