Wednesday, 9 March 2022

Committees

Public Accounts and Estimates Committee

Reference

Debate resumed on motion of Mr RICH-PHILLIPS:

That this house, pursuant to section 33 of the Parliamentary Committees Act 2003, requires the Public Accounts and Estimates Committee to inquire into, consider and report:

(1) by 30 June 2022, on the financial position of WorkSafe and its administered WorkCover insurance scheme, including but not limited to the:

(a) financial sustainability of the scheme;

(b) ability of the scheme to assure employees that proper financial and medical support will be received into the future;

(c) level of premiums paid by employers;

(d) the impact of any potential increased premiums on employment statewide;

(2) by 30 September 2022, on the operations of the port of Melbourne lease, including but not limited to:

(a) the impact on the price of consumer items due to the outcomes of the lease;

(b) the failure of the operators to comply with their obligations to run the port efficiently for the long-term interests of users and Victorian consumers;

(c) issues of significant and sustained non-compliance with the pricing order during the review period;

(d) why the port of Melbourne’s power has not been effectively constrained in relation to the process for setting or reviewing rents or associated payments payable by its tenants;

(e) the ability of current legislation, port concession deed and other contractual arrangements to constrain the port of Melbourne’s power;

(f) the port of Melbourne’s use of a broad range of negotiation strategies and processes to drive higher rent outcomes that are not appropriate in a monopoly market, where tenants at the port face significant barriers in pursuing and securing alternative suppliers of suitable land;

(g) whether the port of Melbourne’s exercise of its power has caused material detriment; and

(h) whether further economic regulation is justified to ensure there is mitigation of the ability of the port to exercise power through rent seeking.

Mrs McARTHUR (Western Victoria) (14:25): I rise to speak on this motion, which deals with oversight of one of the most critical pieces of infrastructure in this state. If the last two years have taught us anything, it is that the logistic lifelines that prop up our modern lifestyles and that allow companies to hone their operations into knife-edge efficiencies and deliver us fresh food and goods are incredibly fragile. The largest part of these crucial lifelines are the sea lanes of trade and the ports they connect. The importance of maritime trade to an island nation like Australia cannot be overstated. I am sure that, like me, many of my colleagues in this chamber have found themselves waiting forlornly for packages from overseas to arrive, significantly delayed by the chaos caused in global supply chains by the COVID pandemic. Systems that many of us never thought about but completely took for granted suddenly seized up, and for the first time in the lives of many people they had to contemplate shortages in supermarkets and post that may never arrive.

Given the hugely changed perspectives on these critical elements of our economy, it is infuriating to hear that the Essential Services Commission has issued a scathing rebuke of the port of Melbourne in its first review, five years into the 50-year lease of the port—a 50-year lease to a consortium that I might remind everyone includes China Investment Corporation, the People’s Republic of China’s sovereign wealth fund. It is yet another Labor government decision regarding China that has not aged well. According to the Essential Services Commission the port has failed in its obligations to run efficiently. The commission’s report states:

… we consider that it does not promote the efficient use of, and investment in, the provision of prescribed services for the long-term interests of port users and Victorian consumers.

The commission went on to reveal that in the first five years of the lease the private operator had overestimated the revenue required to operate the port by between $300 million and $650 million. The commission indicated that it had arrived at this figure by comparing it to a similar ‘efficiently run’ enterprise. Inefficiencies will always be passed on to the consumer, as the commission noted:

… Victorian consumers in the future may be impacted by prices that are higher than they should be …

This Labor government packaged up and spun the idea of a 50-year lease of the port to the Victorian public in order to fund its level crossing removal program and promised that the taxpayer would not be any worse off. Considering that the level crossing removal program has blown out by many billions of dollars, like every single project this government touches, how could we possibly trust that Labor actually did its homework on the port lease?

Given the critical importance of the port to the effective operation of business across this state, it is galling to see that the essential services watchdog was so concerned it was prepared to flatly report:

The Port’s approach to managing its operating expenses is not consistent with that of a prudent or efficient service provider.

