Stay safe at work WorkSafe Victoria Annual Report 2017
Annual Report 2017
Letter to Minister Contents
September 2017 About WorkSafe 2
Robin Scott MP Strategy 2017 4 Minister for Finance 1 Macarthur Street Report from the Chairman East Melbourne Victoria 3002 and Chief Executive 6 Looking to the future 10 Dear Minister Our Board and organisation 12 I am pleased to submit the 2016/17 WorkSafe Victoria Annual Report for presentation to the Parliament, as required by section 46 of the Financial Safety 14 Management Act 1994. Return to work 24 Yours sincerely Service 28
Sustainability 34 Paul Barker Chairman Culture and place 40 Financial report 46
Appendix 1: Prosecutions 105
Appendix 2: Agent performance results 112
Appendix 3: Self-insurance report 120
Appendix 4: Governance and compliance 126
Appendix 5: WorkSafe’s response to Ombudsman Victoria’s recommendations 140
Appendix 6: Disclosure index 144
WorkSafe Victoria Annual Report 2017 1 About WorkSafe About WorkSafe
Our vision: WorkSafe: Victorian workers • strives to prevent workplace injuries, illness and fatalities returning home safe every day. • provides benefits to injured workers and helps them return to work Our mission: Actively working • enforces Victoria’s occupational health and safety and accident compensation laws (including with the community to deliver relevant Commonwealth laws) • provides reasonably priced outstanding workplace safety workplace injury insurance for employers and return to work, together • manages the Victorian workers compensation scheme with insurance protection. • provides an emergency response service that operates 24 hours a day every day across Victoria. Our statutory obligations are covered in the following Acts of Parliament: • Occupational Health and Safety Act 2004 – health, safety and welfare in the workplace • Workplace Injury Rehabilitation and Compensation Act 2013 – workers compensation and the rehabilitation of injured workers • Accident Compensation Act 1985 – workers compensation and the rehabilitation of injured workers • Dangerous Goods Act 1985 – explosives and other dangerous goods • Equipment (Public Safety) Act 1994 – high-risk equipment used in non-work-related situations • Workers Compensation Act 1958 – workers compensation prior to 1985.
2 WorkSafe Victoria Annual Report 2017 WorkSafe provides a range of Our stakeholders Occupational Health benefits to injured workers, including: and Safety Advisory Committee Strong engagement with The Occupational Health and Safety • weekly payments stakeholders helps us achieve our Advisory Committee (OHSAC) is • medical and allied health treatment vision and mission. The Stakeholder established under the Occupational Engagement Framework sets out • ambulance transport Health and Safety Act 2004 (OHS the principles, processes and • hospital treatment Act) to advise the WorkSafe Board methods we use. Our stakeholders about promoting healthy and safe • personal and household help include employee and employer working environments and the representatives, medical and allied • impairment lump sums operation and administration of health providers, legal practitioners • common law damages. the OHS Act and regulations. and industry bodies. Our WorkSafe also provides a range collaborations with them take many The purpose of the OHSAC is to of income support, lump sum forms and extend across many focus on strategic issues, providing compensation and expenses contexts. Their invaluable expertise an important interface between reimbursement to dependents informs our strategy, policies and WorkSafe’s operational activity and of workers who die as a result program development to help deliver the WorkSafe Board. of a work-related injury. the best outcomes for Victorians. WorkCover Advisory Committee Stakeholder committees mandated The WorkCover Advisory Committee Funding by legislation are the Occupational (WAC) is established under the Health and Safety Advisory Workplace Injury Rehabilitation and We are funded by WorkSafe Committee and the WorkCover insurance premiums paid by Victorian Compensation Act 2013 (WIRC Act) Advisory Committee. Other working to advise the WorkSafe Board about employers. In 2016/17 this totalled groups and committees include: $2.214 billion. This was augmented workers’ entitlement to compensation, by investment income totalling • Occupational Health and return to work, rehabilitation, and the $1.661 billion. Safety (OHS) Stakeholder operation and administration of the Reference Group WIRC Act and relevant regulations. • Rehabilitation and Compensation Working Group • Major Hazards Advisory Committee • Legal Liaison Group • Return to Work Working Group.
WorkSafe Victoria Annual Report 2017 3 Strategy 2017 Strategy 2017 At the end of WorkSafe’s five-year corporate strategy, Victorian workplaces are safer than ever.
Over the last five years, there has The scheme remains financially of mental injuries in the workplace, been a substantial drop in the number sound. However, supporting injured which presents more complex return of Victorians injured at work. Worker workers to return to sustained and to work issues. This impacts the and employer satisfaction with the safe work remains a challenge and scheme but more importantly, it services they receive both from we did not meet our five year target. impacts the people who need the WorkSafe and its agents is strong. This is mainly due to the increase support of our compensation system.
