Northern Territory Second Reading Speeches

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WORKERS REHABILITATION AND COMPENSATION LEGISLATION AMENDMENT BILL 2015

Madam Speaker, members may recall the ministerial statement delivered by the member for Port Darwin in the House on 26 November 2014 where he outlined the government’s intention to amend the Workers Rehabilitation and Compensation Act following an extensive review of the act.

That review was overseen by the Workers Rehabilitation and Compensation Advisory Council which is made up of representatives of employers, workers and other scheme participants. The review involved considerable public and stakeholder consultation, including an 84-day public comment period resulting in submissions being made. The last comprehensive review was undertaken in 1984. While there have been some reviews of specific issues, the Northern Territory compensation scheme is now out of step with other jurisdictions.

This has been a concern to both the insurance industry and the business community, who have been seeking a comprehensive review for some time. The current scheme provides no-fault cover for eligible workers who are injured at work. Benefits of the scheme include weekly payments, medical treatment, rehabilitation costs and, in some cases, payment for permanent impairment.

The scheme is focused on rehabilitation and return to work, but with potential for injured workers to be paid income maintenance until pension age and medical expenses for life. It is a generous scheme in comparison with other schemes in Australia.

Northern Territory insurers have flagged the pressures in the scheme will result in increased premiums for employers. The average premium rate in the Northern Territory is already one of the highest in Australia with only the ACT and South Australia being higher. Unless action is taken to revise scheme benefits, workers compensation premiums in the Northern Territory will continue to rise.

Northern Territory businesses are already competing with interstate businesses. As such, the review of the scheme has advocated changes to benefits are necessary if the Northern Territory scheme is to remain affordable for business and to ensure Northern Territory businesses have every chance to be competitive.

While a significant change will be to restrict compensations of five years or less for less seriously injured workers, other proposed changes will benefit many more workers. There are changes that increase benefits and others that will provide increased transparency, better claims management and improved communication with injured workers.

Government is committed to ensuring the scheme is fair and balanced and enhances its primary focus on achieving early and successful return to work outcomes.

This bill represents the first stage in the implementation of the reviews recommendations. The balance of the recommendations will be captured in a second bill expected to be introduced in the May 2015 sittings.

I would now like to bring to the attention of the House the key changes we are proposing in this bill. To reflect government’s commitment to ensuring all participants in the scheme have a clear understanding of the purpose of the legislation, it is proposed that the act be renamed Return to Work Act. The most significant proposal is to limit weekly benefits for most claimants to a maximum of five years, with medical and treatment costs to end 12 months after that date. However, claimants who are assessed as having significant, permanent impairment of 15% or more will retain the existing entitlement of weekly benefits until their pension eligibility age and be entitled to medical and treatment costs for life.

Although this is an important change to the scheme, it will only impact on a minority of claimants. Analysis by the Northern Territory scheme actuary has estimated that of the 22 000 claims made on insurers over the past nine years, only 157 claimants – an average of 18 claimants per year – are still on compensation after five years. Although these numbers are relatively small, the cost of these claims is disproportionately high.

A new definition of work is proposed based on whether pay as you go tax instalments are being deducted or should be deducted by a worker’s employer. The benefit of this change is that the pay as you go test will achieve better consistency with Australian Taxation Office requirements. The Australian Taxation Office website includes extensive explanatory information and a tool to help business determine if pay as you go should be deducted.

The approach will make it easier for individual businesses to determine their worker’s compensation insurance obligations. The change will also achieve consistency with Queensland and proposed changes in Western Australia.

The Northern Territory recognises that there is a proven link between fire fighting and the risk of some cancers and has decided to provide presumptive legislation for fire fighters, including volunteers of NT Police, Fire and Emergency Services and Bushfires NT. This legislation will be made retrospective to 25 August 2012.

The proposed legislation establishes a rebuttable presumption that particular forms of cancer developed by career and volunteer fire fighters are work related. This new provision will make the process of claiming workers compensation less cumbersome. Under the presumption, if a fire fighter is diagnosed with one of the 12 cancers identified in the bill and served as a fire fighter for the relevant qualifying period, it will be presumed that the cancer is an occupational disease and is therefore compensable.

For volunteer fire fighters an additional requirement is proposed so the person must have attended at least 150 exposure events within any five year period for brain cancer and leukaemia, and within 10 years for the remaining 10 cancers. This requirement ensures that the presumption only applies to volunteers who have had some measurable exposure to the hazards of fire. The proposed legislation will allow claims to be made up to 10 years after having been involved in active fire fighting.

It is recognised that people are working longer than the traditional pension age. Currently, workers who are injured after 67 years of age are restricted to a maximum of 26 weeks of incapacity benefit. This bill proposes that older workers will get 104 weeks compensation instead of 26 weeks. This will provide a more reasonable level of economic protection for older workers and is consistent with changes in other jurisdictions.

The review of the scheme recognises a weakness in the present system is that there can be little or no financial incentive for highly paid workers or their employers to participate in the Return to Work process. The proposed change to remedy this is to limit the amount of weekly earnings that can be considered for the calculation of a workers weekly compensation. The limit proposed is 250% of average weekly earnings which is the equivalent of over $180 000 per annum. This cap only applies where the claimant is incapacitated for more than 26 weeks and will only impact a small number of claimants.

The review identified that the Territory has fallen behind other jurisdictions in the lump sum payable to dependents after the death of a worker. It is therefore proposed to increase the lump sum and the benefit for a funeral, in addition to creating a new benefit for counselling for dependent family members of a deceased worker. On today’s values, the benefit for death will increase by a little over $147 000, easing the financial burden on the deceased worker’s dependent family. The funeral benefit will double from $7 369 to $14 739.

The intention of the current act is that for diseases to be compensable, employment should materially contribute to the disease. However, strokes and heart attacks which result from underlying disease are often being compensated, because they happen at work. The proposed legislation will exclude strokes and heart attacks, unless the employment was the major contributor to the underlying disease and the cause of the condition. The calculation of normal weekly earnings is of key importance in determining an injured worker’s compensation entitlement.

To achieve improved consistency, this bill provides rules for the calculation of a worker’s normal weekly earnings. The underlying objective is that the worker’s compensation entitlement will closely reflect the amount the injured worker would have continued to earn, had they not been injured. Some changes identified in the review will also be included. One change is, for a worker with two jobs, their compensation entitlement will be for the earnings from both jobs. In the case where there is an entitlement to non-cash benefits for electricity, meals and accommodation, these benefits will be capped at 35% of average weekly earnings - currently $496. However, these non-cash benefits will no longer apply to fly-in, fly-out - or drive-in, drive-out - workers. This is because these workers can receive more in compensation benefits than they earned when working, which is an obvious disincentive to return to work.

The current legislation provides that a claimant will be paid their normal weekly earnings for the first 26 weeks of incapacity. After 26 weeks the benefit, in most cases, reduces to 75% of normal weekly earnings. The bill proposes it be made clear that the 26 weeks will be based on the aggregate of 26 weeks of paid certified incapacity, rather than counting 26 calendar weeks. Unfortunately, there have been cases where injured workers have stoically continued to work, only to find when they needed time off their compensation had already been reduced because the 26 weeks had passed. This change rectifies this unfair situation.

The Territory is the only jurisdiction in Australia where the administration costs of the workers compensation regulator are not funded by contributions from insurance premiums. This bill includes a provision that will require improved insurers and self-insurers to contribute to the operating costs of NT WorkSafe.

The bill before the House is the first stage of this government’s commitment to provide a more efficient and effective sustainable NT Workers Compensation Scheme, and I commend the bill to the House.

 

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