Wielding what is essentially a state-sanctioned monopoly, the port’s inefficiencies and imprudent management of a critical asset effectively act as a tariff on all Victorians. Therefore the coalition is fully supportive of referring this matter to the Public Accounts and Estimates Committee (PAEC). If the Essential Services Commission is concerned enough to call out the port’s non-compliance so frankly in so many aspects of its obligations, every Victorian should be likewise concerned.

This Labor government has over $25 billion of budget overruns on its books. These are costs that will be borne by every Victorian taxpayer for many years to come. Generations of Victorians will bear this cost. Given this government’s inability to manage anything more complex than a chook raffle—they infest everything they touch—it is critical that PAEC closely examines the operations of the port of Melbourne lease and provides confidence to Victorian import-export businesses and residents that their most critical infrastructure is being properly managed. So I certainly support the motion, which reads:

That this house, pursuant to section 33 of the Parliamentary Committees Act 2003, requires the Public Accounts and Estimates Committee to inquire into, consider and report:

(1) by 30 June 2022, on the financial position of WorkSafe and its administered WorkCover insurance scheme, including but not limited to the:

(a) financial sustainability of the scheme;

(b) ability of the scheme to assure employees that proper financial and medical support will be received into the future;

(c) level of premiums paid by employers;

(d) the impact of any potential increased premiums on employment statewide;

(2) by 30 September 2022, on the operations of the port of Melbourne lease, including but not limited to:

(a) the impact on the price of consumer items due to the outcomes of the lease;

(b) the failure of the operators to comply with their obligations to run the port efficiently for the long-term interests of users and Victorian consumers;

(c) issues of significant and sustained non-compliance with the pricing order during the review period;

(d) why the port of Melbourne’s power has not been effectively constrained in relation to the process for setting or reviewing rents or associated payments payable by its tenants;

(e) the ability of current legislation, port concession deed and other contractual arrangements to constrain the port of Melbourne’s power;

(f) the port of Melbourne’s use of a broad range of negotiation strategies and processes to drive higher rent outcomes that are not appropriate in a monopoly market, where tenants at the port face significant barriers in pursuing and securing alternative suppliers of suitable land;

(g) whether the port of Melbourne’s exercise of its power has caused material detriment; and

(h) whether further economic regulation is justified to ensure there is mitigation of the ability of the port to exercise power through rent seeking.

I urge the house to support this motion.

Mr MELHEM (Western Metropolitan) (14:33): This is another motion by Mr Davis. Actually there are two of them combined into one, and we are going to vote on them separately. Mr Davis has managed over the years to actually set new precedents and new benchmarks in this place for references to the Public Accounts and Estimates Committee. PAEC is a joint committee. That is part of its job—to actually go and question authorities and ministers in their daily business. Particularly since Mr Davis became the Shadow Treasurer, I suppose he has been wanting to utilise the services of PAEC to basically do his shadow work. There is nothing new there. He was doing similar things I remember in the last Parliament when he used the Environment and Planning Committee to do his shadow work and had reference after reference after reference. We even had a recurrent six-monthly report on rate capping back then. But then when he was no longer the Shadow Minister for Planning and Shadow Minister for Local Government, suddenly everything stopped. So I just want to make the point that it is within PAEC’s jurisdiction to actually question ministers and authorities on all these matters raised in the two paragraphs.

In relation to WorkSafe Victoria, I might leave it to Mr Erdogan, our next speaker, to expand on that issue. But WorkSafe I think are doing a great job, and I spoke about that yesterday when we were debating the bill in relation to presumptive rights. And the minister is doing a fantastic job.

Talking about the financial difficulties we are in, and I want to review all that, we forgot we have had a pandemic for two years. We forgot we have got now a Russia-Ukraine war—Russian aggression, I should say. We are living in a difficult time. We forgot that when that lot were in government they pulled $641 million out of WorkSafe and they never gave it back. We are actually putting in money to WorkSafe. We do not apologise for looking after workers, and we will continue to look after injured workers.

In relation to the port, a review took place not long ago by the Essential Services Commission to basically review the operation of the port. I take it that maybe Mr Davis read that report and thought, ‘Okay, I’d better put a notice of motion on it’. The report has just been released. Yes, it picked up some issues that need to be addressed, and they will be getting addressed. I think the 21-day period has not lapsed yet for response to that Essential Services Commission report.

