Wednesday, 15 November 2023

Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023

Second reading

Debate resumed on motion of Danny Pearson:

That this bill be now read a second time.

Cindy McLEISH (Eildon) (11:57): The reason we have the bill before us, the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023, is because WorkCover, the scheme, is broke and Labor broke it. It is pretty easy to see that since 2018 the performance of WorkCover has been on a steady decline, and it is very easy to find out this information. A quick look at the annual reports, a quick look at the books, will show the extent, and I will talk about the extent to which the system has been on the decline and has been broken. Despite it being on this steady decline for five years and the government being aware that it is on a steady decline, they have only just this year decided to act. I find that fairly extraordinary.

We have a scheme that instead of being self-funded, which is one of the objectives within the legislation, has actually required $1.3 billion of taxpayer money to prop it up. That is an extraordinary amount of money. If we have a look at that, in the last financial year, 2022–23, it was $300 million. Well, that is a lot less than the $450 million the year before and the $550 million the year prior to that. There has not been a miraculous turnaround in that year so that it required less money to be propped up. They have actually had some windfalls with their investments. As you would appreciate, the scheme collect premiums and they invest that, and I guess because interest rates have gone up over the last period of time it has actually worked in the government’s favour, certainly in terms of WorkCover, because that, I imagine, is pretty well the reason why they did not need to prop it up by another $400 million or $500 million.

On top of these failings and the government needing to prop it up, what we see is the premiums have gone up by an average of 42 per cent. This is what the Treasurer said in the Treasurer’s speech when he handed down his budget. Now, I am actually yet to meet anybody who has 42 per cent or less, so I am not quite sure how that 42 per cent average is calculated, but I would be very keen to see if that in fact has come to bear. The scheme is under a lot of pressure. There are more injured workers staying on the scheme for longer. That is something the government needs to address. There is rapid growth in mental injury claims, and the revenue from premiums has not covered the claims management or organisational costs. There are a whole bunch of issues going on here, but I think it is going to take a lot more than legislation to fix this. This is the opportunity for the government to get it right and to have a look at other changes within the scheme.

We have seen for years – true to Labor form – political appointments at the board and CEO level. We have to get governance right. We know the Ombudsman has had a look at politicisation of the public sector, and I think this is a prime example because we have had appointments at that board level, and the CEO, with very strong links to the Labor government. Addressing governance is one thing; governance comes from the minister – what the minister puts forward to the board and to the CEO – but it is also the senior leadership and executive of WorkCover and WorkSafe Victoria itself that needs to be addressed. On top of that there needs to be a good, solid strategy and people who can implement that strategy. We need people with strong leadership capabilities who can build a strong culture, and that is certainly missing at the moment. I know that the CEO recently departed, and they have got an interim CEO at the moment. There is an opportunity for the government to have a look at the leadership and their skills and capabilities, because they need somebody who can implement strategy to turn the ship around and bring everybody else along at the same time. I think that has certainly been missing.

The attempted purpose of the bill here today is to address the viability of the scheme and bring it back to being financially sustainable. So the bill has been introduced to address areas of pain for the government, and these include the rise of mental health claims and the growing tail, which sees people remain on the scheme for a longer period of time. These factors combined are changing the way that they have looked at the scheme and managed the scheme over considerable years. We have people that are staying on for a longer period of time. We see through the statistics that tail of people who are staying on beyond 130 weeks, which is pretty well 2½ years. It is a long period of time and the more they stay on, the longer they do stay on. We have seen a change certainly in the rise of mental health claims.

The bill before us amends the following acts: the principal act here, the Workplace Injury Rehabilitation and Compensation Act 2013; the Accident Compensation Act 1985; and the Occupational Health and Safety Act 2004 (OH&S act). Specifically, if we look at the Workplace Injury Rehabilitation and Compensation Act 2013, the bill inserts a new definition of ‘mental injury’, makes further provision for the circumstances in which benefits are paid for mental injuries, introduces an impairment threshold for assessing eligibility for the payment of benefits beyond 130 weeks, provides for a process of review of the operation of the proposed amendments and makes other miscellaneous amendments. With regard to the Accident Compensation Act, it introduces an impairment threshold for assessing eligibility for the payment of benefits beyond a period of 130 weeks. And with regard to the Occupational Health and Safety Act, it refers to the use of information.

I note that yesterday there was a message from the Governor recommending an appropriation, as the bill is likely to spend money. If you have a look at clause 14, it inserts a couple of new sections which particularly provide that workers may be entitled to further compensation if their whole person impairment increases. So it is possible that there will be additional funds spent, which is the reason for that appropriation recommendation yesterday.

As I have said, the WorkCover scheme is broken. You would expect that the leadership at the ministerial level would be perhaps better than what it has been. I have before me – and I am happy to table this – a document from 28 March this year which is actually the statement of expectations for WorkSafe Victoria. It is a document that the minister provided to the CEO at the time. Given the scheme is so broken, I am surprised at the high level of ‘not much’ that is included in this statement of expectation. To me, it did not look as though it relayed the urgency that was needed to address the failing scheme. It does talk about working closely with the Department of Treasury and Finance and the Department of Premier and Cabinet on reforms and initiatives to prevent workplace injuries and incidents and make return-to-work outcomes better for injured workers. I do know through FOI that they have set up an interdepartmental committee, but we do not really see much of the results about what has happened there.

