Compensation Legislation Amendment Bill 2017


Debate resumed from 2 November 2017; motion of Mr JENNINGS (Special Minister of State).

Mr RICH-PHILLIPS (South Eastern Metropolitan) (14:47:12) — Well, President, the circus rolls on. This morning we started the Oaths and Affirmation Bill 2017. I said at that time that that was, I think, the third occasion on which this house had started to consider the Oaths and Affirmations Bill. We have not got the bill into committee. I was silly enough to venture the view during the second-reading debate this morning that perhaps, possibly, we would see the Oaths and Affirmations Bill brought to a conclusion, having listed it as a government priority in September, having failed to start it, having eventually started the bill in December and having then stopped it. Having resumed debate on the bill today, I ventured the view that we might just get it finished, but alas we have not. The circus has rolled on, we have adjourned off the Oaths and Affirmations Bill and now we are starting the Compensation Legislation Amendment Bill 2017.

This bill is quite a small bill and deals essentially with two discrete matters, so there is some prospect that this bill could be concluded today. In fact it would be the first bill to be started and concluded this sitting week. Without further ado I will move to the substance of this bill and the possibility that it could in fact be dealt with by this house this week.

The Compensation Legislation Amendment Bill makes amendment to the Transport Accident Act 1986 and a separate amendment to the Workplace Injury Rehabilitation and Compensation Act 2013. The Transport Accident Act is the act that governs the operation of Victoria's transport accident scheme, which is administered by the Transport Accident Commission (TAC). This is a scheme which is well recognised by most members of the Victorian community for the function it plays in providing no-fault personal injury insurance to people who are victims of transport accidents which occur in Victoria or occur in Victorian-registered vehicles. The TAC scheme is recognised nationally and internationally as an exemplar in the type of no-fault compensation it provides for people injured in transport accidents who meet the injury threshold, be it in the form of rehabilitation and support services to assist people to recover from injuries, be they physical or mental, incurred in a transport accident, be it income replacement support or be it lump sum compensation.

The scheme is recognised internationally in many respects as world's best practice in the provision of support for transport accident victims, and it is something I think the Victorian community can be very proud of in terms of what has been achieved with the TAC over a long period of time and the strength of that scheme which has been developed over a long period of time.

Of course alongside the role of the TAC in providing that compensation and rehabilitation function is the role it plays in road safety. The TAC's road safety campaigns are also widely recognised and acknowledged, be they television or print media campaigns. More recently it has played a role with the Safer Road Infrastructure program (SRIP), which was something that was extensively expanded under the previous government, which expanded that program to approximately $1 billion of funding for safer road infrastructure over a decade from around 2013. That is a program which has provided very useful financial support for infrastructure investment in safer roads.

It is interesting to reflect on the direction a lot of that funding has been going in over recent years. Members of this chamber are very aware of the growing criticisms in country Victoria around the rollout of the wire rope barrier program, which in its initial stages was targeted to particular identified problem roads where run-off collisions were a high risk or had a high occurrence. More recently though the rollout of the program seems to have been occurring on roads where that risk is lower and the benefits are commensurately lower. We now have, understandably, discussion in the community as to whether the use of that SRIP money on those wire rope barriers is in fact the best use of those funds, particularly when we have seen under this government the deterioration of so many of our country roads over the last three years. There is an opportunity where that Safer Road Infrastructure program could be used to provide other types of safety enhancements to our roads beyond its use in the wire rope barrier program. That is the second element, the road safety element, that the TAC undertakes, but as an entity it is recognised internationally for the contribution it makes to road safety, as well as the very sound no-fault scheme it provides for road accident victims.

The bill before the house today seeks to make a minor amendment to that TAC scheme with the removal of the requirement for certain TAC claimants, transport accident victims, to pay an excess in respect of their claims. The bill achieves this through amendments to section 3 and section 43 of the Transport Accident Act 1986, which will remove the existing requirement for the payment of an excess in respect of certain minor claims. The house has been advised by way of the second-reading speech that the cost impact, in the sense of revenue forgone from removing that excess, is in the order of $6.5 million per annum.

One of the questions that this raises — and I understand the Leader of the Government will comment on this in his summing up — is: what impact will the removal of that excess have in terms of encouraging claims which otherwise would have been made were the excess in place? This goes to the question of how many additional claims the TAC expect to receive as a consequence of the removal of the excess and what the cost impact of those additional claims is estimated to be on the scheme on an annual basis and on a liability basis — but I expect the liability impact will be minor at best.

Another aspect of the bill makes a change to the Workplace Injury Rehabilitation and Compensation Act 2013 (WIRC act). The WIRC act was introduced by the previous government, which had a commitment to rewriting accident compensation legislation in Victoria, which had been through a number of iterations from the 1960s onwards. There were a number of workplace accident compensation schemes which had been in operation in Victoria over the previous 50 years, and it was a commitment of the previous government to consolidate and simplify those schemes through a fresh rewrite of accident compensation legislation.