When the port was leased I remember there were a lot of debates about that. We had a reference to a parliamentary committee, which spent a fair bit of time—and I think it was a good exercise—to go through that, and a good report came out of that. Mr Rich-Phillips—and I thought he might be here to talk about that—was one of the main drivers behind that. That report, I think, was fully implemented.

Mr Davis’s motion, I am not sure what that is going to do. As I said earlier, it is a new precedent set by Mr Davis as the Shadow Treasurer. Probably the opposition room is not giving him enough support to do his job so he uses parliamentary committees for his research and development—to basically do his work. That is basically it.

The current lease is subject to a very strict regulation in relation to, for example, price increases. My understanding is that there is a restriction so they cannot go beyond CPI—that CPI is the maximum that can apply. Yes, there are some issues, as identified by the Essential Services Commission, and they are getting sorted. As I said earlier, the port of Melbourne has 21 working days to consider this latest report and respond, as this is part of the inquiry consideration, and reporting measures are built in already in the lease arrangement. And as I said about the market rent, that was reviewed and some issues were raised out of that. So I am not sure what PAEC is going to do in a short space of time. We have just got a report from the Essential Services Commission. There are 21 days for the port authority to respond to it, and then I would have thought that you could wait a few months and see what happens with the response by the port authority in relation to these issues that were identified in the report, and if you are not satisfied, then maybe we should launch a separate inquiry, a reference like this, and get on with it. But no, the proposal is that we will pre-empt that and we are going to say to PAEC, ‘Just go and launch a separate inquiry’. I mean, the job has already been done. That is why we have got the Essential Services Commission; it is actually written in the lease as part of the arrangements put in place to do exactly what PAEC is being asked to do.

Now, PAEC has got a very important role. Part of their regular work is to actually oversee the process. They will be taking note of the Essential Services Commission report. They will be taking note—the members on the committee—of what the port’s response is. And when the responsible minister appears in front of PAEC, which they do on a regular basis, the committee will be then questioning the relevant minister and public servants in relation to that very point. There are a number of opposition members on that committee, and crossbenchers. This would basically just be sending a separate reference to rehash and redo what the Essential Services Commission has done. To me, they are the ones with the expertise and who were charged to do that review. I do not see the point other than just another political stunt by Mr Davis and his crew.

There are a number of facts which I think Mrs McArthur talked about. Since the lease of the port, productivity has increased by 26 per cent, and it is 30 per cent more efficient than the next-best Australian port. That productivity and efficiency growth is set to continue with the port’s $125 million investment in on-dock rail at the port. So efficiency is being delivered. Costs cannot go beyond CPI. I am not sure what the opposition are trying to achieve out of this apart from, as I said earlier, just a political stunt, because I have not heard so far—maybe other speakers from the opposition will elaborate a bit more—about really the purpose of this motion. I have not heard anything apart from just ‘We’re going to refer it to PAEC’. And I think there was some talk about the Chinese; I do not know where the Chinese come into it, but that issue came up. Very strict regulation was attached to the lease to make sure that the operators adhere to the requirements to make sure that efficiency stays up to date, to take pressure away on cost, to make sure consumers are not ripped off and to make sure the port’s users basically get good value for money. I have not heard anything in the debate so far that suggests that any of these areas are compromised.

As I said earlier, and in the 50 seconds I have got left, I commend the Essential Services Commission for the report they have done. I expect that the port authority will respond to that report within the 21 days. Obviously the minister will be keeping a close eye on that outcome to make sure the operators of the port deliver as per the lease to deliver efficiency and keep pressure down on costs for consumers and users of the port. That is what the lease stipulates, and we will make sure they actually live up to that. So far I have not heard anything to the contrary. With these few words, I will be voting against the motion. We are going to have two votes, according to Mr Davis, so we are going to split them. I will leave my contribution at that.

Mr HAYES (Southern Metropolitan) (14:43): Yes, two votes are better than one, so I am glad to hear the motion is being split. I would like to make reference to a quote by Leith van Onselen in MacroBusiness on 11 February this year, 2022. The quote proceeds:

In 2016, ACCC head Rod Simms said that he no longer supported the privatisation of public assets because it often leads to consumers and end-users being price gouged:

“I am getting more exasperated. I just think governments are more explicitly now privatising to maximise the proceeds—including the Commonwealth” …

“I see it getting worse. I think a sharp upper cut is needed in this area. That’s why I am saying, ‘let’s just stop the privatisations’. It is increasing prices—let’s just call it out.”