Just by way of a little bit of background, WorkCover relies on employer premiums and its investments to support the claims expenses and to run the organisation, and since 2018 these expenses have been absolutely blowing out. The government has been aware of these financial pressures, but it sat on this information pretty well until early this year when work commenced. The minister has said in public forums that this is the culmination of 10 years work. So the government have known that this is a significant issue for them for a considerable period of time and have actually not done much at all, and that is exceptionally disappointing.

Through FOI we were able to obtain a report conducted by actuarial and insurance consultants Finity. They did a review in 2020 of the financial sustainability. In December 2020 it was handed down – three years ago – so the government has sat on this information for two years and has done diddly squat. That is just such a failure by the government and by the minister. We got that information through fighting at VCAT. The initial report that we got was heavily redacted. David Davis in the other place went to VCAT to fight this, and we got a non-redacted version. Well, we are still there trying to get additional information, because I can tell you right now the government are not keen to hand over information. The minister says that he wants to work with us and he wants to provide us with all the information. Well, there is a host of information that we do not have, and I will mention a little bit later the things that we would like to have. The Finity report highlighted in December 2020 that WorkSafe was already:

… at a tipping point … facing both internal and external threats to its financial sustainability.

That was three years ago, and I will tell you, things have only got worse. The report talked about premiums, it talked about mental health, it talked about tackling the long tail and it talked about how there would be insufficient money if you changed the practices – it is insufficient to just do nothing.

What we have also found out is that the premium rate alone could not cover the growing rate. We saw the government whack up premiums hugely, big time, in contrast to what the coalition were able to do when we were in government. We were able to reduce them twice with our treasurers, the member for Rowville and the member for Malvern. We were able to make a positive difference. But since then the management of the scheme has got worse. In the year 2019–20 the net result for WorkCover was $3 billion in the red, and performance from insurance operations was similarly $3.5 billion in debt. Net profits have varied over the last three years. They posted a $1.76 million loss in 2022–23 despite ongoing cash injections. As I mentioned, they have totalled $1.38 billion. The performance from insurance operations remains at $1.8 million in debt. As I said, this tells us that the scheme is absolutely cactus, and the government have failed in their efforts to do something about this.

I want to bring to the house’s attention the objectives of the Workplace Injury Rehabilitation and Compensation Act 2013. Section 10 in division 2 lists the objectives of the act, and they are failing on nearly every single measure. I find it extraordinary when you have the act and the government are failing. Sadly, we still have fatalities and traumatic injuries and are leading in road accidents that lead to death, but we have still some very debilitating accidents and injuries. Other objectives around the early return to work include making provision for the effective occupational rehabilitation of workers and increasing the provision of suitable employment for workers. Two of the first three focus on returning to work, but if you look at the performance in this area it has slipped. You could very easily argue that the government is failing completely on its objectives, including ensuring appropriate compensation and provisional payments under the act are paid to injured workers in the most socially and economically appropriate manner and as expeditiously as possible – ‘Treat them well’.

We have had two Ombudsman’s reports to say they have not always been treated well. They need to ensure workers compensation costs are contained so as to minimise the burden on Victorian businesses. They have failed in that, because they have whacked them up, and the fear is that this bill is not going to make a difference to the premiums, which they are going to look at jacking up again. There is more. One of them is to maintain a fully funded scheme – well, that is just not the case – and the final one is to improve the health and safety of persons at work and reduce the social and economic cost to the Victorian community of accident compensation. Improve the health and safety of people at work – there is work that should be done in the prevention space, and at the moment that work is, I would say, failing. I would like to see greater evidence of what WorkSafe are doing and what the minister has given them, because his statement of expectations does not address these issues sufficiently and gives WorkSafe a lot of wriggle room not to deliver on what is required.

About the bill, I am going to have a look at starting with the mental injury amendments that are there. It introduces new eligibility requirements for work-related mental injuries, and it says that only mental injuries diagnosed by a medical practitioner in the most recent edition of the Diagnostic and Statistical Manual of Mental Disorders, which is the DSM – and I think we may be at DSM-5, with a text review – that are predominantly arising out of or in the course of employment are compensable. If you have a look at the wording it uses in clause 5 about entitlement to compensation ‘predominantly’, this is not really a word that is used a lot in legislation, so I imagine that there are going to be legal cases testing that. It also uses non-medical terminology, such as work-related stress and burnout. I am pretty sure that they are not in the DSM at all, so there are certainly questions around that. It clarifies in doing so that the mental injuries that are predominantly caused by work-related stress or burnout will not be compensable unless these duties are routinely traumatic. I think all of us in this chamber could have a look at the nature of duties that are routinely traumatic, and that would be for a lot of frontline service workers. But I would like to see the government do greater work in the prevention of long-term trauma associated with the work. I have heard of a number of examples of different types of programs that have been put in place to address this, and I really ask the government to do more in this space.

