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- 4 December 2003
Workers Compensation Legislation Amendment (Trainees) Bill
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Second Reading
The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [8.08 p.m.]: I move:
That this bill be now read a second time.
This bill gives effect to a measure I announced in my Budget Speech earlier this year. That is why I am dealing with the bill instead of my esteemed Assistant Treasurer.
Reverend the Hon. Fred Nile: And so you should.
The Hon. MICHAEL EGAN: Yes. From 1 January next year, employers taking on trainees will be required to pay their workers compensation premiums, just as employers of apprentices already do. The New South Wales Government has paid the workers compensation premiums of trainees since 1989. After remaining static for years, the number of trainees in New South Wales rose dramatically from 1997, nearly quadrupling to 56,000 since then. The cost of premiums met by the Government has risen from $4 million in 1997-98 to a projected $47 million in the current financial year. Actuarial advice indicates that the cost of the scheme will continue to rise to more than $70 million a year.
Not only is the scheme becoming unaffordable, it is fundamentally flawed because it removes from employers an important financial incentive to maintain workplace safety. Employers who do not pay workers compensation premiums are quarantined from the financial consequences of injuries to their staff. The evidence shows that large numbers of employers do not care if their staff are injured, provided they do not have to pay.
A recent report by PricewaterhouseCoopers found that the rate of workplace injuries among trainees has risen by 65 per cent since 1997-98. That is not a 65 per cent increase in the absolute number of injuries; it is a 65 per cent increase in the number of injuries for every 1,000 trainees. What is worse, the rate of serious injuries to trainees has more than doubled in four years. At the same time, the rate of injuries among the general work force fell by more than 10 per cent.
WorkCover analysis of one large company's claims shows that the injury rate for trainees was more than double that for other staff. As long as employers are protected from the financial consequences of inaction on safety, these problems will continue, and quite possibly worsen. The incentive is also open to abuse, with some employers enrolling existing employees—and in some cases long-term employees—as new trainees. One company claimed its entire existing staff as trainees. Some of them had been on the company’s payroll for up to 20 years.
Some people have argued that if employers have to pay trainees' workers compensation premiums they will offer fewer traineeships. This argument falls down when it is appreciated that incentives remain for employers to take on genuine trainees. For example, employers get access to training wage rates, exemptions from payroll tax, Federal subsidies of up to $3,300 for each trainee and State and Federal Government support for training provided by registered training organisations.
The State Government will continue to provide travel and accommodation subsidies to trainees and apprentices who are required to travel more than 120 kilometres to attend training. Last year this cost $2.6 million. Trainees and apprentices will also continue to receive public transport concessions. Employers taking on new trainees will be required to pay their workers compensation premiums from 1 January 2004. This will put trainees and apprentices—for whom employers already pay workers compensation—on exactly the same footing.
As a transitional measure the Government will continue to pay the premiums of existing trainees until 31 December 2004. I might point out that Victoria is the only other State providing a concession—and it is very limited—and Victoria also applies payroll tax to trainees. I commend the bill to the House.
The Hon. MICHAEL GALLACHER (Leader of the Opposition) [8.11 p.m.]: I cannot believe what I see, let alone hear. The Workers Compensation Legislation Amendment (Trainees) Bill has extremely important ramifications for the future employment of trainees and apprenticeships in New South Wales. Our completely uncaring Treasurer has left the Chamber after delivering his second reading speech. His Labor colleagues—who purport to represent the workers of this State and the young people who look forward to getting jobs in trades, for example—must be asking themselves, "Are we actually about to vote in favour of this bill after what we have just heard?" Even more interesting is that the Minister for Commerce—who is supposedly at the vanguard of future reforms of workers compensation, the so-called champion of that reform—utters not a word. He did not deliver the second reading speech on this bill. He did not say a thing about the bill. He probably will make a few comments now that I have challenged him to do that. Then again, he may not.
The Minister cannot seriously look honourable members in the eye and say that he believes what the Treasurer has just said. The Treasurer spoke about unscrupulous and uncaring employers, indeed employers who engage in criminal conduct, and they put at risk the lives and wellbeing of their employees. That is what we have just heard from the Treasurer. But he said that this bill would put a stop to those unscrupulous, uncaring and criminal actions. The Special Minister of State has been silent on this legislation, doing the best impersonation of Harpo Marx that I have seen in a long time—not to mention Groucho, the Minister for Transport Services. For years we have been told that the tough approach of this Government in fining employers who do the wrong thing, cracking down on them and dragging them before the courts, is a measure of the willingness of the Government to take the stick to unscrupulous employers. Tonight we are told that this bill is the measure needed to stop employers from putting young people at risk. Of course the bill will do just that—because this legislation will mean young people will not get a job. If an employer has to make a call, he will look to the lowest level in his organisation to make the decision.
