Fenton Darien: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
Fenton Darien: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
[Volume:660;Page:9144] 
DARIEN FENTON (Labour) 
: 
 I want to address clause 14 which is about experience and risk rating. Clause 14 allows for regulations that would establish experience rating and risk sharing in respect of the work account. It states that such systems may include no-claims bonuses higher or lower levies and claim thresholds. Proponents of this amendment will argue that it provides employers with an incentive to keep the claim numbers down and that I think is what we have been hearing from the previous speaker. But unfortunately keeping claim numbers down is not necessarily the same thing as keeping injury numbers down. 
Experience rating has been criticised on the basis that it gives rise to the likelihood that employers will seek to access the benefit from the experience rating system by encouraging workers not to lodge claims or to disguise workplace injuries as non-work injuries. If experience rating is also linked to the total cost of an employer’s claim this will give rise to the likelihood of undue pressure being placed on workers to return to work. 
At the Transport and Industrial Relations Committee we heard from many many submitters who have been involved in this and who were involved during a previous time—in the 1990s actually—when we did have experience rating and their evidence from the 1990s and from overseas indicates that experience rating is a crude tool that cannot accurately reflect the safety performance of employers or improve their performance and it can lead to pressure being applied to workers not to report their injuries. That is the real concern of the Labour members. 
There are real questions about whether financial incentives work in improving worker safety. During the select committee process we asked about this and we got information about it but the Labour members are not satisfied with the answers. We draw the attention of the stocktake to a current consultation being conducted by WorkCover South Australia which is reviewing its penalty bonus system. 
The authors of the discussion document who worked with PricewaterhouseCoopers to gain a better understanding of the system found that there were only very weak links between the bonus penalty rate and claims outcomes. No evidence was found to suggest that the bonus penalty scheme has delivered better health and safety outcomes for workers. The authors also conducted a literature search and concluded that the majority of findings in the literature review were negative towards the experience rating systems. Also studies supporting experience rating tended to be less robust than those against. 
So as I said we heard a significant number of submissions about concerns in respect of experience rating. If we go back to the last time we had this kind of provision under New Zealand legislation we have to go back to the 1990s when the last National Government had that kind of provision under private insurance. The experiences were pretty grim actually. What we heard from submitters and from the experiences of people who were involved in that at the time was pretty inevitable because the profit incentives overrode everything. 
There were arguments about who was covered and who was responsible and workers got caught between those arguments. There were many instances of spurious rejections as firstly workers had to prove that the accident happened while they were on the job and not outside of their job and secondly workers had to jump through a range of hoops time and time again. Many had huge battles to get their claims heard at all. 
I am trying to find as I speak the claims the National Government made back in the 1990s about experience rating and what that actually meant. Members of that National Government talked about the wonderful nirvana we would have where workplaces that had lower accident rates would somehow have lower levies and those that did not would have higher levies. That did not happen of course.