News Item
WorkCover must pay its way
THE State Government finally is about to tackle the daunting task of bringing WorkCover's ballooning unfunded liabilities under control.
The politically unpalatable exercise is long overdue. A new report shows WorkCover's unfunded liabilities have reached $849 million. Without urgent action they will soon top $1billion.
While these liabilities would never have to be paid at one time, they still constitute a debt to WorkCover and, indirectly, to the Government. A continuing blow-out of the liabilities will eventually become an issue for international rating agencies in assessing South Australia's AAA credit rating.
There are only two ways to rein in the WorkCover debt increase premiums to employers which would have a negative impact on profits and ultimately employment opportunities or reduce worker benefits.
A report prepared for the Government by workers' compensation expert Alan Clayton is expected to recommend a cut in employer benefits.
This is a strategy which will put the Government on a collision course with unions. But the reality is that the Government has no choice.
This solution was recommended to the Government more than a year ago by the WorkCover board, headed by Bruce Carter.
At the time, the Government's reaction was to seek a further review by Alan Clayton.
The prevarication leaves the State Government and specifically the Premier, Mike Rann open to charges that in a federal election year it was too timid to make the necessary tough decisions.
During an extended election campaign fought, in part, on claims the former federal Coalition government had reduced worker entitlements, Mr Rann presumably thought it would have been both hypocritical and potentially damaging to Labor for the State Government to cut workers' compensation benefits to workers in SA.
It leaves Mr Rann open to the charge that he acted in Labor's federal political interests, rather than the best interests of the State.
But with the federal election decided and an SA election still two years away, the hard option can be implemented with limited political fallout.
The Opposition will rightly accuse the Government of sitting on its hands and ignoring the WorkCover unfunded liabilities.
Having unduly delayed the necessary decision, the Government must not buckle to union pressure and consider the alternative option of increasing premiums.
SA's worker compensation debt is the worst in the country. Its premiums - a direct burden on employers - are among the highest.
They impinge on SA's competitiveness compared with other states and are a deterrent to investment and employment.
To increase that burden at a time when the state's employment is expanding on the back of mining and defence production would be political and economic folly.
source: http://www.news.com.au/story/0,23599,22085873-29277,00.html?from=public_rss
