Programme 2.3 Workers’ compensation payments

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Special appropriations to Comcare are provided through the Department of Employment.  This includes special appropriations under the Safety, Rehabilitation and Compensation Act 1988 for the payment of pre-premium claim expenses (before 1 July 1989) and under the Asbestos-related Claims (Management of Commonwealth Liabilities) Act 2005 for asbestos-related claims settlements. Expenses for claims accepted since 1 July 1989 do not require appropriation as they are funded from Comcare’s premium revenue.

Further information regarding the operations of Comcare can be found on the Comcare website.

Programme performance

During 2013–14 Comcare paid $35.2 million for incapacity, treatment and other costs for claims resulting from injuries that occurred before 1 July 1989 (pre-premium). Incapacity payments were made to 1138 injured workers with pre-premium claims. The net outstanding claims provision for pre-premium claims reduced from $429.7 million in 2012–13 to $409.2 million in 2013–14.

In 2013–14 Comcare released the Guided Choice Model and Guided Choice Fact Sheet, which explain the choices available to Commonwealth employees with asbestos-related diseases and their dependants.

Table 11 Programme 2.3 key performance indicators

key performance indicators
Key performance indicator 2013–14 estimate 2013–14 actual
Durable return to work rate (ie the percentage of injured workers with ten or more days lost time who were working in a paid job 7 to 9 months after lodging their claim) 89% 81%
Funding ratio (ie percentage of premium-related total assets to premium-related total liabilities) 70% 68%
Percentage of licenses compliant with licensing obligations 100% 97%
Commonwealth average premium rate 1.82 2.12

In 2013–14, the final projects funded by the three-year, $1.5 million Asbestos Innovation Fund were completed. The fund supported researchers, medical providers, community groups and others to complete 12 projects for the prevention and better management of asbestos exposure and improved treatment of asbestos disease sufferers.

Comcare’s timeliness in resolving asbestos claims within 180 days improved from 63 per cent in 2010–11 to 75 per cent in 2013–14. Comcare has reached or surpassed the 65 per cent target for the last three reporting periods. This target is governed by the rules and timetables of the courts of each jurisdiction. Performance can be affected and slowed by the involvement of third parties.

Comcare recovered 8 per cent of the value of asbestos claims settlements from third parties in 2013–14. This result is above the 5 per cent target and is an improvement on the 2012–13 rate of 7 per cent. However, for a variety of reasons, particularly the degradation or loss of evidence and exhaustion of third-party insurance policies, the recovery environment has become volatile.

Table 12 Asbestos claim settlements

Asbestos claim settlements
Key performance indicator 2013–14 estimate 2013–14 actual
Timeliness—resolution of asbestos claims (proportion settled by Comcare within 180 days) 65% 75%
Percentage of the value of asbestos claim settlements recovered from third parties 5% 8%

Note: The Department of Employment and Comcare are reviewing performance indicators associated with these appropriations to increase effectiveness in the 2014–15 reporting period.

Workplace relations policy advice

Building and construction industry

During 2013–14, the department continued to implement and advise on the government’s workplace relations policies relating to the building and construction industry. Key roles included promoting and improving workplace health and safety in the industry by administering the Australian Government Building and Construction OHS Accreditation Scheme (through the Office of the Federal Safety Commissioner) and providing policy advice on the requirements for industry participants who wish to undertake Commonwealth-funded building work.

Re-establishment of the Australian Building and Construction Commission

The Building and Construction Industry (Improving Productivity) Bill 2013 and the Building and Construction Industry (Consequential and Transitional Provisions) Bill 2013 were introduced into parliament in late 2013.

The department provided advice to the government on the development of the Bills, which would re-establish the Australian Building and Construction Commission as the specialist workplace relations regulator for the building and construction industry and implement a range of other industry-specific measures.

Building Code 2014

The department developed a new building code, the Building and Construction Industry (Fair and Lawful Building Sites) Code 2014, following consultations with building industry employer associations, unions and relevant state governments.

