Debate resumed from 24 February 2010.

Mr MIKE BAIRD (Manly) [10.19 a.m.]: I lead for the Opposition in debate on the Workers Compensation Amendment (Commission Members) Bill 2010. While the Opposition recognises that changes need to be made to the way in which workers compensation is managed in this State, concern has been expressed from one end of the State to the other about workers compensation, its impost on businesses in this State, and how unpredictable and unreliable it is due to ongoing costs. Opposition members are concerned about the changes proposed in this bill primarily because of their uncertain cost implications. It is not clear who will pay for the costs that undoubtedly will occur as a result of the Minister being given the green light to appoint additional deputy presidents and full-time arbitrators to the Workers Compensation Commission.

Importantly, the Minister must provide an assurance—a fundamental assurance—as a prerequisite to any change, that there will not be an increase in the cost of workers compensation premiums as a result of these proposed amendments. When the Minister in the upper House was asked to address these issues he said that he would seek an answer from the responsible Minister. Opposition members have not yet received an answer. Ultimately, we want the Minister to answer the questions that have been asked and that remain unresolved. What is the total cost of this scheme? That is a pretty simple question to answer. Will the Minister give us an assurance that there will be no increase in premiums as a result of the proposed amendments? The Opposition reserves its right in the upper House to oppose the bill if that assurance is not given.

The Hon. Greg Pearce, the shadow Minister in the upper House, who will lead in debate for the Opposition in that place, will await resolution of those two critical issues. I strongly believe it is time for someone to stand up for businesses in this State. If the amendments seek to improve the administration of workers compensation, businesses need an assurance that it will not impact on their premiums. The Workers Compensation Commission was established in 2002 to resolve disputes between injured workers and employers over claims for workers compensation. I believe that the commission deals with around 13,000 matters each year, which is a significant number.

In 2008 a review was instigated into the commission's structure and, at the same time, a survey was conducted to evaluate the effectiveness of the commission. This bill is a direct response to the findings of that organisational review. Today I could refer to countless examples but I will refer to only one. At the moment the system is not working for individuals with claims. Pat Theoret from Port Macquarie has more than 60 members in a support group who have been facing lengthy and stressful compensation battles. Last October she wrote to me and said:

It is to be remembered that all of the people, I have spoken to, are terribly damaged. The initial physical injury may have been healed but, they are very distrusting of ever receiving adequate help, because of the way they have been mistreated by insurers, employers, specialists, workcover and sometimes unions. They hope, but don't believe, the system will change as it has been allowed to operate with such disregard of the Act, for a long time.

I state in response to her concerns that we understand that problems are besetting victims attempting to lodge workers compensation claims. We must make the system more efficient to reduce that stress and to ensure that victims are given the help and support they need. While Opposition members are open to structural changes to increase the effectiveness of the commission and its fairness in dealing with disputes, they remain unconvinced that giving the Minister free rein to appoint senior staff is necessarily the way to achieve that. The appointment of these full-time positions might be more efficient and might help to break down some of the backlogs and delays, but two fundamental concerns remain. First, the cost of workers compensation to businesses across this State remains too high. Second, victims, such as those to whom I referred in Port Macquarie, are suffering in their attempts to lodge workers compensation claims as it is taking too long and it is causing a great deal of stress.

We have the worst of both worlds: uncompetitive premiums and outcomes for people who are struggling to lodge claims and who are not getting the attention they deserve. The objects of this bill are, first, to enable more than two deputy presidents to the Workers Compensation Commission at any one time; and, second, to enable the appointment by the Minister of senior arbitrators to the commission. Currently, the legislation provides for the president of the commission to appoint a limit of only two deputy presidents on a sessional basis. However, schedule 1 substitutes section 368 of the Workplace Injury Management and Workers Compensation Act 1998 to remove that restriction on only two deputy presidents and to give the Minister the authority to appoint an unlimited number of deputy presidents and senior arbitrators on salary for a five-year term. These amendments, which contain inherent risks, give the Minister cart blanche to appoint his or her mates to some of those positions.