The Hon. John Della Bosca: You have got to do better for employers.
The Hon. MICHAEL GALLACHER: Ah, the Special Minister finds his voice when his mate is back. His laryngitis has gone now that his little chum has returned, giving him enough ticker to want to have a go. Minister, bring it on in your speech! What the Treasurer said—
The Hon. Michael Egan: Was good.
The Hon. MICHAEL GALLACHER: You might say it was good, but your nose got bigger and bigger as we watched you deliver your speech—because I don't believe you believed what you were saying.
The Hon. Michael Egan: I am very sensitive about my snoz!
The Hon. MICHAEL GALLACHER: You resemble my comments, right! What the Treasurer has done is put yet another large obstacle in the way of many young people getting a traineeship in this State. We now have something like 40,000 traineeships. If the Treasurer left this place and took the time to walk around the streets and speak to those who employ young people, they would tell him about the many barriers to bringing young people on board. Employer after employer is telling us about their concern to give young people an opportunity. But the Treasurer puts in their way a massive barrier. Worse, the Minister in this Chamber who purports to represent the best interests of workers compensation has simply kowtowed to the Treasurer, who acts on a whim to keep his budget in surplus—at the expense of employers and employees.
The Special Minister will have to speak in this debate now because he will have no credibility if he allows the Treasurer to run amok. The Special Minister will have to get to his feet and paddle with all his might to try to get out of the mess that the Treasure has put him in. New South Wales employers, who make every effort to bring young people into their business, will now have to overcome another massive hurdle that the Treasurer puts in front of them. I would like to hear from the Country Labor representative in this Chamber. The Hon. Christine Robertson will have a difficult task explaining to people in country New South Wales how this bill will ever assist young persons who hope to be trainees.
When it comes to workers compensation, this is without doubt one of the worst bills that I have seen in the years that I have been here debating workers compensation. It is foolish legislation. It may well rake in a few bucks for a lazy Treasurer desperate to gather into his coffers as much money as he can. If it is not the clubs, it is employers in general. The biggest victims of this legislation will be the young people of 16, 17 and 18 years of age who look forward to getting a traineeship in the building trade or in the many other fields of industry. Their best means of getting that opportunity is the employer who says, "I will give you a start." Until now, the workers compensation charges for traineeships have been borne by government, but now the New South Wales Labor Government turns its back on those employers. As a consequence, employers will have to look at the bottom line.
I apologise for being so passionate in my criticisms of this legislation. I just cannot believe that the Government introduced this bill. The Treasurer announced this proposal in his Budget Speech. But I thought and hoped that commonsense would prevail and this would be one of those proposals that would slip under the radar and disappear. I just cannot believe that the last Christmas present that employers will get in 2003 from the Government will be the responsibility of telling their trainees, "Don't turn up after 1 January next year." The Opposition is pleased and proud to oppose this bill.
Reverend the Hon. Dr GORDON MOYES [8.18 p.m.]: I support the Government's Workers Compensation Legislation Amendment (Trainees) Bill. This bill requires employers, other than self-insurers, to take out certain policies of insurance to cover their liability for workers employed by them. I am very pleased to know that the number of trainees in New South Wales has increased so dramatically over the past five years—nearly quadrupling in that time, to 56,000. I note from the speech delivered by the Treasurer that one company claimed that its entire existing staff were trainees, even though some of them had been on the company payroll for twenty years. As I know a little bit about engaging trainees, I know that to be an illegal practice. It should not be countenanced by the Government or by anyone else.
Until my successor at Wesley Mission is appointed, I am responsible for employing 165 trainees out of a staff of 3,500. I do not believe there should be a disproportionate number of trainees to full-time paid staff. The documents I have signed indicate that no trainee shall take the job of any existing full-time staff member. I encourage the training of unskilled people, who might otherwise not have a job, to improve their capacity for future training. It is a new kind of apprenticeship. I appreciate that not all young people are able to undertake the full length of training and this type of traineeship provides some training. In addition, the trainees for whom I am responsible must also undertake compulsory training in occupational health and safety. They must also undertake a compulsory course in basic computer skills so that when they complete their traineeship they can type out their own curriculum vitae.
The Hon. Michael Egan: Would I be able to undertake that course?
Reverend the Hon. Dr GORDON MOYES: There would be areas within the Wesley Mission where even you would lack the skills. We would be delighted to have you, but we would not allow any full-time staff member to be displaced to take you on. The Federal Government should be encouraged to also embrace this measure. The traineeship initiatives of the Federal Government have been excellent and I congratulate the Federal Government on funding many traineeships. On a number of occasions in this House I have raised questions with the Minister for Industrial Relations on industrial safety. Likewise, Wesley Mission instructs every trainee in occupational health and safety matters. It is the responsibility of every employer to ensure that young trainees are trained in occupational health and safety. Employers should also contribute to their insurance and WorkCover premiums. We do not agree with rorts. Workers compensation premiums should be paid and trainees should be fully covered. We commend the Government for introducing the bill.