With regard to ongoing eligibility for compensation, what they have looked at doing is introducing a whole person impairment threshold of greater than 20 per cent alongside the existing capacity test for injuries for a person to remain entitled to weekly payments beyond the 130-week second entitlement period. This applies to physical injuries and applies to mental injuries, and they are assessed differently. Physical injuries are assessed using the AMA Guides to the Evaluation of Permanent Impairment. It is an American Medical Association guide, it is up to the fourth edition and it has been used for quite a long time. For mental injuries what is being used is the Guide to the Evaluation of Psychiatric Impairment for Clinicians, and this I was very interested to see was put together by Melbourne psychiatrists Michael Epstein, George Mendelson and Nigel Strauss in 2005, because at that time the AMA guides were insufficient to address mental whole person impairment.

On information sharing, it amends the Workplace Injury Rehabilitation and Compensation Act and the OH&S act to allow the authority to use information collected for the purposes of the acts to fulfill its functions or exercise its powers under the act in certain conditions. There is another part as well which refers to arbitration, and it clarifies that disputes relating to whether a worker has suffered an injury in circumstances that are compensable under the act are not disputes that can be referred to the Workplace Injury Commission for arbitration. So there are very specific types of decisions that can be arbitrated on, but whether a person has suffered that injury in the first instance is not one of those.

There is also built into this scheme a review of the amendments. It requires the minister to cause an independent review of the amendments to the WorkCover scheme arising out of this bill in the 2027 calendar year. I think that is too late, absolutely. You cannot have this scheme motoring along from, in theory, early next year for three years or so if things are not working, and I think it is only fair that it is reported on more frequently than is proposed through this legislation.

There are many issues. I have had an enormous amount of feedback provided from multiple sources, and it is important that we maintain the integrity of the system and that those people who have legitimate claims are managed better up-front. If they can get back to work, they need to have this system there to support them in those early days. It also seems for many stakeholders that the legislation is being rushed through prior to Christmas. The government has consulted with some larger stakeholders but not everybody, and there are still a lot of concerns.

I want to talk about the concerns about Return to Work Victoria, because the minister in his media release earlier in the year – in May, I think it was – and in his second-reading speech talked about the establishment of Return to Work Victoria but there is absolutely zero information. He talked that up. We do not know, but I am assuming it is not a statutory authority because it is not referred to in the bill in any way. Is it a unit in the department or does it sit within WorkSafe? Do they need funding or not? It was not included in the appropriation that the message from the Governor brought to our attention yesterday. We do not know about this. Is it going to be at the back end or the front end or both? There are just no answers, and the government are failing with their return-to-work objectives.

I said two of the first three objectives relate to return to work. The longer a claimant is off work, the less likely they are to return to work, and ending return-to-work activity is central to the financial cost of the workers compensation scheme and for the injured worker. This is better for everyone. The information I am reading now is from the Finity report that I said we obtained through freedom of information, that once a claim has moved past 130 weeks, there are very few exits. The minister, who extraordinarily did the bill briefing himself, did mention that this is certainly the case, that there are fewer exits regardless of whether it is physical or mental. But mental injury return-to-work rates are certainly lower than other injuries, and this is key. This again is from the report:

A growing proportion of claims are exceeding the two week employer excess and thus being counted as weekly claims.

This suggests that the return-to-work performance in

… the first two weeks after injury has slipped over time; this applies to both Mental Injuries and Other Injuries

The government have taken their eye off the ball here. They have talked up Return to Work Victoria, but we have absolutely no information about it. The minister says, ‘No, trust us on this.’ Well, sorry, I cannot trust you on this. I need to have that information. The unions would like to have that information; employer groups would like to have that information.

Turning now to the mental health claims, as I mentioned earlier, there is some technical language and complexity in the bill seeking to remove the entitlement in respect to a mental injury predominantly caused by work-related stress or burnout that has arisen from events usually considered to be part of the normal workplace, unless it is one of those particular areas. I know that I would like to see greater emphasis put on the frontline responders who may be in positions that many of us are not in normally.

I have mentioned the independent review of amendments, and I would like that to also have a greater number of checkpoints in there, not just one in 2027. Prior to that, the long-term tale about reducing the number of people – well, it is still a little bit unclear to us what sort of difference that is going to make. We have not seen the data, and I want to see the data. It is like the increases in premiums. Employer groups have absolutely voiced their concern that they cannot cop another large premium rise, but they do not want the scheme to fall over. So we need to get the balance right here. I am proposing a reasoned amendment, and I move:

That all the words after ‘That’ be omitted and replaced with the words ‘this house refuses to read this bill a second time until the government:

(1) agrees to freeze premium increases for 24 months and then limit increases to be in line with CPI for a further 24 months in order to provide certainty to businesses;

(2) provides details of the commencement date, structure, objectives, functions and funding of Return to Work Victoria;

(3) provides a detailed analysis and comparison of public and private sector claims for physical and mental injuries and commits to increasing focus on prevention strategies for each sector;

(4) makes available the reports on the modelling for the legislation; and

(5) commits to reporting annually to Parliament on the implementation and progress of the new arrangements, prior to the proposed legislative review in 2027.’

