An article published in The Age newspaper, 24 March 2000.
A quick quiz on WorkCover:
Who said: "It is clear to this government that the common-law negligence
action which bases its entitlement on proof of fault is a costly, inefficient
and inappropriate mechanism for compensating injured workers."?
Who was the first Victorian Government Minister to vote to end all common
law legal actions for workers compensation?
Which was the first Australian State to end all common law legal actions
for workers compensation, and when?
If your answers were Jeff Kennett, a Kennett Government Minister, and
Victoria in 1997, score yourself zero.
The correct answers are:
Federal Labor Minister Brian Howe, advocating the total elimination of
common law from Commonwealth workers compensation. (Hansard 27
April 1988, p.2194)
Mr John Brumby, voting as a Commonwealth MP for Brian Howe's
legislation. (Hansard, 20 May, 1988, p.2755)
South Australia in 1992, under a Labor Government.
Over recent years, Labor in Victoria have worked hard to have us believe that
so-called common law legal actions for workers compensation are a time-
hallowed civil right removed only by the tyrannical act of a repressive
Coalition government.
But in fact the impetus to remove common law from workers' compensation
has traditionally come from the Labor side of politics.
In Victoria, it was the Cain Labor government that looked to replace the old
common law based workers compensation scheme with a statutory no-fault
scheme.
The Cain government totally removed common law actions for economic loss
in 1985, leaving common law only for non-economic loss (pain and suffering).
It was the newly elected Coalition government that in 1992 restored common
law legal actions by seriously injured workers for economic loss.
One might therefore have thought that when in 1997 the Coalition concluded
that common law legal actions were not the best way to provide compensation,
Victorian Labor would have claimed a moral victory.
But instead they quickly launched an opportunistic campaign to attack what
many in the Labor movement had advocated for years.
Ironically, it was to overcome deficiencies of the common law that the Labor
movement first called for statutory workers compensation in the late 19th
century.
Under pure "common law", a worker could not recover for injuries due to
the negligent action of a fellow worker, or to which his or her own negligence
contributed in the slightest degree.
Furthermore, if the injured worker died, the right to sue for negligence
ended, and his or her dependents could not recover.
Legislative amendments were necessary to overturn each of these elements
of the common law.
Thus the so-called common law workers compensation action of today is in
fact a recently created hybrid of common law and statute, which cannot
demand allegiance based on antiquity but must stand or fall on its merits.
Another myth in the current debate is that common law is needed because
Victoria has low benefit levels for seriously injured workers.
Prior to 1997, the average payment received by a Victorian worker as a
result of a common law action was $171,000, which took the place of both
weekly benefits and a statutory lump sum.
Under the 1997 statutory benefits, a worker unable to work again will receive
weekly benefits of 75% of pre-injury ordinary time earnings, to a maximum of
$887 per week, until retirement age.
For a 30 year old worker receiving weekly payments of $650, this would
total $1,186,185 over 35 years, equal to around $490,000 in present value.
As well, a lump sum benefit is payable, to a maximum of $302,250 for very
serious injuries such as paraplegia or blindness.
By comparison, weekly payments, plus any statutory lump sum payment,
cannot normally exceed $119,048 in total in Western Australia, or $235,640
in Queensland.
In NSW, an injured worker who is married with one child will receive a
maximum of $395.80 a week. The maximum NSW statutory lump sum is
$171,000.
To receive more than these amounts, an injured worker in Western Australia,
Queensland or NSW would need successfully to run the gauntlet of a common
law legal action.
In South Australia, which does not have common law, long term weekly benefits
are 80% of the worker's average weekly earnings, but the maximum lump sum
payment is only $175,875.
In their current campaign, not only do Victorian unions want to bring back
common law legal actions with retrospective effect, they also want to keep all
of the increased statutory benefits which were provided in 1997 to replace
common law, and on top of that they are pushing for further increases in
statutory benefits.
These demands will increase WorkCover premiums by over 20% - or more
if claims blow out beyond estimates. Even the Government's proposed upper
limit will increase premiums by 15%.
The Government argues that premium increases are OK so long as Victorian
premiums remain "competitive", by which they mean at or below the national
average. But to be "competitive" one has to do better than one's competitors.
Queensland's premiums will be an average of 1.85% of payroll from 1 July,
lower even that Victoria's current level of 1.9%.
Queensland have already shown with instances such as Virgin Airlines that t
hey are highly competitive in winning business away from Victoria.
If the Government does not resist the unions' campaign, it will end up
costing Victoria confidence, investment and jobs.
Robert Clark MP
Shadow Minister for WorkCover
robert.clark@parliament.vic.gov.au
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