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?