WorkCover's liabilities exaggerated to slash hurt workers' benefits: unions - The Kennett Trap

The Kennett Trap

ANNA PATTY May 25, 2012

The state government has been accused of exaggerating WorkCover's liabilities to create a smokescreen for slashing benefits to injured workers.

Unions NSW today told a parliamentary inquiry into the NSW Workers Compensation Scheme that the government has been diverting attention away from the real reasons behind the scheme's $4 billion deficit.

Unions NSW Secretary Mark Lennon said WorkCover's unfunded liability had been "wildly exaggerated to create a sense of crisis, so that the government can cut payments to sick and injured workers, in the name of allegedly helping business".

"The $4 billion figure being bandied about is based on a worst-case scenario," he said.

"While some reform of the scheme is necessary, the real savings need to come from claims agents and administrative costs, which are the real drivers of unfunded liabilities.

"Sick and injured workers must not have their entitlements cut because of a blow-out in administrative costs."

Unions NSW's submission to the parliamentary inquiry says the government has exaggerated the risk margin of the WorkCover scheme, which is publicly underwritten.

Insurance premiums for employers have fallen by 33 per cent since 2005, removing $1 billion from the scheme, despite an increase in the rate of serious workplace injuries.

While the government has said NSW should have lower premiums to match those in Victoria, it has failed to acknowledge that NSW has a much higher rate of serious injuries than Victoria.

Private insurers have also increased the amount they claim from the scheme at a rate that is way above inflation.

An issues paper released by Finance Minister Greg Pearce outlines possible measures for cutting benefits to injured workers and removing journey claims.

Unions NSW says the paper fails to discuss the WorkCover Board's management of the scheme or to consider the performance of WorkCover's claims agents.

It also says the government has been silent on how it will help workers return to work, other than by cutting their benefits.

"When WorkCover schemes encounter financial difficulties, politicians find it expedient to reduce scheme costs by targeting the entitlements of injured workers rather than tackle the underlying causes," the submission says.

"The reluctance of governments to scrutinise the actions of scheme administrators, their claims agents and employers, especially in view of the pivotal roles they play in the functioning and financial performance of workers' compensation schemes, is a deep-seated, perennial problem and a major obstacle to genuine reform."

The Australian Manufacturing Workers Union today warned the state government it would fight any unfair cuts in benefits for injured workers.

"Premier [Barry] O'Farrell and the employer lobby are on notice that if they buddy up to slash the entitlements of injured manufacturing workers and bereaved families, we will take them on," NSW secretary Tim Ayres said.

"Manufacturing is the most dangerous industry in NSW by far, generating the highest number of serious workplace injuries. We had a tragic fatality in westernSydney just yesterday."

The Australian Manufacturing Workers Union is looking into top-up insurance to cover any shortfall in injured workers' entitlements if benefits under the workers compensation scheme are cut.

Mr Ayres said the AMWU said the insurance cover might be more expensive than the premium reductions the government had delivered to manufacturing businesses.