The product of that exercise, which took approximately two and a half years to do, was the WIRC act. The work act is now in place as the principal legislation governing the Victorian WorkCover Authority, the establishment of the body corporate and also the operation of the compensation scheme, which is recognised as one of the best no-fault schemes in Australia and internationally. It is a scheme which has enjoyed a very healthy financial position. It, along with the TAC, are schemes which are unique in many respects in the way that they have full balance sheet recognition of their future liabilities, unlike many compensation schemes which are funded on a year-to-year basis, with premiums paying only the cash costs of claims in a given year. This of course can lead to significant black holes in funding for long-term claims.

Both the TAC and WorkCover have their claims fully recognised on their balance sheets — the long-term whole-of-life cost of their claims are recognised on their balance sheets — and their balance sheets are backed by, in the case of those two schemes, tens of billions of dollars of assets to ensure that those claims can be met as they fall due. That is a very, very important aspect of those two compensation schemes, and it is actually one of the risks that now exists for Victoria with the development of the national disability insurance scheme (NDIS) as the commonwealth-sponsored scheme to provide support for those people in the community with disability.

One of the challenges with the development of the NDIS, which has not yet been met, is getting an understanding of the true actuarial cost of providing support for disability in the Australian community. The NDIS scheme is largely funded year-to-year with appropriations. This creates a big risk for TAC and WorkCover, which have through necessity very strong and tight cost controls in the provision of services to injured claimants, because those costs have to be reflected as whole-of-life costs on the balance sheet. With the absence of that discipline for the NDIS — not having that balance sheet recognition of their whole-of-life liabilities — the risk of cost increases through the NDIS as a price-setter and then flowing through to our schemes is very real.

The previous government and I, as minister for the two Victorian schemes, were very keen for TAC and WorkCover to develop a very close working relationship with the National Disability Insurance Agency (NDIA), the agency responsible for the commonwealth scheme, which of course has its head office in Geelong. We wanted to have our scheme working with the commonwealth scheme to ensure that those risks of the commonwealth being a price-setter and causing substantial disruption to the finances of the Victorian schemes were avoided through close collaboration between NDIA, TAC and WorkCover.

I think that close working relationship and the experience and understanding that TAC and WorkCover have — the executive of those two schemes — is incredibly important to ensuring that the NDIS does not go off the rails in the next decade. It is a scheme which has promised an enormous amount to those members of the community with disability. It frankly has promised beyond what it can deliver with its current funding level and there are huge risks to that scheme and to our schemes if it is not prudently managed. I think the expertise of TAC and WorkCover will be critical in ensuring that the NDIA is able to manage its scheme successfully. We certainly hope that the NDIA and the commonwealth government are receptive to that experience which exists within our two statutory schemes, which are fully funded, have robust balance sheets and have demonstrated their ability to run fully funded compensation schemes for many decades.

The element of this bill which seeks to amend the WIRC act is in relation to the treatment of jockeys and apprentice jockeys in the racing industry and the way in which Racing Victoria is designated as the employer of those jockeys and apprentice jockeys for certain activities — racing and training activities — as opposed to the trainer who engages them depending on what activity they are undertaking at the time an injury occurs. Our advice is that this change to reflect and clarify when a jockey or apprentice jockey is employed by Racing Victoria versus the trainer has been made at the request of the industry and is supported by the Victorian Jockeys Association.

This change does highlight some of the challenges which exist in accident compensation for professional sportspeople. It has been interesting to watch. Generally there are exclusions around professional sportspeople's injuries under the WorkCover scheme, and it has been interesting to watch the change in some professional sports in Australia and their approach to injury. One of the issues which was starting to get some recognition during the life of the previous government was the impact of injuries, particularly head injuries — concussion injuries — in AFL football. Of course it is outside the scope of the scheme but this nonetheless was starting to be recognised as a high-risk injury in that sport, an injury which can carry long-term consequences. We are starting to see that become more evident through some of the public commentary from former AFL players who have been the subject of concussion injuries.

It did start to highlight that this is going to be an increasingly challenging area for professional sports where injuries of that nature do occur. It is a question as to whether the current arrangements, which provide in broad terms a carve-out for professional sports from the WorkCover scheme, are sustainable into the future given those types of injuries will become of increasing concern now that they have been identified. The period when they were identified, as I said, was the 2013–14 period. It was largely being highlighted by medical professionals — neurologists — operating in that area. That concern is now being recognised more generally by the AFL and the community. I think that is going to be an area to watch with respect to our accident compensation scheme for those professional sportspeople.

This bill is relatively straightforward. The two provisions with respect to the removal of the TAC excess are not opposed. Likewise, the change to the WorkCover scheme with respect to jockeys and apprentice jockeys is also not opposed. I look forward to the minister in his summing up outlining the demand effect that is expected to occur through the abolition of the excess on the TAC scheme. But as I said, this is a simple bill, and hopefully, unlike everything else this Parliament has touched this week, it may stand a chance of actually being passed in a single day.

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