A significant increase in common law claims has seen Queensland’s workers’ compensation scheme accumulate an operating deficit of $1.3 billion
A significant increase in common law claims has seen Queensland’s workers’ compensation scheme accumulate an operating deficit of $1.3 billion over the past two financial years, prompting talk of a system overhaul.
According to HopgoodGanim Lawyers, a discussion paper has been released by Queensland’s Department of Employment and Industrial Relations contemplating major changes for the scheme.
Currently, Queensland has a dual scheme under the Workers’ Compensation and Rehabilitation Act 2003.
This means significant statutory benefits are available to injured workers on a ‘no fault’ basis and ‘unrestricted access to common law damages’.
HopgoodGanim explains the common law aspects of this scheme have historically set Queensland apart, as all other states (except the ACT) impose a threshold workers must meet before they can sue their employer at common law for damages.
Despite having the lowest average premium rates in Australia (at $1.15 per $100 of wages paid, a massive 17 percent less than the next lowest state, Victoria) and maintaining full access to common law damages, Queensland’s scheme has historically run at a surplus.
However, a combination of the GFC, which savaged WorkCover’s investment returns to $800 million, and significant increase in common law claim numbers and costs, has severely affected the affordability of the scheme.
As a result, the operating deficit of $1.3 billion has had to be absorbed by WorkCover’s ‘investment fluctuation reserve’.
As outlined by HopgoodGanim Lawyers, there are two main ways an entity can sustain viability in such circumstances: increase income or decrease expenses.
The WorkCover Queensland Board, which has responsibility for administering the scheme, has made several proposals for achieving these aims, including:
- Progressively increasing the average premium rate (from the present $1.15 to $1.40 per $100 of wages paid by 2017-2018)
- Introducing a common law threshold, whereby only workers with a whole person impairment of 10 percent or 15 percent can sue for damages
- Altering short-term statutory wage payments for workers with ongoing impairment following the injury.
Alternative proposals have also been made by stakeholders, such as making it easier for employers to defend common law claims or increasing the employer excess.
The Queensland Government is now inviting comment on its discussion paper, titled ‘The Queensland Workers’ Compensation Scheme: Ensuring Sustainability and Fairness’.
Closing date for submissions is March 24.