Published on: May 2022
Record: HANSARD-1323879322-124400
State Insurance and Care Legislation Amendment Bill 2022
Second Reading Debate
Debate resumed from 30 March 2022.
Ms LYNDA VOLTZ (Auburn) (10:19:40):
I advise that the lead speaker for the Opposition in debate on the State Insurance and Care Legislation Amendment Bill 2022, the member for Canterbury, has been delayed. I will speak first on behalf of the Opposition, to be followed shortly by the member for Canterbury. The objects of the bill are to amend the State Insurance and Care Governance Act 2015, the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998 to make further provision for governance arrangements for insurance and compensation schemes; to extend the enforcement powers of the State Insurance Regulatory Authority [SIRA] in relation to the workers compensation Nominal Insurer, Insurance and Care NSW, the NSW Self Insurance Corporation and persons exercising claims administration functions on behalf of insurers; and to make further provision in relation to claims for workers compensation death benefits and the commutation of workers compensation liabilities.
The bill repeals the Workers Compensation Legislation Amendment Act 2012 consequent on those amendments in relation to death benefits and commutations. The bill is the result of significant consultation with SIRA and the Insurance Council of Australia, but I note that the Workers Compensation Independent Review Office [WIRO] was informed of the bill but not consulted. Likewise, the union movement was not included as part of the consultation process in the formulation of the bill. The unions were advised of the legislation after the bill was compiled. There have been significant problems with SIRA and workers compensation legislation in the past. In particular, a lot of workers have had significant trouble accessing their benefits and finding out who is responsible for paying them.
Those issues have been the subject of debate for over a decade—workers have had their payments cut off, have not received medical reports and regulation by SIRA has been lacking. The intention of the bill is to streamline and put more regulatory muscle back into the SIRA process. The reality I have seen as the member for Auburn—as someone who has had a large number of injured workers and their families pass through my office over a long period—is that many workers have not been able to access either the payments or the kinds of medical treatments they need under the current workers compensation system. The changes proposed by the bill may go some way to resolving those issues. I will now stand aside for my colleague, the member for Canterbury, to lead in debate for the Opposition.
Ms SOPHIE COTSIS (Canterbury) (10:23:09):
I lead for the Opposition and represent the Hon. Daniel Mookhey in this place in debate on the State Insurance and Care Legislation Amendment Bill 2022. I acknowledge his work to hold the Government accountable with respect to icare. I thank all the stakeholders—the unions, businesses, Unions NSW, the business chambers, the Law Society of New South Wales, the New South Wales Bar Association and the individuals—who have contributed to discussions on the bill and the workers compensation scheme in New South Wales. Most importantly, I acknowledge the injured workers of New South Wales and the Injured Workers Support Network. I acknowledge their strength and courage, and thank them for their advocacy for injured workers in New South Wales—many of whom have not been able to work for many years and have had to battle bureaucratic rigmarole to claim their workers compensation entitlements.
All members in this place represent injured workers in their electorates, regardless of politics. But over the past 10 years the New South Wales Coalition Government has not put injured workers at the forefront. Our workers compensation system is broken. I thank the Minister's office for providing the Opposition with briefings on the State Insurance and Care Legislation Amendment Bill. Many people have done a lot of work on this bill. The shadow Treasurer, the Hon. Daniel Mookhey, will move amendments to the bill in the other place, which I will speak to during the consideration in detail stage. I will also move an amendment in relation to commutations that I have spoken to the Government about. I put on record that I have had good, sensible discussions with the Minister's office, with crossbench members and, of course, with my colleagues about the bill. As members have heard, the member for Auburn is a passionate and important advocate for injured workers. We served together in the upper House when the Government introduced the 2012 bill. We fought very hard into the wee hours of the morning—all night—to defend, advocate for and support injured workers.
Members in this place and in the other place have made some really bad mistakes that have caused a lot of grief for injured workers and their families. Injured workers have been left on the scrap heap in this State. But I acknowledge that the Government has brought forward this bill to make changes to the State Insurance and Care Governance Act 2015, the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998 to implement some of the recommendations of the McDougall review, which were handed down in April 2021. The bill attempts to clarify the objectives and functions of both the State Insurance Regulatory Authority [SIRA] and icare. It gives SIRA investigative and regulatory powers over the Nominal Insurer, increases the term for which an appointed director of icare's board may hold office, and provides for SIRA and icare to advise the Minister on whether issuing a particular direction to icare's board would be in the public interest. Finally, the bill makes allowance for the settlement of lump sum death benefits and the restoration of some commutation rights. The Opposition does not believe that should be provided for through regulation. I have been discussing that issue with many stakeholders and also with the Government.
The shadow Treasurer has identified a litany of issues in relation to icare, which I put on record. Labor has exposed a long list of wrongdoings at icare, but that list is not exhaustive. Icare underpaid 52,000 workers by up to $80 million in total. It awarded its new CEO a $120,000 pay rise earlier this year, making him New South Wales' highest paid public servant. Icare is increasing employer premiums by 6 per cent over the next two years. Icare tried to introduce a gap fee for injured workers needing to see a doctor last year. Icare racked up underwriting losses totalling $4.5 billion in the last three years, resulting in the loss of icare's $3.9 billion surplus. The Treasurer at the time, now the Premier, had to rush approval of a $4 billion emergency bailout for the icare-managed workers compensation fund, which was protecting New South Wales police officers, paramedics, nurses and teachers, after it came within 23 minutes of plunging into a crisis in June last year. Senior Treasury officials said in internal emails that icare had a direct line to the then Treasurer and they could not rein in the scandal-plagued agency.
Last year icare was caught secretly paying a labour hire firm $700,000 to hire a former United States Republican operative to work in the then Treasurer's office. Icare was found to have awarded a $140 million IT contract in a seven-day tender, despite bidders warned the rush process would lead to ruin. The project's cost has since risen to $360 million and remains incomplete. Icare was busted for handing $18 million without tender to the IVE group. That is the Liberal Party's printer and a major donor, led by the former president of the NSW Liberals. Icare broke its own procurement rules to award at least $6 million of contracts to Korn Ferry, a recruitment firm closely linked to a former New South Wales Liberal Party Minister and party treasurer.
A leaked report from last year shows that the scandal-plagued agency icare overpaid dodgy doctors hundreds of millions of dollars in duplicate, fraudulent payments. Icare handed $4 million in salary and bonuses to its eight top executives in the 2019 financial year, despite the agency losing $873 million that year, and 200 of its 1,200 staff were also paid bonuses. Icare's former CEO had to resign due to a conflict of interest after it emerged that icare handed his wife a $770,000 contract without tender. The same CEO and another top executive took an undisclosed sponsored trip to Las Vegas paid for by a multimillion-dollar contractor to use the agency. Icare's top executives took a total of 36 foreign trips in four years, 10 times more than taken by the State Insurance Regulatory Authority [SIRA], its regulator. Icare faced an ICAC referral for handing an $11 million marketing contract to a company secretly owned by a top executive of the agency.
In September 2019 Treasury secretly cancelled an external investigation into probity and governance at icare after the former CEO complained. The State Insurance Regulatory Authority made referrals about icare to the Independent Commission Against Corruption for further investigation. Last December in a report the Auditor‑General slammed icare for illegally using employers' money to bankroll its lavish spending. In an April 2021 review, former Supreme Court Justice Robert McDougall slammed icare for failure of governance, sloppy execution and difficulties in getting injured workers access to their entitled benefits. In a unanimous report agreed to by all parties, an upper House inquiry slammed icare's board for comprehensively failing to properly govern the insurer. In 2019 a damning independent review found that in 46 per cent of claims handled, icare failed to follow the relevant law.
The bill will fail to fix icare because it will still write too many of its own rules. We should not be here supporting icare special privileges. The Parliament should make icare follow the same rules as every other public sector agency. I urge both Houses to support these amendments that provide that members of staff of Insurance and Care NSW and the chief executive are not entitled to the payment of a performance-related bonus or incentive payment; amend the Public Works and Procurement Act 1912 to eliminate the Workers Compensation Nominal Insurer's exemption from procurement laws and instead define it as a government agency so as to ensure proper procurement and transparent tender processes; require icare to report, using its accounting ratio, every six months and change its actuaries every five years; appoint one nominee of Unions NW and one nominee of employers, either Business NSW or AIG, to icare's board; and make returning injured workers to health and employment an objective of icare.
