The Guardian November 26, 2003


Workers to suffer for
South Australia's WorkCover troubles

by Bob Briton

South Australia's WorkCover Corporation now has, according to 
media reports, unfunded liabilities estimated at $600 million. In 
September the figure was put at $419 million. As recently as 
1999/2000 the amount was just $22 million. All sorts of reasons 
are given for the blow-out but state parliamentarians and the 
bosses' media are united in their choice of remedy: fewer workers 
will get payouts and they will be sent back to work sorer and 
sicker.

The unfunded liabilities in question are the difference between 
WorkCover's assets and the compensation claims it anticipates 
having to pay out over the next 40 years! Corporation chairman 
Bruce Carter has predicted that the estimate could go even higher 
when the cost of asbestos claims becomes clearer early next year. 
These may add between $50 million and $590 million to the 
equation.

The Liberal opposition has tried in vain to present the 
predicament to the electorate as a looming collapse along the 
lines of the State Bank over a decade ago. That fiasco required a 
massive taxpayer funded bailout and kept Labor out of office for 
two terms. However, the situation with WorkCover is not a crisis 
of those proportions and the Liberals' credibility on the issue 
is not helped by an examination of their role in government.

In 2001 the Libs worsened WorkCover's cash flow by reducing the 
levy on employers to an average of three per cent of payroll. 
They also handed the bosses a rebate valued at $25 million. 
Together these measures cost more than $160 million. While 
current Industrial Relations Minister Michael Wright is quick to 
point this out, neither he nor the WorkCover Corporation' s 
chairman is talking about putting the levy up.

"We are sure that the current average levy rate of three per cent 
should ensure clawback of the unfunded liability within 10 
years", Mr Carter told The Advertiser last week.

Fewer payouts

In the same interview he said that WorkCover would put an 
emphasis on making fewer payouts to workers and getting more 
people back to work. The clear implication is that the 
corporation's problems are the fault of malingering workers. This 
strategy is to be pursued even though the public discussion of 
the causes of WorkCover's woes scarcely mentioned the role of 
claims. Naturally enough, safety standards in the State's 
workplaces were not discussed, either.

In fact, none of the reasons trotted out for the present 
predicament dealt with these aspects of the scheme. The WorkCover 
chairman cited changed accounting measures. Other reports 
mentioned overseas share market investments that went bad. In 
spite of calls for greater transparency and accountability, the 
Minister is keeping the details quiet. However, some conclusions 
might be drawn from the recent record of Victoria's WorkCover 
Authority.

Workcover profits Like its Victorian counterpart, WorkCover 
currently has positive cash flow. Last year, Victoria's WorkCover 
Authority posted a record $504 million profit from its key 
insurance operations. However, it ended up $316 million in the 
red for the year overall after losing $437 million on global 
equity markets and another $383 million by making what The 
Herald Sun called "wrong assumptions about the economy".

Who should pay for WorkCover's misplaced faith in capitalism? If 
the bosses, the media and pollies from the major parties have 
their way it will be the workers who will suffer through reduced 
levels of compensation for work-related illness and injury.

And why should there be so much work-related illness and so many 
injuries? What about 40 years of workplace safety, jailing of 
bosses responsible for workplace deaths, and not speculating on 
the markets with WorkCover funds?

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