Baseline Year 4 Year 5 Year 5 Strategy Performance 11/12 result 15/16 result 16/17 target 16/17 result 2017 target achieved Safety Claims per million hours 8.23 6.95 6.62 6.43 10–15% 22% worked1 improvement improvement
Four-week claims per million 3.24 3.02 2.88 2.97 10–15% 8% hours worked1 improvement improvement
Return to work Not yet at work six months 21.90% 19.77% 19.47% 21.53% 10–15% 2% after injury improvement improvement
Service Employer service 86.7% 90.4% 91.3% 90.3% 87–90% 90.3%
Worker service 83.1% 87.2% 88.2% 88.0% 85–90% 88.0%
Community service 70.9% 71.6% 73.8% 70.5% 71–75% 70.5%
Sustainability Actuarial release $182m ($135m) $50m ($169m) $350m $118 m cumulative
Breakeven premium 1.282% 1.236% 1.238% 1.262% 1.200% 1.262%
Performance from insurance $385m $280m $329m $233m NA2 $233m operations
Culture and place Sustainable engagement 77 79 82 75 Top quartile 2nd quartile index Australian National Norm (ANN)
1. Safety results for 2011/12 differ from those reported in previous annual reports due to an ABS change to labour force data prior to January 2014. 2. Set by the annual budgeting process.
4 WorkSafe Victoria Annual Report 2017
Our Strategy 2017
performance o r overview:
Safety Biggest safety improvement ever – 22% reduction in claims per million hours worked
Return to work Service Result influenced by growth in Service is a key focus mental injuries of Strategy 2030
Sustainability Culture and place Scheme remains Successful relocation financially sound of first group to Geelong
WorkSafe Victoria Annual Report 2017 5 Report from the Chairman and Chief Executive
Report from the Chairman and Chief Executive This year marks the end of Strategy 2017 and the commencement of our next long-term strategy: Strategy 2030.
We can be proud of our achievements Safety over the last five years. We set ambitious targets across our strategic During the five year strategy to priority areas and we have made 2017, there has been a 22 per cent some great improvements, although reduction in claims per million hours some challenges remain. The scheme worked. This is the largest reduction remains financially sound with on record and particularly significant consistently low premiums. We have as this comes at a time when the built an extensive body of research number of hours worked in Victoria to inform Strategy 2030. It will enable is growing. This is a strong indication us to make progress in the areas that employers and workers are where our results are still in need making safety a priority in the of improvement. Our approach will workplace. We are well placed be to design our service based on to meet the National Australian the needs of workers and employers. Work Health and Safety Strategy It will improve the way we deliver 2012–2022 target of a 30% services, enabled by technology, and reduction in claims. will allow us to offer tailored products, The result for our measure of more services and support that focus on serious injuries; four-week claims prevention of injury and illness and per million hours worked, is being return to work. To achieve this we influenced by a rise in mental injury will become prevention-led, working claims, particularly across with the Victorian community to Government. actively prevent injury and illness from occurring in the workplace and in preventing further harm during recovery.
Above from top: Paul Barker, Chairman Clare Amies, Chief Executive
6 WorkSafe Victoria Annual Report 2017 Mental wellbeing in the workplace is Over the last five years, tragically Return to work an increasingly challenging area for 115 people lost their lives at work, employers across the state to 37 were working on farms and 27 We continue to experience manage. We are committed to were construction workers. We have challenges in achieving improvements supporting employers to create expanded our programs in both these in return to work rates and our results workplaces with a focus on health high risk industries. Our Farm Safety over Strategy 2017 reflect this. and wellbeing. We are working in campaign alerted the agriculture This year, 78.47 per cent of injured partnerships across Government, industry that incidents still happen, workers were able to return to work with healthcare providers and with even to experienced farmers. We built within six months of their injury, below Victorian workplaces to address the on this with the recent quad bike our target of 80.53 per cent. The underlying issues, while educating safety campaign, which highlighted increase in mental injuries, which employers and workers on how to just how dangerous quad bikes can present more complex challenges for recognise the risks. be. This was combined with a $6 return to work, has been a significant million Government rebate to fund driver of this result. There are a Up to 95 per cent of healthcare safety improvements to farmers’ quad number of initiatives that are being workers have experienced violent bikes. Our dedicated construction deployed to assist workers with or aggressive behaviour at work. program provides direct oversight of mental injuries to recover from their We are working across Government construction safety in Victoria. It has injuries and safely return to work or and with the community to reinforce delivered increased inspections find meaningful new work. the message that violence towards looking at falls prevention, workers is never acceptable. As well We are taking an integrated approach musculoskeletal injury prevention, as raising awareness, we are focusing to workplace mental health and demolition, and has supported the on early intervention and engagement wellbeing, which will improve the Safe Worker and Traffic campaign in at all levels across industry. support offered to workers. The conjunction with VicRoads. sooner an injured worker can get Building on the success of the We must continue to work towards back to safe and sustainable work, WorkHealth initiative, a new program our vision of Victorian workers the better it is for the worker and is being launched that will focus on returning home safe every day. their family, for the employer and making mental wellbeing in the for the community as a whole. workplace a priority for everyone. It builds on the previous investment in Over the five years of Strategy 2017, health promotion and gives employers we have implemented initiatives to tools and strategies to promote health change the conversation about as well as minimising risks to mental returning to work after injury. The health in the workplace. Health Benefits of Safe Work program, supported by the Getting Back campaign, commenced in 2014 and supports general practitioners and physiotherapists in applying the health benefits of good work evidence to their clinical practice. The new certificate of capacity focuses on what a worker can do, and providers are now consistently using this form.