This is a long list and it has been a very long and exhaustive process. We should have accountability and transparency. I urge the crossbench to support these amendments when they are moved. I now turn to commutations and the lump sum death benefits. I make some general comments about commutations before turning to the specifics. The benefits section of the bill before us responds to recommendation 40 of the McDougall review, which stated:
That the legislature give consideration to expanding the powers of commutation and settlement of lump sum death benefits, subject to the approval of the Personal Injury Commission.
A commutation is an agreement between an injured worker, their employer and the scheme agent to pay the injured worker's entitlement as a lump sum. A worker who has accepted a commutation is no longer entitled to future weekly payments or to claim medical, hospital and rehabilitation expenses for their injury. I put on the record very clearly that the Opposition supports in principle the expansion of commutations. We on this side support a viable and sustainable system but we need to make sure that the injured worker is at the very heart and has all the protection and particularly the support.
Every injured worker has a different story, but the devil is in the detail. This is what we have been talking about to the Government and stakeholders. Again I put on the record that I acknowledge the very considered discussions that we have had with the Government in relation to commutations. On all of the issues, we want to work together. On this issue, as I have said to the Government, we want to work together with stakeholders, Unions NSW, business, the Law Society, the Bar Association, self-insurers and all the experts. We need to get the experts around the table and come up with a system that is there for the injured worker to have independent financial, legal and medical benefits advice.
The Opposition has consulted widely on the proposed amendments covering commutations. As I have said on many occasions, I thank the many people who gave us detailed and frank advice, including Unions NSW, the injured workers group, the Law Society, the Bar Association, the Self Insurer's Association, specialised insurers, Business NSW, actuaries, lawyers and barristers who work in this space and are committed to ensuring that injured workers are protected and supported in a workers compensation system that is not working for them and is taxing on so many. It is a complex and contested space.
First review of the workers compensation scheme2020 review of the Workers Compensation Scheme
I note that the 2012 Joint Select Committee on the NSW Workers Compensation Scheme report, the 2017 Legislative Council Standing Committee on Law and Justice's , the Standing Committee on Law and Justice , and the McDougall report highlighted the need to reform commutations. The Joint Select Committee on the New South Wales Workers Compensation June 2012 report stated at recommendation 13:
That the NSW Government liberalise the availability of commutations, generally subject to the proviso that the injured worker has obtained independent legal and financial planning advice before agreeing to a commutation.
The 2017 Standing Committee on Law and Justice report noted "concerns that the current provisions for commutations are overly onerous". Recommendation 9 of the Standing Committee on Law and Justice's 2020 review stated:
That the State Insurance Regulatory Authority investigate:
…
other options for injured workers and insurers to reach settlements and exit the scheme …
The McDougall inquiry noted:
I agree that any measures that may increase the early resolution of claims, and decrease disputes, are desirable … there are also significant psychosocial benefits in allowing workers and their families to settle claims, avoid the ongoing stress and difficulty that pursuit of a claim can create, and get on with their lives.
Lump sum payments were available under section 40 of the 1987 Act prior to 2012. The 2012 reforms introduced limited lump sum payments for permanent impairment via a commutation. Section 87EA of the 1987 Act lists the current preconditions for commutation whereby the injured worker has a permanent impairment of at least 15 per cent as a result of their injury, has been paid compensation for their permanent impairment, first received weekly payments for their injury more than two years ago, has fully exhausted all opportunities for injury management and return to work, has received weekly payments regularly and periodically throughout the previous six months, is entitled to ongoing weekly payments and has not had their weekly payments stopped or reduced as a result of not complying with their return to work obligations. These preconditions mean that, while commutations are still available, access is limited.
Minister Dominello stated in his second reading speech that there are less than 50 commutations each year. We debated these restrictive conditions. We understand the psychosocial issues around people being in the system, and they want to be able to get out. In order for them to get out of the system, we need to ensure that there is a legislative framework that has been rigorously considered, and we must consider the unintended consequences. As I noted previously, the availability of commutations is contested. There are different opinions about how they should be used in a workers compensation system. It is disputed as to whether they should be a permanent or temporary feature of the system, whether they assist or undermine a return to work, what impact they have on the finances of the system and whether they should be used for large or small claims. The points outlined in the standing committee's 2012 report covered the issue well, and I will briefly summarise the areas of contention.
Stakeholders may not agree on how commutations should be used in a workers compensation system, but they agree that the process being introduced by the Government is not right. For such a disputed area there has been limited consultation. There have been submissions and discussions, but the Opposition has concerns about the design of the system through a regulatory process, which is the Government's intention. Stakeholders expressed anger at the limited consultation by SIRA, with key stakeholders missing out on any consultation. They expressed concerns about previous consultations by SIRA and did not believe SIRA should decide what is and is not included. They were also opposed to it being undertaken by regulation, which is the issue the Opposition has raised. There is concern across the board from all stakeholders. It is about legislating through regulation. Even the many people in favour of expanding commutations were opposed to doing it by regulation.
Even though there are serious concerns with the current system, there was a united opinion that the system should be left as is and that we should revisit it and do it properly. We all want to see an improved and expanded system, but we have to do it properly. There should be an undertaking that consultation will be conducted as a matter of urgency and these issues fixed through legislation. With this caveat, many stakeholders supported the Government's points that the current system is not working. Everyone is on the same page. I am putting these points on the record and reflecting on what stakeholders are saying. The Opposition wants to work with the Government on this important issue.
Unions NSW noted that the current system works against negotiated settlements and exiting the scheme. It also noted that, if done well, workers are able to control their finances and leave a draining and adversarial system behind. Everyone supports the expansion of the commutations, but we must make sure that there are appropriate safeguards, such as independent legal, financial and medical advice. The Australian Lawyers Alliance [ALA] and the Law Society of New South Wales told the Standing Committee on Law and Justice in 2017 that 87EA failed to allow injured workers the flexibility to take financial control of their lives and exit the system. I quote:
A worker who is able to settle on a final basis an entitlement to statutory compensation in exchange for a lump sum is then far more likely to be able to return to work in suitable employment with an alternate employer. A worker with a finalized claim is no longer "in the system" and as a result is more employable. Our experience has demonstrated the positive impact a lump sum settlement can have upon an injured worker's sense of autonomy and psychological state, which is often an impediment to a sustainable return to work.
The icare submission to the McDougall inquiry stated that commutations can provide greater choice and flexibility. I understand why icare is very supportive of this but, as I keep reiterating, we have to get this right. The NSW Self Insurers Association supported expanding commutations, saying that these agreements allow an injured worker to finalise their claims and entitlements and "put it all behind him or her and move on with their life and on to different employment". I also note the argument about commutations creating a "lump sum culture", which Michael Playford from PricewaterhouseCoopers flagged in the standing committee's 2012 report.
It was also raised by the Australian Industry Group and the NSW Business Chamber at the time. Mr Playford argued that commutations created financial pressures on the system and a perverse incentive for workers to stay off work to hold out for a lump sum payment and led to a deteriorating claims experience. I am interested in the research behind these statements. It is important, and we need to see it. I note the Law Society of New South Wales rejected this explanation. I quote its evidence from the 2012 inquiry:
What I found is far from workers expressing excitement at the prospect of a lump sum dangling at the end of the rainbow. The experience is quite to the contrary. When I explain their entitlements to them ... they express an abhorrence as to the fact, "How do I pay off my mortgage? How do I survive on a day-to-day basis with those entitlements?" This alleged existence of a lump sum culture assumes there is some voluntary intent on the part of the worker to remain on the drip feed until this lump sum at the end of the rainbow becomes available. The lump sums that are now available are so paltry that they would not attract anyone to remain in this system for an extended period of time.
Dr Kevin Purse stated that a "lump sum culture" was a result of misadministration of the scheme. Other stakeholders supported using commutations in a targeted way for limited cases and periods to clean up the system. I foreshadowed an amendment to remove this section. Stakeholders may not agree on how commutations should be used in a workers compensation system, but they agree that it should not be undertaken by regulation. There are concerns about the process by which the Government is trying to achieve changes. It is problematic.
Apart from minor changes, the proposed amendments in the bill largely reflect the amendments relating to commutation of compensation contained in schedule 8 to the Workers Compensation Legislation Amendment Act 2012, which was introduced on 19 June 2012. They include uncommenced provisions enabling regulations under the 1987 Act to permit insurers to commute workers compensation liabilities in cases prescribed by regulations that do not meet the current criteria for commutation. As I have said to the Government, we are being asked to sign up to something with no specific details.
