South Australia’s Workers Rehabilitation and Compensation Scheme is an essential safety net for injured workers.
Due to significant changes in South Australia’s social and economic environment, an independent review was undertaken by the South Australian Government to reassess the fundamental structure of the Scheme for the first time in 20 years.
The review was undertaken by two of Australia’s leading experts in workers compensation – Alan Clayton and John Walsh and resulted in a report 1 being tabled in Parliament in February 2008. The report recommended a package of legislative and non-legislative changes to the Scheme designed to ensure:
- injured workers would receive fair and equitable financial and other support that should be delivered efficiently and equitably and enable the earliest possible return to work
- the average levy rate (paid by employers) would be reduced and contained with the range of 2.75% and 2.25% by 1 July 2009
- the Scheme would be fully funded as soon as practicable.
These were the terms of reference of the review set out by the South Australian Government. The new legislation is expected to meet the terms of reference and the Scheme will become fully funded within six to seven years.
1 Clayton-Walsh, December 2007, Review of the South Australian Workers Rehabilitation and Compensation Scheme Report
Why did the Scheme need to change?
The primary objective of the Workers Rehabilitation and Compensation Act 1986 is to rehabilitate and return injured workers back to safe employment and the community.
Despite this intention, South Australia has the lowest return to work rates of all Australian states 2, a trend that has been consistent over the past 10 years. It also has the worst funding position and the highest average levy rate paid by the employers who fund the Scheme.
The social cost of poor return to work can be significant – for injured workers and their families and ultimately the South Australian community. Delayed return to work can result in depression, family breakdown, diminished social networks and poor health outcomes unrelated to the original injury.
Employers carry the financial burden of a high-cost, uncompetitive scheme.
Despite strong investment returns over 20 years, WorkCover’s claims liabilities have continued to rise with ongoing increases in the number and length of longer-term claims.
At 31 December 2007, WorkCover’s liabilities exceeded its assets by $911 million (unfunded liability).
The new legislation will assist in significantly increasing return to work rates in South Australia, thereby minimising the negative impacts of injured workers remaining on the Scheme, and enabling a reduction in the cost of levies paid by employers and ensuring the achievement of full funding.
2 The Campbell Return to Work Monitor, prepared for the Heads of Workers Compensation for the past 10 years, compares the return to work performance of Australian and New Zealand workers rehabilitation and compensation schemes. It reports South Australia as having poor return to work performance across several measures in a trend that has been consistent for as long as the comparison has been made. See http://www. hwca.org.au/reports_rtw.php