Later in 2016 it was revealed that the privatisation of the Port of Melbourne was one of the reasons why Simms ‘crossed the floor’ on privatisation:

To understand why the competition regulator Rod Sims lost patience with the way governments privatise public assets, look no further than the ports of Newcastle and Melbourne.

Price gouging by inadequately regulated monopolies before or after privatisation—all aimed at buffing the sale price for cash-strapped governments—is the common thread …

The Port of Melbourne hiked rents to stevedore DP World by about 750 per cent last year … The port is being readied for sale with a price tag of about $6 billion, and rents are not included in the proposed regulatory regime.

Fast forward five years and the first review of the Port of Melbourne’s privatisation has been held by Victoria’s Essential Services Commission. Not surprisingly, it has found the Port is being run inefficiently and users will be further gouged:

The state’s essential services watchdog criticised the long-term lease of the port, warning consumers could be forced to pay “prices that are higher than they should be” for imported products because the private operator has run the port in a way that is “not consistent with that of a prudent or efficient service provider”.

I will end that quote there.

Mr ERDOGAN (Southern Metropolitan) (14:46): I rise to oppose the motion by Mr Davis. Obviously Mr Davis has flagged that he will be splitting this and there will be two votes on this motion. When you read the motion before the house, it is in two parts and covers two substantially different areas of government. It is probably sensible, because they were initially two separate motions that were joined, and now it seems that the vote will be conducted separately in the interests of expediency and interest.

I want to touch on a number of factors. I will probably focus my contribution more on the first part of the motion, which is about the Public Accounts and Estimates Committee inquiring into and reporting on aspects of WorkSafe Victoria and the WorkCover insurance scheme. I will focus mostly on that, and I will touch on some of the port matters a bit later—time permitting—that Mr Hayes discussed and a number of other speakers have touched upon.

The WorkCover system is a very important safety net that we have in our state. I worked in this field for almost a decade, so I am familiar with how it operates. For those of you that may not be aware, WorkCover is an insurance scheme that protects injured workers. It provides a form of compensation when workers are injured in our state or while doing work that is related to our state, in the form of weekly payments of compensation for time workers have to have off work for their injuries, and it also provides them access to all reasonable medical and like expenses necessary in their recovery. There are also pathways for lump sum compensation where injuries are unfortunately permanent injuries, and there is a gateway for an impairment benefit. It is a no-fault scheme. Then there are obviously common-law rights, as you would understand, where you need to prove that you have a serious injury and that there was negligence on the part of another party, whether that is your employer or a third party, to get access to common-law damages for your pain and suffering or loss of earning capacity. That is the WorkCover scheme overall. It is a scheme that we as Victorians should be familiar with because in our workplaces we are covered by it. Unless you are an employee of a commonwealth government or former commonwealth government agency, which are covered under Comcare, you will be covered by the WorkCover system.

I rise to oppose this motion because obviously I am proud of our government’s record when it comes to workplace safety. There have been a number of bills that we have debated in this chamber which have increased safety outcomes for workers or made improvements to the work safety system in place, such as the arbitration model. We have also discussed at length the provisional payment scheme, which allows people with mental injuries access to treatment straightaway rather than waiting for the formal approval process to take place. These are just some of the improvements we have made in the area of work safety. But work safety more broadly is not just WorkCover per se; it is obviously WorkSafe’s remit. Changes on issues such as workplace manslaughter and other changes have improved lives and I believe have made or will make a big impact going forward to working people in our state, such as the wage theft legislation. That was an Australian first, and we are leading the way again.

I am very sceptical about the coalition’s record when it comes to the WorkCover scheme. That is why when I saw this motion from Mr Davis I was less than impressed, because we know when Mr Davis was in government in the late 1990s they abolished common-law rights. They abolished the right of injured workers to get a larger compensation amount for their pain and suffering and loss of earning capacity. That was completely abolished, and it was only reinstated by the Bracks government in 1999. So I think the coalition’s record when it comes to WorkSafe or the WorkCover insurance scheme is quite chequered, to say the least.