The New South Wales Bar Association sent a no‑holds‑barred letter to all members in this place putting forward its concerns and issues with that aspect of the bill. We should not be legislating through regulation in this particular area of law. I have heard the other argument, that we should not be putting operational matters in regulations. We must ensure that we know the classes of workers, the industry and the sectors, and that we have research, statistics, facts and information. I do not say this very often but we have had good discussions with the Government, and I am very hopeful that the work will be done and consultation will be undertaken with the key stakeholders to articulate how best we can deal with this important area. I mentioned the New South Wales Bar Association's powerful letter, which all New South Wales MPs received. The letter states:
… commutation arrangements should be closely considered by Parliament to ensure that they do not fail to provide for those entitled to be provided for.
4.The Association has consistently and strenuously opposed the over‑use of Henry VIII clauses in NSW, which circumvent the ordinary process of parliamentary scrutiny and debate. The ability of Parliament to oversee and control delegated legislation is of fundamental importance in a liberal democracy.
…
7.The form of the legislation introduced into Parliament provides the member of Parliament with no indication of the circumstances in which commutations are now to be permitted.
As I said, with regard to the availability of commutations, we need to know what it is based on: the industry, location, injury type, age, degree of impairment, amount of entitlement, income, employment type or any other criteria. In his second reading speech, the Minister said the Government is committed to undertaking a program of work, including consultation with stakeholders. But that consultation will take place outside the public forum and without parliamentary scrutiny. The Opposition supports the Government undertaking consultation with experts. We are happy to be part of that. But Parliament exists for a purpose, which is to scrutinise these important matters. As I said, the Opposition supports the principle of expanding commutations, but we will put forward an amendment to remove the ability to do so by regulation. I turn to the issue of lump sum benefits. The bill responds to recommendation 40 of the McDougall review, which states:
That the legislature give consideration to expanding the powers of commutation and settlement of lump sum death benefits, subject to the approval of the Personal Injury Commission.
2020 review of the Workers Compensation Scheme
It also responds to part of recommendation 9 of the Standing Committee on Law and Justice report , which states:
That the State Insurance Regulatory Authority investigate:
…
other options for injured workers and insurers to reach settlements and exit the scheme
There is widespread support amongst stakeholders for the changes relating to lump sum death benefits. The amendments provide for the settlement of lump sum death benefits disputes in the Personal Injury Commission on a compromised basis. However, as indicated in the bill, there must be a death benefit liability dispute before the Personal Injury Commission. All parties must be legally represented unless the commission otherwise directs. The prescribed lump sum death benefit amount only may be compromised. The commission cannot entertain proceedings to give effect to the settlement unless all parties agree to it; there is a reasonable basis for the insurer to dispute liability for the death benefit compensation; and the amount of compensation proposed to be paid in settlement of the claim is reasonable in the circumstances. Where the commission makes a determination to give effect to the agreement, the insurer is taken to have accepted liability for death benefit compensation. The amendment enables the workers compensation guidelines and the rules of the commission to provide for certain matters relating to agreements.
Currently the legislation provides an all‑or‑nothing proposition for both families and the insurer. The full lump sum amount is payable or nothing is payable, subject to the determination of the dispute. People will miss out where liability for the cause of death related to employment is declined. That refers to death claims in the Personal Injury Commission where decisions are made against the deceased—that is, cases where the deceased worker has lost. Former Supreme Court judge McDougall pointed out that that can cause significant distress to the families of workers killed in workplace accidents. His review states:
There is no principled reason why they should not be able to compromise claims, so long as there is appropriate oversight of the compromise.
These disputes have the potential to be lengthy and complex. The amendments provide an option to families of the deceased, and to the insurer, to avoid prolonged litigation by voluntarily entering into an agreement with oversight by the commission.
The Opposition is concerned about the potential for death benefits legislation to be remedied in a piecemeal fashion. Justice McDougall and multiple experts have pointed out that that is an issue with the workers compensation system. I am glad the Government has acknowledged that. I note that last year the Government introduced the Motor Accidents and Workers Compensation Legislation Amendment Bill 2021. Schedule 2 to that bill amended section 25 of the Workers Compensation Act 1987 to create an additional compensation entitlement to cover the fees charged by the NSW Trustee & Guardian to manage a dependent child's lump sum death benefit to ensure that the child's lump sum is not at risk of being eroded by fees over time. The Opposition supported that important amendment. It had widespread support. That bill is still with the upper House. We need to get a move on. That important amendment came about through some excellent work by the Law Society of New South Wales and the ALA. Again, I acknowledge that the Government undertook to do it, but it must be resolved.
I will have more to say during the consideration in detail stage. This long and arduous process has taken 10 years. Last week I spoke to a number of injured workers from the Injured Workers Support Network. I put on record that they are distressed. Every day they encounter difficulties trying to get through the system. They told me about difficulties with case managers. The Hon. Daniel Mookhey and I, together with the Secretary of Unions NSW and the Injured Workers Support Network, were explaining the objects of the bill. A number of injured workers asked us a series of questions. They do not want to sit at home doing nothing. They want to get back to work. But there must be a considered system that has the injured worker at the centre of what we do. One of the gentlemen said to me, "Sophie, I've had over 45 operations, and I have to get more surgery on my back. I have to get all this treatment." He said, "I took that commutation and that was it, and I am in this situation". There were many stories. The Government needs to listen to those stories and make the system work for injured workers, putting them at the heart of what it is doing.
I urge the crossbench to support the Opposition amendments, but I put this on the record before I finish. In the other area that I have responsibility for, dust diseases, I have been urging the Government to act for months now. The Government commissioned the Driscoll report, which talks about five dust diseases that need to be put on the schedule. I have written to the Government Ministers responsible: Tudehope, Petinos and Kean. It is not difficult.
Two stonemasons gave evidence on 18 March. They are 45- to 50-year-old men, with families, who have silicosis. Those young men cannot breathe and are finding life very difficult. One of the gentlemen has a child with disability, and the bills are piling on. The charges, the fines and all those fees—everything they have to pay for is piling on. They gave evidence from their experience, not from written notes or anything. We are seeing an increase in the high numbers of people in the workplace contracting dust diseases, and something has to happen. I am urging the Government to please get those five diseases on the schedule. They have the information, and we need to protect workers.
I can talk about this all day, but I will leave it at that. I am urging the Government to take that action. The dust diseases review report from the upper House will come out very shortly. The Government needs to take the recommendations very seriously, because this is the third report that we have had now and New South Wales is lagging behind every other State. None of us, not even members opposite, want to see Hardie mark 2.0, but that is where we are heading.
I went to a memorial at the brickworks at Holroyd on Saturday with Mayor Lisa Lake, councillors, Barry Robson from the Asbestos Foundation Australia and Parramatta candidate Andrew Charlton. We spoke to a number of families, and it is devastating. My uncles worked in the railways; my dad worked at Metters. They died in their late 70s and 80s, but a lot of that generation did not have work health and safety. They did not have what we purport to have now, although we need to strengthen SafeWork NSW. Those people died because of dust diseases.
We had a recent death, and one of the family members was just devastated. They have lost everything, and these are young people. Many migrants that came to Australia in the fifties and sixties worked in those environments and contracted dust diseases. Now we have a new generation, and we are seeing the numbers increasing. Something needs to be done. The Opposition will work with the Government, whoever it is, because this is a matter of urgency. I ask the Government to please have a look at those recommendations and, more importantly, to put those dust diseases in that schedule. I will have more to say during the amendment process, but I thank the House for listening to my contribution to this very important debate.
Mr JUSTIN CLANCY (Albury) (11:04:44):
I welcome the opportunity to speak in support of the State Insurance and Care Legislation Amendment Bill 2022. The objects of the bill are:
State Insurance and Care Governance Act 2015Workers Compensation Act 1987Workplace Injury Management and Workers Compensation Act 1998
… to amend the , the and the as follows—
(a)to make further provision for governance arrangements for insurance and compensation schemes,
(b)to extend the enforcement powers of the State Insurance Regulatory Authority in relation to the Workers Compensation Nominal Insurer, Insurance and Care NSW, the NSW Self Insurance Corporation and persons exercising claims administration functions on behalf of insurers,
(c)to make further provision in relation to claims for workers compensation death benefits and the commutation of workers compensation liabilities.
