Comcare review - background information paper
Review of self-insurance arrangements under the Comcare scheme
Department of Education, Employment and Workplace Relations
Background information paper
January 2008
Background information paper - PDF version (PDF 72kB)
About the review
The Department of Education, Employment and Workplace Relations has released this paper to allow individuals and organisations to prepare submissions to the review of self insurance arrangements under the Comcare scheme. This paper outlines:
- the scope of the review
- how the review will be conducted
- background information
- the terms of reference.
The Department wishes to receive information and comment on issues that participants consider are relevant to the terms of reference for this review.
Key dates
| Due date for written submissions |
29 February 2008 |
| Consultation completed |
31 March 2008 |
| Department’s report to Minister |
31 July 2008 |
Information
Submissions
Contacts
Scope of the review
The review will analyse arrangements in the Commonwealth scheme of workers' compensation and occupational health and safety, referred to here as the Comcare scheme, for corporations that apply for licences, or are licensed, to accept liability for, and/or manage, claims under the Safety, Rehabilitation and Compensation Act 1988.
How the review will be conducted
The Department will engage a consultant (from its panel of research experts) to lead the review and undertake consultations. Interested parties are invited to make submissions to the review.
Terms of reference
A copy of the terms of reference is available.
How to register an interest
It would assist in the conduct of the review if participants were to register their interest by email to ComcareReview@deewr.gov.au as early as possible. Registration is not essential however.
Submissions may be emailed to ComcareReview@deewr.gov.au
Submissions
Submissions should be concise, address the terms of reference and, where possible, contain relevant supporting information and/or data.
All written submissions will be published on the www.workplace.gov.au website. However, if you would like your submission to be treated as confidential, please ensure that you make a specific request in this regard. Please be aware that submissions made on a confidential basis cannot be referred to in the report.
Records of consultation discussion will not be published, although excerpts of transcripts, or abstracts, may be used in the final report.
Background
The Safety, Rehabilitation and Compensation Act 1988 (the SRC Act) establishes a statutory framework of workers' compensation for employers and employees in the Commonwealth jurisdiction, including corporations that are licensed to self-insure their workers' compensation liabilities. Non-licensed authorities, primarily Australian and Australian Capital Territory Government agencies, pay annual premiums to insure their liabilities.
The scheme of workers' compensation under the SRC Act is administered by the Safety, Rehabilitation and Compensation Commission (the Commission) and Comcare, and is commonly referred to as 'the Comcare scheme'. The Department of Education, Employment and Workplace Relations (DEEWR) has portfolio responsibility for Comcare and the Commission. Comcare advises the Minister for Employment and Workplace Relations (the Minister) on policy matters concerning the SRC Act.
Since 14 March 2007, premium paying agencies and corporations licensed to self-insure under the SRC Act have been subject to a single national workplace health and safety regime under the provisions of the Occupational Health and Safety Act 1991 (the OHS Act).
In the lead up to the 2007 federal election, the Australian Labor Party proposed a moratorium on the future granting of licences to corporations seeking to self-insure, until the arrangements in the Comcare scheme were reviewed.
On 11 December 2007, the Hon Julia Gillard MP, Minister for Employment and Workplace Relations, issued a media release formally announcing a moratorium on granting further self-insurance licences under the Comcare scheme, as well as the need for a review of the scheme. A copy is at Attachment B.
On 23 January 2008, the Minister released the terms of reference for the review. A copy of the media release is at Attachment C.
Self-insurance and the Comcare scheme
Self-insurance arrangements in the Comcare scheme were introduced to provide competitive neutrality for those corporations competing in the marketplace with Commonwealth owned, or formerly owned, businesses to ensure that the Commonwealth did not have an unfair advantage.
For a number of years, all of the self-insurers under the Comcare scheme were either owned or formerly owned Commonwealth authorities. Following the High Court's decision in Attorney-General (Vic) v Andrews [2007] HCA 9, which upheld the validity of the SRC Act's self-insurance provisions, a number of corporations sought to self-insure under the Comcare scheme.