Obviously we understand that the issues in this motion are under the remit of PAEC already, as Mr Melhem touched on. So PAEC already have the jurisdictional powers to look at these issues if they see fit, and they can question them in due course. Again, on the need to push this motion before the chamber today, I am not sure if it was necessary, but nonetheless we are here again on this point.

There are a number of issues about the scheme and about some of the cost increases that Mr Rich-Phillips has touched on in this place a number of times, but I think they are challenges that this government has been up-front about. Mr Melhem touched upon the global pandemic that we are facing with COVID-19. There are other issues as well: the changes in the way we work and the changes in the types of injuries that people are suffering from, particularly mental injury claims. These are quite complex and can be quite costly, and they add to them. Obviously our government has always been forthright in notifying about the challenges that are facing the scheme. I am proud that we do have this scheme, which is quite comprehensive. It protects all Victorian workers. And in terms of the premiums paid, we definitely do not have the highest out of the states and territories; I have discussed that also in this chamber in the past.

Obviously the arbitration changes are some of the changes that I was most impressed with, because when there is a dispute people are referred to the Accident Compensation Conciliation Service, and this provides a mechanism for dispute resolution outside the court system. Earlier today Ms Maxwell talked about issues to do with the justice system and with the courts system, and Mr Ondarchie also did. They shared their experiences with the courts system. What this arbitration system provides is an alternative avenue to resolve these disputes without having to go through that court process, so they hopefully do not need to go to court if the arbitration system works as planned. There are obviously a number of other WorkSafe initiatives that we should all be aware of, such as the WorkWell program, another initiative that our government has implemented. I am sure some of the other speakers and Minister Stitt may want to touch upon some of these programs that have been rolled out by our government and are very helpful to Victorian workers.

Obviously our role as a government in terms of workplace safety has been leading all states and territories. We have a good scheme. And we do not just talk about workplace safety. Since getting elected in 2014 the Andrews Labor government has put on board more inspectors—approximately a 30 per cent increase in terms of inspections and inspectors doing this work—so we are always ensuring that WorkSafe has the resources to be able to identify issues, call for rectifications as needed and prosecute if the right thing is not being done. Like many of you, I also read the Ombudsman’s report into how certain operators within the WorkCover system are operating and I was appalled, so I am pleased to see a number of those recommendations from reports being implemented by our government.

As I have mentioned, this government is already undertaking a number of reforms in this space. The COVID-19 pandemic has exacerbated the pressures on the system, and of course greater awareness of mental injuries in the workplace has also added to that. But I am not sure that Mr Davis really cares about this issue. I feel as though he is pushing this as just another talking point for him in the media cycle. I am interested as well because I did listen to him on the radio, and he reflected on the fact that his policy now is to not oppose government policy in a number of areas. That is, I guess, a positive change, but in regard to the work we are doing in the WorkSafe and WorkCover areas, I would hope that the opposition supports us, because we just want to increase safety outcomes for all Victorians and their families as well, because usually they are just as greatly affected as the injured worker.

Mr Melhem touched upon the port of Melbourne lease, which is the second part of this motion. I note that my time is very limited to touch upon that section before us, but I will still discuss one avenue. I was impressed that the lease of the port has led to efficiency gains and productivity gains, which was fantastic to hear because we always want a positive economic outcome for Victorians, and if that is one of the outcomes, that is fantastic. I note that the opposition also talked about the port lease. I am pretty sure it was not just us. There was the port of Darwin lease as well, but I will not touch upon that because that is not before the house. I will let people reflect on that in their own time.

I think the inquiry of the Essential Services Commission did make a number of findings, but I think it is also a reflection of why we inserted the Essential Services Commission into this space—because we understand that a strong regulatory framework is needed and that is what works. That is why for an essential service like this the Essential Services Commission having the powers to do this review and make recommendations is so crucial. Obviously it should come as no surprise that I will be opposing this motion. I think it is a political stunt and builds upon a number of other similar motions that Mr Davis has moved in this chamber in the past. On that note, I will be opposing the motion, or both motions now, before the house.

