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WorkCover liability to reduce to “zero”

Oct 31, 2014

Industrial relations minister John Rau says WorkCover’s unfunded liability will fall to zero in July 2015 when a new scheme begins operating.

The Weatherill Government yesterday achieved what the Rann Government could not – and that is to completely overhaul the state’s beleaguered WorkCover scheme.

With the support of the Opposition, the Parliament passed the Government’s Return to Work Bill, with the new scheme replacing WorkCover from 1 July 2015.

The Government says the new scheme will provide “early intervention” for injured workers, while critics say it will save money by dumping injured workers from the scheme if they’re not back at work within two years.

Rau told Leon Byner’s FIVEaa radio program this morning that WorkCover’s auditors believe the new scheme would reduce businesses’ WorkCover fees by an average of 25%.

The total saving to registered businesses in SA would be more than $180 million per year.

WorkCover’s massive unfunded liablity would be erased.

“The advice I’ve had from the corporation is that come the 1st of July next year, the unfunded liability will change from about $1.1 billion to zero,” Rau said.

When asked why, he said: “Because the amount of money coming in the front door will be the same amount of money as is going out …”

Defending the new arrangements against accusations that seriously injured workers would be thrown off the scheme, Rau said that 94% of workers already returned to work within that period.

“So the numbers of people who would actually be getting anywhere near two years in absolute terms are relatively small and, of those, the people who are seriously injured can remain on the scheme,” he said.

He said the current scheme had been too open.

“It’s, in my opinion, fairly reasonable to say that for a long period of time, the front door of the system has been pretty well wide open – anyone could walk in.”

WorkCover has been a weeping sore for Labor since it took power in 2002, with unfunded liabilities increasing exponentially along with levies.

In an exclusive report in October 2013, InDaily reported Rau’s view that the scheme was “buggered” and should be decommissioned.

Unlike a previous attempt by Labor, under Mike Rann, to reform the scheme, the Weatherill administration has managed to keep union concerns to a relative minimum.

Opposition industrial relations spokesman Rob Lucas welcomed the passage of the Bill, but said genuine reform was overdue.

“The Return to Work Bill was introduced to Parliament as South Australia had the highest levy rate in the country, an unfunded liability of $1.2 billion and the worst return to work rate in the country,” he said.

“Genuine reform in this area has been long overdue.

“The State Liberals are cautiously optimistic that genuine reform will occur with the passage of this Bill after 12 years of Labor’s mess.”

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