WorkSafe Victoria Annual Report 2017 7 Report from the Chairman and Chief Executive
Service We have listened to feedback from Sustainability employers about our premium We have met our five year Strategy processes and have made a number Maintaining a financially sustainable 2017 service delivery target for of improvements. Premium notices scheme is fundamental to our workers and exceeded our target are issued earlier to assist employers ongoing success and we continue for employer service. Our community in planning and have been made working to maintain it. We can be service result, which measures the shorter, clearer and easier to proud of our efforts in this area. Victorian community’s perceptions understand. An additional five per Performance from insurance of our education and enforcement cent discount option for early operations was $233 million. activities, is below our five year target. payment was introduced in 2015 This result was influenced by the We are improving the way we deliver (which is in addition to the three per full year actuarial valuation which services to injured workers and this cent early payment discount option increased our projected claims will continue into our next long-term still being offered), and now over cost by $169 million. strategy. We have made positive half of employers select one of Despite the continuing challenges changes to the way we manage the advance payment options. of common law and an increase claims to reduce complaints and Over our five year strategy, we in more complex injuries our scheme disputation. We must ensure we are successfully built a digital system remains financially sound. We providing the best service possible for that stores millions of documents maintain consistently low premium injured workers and their families as including invoices, certificates of rates, with one of the fairest and they recover from a workplace injury. capacity and many others that are most affordable premium rates in the Public awareness campaigns important in managing a claim, country. We have been able to do this contribute to the community service enabling real-time access to while maintaining compensation and measure, by delivering safety and documents and reducing printing. rehabilitation benefits to support prevention messages across the This contributes to a faster and more injured workers in their recovery and community. Throughout Strategy efficient claims management process return to work. The funding ratio is 2017, our approach to raising for injured workers and employers. 119 per cent and is above the target awareness has expanded to include It has been a significant technology range of 82.5 to 117.5 per cent. targeted channels. We use digital project for WorkSafe and will support and social media to address specific future digital strategies, allowing for audiences, such as young workers integration of digital channels as they and culturally and linguistically diverse are developed. communities, with tailored messages. We are increasingly adopting an ‘always on’ approach to campaigns, so that audience reach and impact are greater.
Our next long-term strategy, Strategy 2030 will strengthen our focus on preventing injury and illness, and on preventing further harm to injured workers.
8 WorkSafe Victoria Annual Report 2017 Culture and place Strategic direction We cannot achieve these goals on our own. Input and support from Our employee engagement results Our next long-term strategy, Strategy the Victorian community is critical have not met the target for Strategy 2030 will strengthen our focus on to the successful implementation 2017. We know we need to continue preventing injury and illness, and of the strategy. Our commitment to to focus on our own people’s on preventing further harm to injured collaborating with our stakeholders experience working at WorkSafe, workers by taking a broader view of remains strong and we relied on particularly through the changes with prevention. Becoming prevention-led extensive input from employers, our Geelong relocation and the means working with the Victorian workers, the broader community announcement of Strategy 2030. community to actively prevent and our key stakeholder groups workplace injuries and illness from We are encouraged by the to help shape the strategy and occurring. It is more than preventing commitment of our people throughout our future direction. incidents and injuries – it is also the period of change surrounding the preventing further harm if an incident relocation of our head office to or an injury does occur. Geelong. In the last year, the first Thank you group of 160 positions successfully The strategy is focused on improving There are many people who have relocated and by mid-2018, more WorkSafe for the benefit of workers, contributed to making Strategy 2017 than 700 workers will be based in our employers and the Victorian a success. We would like to thank the new Geelong headquarters. We community. It is important that Board, our senior management team continue to offer a range of supports WorkSafe continues to strengthen and everyone who works at WorkSafe to our people to assist them through its role as a regulator, and maintain for their commitment to prevention. the process. benefits and safety standards for We thank our responsible Minister, workers and employers. We will work Our relocation to Geelong is a Robin Scott MP, Minister for Finance. towards progressively engaging the catalyst for us to transform how we We also thank our stakeholders for community in the prevention of injury do business. We are taking advantage their extensive input and work during and harm at work and creating of new technology and incorporating 2016/17, and with helping to shape a community expectation that this into our new head office. Our our thinking on Strategy 2030. We workplace injury or illness is not new building will feature leading will continue to work with you all to acceptable in any workplace, at accessibility and environmental ensure safety at work. any time. sustainability design, and will provide an environment that supports the Our priority is to ensure we’re health and wellbeing of our people. providing the best possible services and support to Victorian workers Paul Barker and employers; tailoring them to Chairman the people who use them.
Clare Amies Chief Executive
WorkSafe Victoria Annual Report 2017 9 Looking to the future
Strategy 2030 and Geelong, a different way of working
Integrating into Geelong The relocation of our headquarters to Geelong is an exciting opportunity for WorkSafe and the Geelong community. The relocation will bring jobs and growth to the region and strengthen the social insurance sector in Geelong. By mid-2018, more than 700 WorkSafe employees and contractors will be based at our new headquarters. We are actively seeking to contribute to the local community. We are investing in local events and organisations to build the region and to encourage people to build a life in Geelong. We are part of a growing social insurance network in Geelong with the TAC and the NDIA. We are reintroducing a graduate program in 2018 to build capability across Geelong in social insurance. We will also establish traineeships within WorkSafe from 2018 that will help address disadvantage in the region. The relocation of our head office to Geelong will enable WorkSafe to transform by: • taking advantage of new technology and incorporating it into the build • creating a building that leads the way in accessibility and sustainability • initiating and driving cultural change.