Ms STITT (Western Metropolitan—Minister for Workplace Safety, Minister for Early Childhood) (14:56): I rise to oppose the motion moved by Mr Davis today. I want to reiterate what a number of my colleagues have said today in that I do not believe that the purpose of this motion is pure and I do not believe that it is about focusing on improving outcomes for injured workers, let alone preventing injuries in the first place. Time and time again this government has shown that that is what it is focused on—making sure WorkSafe Victoria has the tools and the resources available to make our workplaces safer—whether it is our provisional payments scheme, which passed this house last February and provides workers with the support they need for mental injuries without waiting the 38 days for their claims to be supported, or whether it is supporting injured workers to get the outcomes they need with the introduction of our arbitration function in the Accident Compensation Conciliation Service. That is a major reform that provides a low-cost, timely and effective alternative to the court process for injured workers to achieve a fair resolution of disputed workers compensation claims.

We are a government that supports injured workers. This is not a political football. I am absolutely focused on one thing, and that is the people who rely so heavily on the WorkSafe scheme—people who in many cases have gone through intense trauma. It has a major impact on them, their families and their friends, and that is who I am focused on. But to do that we need to make sure that the WorkCover scheme is operating sustainably. I have been absolutely up-front about that and I have been up-front about the challenges facing the scheme. As we stated in our media release on 3 June last year:

Victoria’s vital WorkCover scheme has been under pressure in recent years due to significant increases in the number, complexity and cost of claims—particularly mental injury claims. The COVID-19 pandemic has compounded the impact on WorkSafe’s sources of revenue—premium payments and investment returns.

We are not hiding from this. I have said consistently that mental injuries are rising. While it is so important that workers put their hands up to get the help they need, it is putting pressure on the scheme, and I have been completely up-front about that. On top of this is the importance of improved claims management so people are properly supported while they recover and are also supported to safely return to work. That is why the government and WorkSafe are working together to implement measures that better support people returning to work—measures that focus on injury prevention and tailored claims handling.

While I welcome the opposition at any time asking me about these matters, and of course the crossbench as well, I would like to remind the opposition that I do appear at the Public Accounts and Estimates Committee budget estimates hearings every year together with the WorkSafe CEO and they have not once asked me a question about the WorkCover scheme. It has all been whatever the political pointscoring of the day is. I am absolutely up for being asked questions at PAEC in the course of ordinary budget estimates hearings about my portfolio responsibilities. In the meantime the major focus for me is to make sure that WorkSafe is developing initiatives aimed at addressing the pressures on the scheme and managing the long-term financial sustainability of the scheme.

I would not be alone in the chamber in being a bit confused about the time left for this motion, and I can see that Ms Patten is getting a bit anxious about it. I do not want to interfere with Ms Patten’s timeslot. I have got a couple of very quick points to make, and then I will conclude my contribution.

WorkSafe inspectors are an incredibly important part of prevention, and they are out there every day working hard to support businesses and workers to prevent injuries from occurring in the first place. They are also focused on the most dangerous and high-risk industries. So rather than attempting to divert WorkSafe’s resources through the proposition of this particular inquiry that the Leader of the Opposition is proposing, my view is that there is ample opportunity for these issues to be canvassed during the normal PAEC budget estimates hearings. The government is getting on with the job of prioritising better prevention of workplace psychological injuries and earlier intervention when injuries do occur. We are working together to confront these issues.

Just really, really quickly in respect to the port of Melbourne, again as some of my colleagues have outlined already, there is a power of work already going on in relation to these matters. We know full well that when we leased the port we built in robust mechanisms to protect Victorian consumers, including giving the Essential Services Commission power to review the report and the port of Melbourne’s operations, and this work is already underway. So while global supply chains are under enormous pressure, Victoria continues to rise to meet those challenges.

In conclusion, the government is fully focused on getting on with the job whether it is improving outcomes for injured workers, reducing mental and physical injuries in the workplace or ensuring our port is economically efficient. We do not support the motion. I will conclude my remarks there.

Mr DAVIS (Southern Metropolitan—Leader of the Opposition) (15:03): I move:

That debate on this motion be adjourned until later this day.

Motion agreed to and debate adjourned until later this day.