The Hon. Dr ARTHUR CHESTERFIELD-EVANS [8.23 p.m.]: This bill is a great disappointment. When the bill was foreshadowed in the 2003 budget concern was expressed about the repercussions of such a move on the employment of trainees. Youth employment has, and remains, one of the continuing failings of both State and Federal governments. In 1984 or 1985 I undertook a public service fellowship on workplace absence management. The motivational factor to workplace absence was the extent to which people had control of their own destiny. Education was important to providing flexibility and giving people confidence to be assertive in their workplaces.
I researched the matter and found that universities were not responsive to those who wished to undertake training. People were required to be fully enrolled, to undertake part of a three-year course and to attend a day course because of limited night courses. TAFE colleges and the Workers Educational Association provided better facilities. At that time the philosophy centred on privatisation. Indeed, the Water Board paid for many courses that were not targeted and were merely feelgood, expensive rip-offs. It is important that workers continue to receive training. With the corporatisation of Sydney Water 150 people attended one of the best apprentice training colleges in the State, the college at Potts Hill near the reservoir at Birrong. As a cost-saving measure that college was closed and the Government made no further contribution towards training young people. For a quick buck it sold or leased the land, despite the need for further training. Indeed, a training levy was introduced but, unfortunately, there were rorts in the system with managers undertaking expensive weekend courses at fashionable venues under the guise of corporate bonding.
The Hon. John Della Bosca: Did you go?
The Hon. Dr ARTHUR CHESTERFIELD-EVANS: Yes, I went to a couple. I was being trained at the time.
The Hon. Michael Egan: What were you being trained at?
The Hon. Dr ARTHUR CHESTERFIELD-EVANS: I made a significant contribution through the non-smokers movement. I set up a smoke-free, workplace, employer education program—it was a shame I did not get to the Treasurer at that time—which cost a mere $13,000 out of the New South Wales levy. We produced a kit and a movie for Franklins. Indeed, our efforts encouraged Franklins to be smoke-free. The program I created was good value indeed. The Water Board also was smoke-free with the best occupational health and safety fitness program of any statutory authority in this country, and perhaps the world. I put together that cost-effective program, but that is another story.
The Hon. John Della Bosca: Why did the Water Board pay for the Franklins movie?
The Hon. Dr ARTHUR CHESTERFIELD-EVANS: It didn't. I did that little effort in my spare time. In 1987 only 4,000 people were trainees; now there are 56,000. The Government should be proud of that achievement. Instead, it highlighted the fact that in 1997-98 the cost of workers compensation premiums was $4 million whereas the projection for 2003-04 is $47 million. One could argue that the scheme has been successful and that the amount is not considerable for that number of trainees. It is false economy not to provide incentives for young people to find work or undertake training. It is the same as preventative medicine: $1 spent in training may save $6 to combat crime or drug abuse.
One argument in support of discontinuing the scheme has been that the system is open to abuse. The Parliamentary Secretary in the other place said that some company employees had been listed as trainees for 13 years. Those people may be training to further their careers, although many were probably abusing the system. However, a few rorts do not justify dismantling the whole system. The smart option is to stop the rorts. If there are rorts in the building industry and phoenix companies through the misclassification of people when premiums are discussed, there are probably a large number of rorts with workers compensation premiums. The Government should ascertain whether it is merely an indicator of the broader problem of avoidance of workers compensation premiums. Instead it is shooting the messenger and not dealing with the major problems. Many unions would agree with that statement.
The Government should be better informed on traineeships and the people paying workers compensation premiums. Perhaps consideration should be given to limiting the training concession for three years to a single person if the Government believes the system is being seriously rorted. That is only one way to control the situation. The Government should know where the money is going and supervising the scheme is only a small percentage of the overall cost. The way the Government introduced the bill is to be condemned. It was introduced in the other place on 19 November without even being listed on the business paper. Notice of the introduction of the bill was given at six o'clock, the debate came on at 10.52 p.m. and the bill was passed at 11.10 p.m. It is outrageous that a bill that will have such a profound effect on employment opportunities for young people in this State was dealt with on notice and in 20 minutes. In the additional briefing note to the bill that was circulated on 2 December the Treasurer advanced the argument:
As employers do not pay workers compensation premiums for trainees they have less incentives to maintain workplace safety. A bad safety record for trainees cost them nothing.