10 Strategy 2030 There are seven strategic themes that have informed the development of the key initiatives, the future operating model, future processes and the high-level transformational roadmap required to deliver Strategy 2030.
WorkSafe’s Strategy 2030 The Transformation Program will we communicate with workers, transformation will be delivered establish longer-term foundational employers, and the broader through two programs. pieces, including business and community by redeveloping technology requirements, business our website and by simplifying The Products and Services design and process mapping. our guidance material. Innovation Program will deliver We have identified early opportunities innovation capability and enhanced for change. We will simplify the way data analytics.
Seven strategic themes of Strategy 2030
Prevention-led, from the prevention of injury and illness in Victorian workplaces, as well as the prevention of further harm during recovery
WorkSafe will be an organisation focused on the needs of workers and employers
Simplifying WorkSafe’s Offering tailored products, business to improve your services and support experience with us to workers and employers
Sharing goals and Leading the way and outcomes with the adapting quickly community
WorkSafe will use sophisticated analytics and data
WorkSafe Victoria Annual Report 2017 11 XXOur Board and organisation Our Board and organisation
Board Board members at 30 June 2017 Paul Barker Chairman B.Bus, FCA, AGIA and ACIS, MAICD Appointed September 2015 Clare Amies Chief Executive BA, BSW, MSW, Grad. Cert. Public Policy, AMP (Harvard), MAICD Appointed March 2015 Ross McCann AM BEng (Chem) (Hons), FIChemE Appointed October 2013 Neil Lucas PSM, JP Appointed August 2014 Dr Samantha Smith DBA, MA, BBus (Mktg), GAICD Appointed October 2016 Doug Kearsley BSc(Math) (Hons), GDip (Operations Research) Appointed April 2017
12 WorkSafe Victoria Annual Report 2017 Organisation Health and Safety chart Marnie Williams Executive Director As at 30 June 2017 Insurance Shane O’Dea Executive Director
Legal Services Leanne Hughson General Counsel
Finance Roger Arnold Chief Operating Officer and Chief Financial Officer
Chief Executive IT Shared Solutions Clare Amies Ashley West Head of ITSS
Chief Risk Officer Mark Linter
External Affairs Linda Timothy Executive Director
Strategy David Watson Executive Director
Innovation Marion Nagle Executive Director
People and Culture Cheryl Woollard Executive Director Joint TAC/WorkSafe collaboration
WorkSafe Victoria Annual Report 2017 13 Safety
Safety More Victorians are returning home from work safely than ever before, and this is a direct result of Victorians’ commitment to making workplaces safer.
QUAD BIKE SAFETY CAMPAIGN: Three per cent of Victorians work on farms yet almost thirty per cent of workplace deaths occur on them. The quad bike safety campaign aimed to raise awareness that quad bikes are one of the main causes of serious injuries and fatalities on Australian farms. A new risk assessment tool enables farmers to identify their risk of rollover while the Quad Bike Safety Rebate encourages the take-up of known safety solutions. 14 Results Our approach The Inspector Coaching Capability program provides behavioural Victoria achieved a record safety As Victoria’s OHS regulator, capability training as part of an result in 2016/17. Claims per million WorkSafe aims to prevent workplace inspector’s early development. It hours worked reduced by 7.5 per cent injury, disease and death. We apply trains inspectors to adopt a more to 6.43, the best result yet. Four-week a constructive compliance approach consultative communication style claims per million hours worked, to prevention; changing behaviours and to tailor their approach to suit which gives an indication of severity and attitudes through a mix of the situation. and complexity, reduced by 1.7 per encouragement and deterrence. cent to 2.97. The total number of We support employers and workers As a modern regulator, we apply claims decreased in the year by 443 to improve workplace health and a risk-based approach, identifying or 1.7 per cent. safety by educating, encouraging, the industries and hazards that are facilitating and rewarding compliance. the highest risk of causing harm. Tragically, there were 21 fatalities We have developed and evolved this in 2016/17. We use marketing campaigns, approach over time and it supports sponsorships, targeted our strategic business planning communications programs and for the allocation of resources. industry events to foster community We apply tools and interventions engagement to support and enact that are the most appropriate to the workplace safety and prevention. We circumstances and that will achieve work closely with our stakeholders the best result. to inform our strategic direction. We provide incentives in the form of premium discounts and grants as Total annual standard claims well as awards and public recognition for best practice OHS. We use information and education to assist employers to comply with OHS laws, while ensuring there are appropriate consequences for breaches. The Health and Safety Inspectorate provides information and education to show workplaces how to comply with OHS laws. We deter breaches by inspecting for compliance and enforcing non-compliance. We investigate and prosecute those who do not comply.