I particularly speak to clauses 22 and 24 in schedule 2 to the bill. Those provisions extend the power of the State Insurance Regulatory Authority, or SIRA, to regulate insurers through enforceable undertakings and directions. The independent review of icare and the State Insurance Care and Governance Act 2015 undertaken by the Hon. Robert McDougall, QC, found that SIRA should have sufficient enforcement powers to properly regulate the Nominal Insurer and Government self-insurers' compliance with the workers compensation legislation.
The bill proposes a new section 195, which establishes the power for SIRA to give a direction to all relevant parties undertaking workers compensation claims management activities. Importantly, the bill allows SIRA to issue a direction to any licensed insurer or self-insurer, regardless of how they are established as an insurer, with respect to a contravention of a condition imposed in the insurer's licence or the workers compensation legislation. In addition, a licensed insurer or a self-insurer will be able to give an undertaking to SIRA in relation to a contravention or alleged contravention of the relevant Acts.
Under proposed new division 4A of part 7 of the Workers Compensation Act 1987, SIRA will be able to accept an undertaking from an insurer in relation to a contravention or alleged contravention of the workers compensation legislation. The undertaking must be in writing, and the insurer must carry out the specific activities set out in the undertaking. For example, an insurer may offer an undertaking to SIRA where the insurer has uncovered a breach and has already commenced remedial action to address the contravention. An undertaking is insurer led, and supports and promotes a collaborative approach to regulation.
The bill also proposes to introduce a new power for SIRA to issue a direction to an insurer if SIRA is satisfied that the insurer has contravened its licence, the workers compensation Acts or a requirement made by the authority under the workers compensation Acts. A direction can require an insurer to take action, or refrain from taking action, to rectify the breach. Those proposed amendments enhance SIRA's oversight powers to ensure that all parties, including the Nominal Insurer, comply with the workers compensation legislation. SIRA must publish a notice of decision to accept or reject an undertaking as soon as practicable after it has decided to accept or reject the undertaking. In regard to a direction, SIRA must publish a statement of the effect of the direction and reasons for issuing the direction.
I touch on the role that SIRA has within our community and the impact at the local level that my office is seeing in working with SIRA on behalf of a constituent. It emphasises the importance of having the regulatory authority to oversee insurance agencies. Our constituent has a fight with an insurance company that has been unresponsive to her issue.
This particular case involved overcharging a premium because an incorrect address was applied by the insurer. It is pertinent because the constituent is elderly and has recently undergone surgery. The insurance agency has a shopfront in our community and when the constituent went there, she was told they could not help her. She made many phone calls to the company and got nowhere, so she came to my office. I sat down with her a few weeks ago and discussed her situation. My office staff rang the insurance company, but no‑one senior would come to the phone. An email address was provided for their government relations section. We sent three emails in search of a contact person to call the constituent. There was no response, so we lodged a complaint with SIRA. Within days my office was contacted by the insurance company, which apologised to staff and said that it would amend its procedures.
That is the importance of having that regulatory authority to oversight insurance agencies and their activities. In this case, ongoing correspondence is now underway between the insurer and the insured; communication has been restored. On this occasion, I give high marks to SIRA for quickly understanding the need to look after this older and unwell but recovering person. It acted and the service it provided was personal. It did not avoid confronting the insurance company and, importantly, it got the lines of communication back up and running. As we look at expanding SIRA's work, I am encouraged by that action. The State Insurance and Care Legislation Amendment Bill 2022 provides amendments that will give SIRA additional tools to better regulate insurers and ensure that there is compliance across the workers compensation scheme. I commend the bill to the House.
Mr JOHN SIDOTI (Drummoyne) (11:11:15):
I thank the House for the opportunity to contribute to the State Insurance and Care Legislation Amendment Bill 2022. Without duplicating what many members have spoken about previously, I am aware of the objective of the bill. I will move straight to schedule 1, which amends the State Insurance and Care Governance Act 2015. It goes through a series of provisions. A whole series of motherhood statements have the obvious and bureaucratic mumbo jumbo, which go hand in hand with the alarming provisions in schedule 2. I will turn now to schedule 2, which amends the Workers Compensation Act 1987. This schedule has some positives, such as sensible provisions enabling death benefit disputes to be settled on a compromise basis rather than with an "all or nothing" approach. I support those provisions. I quote:
A party to a death benefit dispute may lodge with the Commission a proposed agreement for an amount to be paid in settlement of the part of the claim that relates to the lump sum death benefit under Division 1.
The schedule also includes a proposal to enable regulations to be made to ease restrictions on commuting a worker's rights to compensation on a "once and for all" basis by payment of a lump sum. The principle of the idea is a good one. It will enable more injured workers to exit the compensation system, where appropriate. But not a single clue is given as to what the new criteria will be to enable a commutation of a worker's rights. It is all left to regulation. Why are we in the dark over such an important aspect of the workers compensation system? This lazy drafting technique lacks transparency, will not be supported and should not be supported. The balance of schedule 2 is alarming. It gives the State Insurance Regulatory Authority [SIRA] more bullying powers over hapless claims officers. For example, section 195 states:
(1)If the Authority is satisfied an insurer has contravened its licence, the Workers Compensation Acts or a requirement made by the Authority under the Workers Compensation Acts, the Authority may issue a written direction requiring the insurer to—
(a)refrain from conduct contravening the licence or the Workers Compensation Acts or other requirement, or
(b)take action to comply with, or to prevent or remedy a contravention of, the licence or the Workers Compensation Acts or other requirement, or
(c)take other action prescribed by the regulations.
(2)An insurer must comply with a direction issued to the insurer under this section.
Maximum penalty—1,000 penalty units.
(3)It is a condition of an insurer's licence under this Act that the insurer must comply with a direction issued to the insurer under this section.
(4)The Authority must, as soon as practicable after issuing a direction under this section, publish on its website a statement of the effect of the direction and the reasons for issuing the direction.
(5)In this section—
Workers Compensation Acts
includes instruments made under the Workers Compensation Acts.
The scheme deficit has blown out like never before since the creation of SIRA and icare. Why are these massively expensive bureaucracies being given more and more functions and powers? There is already a litany of offence provisions in the legislation directed at insurers. For example, offence provisions exist for failing to determine claims within certain time frames. There is also an existing penalty provision for disputing a claim based on grounds which are not genuine. How will this extra layer put a single extra dollar in the hands of injured workers? SIRA already has enormous powers over insurers. One example is section 183A of the Workers Compensation Act, which states:
(1)If the Authority is satisfied that a person who is or was a licensed insurer or self‑insurer has contravened its licence or this Act or the regulations, the Authority may—
(a) impose a civil penalty on the person not exceeding $50,000, or
(b) issue a letter of censure to the person.
(2)Before imposing a civil penalty, the Authority is required to give the person concerned an opportunity to make written submissions with respect to the alleged contravention, but is not required to conduct a hearing into the matter.
(3)A civil penalty that has been imposed under this section may be recovered by the Authority in a court of competent jurisdiction as a debt due to the Crown.
…
(5)The Authority may cause a letter of censure issued by it under this section to be published.
(6)A civil penalty that is paid or recovered is payable into the Workers Compensation Operational Fund.
Why would any person take a low‑paying job as a claims officer at Employers Mutual Limited, GIO, Allianz or QBE only to be bullied by higher‑paid bureaucrats? The legislation in this field is notorious for its complexity. How about we do something about that? As long ago as 2000, the judges of our Court of Appeal complained that:
The Act is a complex piece of legislation which has been much amended. The consequence is that the interpretation of its provisions and amendments is often attended with great difficulty.
If an eminent judge finds the legislation difficult to interpret, what chance does a hapless claims officer have? Picking fault and finding noncompliance with the plethora of legislation and instruments made under the workers compensation legislation would have to be the easiest gig in town. I guess it is like ripping wings off butterflies. It produces nothing but allows high‑paid bureaucrats to justify claims for more power and more funding. Meanwhile, the system continues to be hopelessly fractured, with more reliance on high‑paid consultants and ever‑expanding regulators.
