On 29 March 2001, the Government introduced reforms to the New South Wales workers’ compensation scheme, through the Workers Compensation Legislation Amendment Bill 2001. The Bill was designed to amend the Workers Compensation Act 1987 and its companion act, the Workplace Injury Management and Workers Compensation Act 1998, to make extensive reforms to claims procedures, dispute resolution, commutation, lump sum compensation, common law damages and other matters.

The Bill was strongly attacked by the union movement, the legal profession and other stakeholders. The main concerns were: the proposed changes to the dispute resolution procedures (particularly changes to the role of the Compensation Court of New South Wales and the use of binding medical assessments); and amendments to common law damages and statutory lump sum compensation.

After negotiations with stakeholders, the Government agreed, on 21 May, to make alterations to the package of amendments and to refer the common law issues to a judicial inquiry, to be undertaken by Justice Terry Sheahan. After a breakdown in negotiations, the Government introduced a new amendment bill - the Workers Compensation Legislation Amendment Bill (No 2) - into the Legislative Assembly on 19 June 2001. This paper examines the Government’s 2001 workers’ compensation reforms, particularly the contentious reforms.

PART A examines the common law and the statutory workers’ compensation scheme in New South Wales. In Section One, the development of the common law remedy for workplace injuries caused by negligence is traced and the current common law, as altered by statute, is set out. In Section Two, the development of the statutory scheme is examined, followed by a review of the scheme as it operates currently.

PART B examines the Government’s 2001 reforms. Section One looks briefly at the perceived need for the reforms – WorkCover’s $2.18 billion deficit. Section Two provides an overview of the main aspects of Bill No 2. In Section Three, an examination of the contentious reforms, including a comparison between the original Bill and Bill No 2 is undertaken.


BACKGROUND
Over the years, New South Wales workers’ compensation legislation has been amended on many occasions, in various attempts to fine-tune the workers’ compensation scheme. It is currently facing a deficit of $2.8 billion. This year the Government intends to implement further reforms, some of which have proved to be extremely controversial. The Workers Compensation Legislation Amendment Bill 2001 was introduced into the Legislative Council on 29 March 2001. This Bill was designed to amend the Workers Compensation Act 1987 (‘the 1987 Act’) and its companion act, the Workplace Injury Management and Workers Compensation Act 1998 (‘the 1998 Act’), to make extensive reforms to claims procedures, dispute resolution, commutation, lump sum compensation, common law damages and other matters.

The Bill met with intensive lobbying from trade unions, the legal profession and other stakeholders. The main concerns were: proposed changes to the dispute resolution procedures, particularly changes to the role of the Compensation Court of New South Wales and the use of binding medical assessments; access to common law; and the proposal to use American Medical Association guidelines to assess permanent impairment of injured workers. Conversely, and not surprisingly, most aspects of the original Bill were supported by employer groups.¹

After negotiations with stakeholders, the Government agreed, on 21 May 2001, to make alterations to the package of amendments and to refer the common law issues to a judicial inquiry, to be undertaken by Justice Terry Sheahan.² The negotiations broke down and it became apparent that the Government was intending to introduce a revised Bill into Parliament that the unions claimed did not reflect the agreement they had with the Government. 19 June 2001 saw unprecedented union protests at the New South Wales Parliament that were intended to prevent the legislation from being introduced into Parliament. While the Legislative Assembly sat at the scheduled time of 2.15 pm the Speaker left the chair. When the Assembly resumed three hours later, the Workers Compensation Legislation Amendment Bill (No 2) (‘Bill No 2’) was introduced and read the first and second time. It was passed the following day.³

This paper examines the Governments’ 2001 workers’ compensation reforms, particularly the contentious reforms. By way of background material, Part A of the paper examines the common law and the statutory workers’ compensation scheme in New South Wales. In Section One, the development of the common law remedy for workplace injuries caused by negligence is traced and the current common law, as altered by statute, is set out. In Section Two, the development of the statutory scheme is examined followed by a review of the scheme as it operates currently.

Part B of the paper examines the Governments’ 2001 reforms. Section One looks at the perceived need for the reforms – WorkCover’s $2.8 billion deficit. Section Two provides an overview of the main aspects of Bill No 2. In Section Three, an examination of the contentious reforms, including a comparison between the original Bill and Bill No 2 is undertaken.

A. WORKERS’ COMPENSATION IN NEW SOUTH WALES
The New South Wales Parliamentary Library Research Service has published two papers concerning workers’ compensation in New South Wales.⁴ These papers trace the development of the statutory scheme, from the introduction of the first scheme in 1926, to legislative amendments to the scheme in 1999. The papers also follow the development of the common law remedies for workplace injury caused by negligence, and the statutory modification of the common law in this area. The information contained in those papers is summarised and updated in this Part.