There are currently 19 self-insurers under the Comcare scheme, with 15 corporations being declared eligible, although not yet granted a licence, and a further 11 applications for eligibility lodged. The names of corporations granted licences are on the Comcare website at http://www.comcare.gov.au/self_insurance.
The Australian Government aims to ensure that the Comcare scheme has structures that:
- are based on sound public policy principles;
- pose minimal financial risk or cost to the Commonwealth;
- allow for transparency in the self-insurance licensing process;
- provide effective controls, governance and accountability
- ensure self-insurers demonstrate best practice in occupational health and safety, rehabilitation and claims management;
- provide for appropriate and effective enforcement; and
- minimise impacts on the financial viability of state and territory workers’ compensation schemes.
The self-insurance process
The scheme provides that certain Commonwealth or former Commonwealth authorities and other eligible corporations may be granted a licence to self-insure. Under the licensing arrangements, self insurers become liable to pay compensation and other amounts under the SRC Act. There is also provision for self insurers to manage claims.
Licensing involves two stages:
- a declaration by the Minister under section 100 of the SRC Act that the applicant is an ‘eligible corporation’; and
- the grant of a licence by the Commission under Part VIII of the SRC Act.
Both steps are linked, but the decisions of the Minister and the Commission are made independently, so that a declaration of eligibility does not automatically lead to the grant of a licence.
Role of the Minister
Section 100 of the SRC Act provides that the Minister may issue a declaration of eligibility and states:
If the Minister is satisfied that it would be desirable for [the SRC] Act to apply to employees of a corporation that:
- is, but is about to cease to be, a Commonwealth authority; or
- was previously a Commonwealth authority; or
- is carrying on business in competition with a Commonwealth authority or with another corporation that was previously a Commonwealth authority; the Minister may, by notice in writing, declare the corporation to be eligible to be granted a licence under this Part.
To start the declaration process, a written request must be put to the Minister seeking a declaration of eligibility under section 100 of the SRC Act. Guidelines under section 100 (see the following section) are used by corporations to structure applications for eligibility and are used by the Minister when assessing their applications.
DEEWR assists the Minister by administering the declaration process.
Section 100 Guidelines
Upon receipt of an application from non-Commonwealth corporations seeking a section 100(c) declaration, the Minister has an obligation to consider whether the corporation should be declared eligible to apply to the Commission for the granting of a self insurance licence under the Commonwealth’s workers’ compensation scheme.
To assist in consistent decision making under the provision, and to provide guidance to applicants and potential applicants under section 100(c), the Minister may give consideration to the areas of competition and public policy principles described in the next section in deciding whether it is desirable for particular employees to be covered by the SRC Act.
Factors for Consideration
The threshold test for a non-Commonwealth corporation to be declared eligible is to satisfy the Minister that they are 'in competition' with a Commonwealth authority. This is prescribed by section 100(c) of the SRC Act.
In making this judgement on competition, the Minister may have regard to evidence provided by the applicant, or available in the public arena, in the following areas:
- the market in which the applicant and the Commonwealth authority operate, including the composition of the market and/or the market share of the applicant and the Commonwealth authority;
- the substitutability between the goods, services and other provided/produced by the applicant and those of the Commonwealth authority.
It is at the discretion of the Minister to make a judgement on the above areas or on any other factors the Minister considers relevant in the making of her decision.
In addition to assessing threshold competition issues, the Minister will evaluate broad public policy considerations when deciding whether to declare corporations eligible under section 100 of the SRC Act. This discretionary power allows the Minister to make a declaration if she is satisfied that it would be 'desirable for this Act to apply to employees of a corporation'.
The Minister may consider the following public policy principles:
- the likely impact on employees of the corporation to the grant of a licence
- the likely impact on the corporation to the grant of a licence
- the likely impact on the integrity of the Commonwealth scheme of workers’ compensation under the SRC Act
- the likely impact on the operations of the State and Territory Government workers’ compensation schemes.
In considering these principles, the Minister may also take into account:
- the size of the corporation (based on a minimum threshold of 500 employees); and
- the scope of the corporation's operation across jurisdictions (based on a minimum threshold of two jurisdictions); and
- where competition exists, whether this is a substantial part of the applicant's business.