As I have mentioned, employers cannot cop another whopping premium increase. For some of them, it would put them out of business. For some of them, it would inhibit growth and jobs. Even Trades Hall told me that they worry about what this would mean for the future of jobs being made available for workers – and you know, I think the Victorian Chamber of Commerce and Industry and Trades Hall were in agreement on a number of these issues. Everybody wants to see greater work around what Return to Work Victoria will look like.

On the third point, about the comparison of public and private sector claims for physical and mental injuries, it has been said a number of times that in the public sector mental injury claims are much greater now. I acknowledge that we have the paramedics, we have emergency services, we have police and we have teachers, but we would like to see departmental data. Are we failing our workers by not providing a safe place mentally for these people? What is happening there? We need to understand what these challenges are. Are the government doing anything about it? Have they made any efforts in prevention or are they helping people get back to work quickly? This is one of the reasons that I will be looking for the coalition to refer it to an inquiry in the other place, because this is the opportunity for the minister to get it right.

On the fourth point here, about making available the reports on the modelling for the legislation, there is a lot of information that we do not have, and the minister has said to me multiple times that he wants to give us all of the information, and everything I seem to ask for they do not really have. He has been fine coming back with easy questions, giving me the answers to those, and I really appreciate that, but through FOI we have been able to ascertain that there are quite a number of reports that have not been made available to us.

I have mentioned the Finity report that we got through VCAT, handed down in December 2020. It was released after the election last year. The VCAT judge ordered that it be released prior to the end of the year. Well, they did it after the election, 30 December, just before New Year. Gosh, that is an open and transparent government if ever I have seen one. What we have also ascertained through that was the agenda and minutes of the interdepartmental committee that has been set up – and I do not know the terms of reference. They had the initial terms of reference, and then about nine months later I see through the minutes that the terms of reference were amended. We do not know what their terms of reference were, but I will say that the government sat for two years before deciding they had better do something about this broken scheme. What was it, the interrelationship between the government through the Department of Treasury and Finance, through the Department of Premier and Cabinet, through the minister’s office and through the Premier’s private office, because there is also reference to those? I would like to know what influence the Premier’s private office had over some of the decisions that were made.

There was a report conducted by PwC. I see through the minutes that there was additional work commissioned through Finity. We do not know what that is about either. Taylor Fry, an analytics and actuarial consulting firm, have done some work as well, and we do not have access to that report. So it is very difficult for the government to say, ‘Here we go. We’ve got this bill. We’ve got it right.’ They have not got it right. There are so many issues. I think if we get this off to an inquiry, to a committee in the other place, it will get us an opportunity to go into more detail so that all of the stakeholders that have skin in the game here can get to tell us to make sure that we shape this legislation into the best that it can be.

The scheme is broken, no doubt about it. The minister admits that. He says that time and time again. He probably omits to say that it is Labor that has broken the scheme. They have brought something to Parliament that is full of holes with more questions than answers, and we have so many questions that we need answers to. Employers cannot cop premium increases of 42 per cent. When I talk to employers it is an average of 42 per cent, which makes you think that there is somewhere between 30 and 50 per cent. Well, I will tell you what: everybody I have spoken to has increases of 70 to 80 per cent. That is just not good enough. Injured workers and employers cannot carry the can for failed administration.

Nathan LAMBERT (Preston) (12:27): I rise to support the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023, which as we know amends the Workplace Injury Rehabilitation and Compensation Act 2013 and the Accident Compensation Act 1985 and to a slightly more minor degree the Occupational Health and Safety Act 2004.

I was hoping to address the comments made by the member for Eildon. I will, perhaps briefly. We are very much saying in this bill that we are addressing the issues that are widely recognised to affect the scheme, and the gist of the member for Eildon’s points as I understood them was that we should fix them up more quickly. With the fullest of respect, I think that when you are in opposition and you have nothing else to say, that is what you always say. I note that the member was quoting a report that came out in 2020, a report that came out in 2021, a government response in 2022, the significant reforms announced earlier this year and then the significant legislation ahead of us now. I would put to the member that those time lines are indication of a minister who is working very hard. With respect to the Finity report in particular, which she quoted at length, I would draw her attention to the fact that there was a COVID pandemic in the period to which she refers. It was very difficult, I point out to the member, during that period to understand which changes were the result of temporary COVID measures and which were permanent. That is something upon which we have visibility now. I would note further for the member’s benefit that those reports urged action because of predicted outcomes, but at the time that they were done WorkCover clearly still had assets that exceeded its liabilities. It was not in a negative position then. It was a warning that we had to take action in the long term, and that is what we are taking today. If I can make a final point, it might have been gracious for the member to acknowledge that when she was in government taking $600 million out of the scheme, as they did, it did not really help the situation.

I might just very briefly note that of course a reasoned amendment has been circulated, and there is a great deal of inconsistency between giving a 30-minute speech that essentially says the government is moving too slowly – which we reject – and then circulating a reasoned amendment that asks us to pause to take longer and, as I understand from the member, to then have an upper house inquiry. I note the reasoned amendment concerns substantially things that are not in the bill, things that relate to the May reforms. The member can take them up with the minister, but we have a bill in front of us today, and certainly I will be supporting passing the bill today.