We spent a fortune on consultants during the review into the scheme by retired Supreme Court judge the Hon. Robert McDougall, QC. His report was handed down in April 2021. The New South Wales Treasurer at the time, Dominic Perrottet, and then Minister for Digital and Minister for Customer Service, Victor Dominello, announced on 4 August 2020 that the scheduled five‑year review into workers compensation would be brought forward. It is an understatement to say that icare and SIRA were not covered in glory in the McDougall report. Why increase SIRA's powers to belt claims handlers? Instead, why not make the legislation easier for the claims handler to understand and administer? Justice McDougall suggested exactly that when he said:
… as those within the workers compensation system already know, the current legislative system is cumbersome, confusing and unwieldy... The current legislative provisions have resulted in a level of confusion, inconsistency and complexity that does nothing to assist the schemes to achieve their policy objectives. That must change... There is no reason for the retention of the existing and confused morass of multiple statutory instruments. Everyone involved with the scheme should be able to have recourse to one clear and consistent source of rights and responsibilities.
It is lazy and poor governance for this Parliament to keep dreaming up ways of empowering high‑powered, high‑paid people to smash the little people trying to administer the legislation, which his Honour described as failing to provide a clear and consistent set of rights and responsibilities for the claims handler to administer. I suggest that we abandon those provisions and instead show that we have the intellectual capacity and the decency to work hard to put legislation in good order before jumping to bully those who are trying to navigate this impossible system every day.
Mr PAUL LYNCH (Liverpool) (11:20:03):
The objects of the State Insurance and Care Legislation Amendment Bill are to amend the State Insurance and Care Governance Act 2015, the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998. The aim of the amendments, as it is expressed, is to make further provisions for governance arrangements for insurance and compensation schemes, and to extend the enforcement powers of the State Insurance Regulatory Authority in relation to various bodies. The amendments also extend to provisions concerning claims for workers compensation death benefits and the commutation of workers compensation liabilities.
These last two categories—commutations and compromises on workers compensation death benefits—probably attract the most interest, and certainly attract my interest. Prior to entering this place, I was a lawyer in practice for almost a decade and a half—in the last century. A significant amount of my professional time, although certainly not all of it, was spent appearing for worker applicants seeking compensation benefits under the 1926 legislation, which was introduced originally by the Lang Government, or under the 1987 legislation. The regime is very different now, although I am certainly not convinced that the current one is better. I dealt with both these issues—that is, lump sum settlements and compromises on death claims—whilst in practice. In my time, the procedure analogous to a commutation was known as a redemption. It was a different process, yes, but the broad philosophy was the same.
The payment of a lump sum in replacement of other ongoing payments has a number of benefits. The lump sum is a specified particular amount without the ongoing liability. This benefits the party making the payment; it is a definite amount and it is over. To the injured worker, a lump sum can have benefits. It means an earlier resolution, finalising matters and allowing people to get on with their lives and not be subject to the drip‑feed of weekly payments. Very few commutations currently occur and the changes in this bill certainly do not allow unrestricted commutations. The proposed legislation, however, relaxes the regime and will allow more commutations. That is a good and sensible thing.
There was always an undercurrent against redemptions and you hear it now in the rhetoric about lump sum cultures. Some people were critical of allowing injured workers to get a lump sum. Those critics were often also people who thought injured workers got too much compensation. They also had the elitist view that injured working‑class workers did not have the skills to deal properly with a lump sum. Those critics, of course, were largely spivs in expensive suits that would not know the working class if they fell over them. They were wrong; increasing the number of appropriate commutations is entirely appropriate.
The second of the changes is to settle lump sum death benefits on a compromise basis—that is, rather than getting all or nothing, claims can be settled for something more than nothing but less than a maximum payment. There is an old saying among personal injury litigators: A good settlement is always the best result. This allows all parties to make a realistic assessment of their prospects of success and agree to a resolution commensurate with that. That can obviously avoid the extra cost of litigation. It means the insurer does not run the risk of paying a maximum amount of compensation when it thinks it has a possible basis to deny liability. It means the families obtain some compensation where there is a chance of getting none.
I recall a case I was involved in in practice of a macadamia farm worker who died of a heart attack travelling home from work in a car. The law is very different now but at that time in the 1980s, because he was on a journey from work to home, we might have been able to establish he died of a compensable injury and thus obtain compensation. It was obviously going to be highly contested, granted the cause of death was a heart attack. The insurer was represented at the compensation court with a silk in tow. Having senior counsel in compensation court was a very unusual occurrence in those days. I was there with junior counsel. We could have run the case and, relying on a compassionate view from the court and judge, maybe we would have won and got the maximum payment. Then again, we might have lost and the family would have ended up with nothing.
The insurer could have fought and maybe won a complete victory; then again, they may not have and then been up for quite a substantial compensation payment. Settling the case on a compromised basis was the blindingly obvious thing to do. That suited both parties. Frankly, it was in the interests of justice. Whilst the law and regulatory structure are very different now, that sort of case shows the merit of compromise settlements. I also note in passing that there is a sense of going back to the future with these two changes of increasing commutations and compromises on death claims. They almost go back to some of the things that used to happen, which raises the question of why they were changed to begin with. Having said that, the two changes are read with some enthusiasm.
But there are some discordant notes. The New South Wales Bar Association has expressed its concern about aspects of the proposed legislation. In particular, it has expressed its concerns "with the proposed restructure of the commutation arrangements in the bill, which appears to be intended to be undertaken by the use of regulations in the form of Henry VIII clauses." Certainly anyone who cares about the primacy of Parliament can only be concerned by the use of Henry VIII clauses. In some cases I have been persuaded they are appropriate— for example, most recently in the legislation to deal with the COVID pandemic. That situation, however, is very different from the situation here. As the association points out, there was no reference in the Minister's second reading speech to the use of Henry VIII clauses. The association makes a number of specific comments. One of them is:
Clause 4 amending S.87EA (2) and inserting subsection (2) (c) of the bill appears to envisage giving power to pass a regulation which will permit the lump sum proposed for the commutation to be excessive or inadequate. In a sense the power to make a regulation having this characteristic embodies the problem with Henry VIII clauses more generally, but it also begs two questions:
What legitimate policy goal requires the power to make a regulation permitting overpayment and/or one allowing under compensation?
What properly designed scheme can afford overpayment?
It also points to clause 8. This excuses a worker from obtaining advice on certain cases. There is no clarity at all as to what the criteria for inclusion in a class of worker not requiring advice might be. The clause also allows regulations that require a worker to obtain advice but, once again, without even a hint of the criteria to be used in working out who is covered by the regulation. These problems seem to be exacerbated by the provision of clause 9, which requires that a worker who wishes to withdraw from a commutation agreement do so by writing to the President of the Personal Injury Commission. Is this potentially for a class of worker not required to obtain advice on the wisdom of a commutation? If so, this seems at best confused. As the letter from association president Michael McHugh, SC, notes, substantive changes in the scheme should not be left merely to regulation. The general provisions about commutations and compromises in death claims are going in the right direction. It is just a pity that the technical detail does not seem to have matched it.
Ms JENNY LEONG (Newtown) (11:27:45):
I speak on behalf of The Greens in debate on the State Insurance and Care Legislation Amendment Bill 2022. I acknowledge my Greens colleague MLC‑elect Sue Higginson, who is watching the debate and will take carriage of these issues and this area of work when she is sworn into the New South Wales upper House. She will take on the mammoth task of filling the shoes of David Shoebridge, who I acknowledge has done significant work in exposing the scandals and issues around workers compensation and particularly the failings of the now Premier and then Treasurer Dominic Perrottet when it came to the oversight of icare. I also acknowledge Labor member in the upper House the Hon. Daniel Mookhey, who I understand worked very closely with David.
I recognise the work they have done in addition to the Opposition spokesperson in this place, who has been leading the charge in making sure we have a workers compensation scheme in this State that respects and reflects the dignity of people in their workplace and does not prioritise large pay packets for those overseeing the scheme over and above the treatment of the workers they are intended to serve.
The bill implements part of the Government's response to the recommendations made by the independent review of icare and the State Insurance and Care Governance Act 2015. It also responds in part, if not directly, to the Legislative Council's Standing Committee on Law and Justice and the review of the workers compensation scheme that my colleagues David Shoebridge and Daniel Mookhey and others were instrumental in using to expose the outrageous icare scandals we have seen over many years. It is very easy to come here and start talking about the machinations of the scheme, the regulations and the legislative changes we are making while forgetting the real people who are impacted by the scheme's past failures.
All members in this Chamber have heard directly from people in their communities about how the failures of this system have increased the distress, trauma and frustrations experienced by individuals who need to deal with this system. We even heard Government members talking about the challenges in this space. It is important that we recognise that we need a scheme that not only respects the rights and dignity of injured workers but also recognises they have been through significant trauma. Many of those individuals want to get back to work. Instead, they are caught up in a horrific system that adds to the trauma.