The principles and threshold competition issues above are not intended to be exhaustive. Corporations, and other interested parties, are free to bring to the attention of the Minister any issues that bear on whether coverage under the SRC Act is desirable.
Review mechanism
A declaration under section 100 is a precondition to granting a licence under Part VIII of the SRC Act. Corporations applying for a declaration under section 100 would be expected to apply for a licence within a reasonable period of time after being declared eligible to be granted a licence. In the event that a corporation does not proceed with an application to the Commission for a licence to self-insure within twelve months of the date that a declaration has been granted, the Minister may review the need for the declaration and decide whether it should continue in force.
Role of the Commission
If a corporation is declared eligible by the Minister, it may apply to the Commission for a licence. The Commission considers applications and may grant a licence in accordance with sections 103 and 104 of the SRC Act. Section 104 sets out the criteria that an applicant must satisfy, that is:
- the applicant has sufficient resources to fulfil the responsibilities imposed on it under the licence; and
- the applicant has the capacity to ensure (where the scope of the licence so provides) that claims that are to be managed either by the licensee, or by another person identified in the licence on the licensee's behalf, will be managed in accordance with standards set by the Commission for the management of claims; and
- the grant of the licence will not be contrary to the interests of the employees of the licence whose affairs fall within the scope of the licence; and
- the applicant has the capacity to meet the standards set by the Commission for the rehabilitation and occupational health and safety of its employees.
A copy of the guidelines used by the Commission to make such an assessment can be found at http://www.comcare.gov.au/Guidelines-Licence_application_evaluation.
Conditions of licence
Under section 108 of the SRC Act, the Commission can impose conditions of licence on self-insurers. These can deal with financial viability and compliance capability issues, among other things. A sample condition of licence can be found at www.comcare.gov.au/self_insurance_ licence.
Monitoring and enforcement
Self-insurers under the SRC Act are subject to a monitoring regime, carried out by Comcare on behalf of the Commission, which includes compliance with the SRC and OHS Acts. This includes reporting on workers' compensation data, reporting on management systems reviews and improvements, reporting on performance standards, site auditing and procedural auditing.
Consultation between employers and employees
Self-insurance licence applications
Under Schedule 3, Part 2 of the SRC Regulations 2002, applicants for self-insurance licences are required to provide evidence of consultation with employees about their intention to apply for a licence. Examples of evidence include any written notice to employees or employee representatives of the intention to apply for a licence, any written responses to the notices and any minutes of any consultative meetings.
Workplace safety arrangements
The OHS Act adopts the approach advocated by the Robens Committee in the United Kingdom (1972). This involves the concept of shared responsibility for workplace safety, with a principal Act setting out general duties of care aimed to protect employees and others affected by activities at an employer’s undertaking. Broad duties are supported by regulations detailing requirements on specific issues.
Under the OHS Act, duties of care extend to employers, employees, manufacturers and suppliers in relation to plant and substances and persons erecting or installing plant in a work in a workplace; and a feature is participation by employees and their representatives in workplace safety issues. Part 2 of the OHS Act sets out the duty of care provisions.
The OHS Act makes a number of specific provisions for the involvement of employees and their representatives in workplace safety issues, including:
- Sub-section 16(d) requires employers to develop written health and safety management arrangements (HSMAS) in consultation with their employees. The sub-section also provides that the HSMAS must enable effective cooperation between the employer and the employees in promoting and developing measures to ensure the employees’ health, safety and welfare at work, provide adequate mechanisms for informing the employees about the arrangements, provide adequate mechanisms for reviewing the effectiveness of the arrangements and provide for a dispute resolution mechanism to address disputes arising in the course of consultations;
- Section 16A provides that employee representatives can represent employees in consultations to develop or vary health and safety management arrangements;
- Part 3 of the OHS Act provides for employees to select health and safety representatives to represent them at the workplace and sets out the powers and functions of those representatives. Part 3 also provides for the establishment at workplaces of health and safety committees which comprise representatives of both the employer and the employees.