11 12 1 1 1 1 12 1 1 1 1 17
Mental wellbeing We use an integrated approach to A range of initiatives are in place mental wellbeing in the workplace, to promote mental health and Twenty per cent of applying a mix of primary, secondary wellbeing in the workplace and Australians are expected and tertiary interventions to promote to support those who are injured. positive mental health, reduce (see page 17) to experience a mental workplace risks, and provide health condition each year, targeted support and assistance making mental health for those affected by stress disorders. This is based on research an issue for workplaces. and resources developed by Deakin This is reflected in our University, Phoenix Australia, the safety results. Black Dog Institute and the Royal Australian College of General Practitioners.
WorkSafe Victoria Annual Report 2017 15 Safety
Raising awareness In 2016/17, major safety public awareness campaigns and sponsorships included:
Occupational violence and Recognising this is a community-wide issue, WorkSafe, Ambulance Victoria and the aggression (OVA) in healthcare Department of Health and Human Services joined forces to launch a major Victorian public campaign, ‘It’s Never OK’ awareness campaign that made it clear that violence and aggression against healthcare workers is never OK. The campaign aims to: increase awareness of the prevalence of OVA in the healthcare sector, shift attitudes so people do not believe OVA is part of the job for healthcare workers and increase the belief that extreme acts of violence as well as ‘less extreme’ acts of aggression are all unacceptable. The campaign seeks to drive action by encouraging the community to STOP the behaviour, healthcare workers to REPORT the behaviour, and employers to PREVENT the behaviour and VALUE their workers. Quad bike safety campaign Quad bikes are one of the main causes of serious injuries and fatalities on Australian farms. A new risk assessment tool enables farmers to identify their risk of rollover and encourages the take up of known safety solutions. The Quad Bike Safety Rebate funds quad bike rollover protective devices or alternative work vehicles. Young workers campaign This campaign encourages workers to take action and speak up if they feel unsafe. It was a wholly digital campaign which received 325,000 views and 2.3 million Facebook impressions, driving an almost 900 per cent increase in unique visitors to the young worker webpage. Post campaign surveys revealed that 73% of young workers felt more confident to speak up as a result of viewing the campaign. A young worker safety tip card pack was developed and sent to 3,500 employers in high risk industries. Enforcement ‘Really Bad Day’ This campaign is focused primarily at employers and aims to increase awareness that campaign WorkSafe inspectors will be visiting workplaces (anywhere, any day, anytime) and enforcing the law to help keep workplaces safe. The campaign encourages employers to be proactive and take action to prevent workplace incidents. It enables people (especially employers) to take action themselves with tools and resources to make safety in their workplace a priority every day. Christmas Safety campaign The two months leading up to Christmas have historically been the most dangerous time of year for Victorian workers. This awareness campaign was launched due to an increase in the number of workplace fatalities leading up to the Christmas period, and reiterates the importance of keeping safe at work during this dangerous time of the year. Smaller campaigns A number of smaller campaigns including Mother’s Day, Father’s Day and ‘Jobs at home day’ raise awareness of the importance of staying safe at work. Sponsorships WorkSafe commenced a sponsorship with the Melbourne Victory Football Club as a major sponsor and official community partner in February 2017.
WorkSafe is the naming rights sponsor of the Victorian Country Football League and the Victorian Country Netball League, raising the profile of workplace health and safety across regional Victoria.
WorkSafe’s premier sponsorship with the AFL Western Bulldogs Football Club gives WorkSafe access to directly engage Melbourne’s communities in the western metropolitan region – home to a large number of high risk industries – about health and safety issues. Health and Safety Month For the first time ever, and after 23 years of running Health and Safety Week, WorkSafe hosted Health and Safety Month in October 2016. Over 80 seminars were run across 25 locations throughout Melbourne and regional Victoria and were attended by around 6,000 people. The theme of the event was ‘planning for tomorrow’ and covered a range of topics including occupational violence and aggression, manual handling, construction, young workers, mental health and culturally and linguistically diverse groups.
16 WorkSafe Victoria Annual Report 2017 Mental wellbeing Victorian Public Sector Mental An innovation grant will fund Health & Wellbeing Charter programs for workers who are (continued from page 15) Public sector leaders have made vulnerable by the industry Mental injuries are more committed to drive and support they work in, for example, workers mental health and wellbeing in in public facing roles and workers likely to be complex and their workplaces by delivering in industries that are in transition. to take more than four education and training for leaders, WorkSafe will fund and manage weeks to resolve. line managers and workers to help the program, which will be launched them identify risks to mental health in 2018, in partnership with The following initiatives are in and promote mental wellbeing. the Department of Health and place to promote mental health Interdepartmental collaboration Human Services. and wellbeing in the workplace and on occupational violence is an Occupational violence to support those who are injured: important element. Consistent and aggression performance indicators will be used Public Sector OHS Leadership by each department to measure Frontline workers are being Group supported by the Inter- improvement, and benchmark subjected to unacceptable Departmental Committee against similar organisations. behaviour at work and it’s impacting Established in 2015, this group A public awareness campaign to their health and wellbeing. These fosters a commitment to healthy tackle violence against health care workers are from a range of and safe workplaces in the public workers commenced in June 2017. industries including health, aged sector with a focus on mental care, disability, youth services, health and wellbeing. A new program focusing on education, law enforcement, retail, mental health and wellbeing hospitality and security. One quarter In October 2016, the group A new five-year $50 million program of all mental injury claims are made endorsed an initiative for the public will empower employers to make by healthcare workers. They are sector: the Mental Health and mental health a priority in the nearly five times more likely to lodge Wellbeing Charter. workplace. It aims to build mentally an occupational violence claim than The next phase will broaden healthier workplaces for a safer, other workers. the program to include other healthier, engaged, more resilient We are working across government agencies and frontline and, ultimately, more productive government to protect workers services and will cover more risks workforce. The initiative will deliver from occupational violence and to mental wellbeing. a ‘one-stop shop’ for workplace aggression. Part of this is to raise mental health and wellbeing and awareness through a campaign will include a free, interactive online that encourages healthcare platform for businesses to access workers to report incidents and the latest advice, research and reminds the community that it’s support. It will allow employers never OK to commit acts of to conduct a mental health check violence or aggression against on their business, employ specially healthcare workers. tailored support programs and link like-minded businesses together.