The new code will come into effect when the Building and Construction Industry (Improving Productivity) Bill 2013 commences and will apply, prospectively, to new projects. The code sets out the standard of workplace relations conduct expected from contractors who wish to perform building work funded by the government. An advance release of the new code was published by the government on 17 April 2014.

The code, to be administered by the Australian Building and Construction Commission, will ensure that contractors bidding for Commonwealth-funded building work do not have agreements or other arrangements that are discriminatory or involve restrictive work practices.

The department continued to provide advice and assessment services to employers on the compliance of their enterprise agreements with the Building Code 2013. The department also conducted interim assessments of draft agreements for compliance with the advance release of the new code, at the request of industry parties.

Fair Work Amendment Bill 2014

The department provided policy and legal advice to the government during the development of the Fair Work Amendment Bill 2014, which was introduced into parliament on 27 February 2014. The Bill amends the Fair Work Act to give effect to a number of the government’s workplace relations election commitments, including changes in relation to right of entry, greenfields agreements, enterprise bargaining and individual flexibility arrangements. The Bill also responds to a number of recommendations of the 2012 review of the Fair Work Act. The department consulted with employer organisations, unions and state and territory governments on the proposed amendments.

Post-implementation review of the Fair Work Amendment (Transfer of Business) Act 2012

The department began a post-implementation review of the Fair Work Amendment (Transfer of Business) Act 2012, which provides the legislative framework for employees transferring from state system employers to national system employers in certain circumstances.

A post-implementation review was required because the legislation had not been subject to a regulatory impact analysis before it was implemented. The department developed a targeted consultation strategy to inform the review process. Submissions were invited from state governments affected by the legislation and from members of the National Workplace Relations Consultative Council and the Community and Public Sector Union. The review is ongoing and will be completed in 2014–15.

Post-implementation review of the Fair Work Amendment (Textile, Clothing and Footwear Industry) Act 2012

The department began a post-implementation review of the Fair Work Amendment (Textile, Clothing and Footwear Industry) Act 2012. Submissions to the review closed on 14 May 2014. The department is preparing a report on whether the Act is working effectively and efficiently to provide the required levels of protection for workers and a reasonable regulatory framework for business. The report is expected to be released in 2014–15.

Transparency and accountability of registered organisations

During 2013–14, the department provided advice and assistance to the government on the implementation of its election commitment for better transparency and accountability of registered organisations. The new policy outlines the government’s commitments to strengthen reporting and disclosure requirements for registered organisations, increase civil penalties and introduce criminal penalties, and establish a Registered Organisations Commission as an independent monitor and regulator of registered organisations.

The government’s election commitment required introduction of laws to give effect to these measures in the first sitting week of the new parliament and the department contributed to the development of the Fair Work (Registered Organisations) Bill 2013 and the Fair Work (Registered Organisations) Bill 2014 to achieve this.

Centre for Workplace Leadership

The department contributed funding to the Centre for Workplace Leadership. Total funding for the centre comprises $12 million over four years from the government, of which around $3.5 million was provided in 2013–14, and around $5 million in cash and in-kind contributions from businesses and the University of Melbourne.

The centre was launched at the University of Melbourne on 20 February 2014. It pools the efforts of industry, government and academia to encourage new ways of increasing the competitiveness, innovation and productivity of Australian workplaces through improved leadership and management practices.

In April 2014 the centre held its inaugural national conference, The Future of Work: People, Place, Technology.

The University of Melbourne has established an advisory board to help guide the long-term strategic direction of the centre and foster industry partnerships. The Secretary of the Department of Employment is a member of the board.

Review of the Road Safety Remuneration Tribunal

The government’s pre-election policy to improve the Fair Work laws included a commitment to review the operation of the Road Safety Remuneration Tribunal.

