A 10% cut in WorkCover premiums to 1.8% of payroll was arguably the best achievement unveiled by the Bracks government in yesterday’s Victorian budget, but Treasurer John Brumby took the opportunity to have a big spray at the Beattie Government for not protecting injured workers.
On producing his graph showing that Victorian WorkCover premiums were now the second lowest in Australia and well below our nearest rivals, NSW and South Australia, Brumby explained away Queensland’s amazingly low premiums of just 1.4% by declaring “you wouldn’t want to get injured in Qld, it’s a dog of a scheme”.
Joh didn’t give a stuff about injured workers and it’s ironic that this comment by Brumby was made on the same day that Queensland Labor Premier Peter Beattie was eulogising the late crooked premier at his state funeral in Kingaroy.
Workers’ compensation schemes often spell trouble for Labor governments because labour lawyers and unions get together to exert pressure and milk the system for all it’s worth. The Kirner government handed Jeff Kennett a scheme with premiums of 2.8% and an unfunded liability pushing $3 billion. The Kennett government quite ruthlessly cleaned this up and the early signs from the Bracks government weren’t good when they sacked Workcover CEO Andrew Lindberg, now the successful CEO of AWB Ltd, reintroduced common law and increased premiums to plug a blowout in unfunded liabilities.
However, since James Mackenzie, a Labor mate with lots of private sector insurance experience, was installed as chairman a couple of years ago, WorkCover has knuckled down to its core business of efficiently processing claims.
There was no reason for the premium cut to be announced in the budget when Workcover is not something that relies on state funding or pays a dividend. The premium cut is a $170 million benefit to Victorian employers and it wasn’t as if the government was about to rip a dividend out of WorkCover.
However, the same can’t be said for the Transport Accident Commission, the compulsory third party insurance scheme in Victoria which is also chaired by James Mackenzie, who Jeff Kennett installed as CEO for three years in the mid 1990s. The TAC has milked its monopoly profits to deliver between $3-4 billion to the budget in dividends and capital returns since 1992. Overall dividend and tax equivalent payments to the Victorian budget from government businesses are budgeted to hit a five-year high of more than $1 billion in 2005-06 and once again the TAC will be the biggest contributor.
There is a fundamental hypocrisy in Steve Bracks passing on lower Workcover premiums to Victorian employers while not doing the same for Victorian motorists who have the lowest accident rate in the world and are budgeted to pay an astonishing $729 million in traffic fines next year.
The government has not put a dollar into the TAC but can get away with raiding billions because it already had the lowest premiums in Australia and provides the best benefits. It is hard to imagine a better public policy outcome than this compulsory government monopoly which is a huge milch cow while also delivering great benefits, low premiums and safer roads. If the other states had any sense they would kick the competing private insurers out of their third party schemes and hand it over to the TAC.