In 2012 the NSW Liberal Government undertook a “wrenching transformation” of the workers compensation system.
A new report, Restoring Security and Respect: Rebuilding NSW’s Workers Compensation System, by Dr Ian Watson and Dr Jim Stanford of the Centre for Future Work at Australia Institute, recommends a five year program to repair and restore benefits for injured workers.
In the report, the authors say the Liberal Government “imposed far reaching cutbacks in benefit payments to injured workers, and other changes. Adjusted for inflation, real benefit payments from the system have declined 25% in just five years – and the burden of benefit reductions has still not been fully implemented.
“Indeed, thousands of seriously injured workers have had their benefits cut off entirely in recent months, as the culmination of limits on benefit payouts first imposed in 2012 (under Section 39 of the revised NSW Workers Compensation Act).
“However, even as injured workers suffer the consequences of reduced benefits, the financial position of the workers compensation system has been radically transformed – from ‘famine to feast’.
“The supposedly dire accumulated deficit which justified the cutbacks disappeared entirely within a year; by June 2013 the fund was back in surplus. That surplus swelled to $4 billion by 2015, driven by reduced benefit payouts and a recovery in financial markets after the global financial crisis (which was in fact the primary cause of the previous temporary deficits).
“Some partial restoration of benefits has been implemented since 2014. But the major beneficiary of the dramatic reversal of the system’s financial fortunes has been private business: average effective premium rates for private employers have declined by 30% since 2011 (and by even more longer term). The financial position of the system will continue to improve further in coming years.
“There is no fiscal or moral justification for injured workers to continue to suffer from austerity in the form of reduced benefits, while the workers compensation system carries a multibillion dollar surplus – one that is poised to get even bigger in the years ahead.”
The report makes 10 core recommendations to restore and rebuild the system.
“Under this timetable, benefits for injured workers would be repaired in several stages over the next five years, with no increase in effective premium rates, and maintaining the full (100%) funding of the system. There is no fiscal excuse for treating injured workers with the callous disrespect they have endured since 2012. That legacy cannot be reversed overnight, but it can be reversed with a significant and responsible commitment to rebuild the integrity of the program over the coming years.
“On the strength of a growing economy, falling injury rates, and continuing normalisation of financial markets, providing injured workers with decent and secure benefits has never been more affordable.
“Our society should focus, first and foremost, on preventing workplace injuries and diseases, through effective pro-active education, inspection, and enforcement (including by empowering trade unions to perform their legitimate function in ensuring workplace safety standards are respected by employers).
“But when injuries occur, society has an obligation to provide workers with compensation they can count on, as a partial offset for the pain and loss they will bear – in many cases, for the rest of their lives. This report confirms that NSW is fully capable of meeting this responsibility. It is simply a matter of political and fiscal priority on the part of the state government, to ensure it happens.”
To read the report (recommendations and conclusions p73): https://bit.ly/2LbMGFp