Having addressed the member for Eildon’s points, I will just turn back briefly to the context of today’s bill. I would love to give a long history of WorkCover, which is a great Labor reform that originated back when it was called WorkCare in 1985, obviously with the important objectives of preventing workplace injuries in the first place but then supporting injured workers where injuries do occur. I just note for everyone’s benefit that the intention back then even of the Labor government was to have a fully public system, and it was amendments forced through by those opposite or their predecessors that led to the mixed public–private system we have today. There are some extensive comments about that mixed system in the Ombudsman report, which I will perhaps refer them to. I will skip through that because the model is not up for debate today, as we know. The government, however, has a key role in making operational decisions about the scheme, about the premia and about the support for workers and the preventative measures, and that is the subject of both today’s bill and the reforms that were announced in May.

The reforms that we are discussing today arise really out of two factors. The first is the rise in mental health injuries. As we know, they are now up to a point where they are 16 per cent of claims but, more importantly, 50 per cent of scheme costs, and that difference is because a lot of the mental health injury claims result in people ending up on the scheme for much longer and indeed ending up in the long tail, as it is called – the period beyond 130 weeks. As a result of that, payouts for mental health injuries are much higher on average. Obviously, that rise in mental health cases coincides with a broader higher incidence of mental health challenges that we all face. We do not know the full reasons for that, but as members are aware, we had the opportunity to debate the Mental Health and Wellbeing Amendment Bill 2023 earlier this year, in June. Without restating what I thought was a very good debate then, we know that this government is taking action on mental health. We have held a royal commission, we are implementing all 65 of its recommendations and indeed this government is funding mental health at a much more significant level than when we came to office in 2014. In fact it is by effectively $1 billion a year more in real terms that we are funding it, and for good reason. I just say all that because I want to be really clear that nothing in this bill is stepping away from the government’s commitment to tackling mental health.

Mental health injuries are real. Mental health is health, to a degree. Mental health and physical health injuries often go together; we understand there are complex interactions between them often. None of that is up for debate. In fact I and the member for Greenvale were talking to some Health and Community Services Union members a couple of months ago, a great union, and they told us some harrowing stories of mental health professionals dealing with repeated physical assaults in their workplace. You can imagine the way that that leads to both physical injuries and mental injuries with complex interactions.

We have to recognise there were three Ombudsman reports and the Rosen report commissioned by former member Jill Hennessy. What we know from that is that as pressure was rising on the system, the costs were contained to a certain degree by private agents pressuring vulnerable people to get off the system. The government has addressed that; that has been debated extensively within these chambers. We made those changes because they were the right thing to do, but there was always a very high likelihood that making those changes would lead to higher costs and give us in the end a true picture of the difficulty of sustaining the system that we can now see today. Effectively we had two choices: we could raise premiums or reduce outgoings. As we have heard from the member for Eildon, some people called for us to go down one path, others called for us to go down the other. We have effectively done both. We recognise that increasing premiums affects not only private business but schools, kinders and neighbourhood houses. There are very, very few exceptions, so we do need to be judicious about those decisions. But of course the crux of today’s bill is the reduction in outgoings. In the time I have got left I will not have an opportunity to go through all of those reductions in detail, but I look forward to hearing other government speakers do so.

Clearly the key change is to move in that direction of the 20 per cent whole-person impairment test at 130 weeks. Those tests are already part of the system. This extends their purpose. I think we recognise that they are not perfect tests by any means. We are still working in the mental health area towards tests that are really robust, but they are the best tests we have available today, and I would say very clearly they are much better than what was happening previously, as the Ombudsman has reported.

The second key change is the tightening in eligibility for mental injury claims. That will impact stress and burnout cases and it will affect overwork cases. Of course this government will retain the 13 weeks of access to treatment and psychosocial supports, but I do recognise the point has been made by trade unions that the government itself and indeed certain departments within the government are over-represented in those cases, and there is probably some work for us to do there.

The main thrust of the reforms is that we are no longer going to manage mental health injuries to the extent that we have been by providing people with indefinite weekly payments that can go on for years and indeed for their entire working life. I think everyone who works in the area understands that whilst that is something you have to do in some circumstances, it should be an option that you use in the most limited way possible, and return to work and all the other measures that the minister has announced are ways that we hope will be a lot more effective in ultimately getting better outcomes for those workers.

Again, I acknowledge on behalf of unions that there are some complex interactions in terms of the way that this bill affects other mental health claims and complex physical health claims. There are concerns about workforce capacity for whole-person impairment and Diagnostic and Statistical Manual of Mental Disorders assessments, and I think the latter in particular we understand. There are requests from unions – which I was sort of pleased to hear the member for Eildon actually support – for some more data. I think many of us would like to see some more data to understand these important issues that we are discussing.

A member: You have got the data. The government has got the data.