WorkSafe Victoria Annual Report 2017 17 Safety
Recognising excellence WorkHealth • Grants to support programs to improve safety for workers with a The WorkSafe Awards are held Improvement Networks focus on workplace bullying and annually, and celebrate best practice The WorkHealth Improvement young worker safety, and and innovation in workplace health Networks pilot program supported 16 supporting injured workers to return and safety. In 2016/17, there were public hospitals and 15 manufacturing to safe work. The Victorian Trades 28 finalists made up of Victorian employers to make headway on Hall Council’s Young Workers businesses, health and safety complex workplace issues including Centre provides a hub for representatives and individuals. mental health, musculoskeletal counselling, legal advice and disorders and safety culture. This education about workplace safety WorkSafe Award winners was done in partnership with the and has received positive feedback Department of Health and Human from stakeholders. OHS Achievement Award: Corrigans Services and the Victorian Chamber • Grant funding to support the Arts Produce Farms of Commerce and Industry. WorkSafe Wellbeing Collective pilot program, will continue to use the key features Health and Safety Representative of an Arts Centre Melbourne initiative, the Year: Kelly Christie, Victoria Police of the program. These include delivered in partnership with applying an integrated approach Entertainment Assist. This initiative Health and Safety Invention of the Year: to health and safety, adopting involves a consortium of Victorian Lend Lease Building Contractors P/L a continuous improvement model arts and cultural organisations for the Telescopic Handrail System, and using established networks and Scott Automation & Robotics for whose shared vision is to effect the X-Ray Primal System of workplaces to reach employers. better mental health and wellbeing for Victorian performing arts Best Solution to a Specific Workplace workers. Health and Safety Issue: M C Herd Funding to improve Pty Ltd Small and medium employer workplace health and support Best Solution to a Manual Handling safety Issue: Bendigo Health • The OHS Essentials Program In 2016/17, WorkSafe continued provides free, independent OHS Commitment to Workplace Health and to financially support a number consultancy services to assist small Wellbeing: Eastlink of initiatives designed to improve and medium sized businesses (less Worker Return to Work Achievement workplace health and safety than 200 employees) to improve Award: Dan Casey, Cervus Equipment including: safety and assist compliance with OHS legislation. Return to Work Coordinator Excellence: Stakeholder support Melissa Johnson, Outlook Vic Inc • Funding to assist those workplaces Injury prevention funds Leading Return to Work Practice relying on quad bikes to upgrade • WorkSafe provided funding to by an Employer: The Royal Children’s the equipment with roll-over the Victorian Trades Hall Council Hospital protection or to purchase for the OHSRep website, which alternative work vehicles. provides important guidance and • Personnel to coordinate and support to OHS health and safety engage on OHS issues on behalf of representatives. key employee and employer representative organisations. • Grant funding to the Gippsland Asbestos and Related Diseases Support/Asbestos Council of Victoria to provide support and advocacy for people in the Latrobe Valley affected by asbestos.