The Road Safety Remuneration System was established under the Road Safety Remuneration Act 2012 and comprises the Road Safety Remuneration Tribunal and a separate education and compliance framework administered by the Fair Work Ombudsman. The purpose of the review was to assess the operation of the Act and the tribunal and advise government on whether the system is an effective and appropriate means of addressing safety concerns in the road transport industry.

The independent review was conducted by Mr Rex Deighton-Smith. The department provided administrative support including undertaking research and analysis to assist the review. The department is currently working with the government on its response to the report on the review.

Safety net and awards policy

The Fair Work Commission began its first four-yearly review of modern awards in January 2014. The department prepared a submission on behalf of the government for the initial stage proceedings and senior departmental officials appeared before the commission. The department will continue to provide policy advice to the government throughout the review process.

During the year, the department continued to advise other government departments on modern awards and the safety net. For example, the department provided advice to the Department of Social Services on its involvement in proceedings before the Fair Work Commission concerning wage assessment tools in the Supported Employment Services Award 2010.

Annual minimum wage review

Together with the Treasury, the department managed the government’s participation in the Fair Work Commission’s Annual Wage Review 2013–14. This included drafting submissions on behalf of the government and preparing responses to questions asked by the commission. Officials from the department also took part in public hearings.

On 4 June 2014, the commission released its decision to increase minimum wages and award wages by 3 per cent from 1 July 2014, resulting in an increase in the national minimum wage to $640.90 per week ($16.87 per hour).

Equal Remuneration Case 2013–14

In 2013, United Voice, the Australian Education Union and the Independent Education Union filed applications with the Fair Work Commission seeking an equal remuneration order for child care workers and teachers working in long day care centres and preschools. The department has been working with the Department of Education and central agencies to provide advice and represent the government’s views in the case.

During the first half of 2014, the Fair Work Commission sought oral and written submissions from the applicant unions, employer and industry groups and governments on the legislative and conceptual issues of the case. The department, on behalf of the government, provided four written submissions to the Fair Work Commission.

Superannuation

The department worked with the Treasury to prepare a discussion paper, Better regulation and governance, enhanced transparency and improved competition in superannuation. The discussion paper was released by the Assistant Treasurer, Senator the Hon. Arthur Sinodinos, on 28 November 2013.

The discussion paper covered a range of superannuation topics, including the government’s election commitment to increase competition in the default superannuation industry. Submissions closed on 12 February 2014. The department is considering the submissions and developing policy to implement the election commitment.

Review of coastal trading

In April 2014, the government released an options paper on approaches to regulating coastal shipping in Australia. The department participated in consultations with stakeholders on the options paper to consider workplace relations aspects of the coastal shipping regime. The consultations were led by the Department of Infrastructure and Regional Development.

The department assisted the lead agency, the Department of Social Services, with developing policy and implementation details of the government’s paid parental leave scheme, particularly the workplace relations elements.

International engagement

The department represented the government  at three meetings of the International Labour Organization (ILO) governing body—in November 2013, March 2014 and June 2014—as well as at the 103rd session of the International Labour Conference held in Geneva in June 2014.

For the 2013–14 term of the governing body, Mr David Garner, the department’s Special Labour Adviser, was chair of the Far-East Asia Sub Pacific Group of countries. At the conference, the government was re-elected to the governing body. Australia will represent the Far-East Asia Sub Pacific Group of countries on the governing body for a three-year term until 2017.

Departmental delegates to the conference participated in drafting a new protocol and recommendation on strengthening action on forced labour, discussions on measures to improve employment outcomes around the world, and initial discussions on a possible new recommendation on transitioning from an informal to a formal economy.

Australian Government representatives and Australia’s social partners at the ILO—the Australian Chamber of Commerce and Industry and the Australian Council of Trade Unions—work closely on ILO matters.

The social partners continue to jointly administer the Pacific Growth and Employment Programme and recently reported increased local participation. The programme is due to conclude on 30 November 2014 and is funded under the ILO – Australian Government Partnership Agreement 2010–2015.