Nathan LAMBERT: More public data, to take up that interjection. The bill of course legislates an independent review, and I should say that Labor governments have never been afraid to review and reform WorkCover and will continue to do so. But ultimately, as a result of today’s bill, we are addressing the issues that everyone is aware of. We know that WorkCover is fundamentally important to providing injured workers with the compensation that they need and deserve. We know it funds very important preventive work. We are seeking with this bill to strengthen it and to ensure that it continues to have broad support in the community. I would like to thank the minister and his team for the work they have done over a very long period to bring on this bill, and I commend it to the house.

Emma KEALY (Lowan) (12:37): I rise today to speak on the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023. It was interesting to listen to the member for Preston telling us about how this is going to actually improve mental health outcomes for workers across Victoria. We heard from the member for Preston as well that the structure of WorkCover is not up for debate. Well, why on earth has this bill been called a ‘WorkCover scheme modernisation’? It is not modernisation. It is not the reform that is needed of the WorkCover system. If there is one thing we can all agree on in this place, it is that WorkCover desperately needs reform, and that is much, much more than a simple change of cutting out key classes of injury or stress and burnout in the workplace, which are legitimate claims in every way.

I spoke to a woman just last week who is going through a WorkCover claim related to burnout, and the ongoing impact on her life is absolutely unbelievable. She is not ready for her story to be shared at this point in time, but anybody I have spoken to in the mental health sector has reinforced that they are deeply, deeply concerned about the amendments that are put forward in this legislation we are debating today. I have spoken to Mental Health Victoria. I understand that when these changes to WorkCover were first flagged by the minister about six months or so ago, Mental Health Victoria actually reached out to the minister. This was confirmed by the minister in the bill briefing. However, no mental health professional, no mental health group was advised and provided with an exposure draft of this legislation. To have such significant legislation before the house, which will have an impact on whether workers can claim for a mental health injury at the workplace or not, but to not consult with the sector who are experts in that area is nothing less than gross negligence on behalf of this government – nothing less than gross negligence.

As I said, there is absolutely no doubt – there is complete unity – that we need to fix WorkCover. We need significant reforms. We can no longer see significant premium increases year on year on year. This year we saw an average increase of 42 per cent. I am yet to speak to one business that had less than a 42 per cent increase in their WorkCover premiums. Many of them had much, much higher increases, some in excess of 80 per cent, with no injuries in their workplace. A very, very important matter for this Parliament to recognise is that the increases are being burdened on good employers as well as employers who are not doing such a great job. And do you know who the worst employer is in all of the state, who is not paying their fair share of WorkCover premiums and who is not taking their responsibility appropriately for management of the health and particularly the mental health of their workers? It is the government; the ministers who are in here today. Whether it is in government bodies, in government entities or in the wider public sector, this is where WorkCover claims are increasing.

In fact if we pulled out the private sector as a separate insurance scheme, as New South Wales have, we would actually see a cut to the WorkCover premiums applied to businesses in Victoria. We would see a cut from currently 1.8 per cent of payroll for businesses in Victoria; we would see that reduced to 1.4 per cent. That is not just me saying that on my calculations. I would love to be able to calculate that, and I am in full agreement with the member for Preston that we should see more data around this, but do you know what? The government have got the data, but they will not release it. The most preposterous thing I have ever heard in a bill briefing was when we were told there has been no modelling done on what the impact on the number of claims will be if we cut out stress and burnout as an acceptable class of injury. Have you heard of anything more ridiculous than ‘We’re going to fix the WorkCover problem because we’re going to cut out these two classes, which will reduce our claims by – oh, I don’t know how many. I don’t know what the number will be. We don’t actually know what that will be’ – and that will of course reduce our WorkCover premiums. That is not what will happen.

Unlike the minister, I have spoken in depth to the mental health sector. In fact before they even saw the full bill on that first reading when the minister gave his summary they said ‘I can see what will happen, Emma. The doctors who are in the know will understand that it is not an acceptable claim if somebody claims for stress and burnout’. So instead they were going to claim for an alternate injury, which is in the Diagnostic and Statistical Manual of Mental Disorders. They will claim for anxiety and depression, which is appropriate. So it will not actually reduce the net number of claims. This person I spoke to actually went on to say that the other problem is if you have a doctor who is not aware that stress and burnout is not an acceptable class of injury and someone is also displaying extreme symptoms of anxiety and depression and other injuries which are diagnosable through the DSM, they are going to miss out on that cover.

Now we have got this system which is going to be put in place where Return to Work Victoria will be the ones who are instead managing these stress and burnout claims, but we have got a little bit of a problem when it comes to the timing of these things. Firstly, no-one actually knows what Return to Work Victoria will actually do. There is not one cent allocated to it in this year’s budget, so the first time we are ever going to see a dollar allocated to it is 1 July next year. We know how slow it is for government of any level, of any colour, to be able to deliver these things, and it will not be up and running on the first day of the new financial year. So we are going to have a position where this new legislation is brought in, which has retrospectivity, which has an impact on the people who have claims in the system today, and there will be nothing. There will be no supports available until Return to Work Victoria is established. The key issue that both Trades Hall and the Victorian Chamber of Commerce and Industry and also the mental health sector have is that we are saying we are going to push on; we are moving ahead with this new model. But there is nothing. There is no structure behind it; there is no money behind it. In fact if you ask for any detail in questions, no-one can provide any information about what it looks like or how it will operate.