18 WorkSafe Victoria Annual Report 2017 Targeted hazard Safe design Asbestos interventions Workplace structures, layouts and The dangers associated with work processes can be designed asbestos are well known. We Highlights from our targeted hazard to eliminate the risk of harm at its continue to inspect workplaces with program this year include: source. WorkSafe works with industry, in-situ asbestos including public and providing guidance and information, private schools, child care facilities, Manual handling conducting audits and researching universities and TAFEs, a sample To address injury from hazardous the current state of practice. The Safe of councils, and workplaces where manual handling we target the Design Information Hub launched in inspectors identified in-situ asbestos. employer in their duty to review April 2016. A nationally consistent In 2016/17, we conducted 385 and revise their risk controls after ‘Guide for Managing Workplace inspections of workplaces where a musculoskeletal disorder injury. Health, Safety and Welfare in Supply removal was occurring. Through over 1,000 inspections, Chains and Networks’, an initiative On a national level, WorkSafe chairs WorkSafe has required employers of the Heads of Workplace Safety the Heads of Workplace Safety to implement improved risk controls Authorities, covers best practice Authorities Imported Materials with to stop the reoccurrence of principles and helps participants Asbestos Working Group, providing musculoskeletal disorders from understand the cumulative impact a nationally coordinated response the same tasks. of design on the safety of workers. to the detection of illegally imported Workplace visits addressed hazards WorkSafe has also targeted high asbestos. WorkSafe is also a member associated with forklifts and traffic risk industries including health and of the national Asbestos Safety and management in the warehousing and social assistance, meat processing, Eradication Council. manufacturing, transport and storage industry. Occupational disease storage to address hazardous Dangerous goods manual handling. Aligned with the Australian Work In August 2015, WorkSafe Health and Safety Strategy 2012 – commenced a five year strategic 2022, the Occupational Disease program of inspection projects to Program covers cancers (including address increasing risks associated skin cancer), asthma, contact with the storage, handling and dermatitis and noise-induced transport of dangerous goods. This hearing loss. includes improving coordination with other government bodies that are Eight new noise control guidance involved in the transport of dangerous documents were developed, providing goods across Victoria. significant advances in technical information available. A program of workplace visits in manufacturing accompanied this guidance. Guidance on sun protection for outdoor workers was developed in collaboration with the Cancer Council of Victoria (SunSmart). Inspector training accompanied this guidance. Inspector training was conducted on contact dermatitis focusing on chromates in construction, wood dust in furniture manufacturing, baker’s flour in bakeries and chemical and wet work in the hairdressing industry.
WorkSafe Victoria Annual Report 2017 19 Safety
Targeted industry Construction Earth resources interventions and WorkSafe targets the construction The implementation of the Hazelwood industry because of the high risk Mine Fire Inquiry recommendations statutory programs of injury and death that workers and has been completed. Strategic Highlights from our targeted industry the community face. The dedicated planning continued to focus on programs this year include: construction industry program identified major mining hazards continues to target the causes of and the broader interpretation and Health care and social assistance serious injury and death and delivered application of Part 5.3 (Occupational Over the past two years, WorkSafe over 12,000 workplace visits this year. Health and Safety) Mines regulations. The aim of the program is to inform, has significantly increased our Victorian mines are regulated by educate and motivate industry presence in hospitals, aged care WorkSafe and the Department participants to voluntarily improve facilities, disability, community support of Economic Development, Jobs, behaviour, while maintaining a strong services and early learning centres Transport and Resources which enforcement and compliance function. focusing on key hazards including continue to build relationships through We collaborate with stakeholders manual handling, occupational their Memorandum of Understanding across the state and with interstate violence and aggression and bullying. and implementation of the Joint counterparts, and use mainstream Activity Protocol. Joint activities Agriculture and social media campaigns to ensure both regulators are ‘better promote ongoing improvement. The quad bike media campaign, connected’ and that a proactive coupled with the $6 million approach to the supervision of mine Government rebate has improved fire risk management is maintained. farm safety in Victoria. The rebate Regulated industries scheme assists farmers to purchase and statutory processes Licencing a safer work vehicle or to fit an WorkSafe is responsible for the issue Major hazard facilities operator protective device. and renewal of licences under the Agriculture remains a high-risk In 2016/17, 19 out of the 36 licensed Occupational Health and Safety Act industry and powered and mobile Major Hazard Facilities in Victoria 2004 and the Dangerous Goods Act plant is a leading cause of injury and submitted their safety cases for 1985. In 2016/17, approximately death on farms. WorkSafe continues assessment by WorkSafe as part 107,000 licences were processed. to promote the safe use of powered of their licence renewal applications. and mobile plant. The Major Hazard Advisory Committee, appointed by the Minister for Planning, was established to provide advice on the way land use buffers around Major Hazard Facilities are determined and implemented. WorkSafe is participating in the development of the Government response to the recommendations made in its report published in July 2016.
20 WorkSafe Victoria Annual Report 2017 Deterrence • A company operating a metal • A principal contractor for an recycling business was fined an apartment development was fined Enforcing OHS and return to work aggregate of $80,000 as a result $116,000 in total for a number legislation is a significant lever used of failing to provide a safe system of OHS breaches including failing by WorkSafe to improve safety across of work. The incident involved to control the risk of unauthorised Victoria. a fire and explosion in which entry into the workplace, failing to Prosecution results and OHS a welder suffered serious burns, provide adequate facilities for the regulatory performance and non-compliance with seven welfare of employees, failing to improvement notices issued control the risk of fall from height, During 2016/17, WorkSafe pursuant to the Dangerous failing to provide safety inductions. completed 103 prosecutions with Goods Act 1985. a success rate of 90 per cent, • A construction company was the 12 enforceable undertakings were • A logistics company operating principal contractor for the building entered into pursuant to the OHS a shipping service was fined of an apartment complex and was Act and a total of $3,460,000 in $1,000,000 for failing to provide fined $80,000 for failing to provide fines were imposed. safe systems of work that resulted safe systems of work in relation in the death of a worker who to risks associated with working The following are some significant was struck and run over by a at height. An incident occurred 2016/17 OHS prosecutions: MAFI trailer crushing him under at a workplace that involved an the wheels. employee who fell 2.8 metres to • A company which operates a large concrete flooring below and landed vegetable growing and sales • A company that operates a number on his right side without hitting his business was fined a total of of building supply warehouses and head, suffering internal bruising. $85,000 for two separate incidents retail sales outlets in Victoria was as a result of failing to provide safe fined $90,000 for failing to ensure • A company involved in recycling plant and systems of work. The first that risks associated with the cardboard boxes was fined incident involved an employee who interaction between forklifts and $800,000 for failing to provide sustained a laceration to his right pedestrians had been reduced plant and safe systems of work leg as a result of stepping into an so far as practicable. A customer following the death of an employee uncovered drain at the base of was injured when roofing sheets who was crushed when a loaded a ladder. The second involved an fell from a forklift and caused injury cage fell after the lifting rope employee who had stepped off to the customer’s leg. connecting the cage to the a moving tractor and was run over hoist snapped. by a spinach seeder, which resulted in fractures to four ribs and his right cheek bone, as well as a dislocated neck.