The Government must apply a merit-based system. I ask the Minister whether it is the Government's intention to apply merit in some of these appointments. The Leader of the Opposition, Barry O'Farrell, articulated the need for a public service commissioner. This is a role that he or she could fill to ensure that merit is applied when making appointments. I will not go through all those examples where merit was not applied in particular appointments. However, the community deserves to have people appointed to the public service payroll on merit, and merit alone. The Minister, in his agreement in principle speech, initially told us that there would be one-off capital costs. I ask the Minister to elaborate on that statement, as salaries are not capital costs; they are recurrent costs. Will a new Taj Mahal office be created? I am interested in the meaning of the term "one-off capital costs".

The Opposition is concerned to ensure that the Minister gives us an assurance that premiums will not be impacted. I ask the Minister also to explain the meaning of "one-off capital costs". An open-ended increase to the number of deputies and new senior appointments undoubtedly will increase costs in the arbitration process. How will that be funded? We are happy to support such a change on the basis that the Government gives us an assurance that there will be no increase in premiums. According to a report of the Institute of Public Affairs entitled "Bearing the Burden 2008", New South Wales already has the highest WorkCover premiums. That is another reason why businesses are moving interstate and jobs are being lost in New South Wales. I cannot emphasise enough the Opposition's concerns: first, the burden on business; and, second, the burden on victims and those who have suffered serious injuries who seek workers compensation.

Despite the Minister's statement that the amendments outlined in this bill will make the commission's operation more cost-effective, how will that work? On the last occasion that the State Labor Government made changes to workers compensation, former Minister Joe Tripodi issued a media release dated 7 April 2009 entitled "Workers compensation premiums will not increase." At least he understood it would have an impact on businesses across this State. Despite those press releases, after June 2009 a number of businesses had much higher workers compensation bills. It is interesting to note that that occurred at the height of the global financial crisis. I seek a detailed response from the Minister when he replies to debate on this bill. Will he assure us that workers compensation premiums will not increase and that those costs will not be passed on to businesses?

ACTING-SPEAKER (Mr Thomas George): Order! The Minister for Ports and Waterways will have an opportunity to contribute to the debate. I ask him to direct his comments through the Chair.

Mr MIKE BAIRD: Last July business owner Gerard Kelly wrote to me and said:

The current change—although Joe Tripodi stated no increase—will have a crippling effect on businesses, if not either to force them to close or alternatively decrease number of employees, due to the increased levels of premiums payable. The majority of employees will not be aware of the increase until they receive the premium notice from the insurer. When operating a business in NSW the 2nd most expensive cost is that of Workers Compensation Premiums. IF SOME ONE could explain how a business in NSW can be expected to accept such changes and continue to operate it would be appreciated.

That is the sentiment of business owners at the coalface, and I hope the Minister understands that. Gerard Kelly and other business owners are looking for leadership in a response from the Minister to make workers compensation costs in New South Wales competitive with what is available in other States, so our businesses are not disadvantaged, but also an assurance from the Minister that victims will be given priority in the processing of their claims to enable them to receive required care. The Opposition is pleased that in his agreement in principle speech the Minister acknowledged the need for the Government to reduce reliance on contractors and temporary staff. The Government has shown a general lack of fiscal discipline. The Government's expenditure of a minimum of $470 million-odd on temporary staff is a clear indication that it has lost focus on fiscal discipline. The Auditor-General has identified that fact time and time again. In this context the Minister appears to have acknowledged it and is attempting to get that problem in his portfolio under control. The Opposition sees that as a step in the right direction.

The structure of the Workers Compensation Commission seems to be similar to that of the Consumer, Trader and Tenancy Tribunal. There are so many stories abounding about the Consumer, Trader and Tenancy Tribunal that several horror movies could be made from them. The Opposition holds concerns about how the tribunal operates, given the experiences that consumers have had with it. The Opposition is hopeful that the Consumer, Trader and Tenancy Tribunal will not to be held up as a model of good public governance. The Government has failed to outline the cost implications of the legislation and has not given assurances that premiums will not rise. The Opposition seeks a response from the Minister on both of those issues, and reserves its position with the shadow Minister in the upper House. If the proposed amendments to workers compensation cause an increase in premiums, the Opposition will not support them. Businesses should not have to shoulder that burden, and the victims require a more efficient process. If an efficient process is established that does not cost more in premiums, the Opposition will be happy to support it.

Debate adjourned on motion by Mr Robert Coombs and set down as an order of the day for a future day.