We cannot simply just go to something that does not exist, that is this nebulous idea. It will not work. You are going to leave thousands of workers without support. This concept of ‘That’s okay, they’ll be covered for 13 weeks anyway if it’s a stress and burnout claim’ – well, if anybody can find an appointment with a psychiatrist or a psychologist within 13 weeks, good luck to you. If you manage to get one of those little golden eggs of an appointment within 13 weeks rather than the average of six months to 12 months, then you will not get a diagnosis, because it takes many, many appointments to be able to get a proper diagnosis which would be accepted by WorkCover. This system is a thought bubble. It is trying to tinker at the edges and is not going to the depths of reform that are needed in this state.

One thing that I would like to particularly emphasise is that this is a massive shift when it comes to what the government have been saying about mental health. I am deeply, deeply concerned that this is a signal – in fact it is clear evidence – that this government, the Allan government, is turning its back on the Royal Commission into Victoria’s Mental Health System recommendations. In fact this move today in this legislation is in direct opposition to recommendation 16, ‘Establishing mentally healthy workplaces’, and I will refer to that, which is:

The Royal Commission recommends that the Victorian Government:

…

advise on, develop and provide resources to assist employers and employees across Victorian businesses to:

…

support people experiencing mental illness at work.

To bring in legislation which says you cannot have an injury related to stress and burnout at work in Victoria under our new legislation is a retrospective step and is directly against recommendation 16, which I add it is the responsibility of the Premier to put in place. Premier Allan has only just come into this place, but for one of her first actions to be to directly oppose the royal commission into mental health is a very, very bad signal for all Victorians that mental health and the stigma of mental health will only be embedded further, that workers in Victoria will not be supported if they are in a mentally unhealthy workplace and that there is no responsibility being taken by the Premier for her own employees within the government sector – and this is not just the frontline employees, it is also the bureaucrats in the big buildings in Melbourne. All of those workers are putting in increased numbers of claims. That is our biggest problem – that the government is not providing a mentally healthy workplace. The government must prioritise that, they must deal with that and they must stop passing the buck to make businesses pay for their lack of support.

Nick STAIKOS (Bentleigh) (12:47): I rise to make a contribution on the important amendments proposed in the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023. I think it is very, very important that we do talk about the long history of this issue because we need to understand very clearly and remember very clearly what the situation was like pre-1985. Not passing this bill risks going back to that.

Prior to 1914 there was scant government regulation and involvement in workers compensation. Injured workers only had access to common law, which allowed them to sue their employer for negligence and be awarded civil damages for the loss suffered, providing they could afford a lawyer. In 1914 the Workers’ Compensation Act 1914 came into force, requiring employers to take out accident insurance policies to cover any compensation payments that they were liable for. But the system was a private industry rort, with agents charging high premiums to employers and inadequate compensation for employees. The system favoured one-off lump sum payments which did nothing for people who suffered prolonged injuries as a result of their work and encouraged a compo culture. For the next 70 years workplace accidents were commonplace, and there were few incentives for employers to implement preventative measures or make safer workplaces.

By the early 1980s it was clear that Victoria’s workers compensation system had reached a crisis point, which is why in 1984 we had the Cooney report, written by Bernard Cooney, a barrister and the chair of the Victorian workers compensation inquiry, which found a 260 per cent average increase in workers compensation costs over five years and identified delays and unfairness in the system. In response, in 1985 the Cain Labor government proudly began the transition to a new and more equitable model, and that was WorkCare, now of course known as WorkCover.

I say all of that just so that we realise that not passing this bill risks going back to that broken system. This government cannot and will not allow the scheme to collapse. Over the past 38 years WorkCover has remade the model for workplace safety culture and attitudes towards occupational accidents. It has shifted the state from the compo culture of the mid-1980s to an expectation that workplaces be safety-focused and that, should the unthinkable happen, a fairer system is in place for injured workers. WorkCover is at the heart of what every Labor government strives to do, and that is look out for workers. That is why these changes to the scheme are needed now, so that it is fit for purpose and sustainable, so that we do not regress to private industry rorts and compo culture, so that we continue to prioritise preventative measures and so that it can keep looking out for workers in the generations to come.

So what are the current challenges? The scheme as it stands today is facing unprecedented challenges, which we have already heard about. We are seeing an exponential increase in mental injury claims, which now represent 16 per cent of new claims and 50 per cent of the total cost of claims. In fact mental injury claims average $290,000 – 2.4 times physical injury claims. This was an unforeseen scenario when the scheme was originally designed nearly four decades ago, and the increase has placed considerable strain on the financial stability of the scheme, with claims liability tripling since 2010.

The other pressing issue is the prolonged duration of workers remaining on the scheme. In 2015 around 8 per cent of injured workers remained on weekly payments beyond the 130-week second entitlement period. In 2023 that number is projected to jump to 18 per cent. The scheme aims to support workers as they recover from an injury and get back to work. It was never designed to be a widespread source of indefinite income. This bill proposes necessary reforms to address these challenges.