This is not new. Sadly, the underfunding of certain aspects of our public service, the outsourcing of certain jobs and the privatisation or the attempt to put things at arm's length has meant that, instead of serving the community and public interests, only certain types of people are protected and the bottom line is prioritised. One clear change that must be made to this legislation is that the decisions or directions of the Minister should consider the public interest. We would have thought that that would go without saying, but the exposed scandals that we have seen in this space over the past decade demonstrate that that change is necessary.
The bill amends the State Insurance and Care Governance Act to clarify the objects and functions of icare and the State Insurance Regulatory Authority [SIRA] in the delivery and regulation of State insurance and compensation schemes. It establishes a four-year maximum term of office for an appointed director of icare, which was previously three years, and requires the icare and SIRA boards to advise the Minister whether they consider a ministerial direction to be in the public interest. The bill also amends the Workers Compensation Act 1987 and the Workplace Injury Management and Workers Compensation Act 1998 to extend SIRA's investigative and regulatory powers to the Nominal Insurer, icare, NSW Self Insurance Corporation and claims managers; empowers SIRA to impose licence conditions on both the Nominal Insurer and Government self-insurers with ministerial approval; provides for the settlement of some lump sum death benefit disputes in the Personal Injury Commission; and provides a framework that allows the president of the Personal Injury Commission to approve commutations and to allow the regulations to expand access to commutations for certain classes of claims.
It is important that we see this legislative change in the context in which it is being brought to the Chamber. In 2020 the Law and Justice committee conducted a review of the workers compensation scheme. The inquiry exposed extraordinary levels of financial mismanagement and that thousands of injured workers were being underpaid by icare. It also found that icare's failures resulted in a poor claims management scheme, causing return‑to‑work rates to plummet, and injured workers were facing considerable difficulties when trying to access the benefits to which they were entitled. The recommendations of this inquiry largely focused on internal processes at icare but called on the New South Wales Government to expand the regulatory powers of SIRA and NSW Treasury and to make operational and administrative improvements to icare.
The Greens do not oppose the legislation. While the legislation is improved, it is important to note that other elements create a significant risk, such as the proposed changes to the scheme's valuations. The additional directional powers SIRA will be given have also been raised with us and were mentioned by a number of members this morning. We also recognise the concerns that were raised directly with us and other members in this Chamber about the briefing note from the Government. In that note the Government was talking up of its extensive consultation, as it is often known to do. The Government stated, "We've consulted broadly with all of the stakeholders." But, when we speak to certain stakeholders, they say, "We haven't heard about this. We haven't been consulted about this." So I question whether we need to make sure that when giving SIRA more power under this legislation that its staff are not the primary people who are being consulted. We have to ask to what granular level has consultation taken place with the unions that are most impacted by the workers compensation issues that regularly come up.
If the Government wants to take the politics out of this matter and if it is trying to serve the interests of workers, I urge it to recognise that the primary goal is to make sure that people are safe in their workplaces and that they do not need to access the services of this scheme services. But the Liberal-Nationals Government has a history of not serving the interests of people. Occasionally, in jest, its members claim to be the party of the workers, but we all know full well that it is the party of the bosses and the people who are trying to profit from the exploitation of workers. That is what it will consistently do, so we need to make sure that we hold them to account.
I need to stress two things and other members in this Chamber have also stressed them. The first is the concern that we are once again kicking the can down the road because the details of legislation we are considering will be in the regulations. Obviously we have the power in the upper House to disallow regulations in the future. But that is not a good way to consider detailed legislation in this Chamber, especially when we have had multiple reviews that recommend certain changes and when the Government responds to those reviews it states that it has consulted widely. We are kicking the can down the road because we have no detail whatsoever about the legislation that we are considering today. I urge the Government to consult in detail when it develops the regulations.
Extension of time
The Greens welcome this action from the Government to implement some of the recommendations. But we also express concern about the lack of consultation. We note that some of the recommendations from the McDougall review with relevance to the New South Wales Government are not addressed in the bill. Those include implementing an appropriate legislative response to the changing nature of work and the growth of the gig economy, which would provide those workers with the benefits provided by the workers compensation scheme, and amending the Workplace Injury Management and Workers Compensation Act to provide for a further assessment of the whole person impairment where there is a significant deterioration in a compensable injury. []
I thank all of the people who have been actively working behind the scenes to improve our workers compensation scheme to ensure that there is oversight. I particularly acknowledge the contributions that Unions NSW and the Construction, Forestry, Maritime, Mining and Energy Union have made. I acknowledge that experts in this space have worked closely with my colleague David Shoebridge over many years to feed in their expertise to expose the scandals that were shamefully overseen by the then Treasurer and current Premier, Dominic Perrottet.
To all of the workers who are facing the challenges around dealing with the dysfunctional scheme and who desire to have a scheme that works better for them and their community, I say that The Greens are committed to ensuring that no worker is injured or dies as a result of a workplace incident. We support the strong role of the unions and strengthening protections for workers to enable them to engage in collective industrial action and strikes to protect workplace conditions. First and foremost, we should be doing all we can to protect people when they are at work so that they are not injured or harmed so they do not need to access the scheme. That is the ideal option.
But the secondary option, if we have to have it, is to ensure that there is a scheme that treats the people that are engaging with this scheme with dignity and respect, and I think most people who have had the experience of engaging to date have not had that. We have an absolute commitment to making sure that we do that. We very much have look forward to looking in detail at the Labor amendments. From what The Greens have heard, The Greens will be supporting the Labor amendments. Anything that we can do to try to strengthen the detail in legislation as opposed to put it into regulations is very welcome.
The New South Wales Bar Association has sent a damning critique of the ongoing habit of the New South Wales Government when it comes to these issues. It is something that has to be addressed. We will then be looking at whether or not we will seek to move further amendments in the other place, in line with the issues raised by the stakeholders that unfortunately were not consulted by this Liberal-Nationals Government, because it seems to be able to pick and choose the people who will tell it what it wants to hear when it comes to consulting with the community.
Mr ALEX GREENWICH (Sydney) (11:40:23):
I thank the member for North Shore for her patience and for letting me jump in. I support the State Insurance and Care Legislation Amendment Bill, which will implement some of the recommendations of the independent McDougall review and the standing committee inquiry into icare. The aim is to strengthen oversight of insurers under the workers compensation scheme and to clarify the roles and obligations of icare and the State Insurance Regulatory Authority. I thank the Opposition, The Greens and other crossbenchers for their work over many years to strengthen oversight and accountability of icare.
I will support the Opposition's amendment to remove the regulation-making power on commutations and welcome the Government's commitment to do further work and bring a detailed plan to expand access to claims back to the Parliament. The amendment will achieve a better outcome for workers and I congratulate the member for Canterbury and the Hon. Daniel Mookhey in the other place. I foreshadow that I intend to move amendments to introduce a mandatory rigorous procurement oversight process that the Nominal Insurer must follow. The Opposition raised the need for reform in this space, and I am currently working with the Government to achieve what we hope to be a transparent and workable process. Everyone in this place agrees that legislation is required to strengthen public confidence in icare and that is what the bill seeks to achieve. This House must protect and support injured workers and that is what we are working to achieve with the bill.
Ms FELICITY WILSON (North Shore) (11:41:51):
I support the State Insurance and Care Legislation Amendment Bill 2022. We are having a very interesting debate. There is a lot of consensus on sentiment around the Chamber in the goal of ensuring that we have a workers compensation scheme that meets the needs of workers, is rigorous and reflects the findings and outcomes of the McDougall review. Obviously, there is a lot of discussion to go about the final shape of the legislation, with amendments being put forward. I look forward to having further discussion on those as we progress. But speaking to the heart of the original legislation and the work that has been undertaken in the review by the Hon. Robert McDougall, QC—the McDougall review, as it has been referred to in this place—we acknowledge that it highlighted the need for greater legislative clarity in the objectives, the roles, the functions and the powers of the State Insurance Regulatory Authority—SIRA, as it has been referred to in this place—icare and SafeWork NSW.