During 2013–14, the department provided legal advice to portfolio ministers, portfolio agencies and other stakeholders about:

  • the operation of the Fair Work framework and the national workplace relations system
  • developments arising from court and tribunal decisions in federal, state and territory jurisdictions
  • work health and safety, workers’ compensation and public sector employment matters.

Primary legislation

The department prepared legislation to implement the government’s workplace relations priorities and supported its passage through parliament.

Amendments to the Fair Work Act 2009 relating to default superannuation funds in modern awards implemented by the former government through the Fair Work Amendment Act 2012, took effect on 1 January 2014.

The family-friendly measures at Schedule 1 to the Fair Work Amendment Act 2013 started on 1 July 2013. These amendments implemented a number of recommendations of the Fair Work Act review. The Fair Work Amendment Act 2013 also made amendments to the statutory right of entry regime that started on 1 January 2014.

The Fair Work Amendment Act 2013 also amended the Fair Work (Registered Organisations) Amendment Act 2012 to delay the commencement of certain parts of the registered organisations amendments. The Fair Work (Registered Organisations) Amendment Act 2012 received royal assent on 29 June 2012.

An anti-bullying jurisdiction implemented by the Fair Work Amendment Act 2013 started on 1 January 2014. Under the legislation, workers who have been bullied at work are able to apply to the Fair Work Commission for an order to stop the bullying. The Fair Work Commission is required to start dealing with an application within 14 days and is able to make any appropriate orders to stop the bullying (other than orders for payment).

The provisions in the Asbestos Safety and Eradication Agency Act 2013 that established the Asbestos Safety and Eradication Agency started on 1 July 2013. The agency’s functions include advocating, coordinating, monitoring and reporting on the implementation of the National Strategic Plan for Asbestos Awareness and Management and providing advice to the Minister for Employment about asbestos safety. The Asbestos Safety and Eradication Council also commenced on 1 July 2013. Its role includes providing advice to the chief executive officer of the Asbestos Safety and Eradication Agency and monitoring the adoption of the national strategic plan.

The Fair Work (Registered Organisations) Amendment Bill 2013 was introduced  in the House of Representatives in late 2013. It will amend the Fair Work (Registered Organisations) Act 2009 to establish the Registered Organisations Commission, strengthen officers’ and organisations’ disclosure and transparency obligations, increase civil penalties and introduce certain criminal penalties. The Bill was reintroduced into parliament in the same form as the Fair Work (Registered Organisations) Amendment Bill 2014.

The Fair Work Amendment Bill 2014 was introduced into parliament in early 2014 to amend the Fair Work Act to implement elements of the government’s 2013 election commitments.

The Safety, Rehabilitation and Compensation Legislation Amendment Bill 2014 was introduced into parliament in early 2014. It would amend the Safety, Rehabilitation and Compensation Act 1988 and the Work Health and Safety Act 2011 to:

  • introduce a new national employer test for licence eligibility to self-insure under the Comcare scheme
  • create a group licensing system to allow corporate employers to centralise their compensation and rehabilitation obligations and capabilities across a corporate  group
  • make changes to certain eligibility requirements for workers’ compensation.

Regulations

The department prepares regulations that are necessary under enabling legislation to give effect to the government’s workplace relations priorities.

During 2013–14, two provisions of the Fair Work Amendment Regulation 2013 (No. 2) commenced:

  • A minor amendment to the Fair Work Regulations 2009, about the entitlement to request flexible working arrangements under the National Employment Standards for inclusion in the Fair Work Information Statement, commenced on 1 July 2013.
  • The model consultation term set out in the Fair Work Regulations 2009 was replaced by a model consultation term that meets the requirements of subsections 205(1) and (1A) of the Fair Work Act as amended. These amendments commenced on 1 January 2014.