One of the key amendments is the introduction of new eligibility requirements for mental injury claims. This change is critical to ensuring that compensation is rightly directed towards mental injuries that (a) cause significant behavioural, cognitive or psychological dysfunction as diagnosed by a medical practitioner, (b) are predominantly caused by employment and (c) are not caused by stress or burnout that would reasonably be expected from usual employment. It is important to note that these changes do not abandon workers who experience severe work-related stress in routinely traumatic roles such as our ambos, nurses and other frontline workers. Their support remains our priority.

This bill also introduces a whole-person impairment threshold requiring more than a 20 per cent impairment for injured workers to continue receiving weekly payments beyond the 130-week second entitlement period. While this measure will help alleviate the financial pressures the scheme is facing, it is also about ensuring that injured workers are not languishing on WorkCover. I want to come to that specifically because nine years ago in my inaugural speech in this house I spoke about social isolation, which is a prevalent issue in our community. It cannot be good for anybody’s mental health to be languishing on WorkCover for years and years and years, isolated from the community. We need to get people back to work, and we need to be better at getting people back to work.

The member for Lowan used some very loaded language about this government’s mental health agenda and our commitment to acquitting the recommendations of the historic Royal Commission into Victoria’s Mental Health System. Well, the fact is – and it is widely understood by Victorians – that we have not wasted a single day in implementing the recommendations of the royal commission into mental health, and since the royal commission we have invested $6 billion in that endeavour. So do not come in here and question our commitment to the mental health of Victorians when we have shown that commitment like no other government in this country – and we are proud of that.

It is not only our investment in mental health but, thanks to our government, more than 80 free TAFE courses. It is now easier than ever before to retrain, to reskill, to secure a change of career. We have those opportunities in this state because of this government. I repeat: we need to help get people back to work, and Return to Work Victoria – and they had a bit to say about that today – will help us do that. That is why we have committed to establishing it. It is going to be a body within WorkSafe dedicated to supporting workers to get back to work. Return to Work Victoria will be co-designed with government, with unions, with employers together with mental health and occupational health experts. A core mission of Return to Work Victoria will be to support workers who are not eligible to enter the WorkCover scheme as well as to provide injured workers on the scheme with the support they need to return to meaningful work or training pathways. The government is committed to giving tailored support to get workers back to work. I repeat: the government is committed to giving tailored support to get workers back to work.

We have consulted widely on this bill with many, many key stakeholders. The member for Eildon in her opening address did express some surprise that the minister conducted the briefing on the bill himself. That is testament to the minister’s commitment to ensuring that we reform WorkCover so that it is there for workers. I repeat what I said at the beginning of this contribution: not voting for this bill risks higher premiums and risks this scheme collapsing and going back to the pre-1985 system where we had 69 private insurers. We do not want to go back to those times, because that will not be good for workers, and it will not be good for employers either. So I commend the bill to the house, and I wish it a speedy passage.

Sam HIBBINS (Prahran) (12:57): I rise to speak on the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill 2023. This is a misleading title if ever there was one. This bill is not a modernisation of the scheme in any sense. This is a retrograde step. This bill takes us backwards to the dark old days where workers had to fight through the courts to get compensation after being injured at work. The member for Bentleigh said, ‘Oh, well, if you don’t pass this, we’re risking going back to that time.’ Well, this bill is removing that risk and it is saying we are definitely going to go back to the dark old days for those workers who are going to be denied access to workers compensation and are going to be kicked off the scheme despite the fact that they have had an injury at work and are unable to get back to work. We are now being asked in this place to rush through these really significant changes to WorkCover entitlements and eligibility rules by the end of the parliamentary year and to start on 1 January 2024 changes that will have a huge impact on the health and wellbeing of Victorian workers, and the Greens are saying no, absolutely not, as should everyone else in this parliament.

We are not going to pass a bill that restricts people who have suffered certain mental injury at work from accessing WorkCover or that throws them off the scheme despite their being unable to work. We have heard from government members it is part of a wider range of reforms such as setting up Return to Work Victoria. Where is it? Where is the start date for Return to Work Victoria? It is not there. No-one is in disagreement that the WorkCover system is in need of reform, but to massively limit eligibility and to kick workers off the scheme is not the solution, particularly at a time when public sector workers, the people the government employs, are at higher risk of mental injury in the workplace. They are already struggling from the government’s cuts to thousands of public sector jobs. They have been suffering under a deliberate government policy to keep wages low with their harsh public sector wage cap, and this bill will only make things worse for Victorian workers.

The government has underfunded WorkCover for years. They have kept those premiums far too low for well over a decade now and have now squibbed the real reform that is needed to improve the system. The government needs to go back to the drawing board, look at how workplaces can be made safer, particularly their own workplaces, which are so affected by this bill – our schools, our hospitals, our public service – and look at how injured workers can get back to work sooner and how they can get treatment sooner. There was some really concerning language I heard from government members: ‘Oh, well, with the assumption that if you are part of –

The DEPUTY SPEAKER: Order! It is time for lunch, so I will interrupt the member, and he will have the call when we return.

Sitting suspended 1:00 pm until 2:02 pm.

Business interrupted under sessional orders.