We know that the bill put forward implements parts of the Government's responses to the recommendations made through the McDougall review. The amendments work to strengthen oversight of insurers under the workers compensation scheme to improve outcomes for stakeholders. They work to clarify respective roles and obligations of icare and SIRA under the different compensation schemes and to expand the powers of commutation and settlement of lump sum death benefits, subject to the approval of the Personal Injury Commission. The bill omits references that have prompted concerns about duplication and complexity, and provides clearer expectations about the respective roles in relation to the functional overlap between agencies since the dissolution of WorkCover in 2015. It is also important that the legislation governing these agencies reflects the contemporary roles of the agencies. As their roles evolve, the legislation needs to be amended to reflect those changes.
The establishment of SIRA and icare, and the structural separation of regulatory and operational functions, was a major reform for the State's insurance care schemes when it took effect. SIRA plays a fundamental role in preserving the integrity of several insurance and care schemes across New South Wales. Under the bill, the authority's role in the strategic development and oversight of schemes is accounted for, as is its ability to publicise data on scheme performance and advise the Minister. The proposed amendments to section 22 (2) (b) and (c) of the Workplace Injury Management and Workers Compensation Act 1998 clarify SIRA's role in establishing procedures for dealing with complaints made by employers. Proposed new section 24 (2) (a) of the State Insurance and Care Governance Act 2015 clarifies SIRA's role as regulator and its role in the strategic development oversight of the schemes. Functions that it no longer performs have been omitted from the legislation, like not managing day-to-day operational matters such as the management of claims.
The bill includes objectives for icare in proposed new section of 9A of the State Insurance and Care Governance Act 2015. Icare's pivotal role in managing the balance of access to compensation for individuals with the wider affordability of insurance at a system level is accounted for in the bill. The bill recognises that the State Insurance Regulatory Authority and icare both have a role to play in achieving this objective. The bill makes it clear that icare, when acting on behalf of or providing services to the Nominal Insurer and the Self Insurance Corporation, is responsible for all day-to-day operational matters including the management of claims. Icare's objectives also acknowledge its role in promoting efficiency, transparency and accountability when operating the relevant schemes under proposed new section 9A (b).
This bill's amendments to bring about role clarity will strength the governance of New South Wales' insurance and care schemes. They articulate the priorities of each of these agencies, spelling out how they differ, the objectives they share and their key areas of focus as they go about their business. Enhancing understanding of icare and the State Insurance Regulatory Authority's roles and objectives amongst stakeholders will generate positive outcomes for customers across New South Wales. The amendments create a yardstick by which we can evaluate both icare and SIRA in future and which I believe will set them up for success. There are also a range of reforms incorporated in the bill, looking to amend the State Insurance and Care Governance Act 2015. These are to specify the objects; to clarify the objects and functions of icare and SIRA in the delivery and regulation of State insurance compensation schemes; to establish a four-year minimum term of office for an appointed director of icare, replacing the current three-year period; and to require the boards of both icare and SIRA to advise the Minister of whether it considers a ministerial direction in the public interest.
Amendments within the bill to the Workers Compensation Act 1987 and Workplace Injury Management and Workers Compensation Act 1998 will further clarify SIRA's functions; extend SIRA's investigative and regulatory powers to the Nominal Insurer, icare, NSW Self Insurance Corporation and claims managers where appropriate; and allow SIRA to impose licence conditions on both the Nominal Insurer and government self‑insurers, provided the relevant Minister approves licence conditions about prudential matters. Under the proposed amendments ministerial approval is not required for licence conditions about claims management activities. The amendments also provide for the settlement of lump sum death benefits disputes in the Personal Injury Commission on a compromise basis, as I referred to earlier, and provide a framework allowing the President of the Personal Injury Commission to approve commutations and allowing the regulations to expand access to commutations for certain classes of claims.
As has been discussed throughout the debate on the bill, the work done by the Hon. Robert McDougall, QC, which was completed last year, was a comprehensive review of icare and the State Insurance and Care Governance Act. The work that was undertaken has comprehensively informed the Government's proposal in this legislation. The Government, as members probably know, has already accepted 35 of the recommendations, which could already be operationally enacted by icare and SIRA. There has been a lot of work done to this point to make sure that we are getting the right outcomes for the State, the workers compensation scheme and the governance of that scheme, including extensive stakeholder management.
Stakeholders include legal profession bodies—and the Government has received feedback from some of those—Unions NSW, the Insurance Council, icare and SIRA themselves, the Independent Review Office and the Personal Injury Commission. To date the Government has had positive feedback on the proposed changes and, obviously, some suggestions on elements where it could make further amendments or support amendments that are brought to the House. All of the New South Wales government agencies were also consulted throughout the Cabinet process. I support the introduction of this legislation and the aims behind it. I am positive that we will see an outcome here which will improve the workers compensation scheme for workers, strengthen oversight of the insurers over time and manage the impact of premiums into the future for people participating in the scheme.
Ms JODIE HARRISON (Charlestown) (11:49:44):
I speak on the State Insurance and Care Legislation Amendment Bill. I note from the outset that the bill comes in response to a recommendation of the independent review undertaken by Robert McDougall, QC, into Insurance and Care NSW, or icare, and the State Insurance and Care Governance Act 2015, which called for this Parliament to give consideration to expanding the powers of commutation and settlement of lump sum death benefits, subject to the approval of the Personal Injury Commission. The bill also comes in response to recommendation 9 of the Standing Committee on Law and Justice 2020 review, which called on the State Insurance Regulatory Authority [SIRA] to investigate other options for injured workers and insurers to reach settlements and exit the scheme.
Though these recommendations address different issues, they both take into consideration stakeholder concerns about the limited ways that claimants and insurers can reach settlements. The bill addresses two main areas of concern. The first is a provision for compromise between claimants and insurers during the settlement of lump sum death benefits. I note there is broad agreement amongst stakeholders that the changes proposed in the bill are beneficial, but I further note that there are some reasonable reservations regarding the way the Government has gone about implementing those changes in legislation. The second area of concern addressed by the bill is the matter of commutations. A commutation is an agreement between a worker and insurer to forgo future compensation or medical expenses and instead issue a lump sum to the claimant. This is a much more hotly contested provision, with a range of stakeholders warning that any change to this complex area of the law may have severe unintended consequences.
True to form for this Government, it is proposing sweeping policy changes—which may have an extraordinary impact on businesses, insurers, the workers compensation system as a whole and, most importantly, injured workers and their families—without adequate explanation of its plans and goals. Before I discuss my concerns about the way the bill proposes to tackle commutations, I will highlight some issues surrounding lump sum death benefit payouts which the bill seeks to correct. Every workplace death is an unimaginable tragedy. Every single worker, no matter what they do for work, should be able to expect that they will come home safe and sound at the end of the day. On 28 April we observed the International Day of Mourning for those lost to work‑related incidents or illnesses. We should never stop our efforts to protect workers and improve workplace safety. But when the unimaginable does happen—which, unfortunately, is far too often—we should do everything we can to ease the burden on those who are left behind. The bill goes some way towards doing that.
As it stands, the legislation provides an all-or-nothing proposition for families and the insurer over the payment of death benefits where liability is disputed: Either the full amount is paid out or nothing at all is paid, with no room for compromise. I cannot begin to imagine the stress that this high‑stakes proposition places on families and beneficiaries who are already struggling with the loss of a loved one. These sorts of disputes are incredibly complex, always gruelling, and absolutely horrible for people already experiencing grief. As Robert McDougall said in his review:
There is no principled reason why they should not be able to compromise claims, so long as there is appropriate oversight of the compromise.
For the sake of those left behind when a worker is killed, I welcome what I, my colleagues and many stakeholders view as long‑overdue reform. But the question has to be asked: With so much support and such obvious benefits, why is the Government approaching this reform in such a piecemeal way? I note that in 2021 the Government introduced the Motor Accidents and Workers Compensation Legislation Amendment Bill, which would amend the Workers Compensation Act to create an additional compensation entitlement to ensure that the lump sum paid out to a deceased's dependent child would not be eroded over time by fees charged by the NSW Trustee and Guardian. It is a good idea—it is a way to ensure that a grieving child does not lose their payout to administration fees—but that bill has still not been moved. Why not? Why has it not been packaged with the bill we are debating now? What are the Government's future plans in this regard and why is it being so cagey about them?
That brings me back to my concerns about the elements of the bill relating to commutations. There are benefits to allowing commutations in certain cases. As McDougall wrote:
There are … significant psychosocial benefits in allowing workers and their families to settle claims, avoid the ongoing stress and difficulty that pursuit of a claim can create, and get on with their lives.