The following regulations were made during 2013–14:

  • Amendment No. 1 to the Building Code 2013 amended the code to clarify the interaction between the code and concurrently applicable state guidelines as they relate to building contractors and building industry participants.
  • The Fair Work Amendment (Anti-Bullying) Regulation 2013 prescribed the fee that is to be paid by persons making an application to the Fair Work Commission for an order to stop bullying and the indexation method for that fee.
  • The Road Safety Remuneration Amendment Regulation 2013 amended the list of state and national heavy vehicle laws that are capable of operating concurrently with the Road Safety Remuneration Act 2012. It also established a code of conduct for bargaining for road transport collective agreements and prescribed additional functions for the Road Safety Remuneration Tribunal.
  • The Coal Mining Industry (Long Service Leave) Legislation Amendment Regulation 2013 extended deadlines for when the Coal Mining Industry (Long Service Leave Funding) Corporation must notify certain former eligible employees about records and when it must seek actuarial advice as to the sufficiency of the Coal Mining Industry (Long Service Leave) Fund.
  • The Fair Work and Other Legislation Amendment (AusAID) Regulation 2013 amended the Fair Work Regulations 2009 to reflect the integration of the Australian Agency for International Development into the Department of Foreign Affairs and Trade.
  • The Fair Entitlements Guarantee (Indexation of Maximum Weekly Wage) Regulation 2013 set out the mechanism for the annual indexation of the maximum weekly wage amount for the purposes of the Fair Entitlements Guarantee Act 2012.
  • The Fair Entitlements Guarantee (Indexation of Maximum Weekly Wage) Amendment Regulation 2014 gave effect to a measure announced in the 2014–15 Budget to pause the annual indexation of the maximum weekly wage amount for the purposes of the Fair Entitlements Guarantee Act 2012 for a period of four years, with indexation to re-commence on 1 July 2018.
  • The Work Health and Safety Amendment (Licences) Regulation 2014 prescribed fees for applications for new or additional high-risk work licences, replacement of a high-risk work licence and renewal of a high-risk work licence. It also extended the transitional period for certain operators of reach stackers to obtain a high-risk work licence until 1 January 2016.
  • The Fair Work Amendment (Protected Industrial Action) Regulation 2014 amended the Fair Work Regulations 2009 to prescribe certain persons for the purpose of subparagraph  424(2)(b)(iii) of the Fair Work Act.

Workplace safety

Office of the Federal Safety Commissioner

The Office of the Federal Safety Commissioner administers the Australian Government Building and Construction OHS Accreditation Scheme and works closely with Australian Government agencies and industry to ensure effective implementation of the health and safety requirements of the Fair Work (Building Industry) Act 2012.

The scheme aims to establish best practice in health and safety systems of building companies that wish to undertake Commonwealth-funded building work. At 30 June 2014, 325 companies were accredited under the scheme. The Office of the Federal Safety Commissioner had been notified of 1135 directly and indirectly funded contracts for building work covered by the scheme with a combined value of $58.55 billion.

In the first half of 2014, the department conducted a review of the scheme to identify ways in which it could be modernised and streamlined without affecting workplace safety outcomes. The review was assisted by an advisory panel comprising representatives from key industry associations, unions, government agencies and the Federal Safety Commissioner. Feedback was received from stakeholders through submissions on a discussion paper issued in February 2014. Recommendations from the review were provided for government consideration in June 2014.

In March 2014 the Office of the Federal Safety Commissioner conducted a survey of all accredited contractors. Responses were received from 126 companies (41 per cent of all accredited companies). Almost 80 per cent of respondents believed that accreditation had improved workplace safety in their organisation; 95 per cent of small companies also had that view. Around 78 per cent said that accreditation had helped them achieve a whole-of-organisation improvement to safety culture, both on site and in the head office.

Concerns were raised about costs and value for money, particularly for small and medium-sized companies. The survey also revealed that there were misconceptions about the scheme, which can act as a barrier to companies pursuing accreditation. Stakeholder consultations identified a number of areas for improvement and ways to address barriers to entry to the scheme.

