Page 4563 - Week 12 - Thursday, 15 October 2009
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arrangements or their employer has a policy, but the insurer which issued the policy has collapsed or is otherwise unable to pay the claim. Simply put, Mr Speaker, the fund accepts financial responsibility for these claims so that injured workers are not disadvantaged by circumstances over which they have no control.
The fund was always intended to act as a support for workers who have been the victim of business practices beyond their control. However, it was never intended that the fund operate as a support mechanism for principal contractors who fail to discharge their due diligence obligation to ensure that their subcontractors have adequate workers compensation. Nor was it intended that the uninsured employer arm of the fund should become the insurer on risk for third party or contributory negligence claims.
Under current provisions, the fund faces liability for cross-claims where, for example, an employee claims compensation for hearing loss contributed to by the nature and conditions of their past and present employment and the relevant former employers are either uninsured or unable to find evidence of an applicable insurance policy. Unintended consequences of changes to the Workers Compensation Act 1951 in 2005 have resulted in the expansion of the class of persons who are eligible to claim compensation against the fund.
As a result, principal contractors are able to seek indemnity from the fund when the cost of an uninsured subcontractor claim falls upon their policy and the fund is being accessed in relation to third party claims. Under the current provisions, it is possible for a principal contractor to seek to recover the cost of an uninsured subcontractor’s claims from the fund, notwithstanding that they have the necessary compulsory insurance policy in place and that their liability arises as a direct result of their failure to act with due care and diligence in engaging an uninsured subcontractor.
This anomaly has resulted in the fund subsidising the cost of the reckless actions of principal contractors and by extension, Mr Speaker, it impacts financially on honest employers whose contributions fund its operations. The government cannot continue to allow disreputable principal contractors to avoid their statutory responsibilities and shift the consequences of their actions onto responsible employers in the ACT business community.
The Workers Compensation (Default Insurance Fund) Amendment Bill 2009 (No 2) will allow the uninsured employer arm of the default insurance fund to achieve its intended purpose and restrict anyone other than those who truly require government support—injured workers of uninsured employers.
Mr Speaker, as I mentioned when tabling this bill, the Workers Compensation (Default Insurance Fund) Amendment Bill 2009 (No 2) is also directed towards ensuring that the default insurance fund remains a sustainable and viable safety net for injured workers. The bill introduces amendments that will implement a sustainable funding model to ensure that the fund is able to pay the claims of injured workers with uninsured employers.
Importantly, these amendments will align the funding model with standard insurance practice, reflecting the fund’s role as a default insurer within the ACT scheme, ensure
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