Is a national workers compensation scheme a solution?

Gary McMullen, Director, Workplace Risk at Aon, believes the current workers compensation scheme is ‘awash with inequality and unfairness’, and wonders whether a national scheme would be a better solution.

“The biggest issue facing our industry is the fractured workers compensation landscape. There are up to eleven different workers compensation schemes currently operating across Australia and the current situation is awash with inequality and unfairness. This includes different criteria for determining liability on claims and also the amount of compensation payable.”

As an example he elaborates:  Following a workplace fatality, if an incident occurred in NSW the total payment to a dependent spouse could be up to 30 per cent more, than if the incident occurred in Vic.  A worker employed in QLD and covered under the Comcare scheme could be paid weekly payments at 100% for 45-weeks, compared to other workers in the QLD covered under the state scheme, whereby weekly payments are limited to just 85 per cent and for 26 weeks.  The duplication in cost to multi-jurisdictional employers in managing workers’ compensation and safety across multiple schemes, runs into the hundreds of millions of dollars. This is in addition to the unfairness and inequality of the different compensation payable, for the same injury.

McMullen stated that it may be worthwhile to revisit the debate around introducing a national workers compensation scheme for multi-state employers, where equity and fairness in regard to decision making and compensation can be achieved.

He added, “The other scenario is whether there is an opportunity to open the debate around privatisation of workers’ compensation at a state or national level. The precedent exists through the High Court’s decision to allow Optus to obtain cover under the Comcare Scheme rather than the State based arrangements. Similarly, the Seafarers scheme provides a privately underwritten option for another class of national employers.”

“In NSW, privatising the scheme does not necessarily require legislative change and may open up the scheme to increased competition that has served jurisdictions like Western Australia very well. The argument for privatisation is that on face value, the public sector is materially more expensive and non-competitive on service delivery. Both of the above scenarios require radical change, but the benefits to injured workers and employers could be compelling.”

More on the current state of the workers compensation market in the upcoming October issue on Insurance Adviser magazine.