Effectiveness indicators

The effectiveness of Outcome 2 in achieving the government’s policy and programme objectives is measured through the indicators set out in Table 13–15 and described in greater detail below.

The department closely monitors and analyses these indicators and advises the Minister accordingly.

Table 13 The federal workplace relations system supports improved productivity outcomes

The federal workplace relations system supports improved productivity outcomes
Key performance indicator Year to June quarter 2013 Year to June quarter 2014
Labour productivity as measured by gross value added per hour worked in the market sector (annual, trend terms) 2.43% 3.3%
ABS wage price index (annual, seasonally adjusted terms) 2.8% 2.6%

Table 14 Low incidence of industrial action (allowing for variations in the bargaining cycle)

Low incidence of industrial action (allowing for variations in the bargaining cycle)
Key performance indicator Year to June quarter 2013 Year to June quarter 2014
Working days lost per thousand employees 20.2 8.45

Table 15 Collective bargaining is widely used by employers and employees to negotiate pay and conditions

Collective bargaining is widely used by employers and employees to negotiate pay and conditions
Key performance indicator Year to June quarter 2013 Year to June quarter 2014
Number of workplaces whose employees had their pay determined by an enterprise agreement made under the Fair Work Act 2009a 6768 Fair Work Act agreements approved 6410 Fair Work Act agreements approved

a Information on the number of workplaces covered by the enterprise agreement stream of the Fair Work Act is not available and therefore the number of employers whose employees had their pay determined by an enterprise agreement made under the Fair Work Act has been used as the best available current  proxy. However, it should be noted that the number of employers is an approximation only of the number of workplaces covered, since it is common for a single employer to use an enterprise agreement to cover more than one workplace.

Wages and earnings

The Australian Bureau of Statistics’ wage price index is the preferred measure of wages growth. The index increased by 2.6 per cent (seasonally adjusted) over the year to the June quarter 2014, down from 2.8 per cent over the year to the June quarter 2013. The softening of wages growth reflects the current state of the labour market.

Public sector wages grew by 2.8 per cent and private sector wages increased by 2.4 per cent over the same period.

In industry terms (original data), over the year to the June quarter 2014, the highest rate of increase in the index was in education and training (3.2 per cent). The lowest annual increase was in professional, scientific and technical services (2.0 per cent) and wholesale trade (2.0 per cent).

Productivity

Labour productivity—as measured by real gross value added per hour worked in the market sector— increased by 3.3 per cent (trend terms) over the year to the June quarter 2014 (up from 2.4 per cent over the year to the June quarter 2013).

Market sector real gross value added increased by 3.3 per cent, while hours worked (in the market sector) were unchanged. It should be noted that short-term measures of productivity are prone to volatility and cyclical effects and should therefore be interpreted with caution.

Industrial disputes

Rates of industrial disputation declined over the year. Through the year to the June quarter 2014, 8.5 working days were lost per thousand employees. This was down from 20.2 working days lost per thousand employees in June 2013 and is the second lowest annual rate of industrial disputation since 1985. The decline was mainly due to reduced rates of industrial disputes in the coal mining and construction industries. It should be noted that industrial disputes data are prone to short-term fluctuations and should be treated with caution.

Through the year to the June quarter 2014, 88,900 working days were lost due to industrial disputes. The education and training and health care and social assistance industries accounted  for the largest number of working days lost (38,600), followed by construction (21,000).

Agreement-making

A total of 6410 enterprise agreements were approved by the Fair Work Commission in the year to 30 June 2014 (latest available data), compared to 6768 agreements approved in the year to 30 June 2013. Almost all industries experienced a lower rate of agreement-making, but in terms of number of agreements, the decrease was most pronounced in the construction and manufacturing industries. This is at least partly due to industry bargaining cycles, with enterprise agreements typically lasting three to four years. The average annualised wage increase under the enterprise agreements approved in the year to 30 June 2014 (latest available data) was 3.4 per cent (up slightly from 3.3 per cent in the year to 30 June 2013).