Page 4136 - Week 11 - Thursday, 17 Sept 2009

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Debate (on motion by Ms Hunter) adjourned to the next sitting

Workers Compensation (Default Insurance Fund) Amendment Bill 2009 (No 2)

Mr Hargreaves, pursuant to notice, presented the bill, its explanatory statement and a Human Rights Act compatibility statement.

Title read by Clerk.

MR HARGREAVES (Brindabella—Minister for Disability and Housing, Minister for Ageing, Minister for Multicultural Affairs, Minister for Industrial Relations and Minister for Corrections) (10.13): I move:

That this bill be agreed to in principle.

The Workers Compensation (Default Insurance Fund) Amendment Bill 2009 (No 2) is directed towards refining the operation of the default insurance fund within the ACT private sector workers compensation scheme to ensure that it remains a sustainable and viable safety net for injured workers. The bill will amend the Workers Compensation Act 1951 to restore the uninsured employer arm of the fund to its original statutory purpose and introduce revised funding arrangements for the fund which align with standard insurance practices.

As I previously advised this Assembly, the fund was created in 2006 as a result of the merger between two entities: the workers compensation nominal insurer and the workers compensation supplementation fund. The uninsured employer arm of the fund now performs the functions of the nominal insurer and provides a safety net of protection to workers who suffer a work-related injury but would otherwise be denied access to their statutory entitlements because of their employer’s failure to maintain appropriate workers compensation insurance arrangements. Simply put, the intent of the fund is to ensure that injured workers whose employers fail to take out a policy are not disadvantaged because of their circumstances and are treated the same as injured workers whose employer held a policy of insurance.

Unfortunately, earlier amendments in 2005 to the Workers Compensation Act have resulted in unintended anomalies that have moved the uninsured employer arm of the fund far beyond its intended purpose. Most significantly, eligibility to claim against this arm of the fund has been significantly broadened. One practical consequence is that some principal contractors are avoiding their responsibility to ensure that their subcontractors have appropriate workers compensation policies. Instead, when the cost of an uninsured subcontractor’s claim falls upon their policy, they seek indemnity from the fund. This shifts the burden from its rightful place and onto the shoulders of those employers who do comply with their obligations, who supported the fund via a levy and who do have a policy in place.

Clearly, the ability of principal contractors to avoid their statutory responsibility in these circumstances undermines the compliance objectives inherent in the Workers

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