Once again, that is no reason to get rid of the concession. That is not to say that the Treasurer has any record to speak of on occupational health and safety. The Treasurer interrupted me when I said that the Fox Studio does not have proper occupational health and safety controls. The studio does not come under the control of either the council or WorkCover because it has an exemption. It comes under the control of the Treasury, where it has no right to be. To this day people continue to complain of fumes from the site. The response is that nothing can be done because when the development was approved no-one was sure what chemicals would be used in the workshops. Who would pass a development application without knowing what was to be used in a workshop adjacent to a residential area? Clearly, the site should have had an industrial rating and an industrial level of supervision.
To get a quick buck the Treasurer passed the workshop more or less without normal occupational health and safety controls. When I pointed this out, a ridiculing piece about how sun cream causes cancer hit the papers. The Treasurer was upset by the article and he got some coverage in the Sun-Herald because, as it turns out, Alex Mitchell does not like sun cream. The sad fact is that the Treasurer has no idea about occupational health and safety. He cannot see past the dollar. He does not value occupational health and safety, and that is the problem. He does not understand remedial health measures, and that could be associated with his tobacco use. I do not want to bring personal prejudices into this debate, but they are often relevant.
Workers compensation premiums as such are not an incentive to maintain workplace safety. A broader and better understanding of how to maintain workplace safety is needed. This is not a reason to get rid of the concession. It is not even a financial issue. It is an enforcement issue for WorkCover. If, as the Treasurer quoted in his briefing note, WorkCover has the figures indicating a company's high rate of injuries, then WorkCover should attend that workplace to investigate, prosecute breaches of workplace safety, and advise the company what to do about it.
The incidence of trainee workplace injuries should not be used as an excuse to bleat about not paying trainees workers compensation premiums. I am not aware of any consultation with the TAFE section of the Teachers Federation, which is one of the groups involved in this sort of training, or employer groups. The Teachers Federation has told my office that it was opposed to the bill, as one would expect. My office spoke to Garry Brack, who is opposed to the legislation because it is a big disincentive to employing trainees. If young employees are not cost-effective in the short term, obviously anything that offsets the on-costs is to be welcomed. That is a major factor in the employment of young people. The bill is short-sighted economics. There has been no consultation about it and it will harm the employment prospects of young Australians. The Australian Democrats oppose it.
Ms LEE RHIANNON [8.33 p.m.]: The Greens are concerned in a general sense that inadequate government support is being given to the recruitment and training of apprentices and trainees. There are skills shortages in some areas, and they can be addressed only by the training of new workers. In addition, apprenticeships and traineeships are an important pathway to full-time work for many young people. The bill affects trainees only and will remove the existing exemptions that allow employers to avoid taking out workers compensation insurance for certain trainees. The Government claims that this is necessary to address employer abuses and because training workplace injuries have been rising, as employers have little incentive to improve safety. We are prepared to accept that these are legitimate issues that need to be addressed. However, the Greens are concerned that this current incentive to take on trainees is being removed without any new incentives being offered. We can accept that the status quo needs to be reformed, but surely there is a way to achieve both objectives.
The Government claims that employers will still have plenty of incentive to take on trainees: training wage rates, New South Wales payroll tax exemption, Federal subsidies and so on. But the point is that all these incentives already exist. This bill removes an incentive but does not replace it. It will be interesting to watch what impact the bill has on trainee numbers. If employers and unions approach the Greens to say that the situation has deteriorated I will certainly come back to this House and ask the Government to remedy its failure. Although the Workers Compensation Legislation Amendment (Trainees) Bill is specifically about trainees, whenever I see the words "workers compensation legislation" I am reminded of the fateful legislation that was the massive sell-out by this Labor Government. It is something that will need to be amended in years to come. It is not possible to think of workers compensation legislation without reflecting on that time.
The Hon. MICHAEL EGAN (Treasurer, Minister for State Development, and Vice-President of the Executive Council) [8.35 p.m.], in reply: I thank members for their contributions to the debate.
Question—That this bill be now read a second time—put.
The House divided.
Ayes, 23
Mr Breen
Mr Burke
Ms Burnswoods
Mr Cohen
Mr Costa
Mr Della Bosca
Mr Egan
Ms Fazio | Ms Griffin
Ms Hale
Mr Hatzistergos
Mr Jenkins
Mr Kelly
Mr Macdonald
Reverend Dr Moyes
Reverend Nile | Mr Oldfield
Ms Rhiannon
Ms Robertson
Mr Tsang
Dr Wong
Tellers,
Mr Primrose
Mr West |
Noes, 11
Dr Chesterfield-Evans
Mr Clarke
Mrs Forsythe
Mr Gallacher | Miss Gardiner
Mr Gay
Mr Lynn
Mrs Pavey | Mr Ryan
Tellers,
Mr Colless
Mr Harwin |
Pairs
| Mr Catanzariti | Ms Cusack |
| Mr Obeid | Ms Parker |
| Ms Tebbutt | Mr Pearce |
Question resolved in the affirmative.
Motion agreed to.
Bill read a second time and passed through remaining stages.
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