But as always with this Government, the devil is in the detail. As the New South Wales Bar Association has pointed out, "The form of the legislation introduced into Parliament provides no indication of the circumstances in which commutations are now to be permitted." Will those commutations be offered on the basis of industry, injury type, the degree of entitlement, the amount of entitlement, gender, age or income? The New South Wales Bar Association surmises that the legislation has been inadequately considered—that it "contains regulatory pathways which could permit the almost complete subversion of the underlying purpose of the scheme".
Unfortunately, coming from the Government of Dominic Perrottet, I would not be surprised if a complete subversion of the workers compensation scheme was the ultimate goal. If we ignore history, we are doomed to learn nothing from it, so let's look at the Premier's history. This is the Premier who wanted icare to be the jewel in his political crown—icare, where serious financial mismanagement at the highest levels led to serious and continual losses even before COVID hit; icare, where executives received bonuses despite those losses and were praised by the Premier for them; icare, which lost its chair and co‑chair to resignation; icare, where there have been dodgy dealings galore, with massive contracts handed out to businesses linked to senior managers, including an $11 million marketing contract given to a company owned by a manager, and questionable tender practices that saw a $140 million contract handed out after a one‑week tender process.
Liberal Party donors enjoyed extra‑cosy relationships with icare as $6 million in contracts were awarded to Korn Ferry, and an $18 million contract went to IVE Group without tender. Staffing arrangements at icare were questionable: The CEO's wife was given a job there, and political staffers on the icare payroll were seconded to the Treasurer's office. But the most egregious of icare's many sins is the underpayment of tens of thousands of injured workers to the tune of tens of millions of dollars.
Ms Kate Washington:
Shame!
Ms JODIE HARRISON:
It is a shame. This is the largest case of wage theft by an Australian government in the history of our country. It is a black mark for this Premier, this Government and our State. Make no mistake, the responsibility for all of this lies with the man who has overseen icare since its inception—Dominic Perrottet. This is the Premier who, as finance Minister, brought icare into the world. This is the Premier who, as Treasurer, oversaw high levels of basic incompetence and dodgy dealings at the highest levels and at the very heart of his brainchild, and whose department abandoned an investigation into icare in September 2019, before the problems that I have spoken about were brought to the public's attention. And now this Coalition Government is putting forward legislation that has not been properly considered and leaves far too much open to interpretation. Given the Premier's history of ignoring mismanagement in the State's workers compensation system, is it really so outrageous to think that he might be willing to overlook the problems caused by this legislation? I do not think so.
After all, the Premier leads a Government that has proven, over and over again, how little it cares for workers. It is a Government that takes every opportunity to sledge the frontline workers who have kept us going through the pandemic. It is a Government that has offered these workers little more than thanks for their hard work and that is overseeing a staffing crisis in our schools, our hospitals and our ambulance service. There is a case to be made for commutations, but I do not trust this Government and this Premier to handle it without the appropriate care. Over and again the Government has proven that it cannot be trusted with workers compensation. Having said that, this legislation goes some way to fixing what is often a horrendous system for those who are injured but it needs amending to overcome the issues that I and others in this place have raised. I support the amendments proposed by the shadow Minister and member for Canterbury who has worked hard on this bill.
Mr PETER SIDGREAVES (Camden) (12:00:01):
I speak in support of the State Insurance and Care Legislation Amendment Bill 2022. I particularly speak to the key commutation benefits introduced by the bill. These amendments have two broad objectives: to allow the administrative function of approving a commutation to be done in the Personal Injury Commission under the delegation of the president; and to create a regulation- making power to expand access to commutations for certain classes of claims with appropriate controls to ensure the long-term viability of the workers compensation scheme.
Currently, under limited circumstances, compensation for workplace injuries may be commuted to a lump sum under the Workers Compensation Act 1987. It is essentially a "pay out" of any future liabilities to pay weekly compensation and medical expenses by making a lump sum payment to the worker. Once a worker commutes their entitlement to compensation in respect of an injury, they are no longer entitled to any further compensation for that injury. In his report former Supreme Court Justice Robert McDougall, QC, found that allowing workers and their families to commute claims can have significant psychosocial benefits. It can help workers and their families to get on with their lives.
These amendments protect workers who accept a commutation in several ways. Firstly, the bill provides that a commutation must be approved by the Personal Injury Commission. Secondly, before approving a commutation, the president of the commission retains the discretion to refer the commutation to a member of the commission for review, to ensure that any commutation agreement is accurate and adequate. Thirdly, the worker protections around independent legal advice and the desirability of obtaining financial advice are maintained. Currently, before an agreement is entered into, a legal practitioner must certify in writing that the worker has been advised of the full legal implications of the agreement and the desirability for the worker to obtain independent financial advice. Independent legal advice is an important protection for workers as it ensures that they understand the implications of accepting a commutation agreement.
The regulations may prescribe certain classes of claims where a worker is not required to obtain legal advice, but that is expected to be the exception and not the rule. It is anticipated that only very low-value claims will be exempted from the requirement to obtain legal advice, and that no worker will be prevented from obtaining legal advice where they consider that to be appropriate or necessary. The provisions create a rule-making power for the commission to deal with procedures for the applications and any documentation to accompany the application. As identified earlier, the second objective of the commutation amendments is to expand access to commutations. Currently there are very few commutations in New South Wales—in part because of this very strict precondition which has been in place for over 20 years. The proposed regulation-making power will allow the Government to identify additional circumstances in which commutation will be permitted.
A commutation can provide workers with an option to exit the scheme with a lump sum and allow them to regain a sense of autonomy and control over their lives. Commutations can benefit insurers by reducing their ongoing claims, management costs and reducing long-tail liabilities. It will be important for these classes of claims to be carefully selected and for this expanded access to commutations to be done in a careful, measured and controlled manner. This is essential to avoid the risk of unintended behaviours, such as a poor return to work or driving a "lump sum culture". Protecting the long-term viability of the workers compensation scheme is critical.
The careful development of regulations with further input from stakeholders prior to regulations being made will ensure that risks are mitigated. This will support the identification of appropriate classes of commutations with controls tailored to the requirements of each class and ultimately achieve intended outcomes. Importantly, the State Insurance Regulatory Authority [SIRA] proposes that before the Government prescribes any new classes of claims eligible for compensation, it will undertake an extensive consultation with stakeholders. Any liberalised commutations program will balance the need for greater access to commutations for workers and employers with the risks to the long-term sustainability of the overall scheme. These commutation benefit amendments support an effective, affordable and sustainable workers compensation scheme. The bill is the first step in establishing the framework to give workers and insurers greater choice and flexibility consistent with the McDougall review recommendations. I thank members for their support of the bill and commend it to the House.
Dr HUGH McDERMOTT (Prospect) (12:06:20):
I make a contribution to the debate on the State Insurance and Care Legislation Amendment Bill 2022. New South Wales Bar Association President Michael McHugh, SC, has raised serious concerns in an official letter published on behalf of the association addressing the proposed restructure of the commutation arrangements in the bill. As a former practising barrister and still a member of the Bar, I take concerns regarding legislative changes raised by the Bar Association with the utmost seriousness. As lawmakers we should also heed concerns raised by this body. The concerns raised by the New South Wales Bar Association in its letter specifically address the use of regulations in the bill in the form of Henry VIII clauses. It stated that the commutation arrangements should be closely considered by the Parliament of New South Wales to ensure that they do not fail to provide for the intended insurance beneficiaries of this legislation.
The New South Wales Bar Association has a consistent record of opposing the excessive use of Henry VIII clauses in legislation formulated by the Parliament of New South Wales. It stated that the benefit of the overuse of these clauses circumvents the ordinary process of parliamentary scrutiny and debate. The Bar Association pointed out that the High Court had noted there is "good reason" for the frequent criticism of using such clauses. The reasoning of the High Court's position on this issue is the court's view that Parliament should have the ability to oversee and delegate legislation—a core feature of our liberal democracy.
The New South Wales Bar Association highlighted that in 2020 the Legislative Council Regulation Committee made recommendations on how to "foster greater transparency in the use of delegated legislative power". The committee recommended two clauses: to highlight the presence in the bill of any Henry VIII clauses, shell legislation or quasi-legislation; and to include an explanation as to why such a broad delegation of legislative power is considered necessary. The bill fails to reference or highlight the need for the Henry VIII clauses, which the committee recommended members of this House must adopt. The Bar Association also pointed out that the Minister for Customer Service and Digital Government failed to mention these clauses in his second reading speech.
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