Compliance measures 2013/14 2014/15 2015/16 2016/17
Annual workplace visits 41,566 4 0 ,711 46,259 45,751
Prosecution success rate 88% 93% 94% 90%
Investigations proceeding to prosecution charges within 12 months 75% 83% 91% 82%
Completed investigations proceeding to legal review outcome 67% 66% 71% 68%
Prosecutions commenced 107 114 119 138
WorkSafe Victoria Annual Report 2017 21 Safety
Key developments Fiskville Inquiry into labour hire and In response to the Parliamentary insecure work Victorian Asbestos Eradication Inquiry into the Country Fire Authority The Labour Hire Inquiry Report Agency Training College at Fiskville, was tabled in Parliament in late The Victorian Asbestos Eradication WorkSafe has offered advice October 2016. WorkSafe is working Agency is working with public sector and support to the CFA regarding with government to ensure that bodies towards ending the risk of the audit of its OHS management labour hire workers have access to asbestos exposure. It will plan for and systems and has developed a the same workplace safety standards advise the Government on how to compliance monitoring program for as other workers and to improve prioritise the removal of asbestos all CFA training locations in Victoria. occupational health and safety from Victorian Government buildings, Additional inspections will be practices in the industry. including schools and hospitals. conducted in 2018. OHS Compliance and WorkSafe has expanded its reporting Enforcement Review on the outcomes of requests for The OHS Compliance and prosecution under section 131 of Enforcement Review consisted of an the Occupational Health and Safety independent expert panel whose task Act 2004, while ensuring the was to review WorkSafe's compliance maintenance of any legal professional and enforcement activities, its privilege and the integrity of any provision of OHS compliance ongoing criminal investigation. information, and promotion of OHS awareness, education and training. The review panel provided its report to Government in November 2016.
22 WorkSafe Victoria Annual Report 2017 Joint regulatory activities WorkSafe has memoranda of Regulations WorkSafe is committed to working understanding with the following The Occupational Health and Safety with others to deliver better service agencies: Regulations 2017 and the Equipment and safety in Victoria. Where the • Australian Maritime Safety (Public Safety) Regulations 2017 compensation and health and safety Authority came into effect in June 2017. laws overlap with the jurisdiction Resources have been provided • Department of Economic of other government agencies, to assist duty holders to understand Development, Jobs, Transport memoranda of understanding the regulations and the changes and Resources establish protocols and remove made to modernise and streamline duplication of requirements for • Department of Health and Human these regulations. stakeholders. They provide a basis for Services establishing regulatory frameworks of • Energy Safe Victoria cooperation and coordination where • Environment Protection Authority there are joint responsibilities. • Fair Work Commission • National Offshore Petroleum Safety and Environmental Management Authority • Office of Public Prosecutions • Office of the National Rail Safety Regulator • Roads Corporations (VicRoads) • Royal Australasian College of Surgeons • Transport Accident Commission • Transport Safety Victoria • Victoria Police • Victorian Building Authority, and • Victorian Registration and Qualifications Authority. More information is available on the WorkSafe website at www.worksafe.vic.gov.au.
WorkSafe Victoria Annual Report 2017 23 Return to work
Return to work WorkSafe is committed to supporting injured workers to return to safe, sustainable work.
RETURN TO WORK CAMPAIGN: The longer you are off work, the less chance you have of ever going back. Our return to work campaign aimed to support injured workers to return to safe work and drive understanding that There’s nothing like returning to work is a positive step in getting back for the recovery process. getting better 24 Results Our approach Raising awareness In 2016/17, 78.47 per cent of injured Returning to work after an injury campaign – Getting workers returned to work within six is a team effort. Employers, health Back months, a reduction on last year and practitioners and agents all play less than our target of 80.53 per a critical role in making sure that Our return to work campaign aimed cent. Mental injuries have impacted a person who gets injured at work to support injured workers to return our return to work results. is supported through their recovery to safe work and drive understanding process and back to work. We target that returning to work is a positive interventions where there is the step in the recovery process. It greatest need for support and use encourages injured workers – as well a range of tools and information to as their treating health practitioners assist all parties in their roles. and their employers – to be proactive and engaged in the return to work process. Practical steps that an injured worker and their employer can take include setting a possible return to work date, arranging suitable duties at the start of a claim, and increasing communication between themselves and the treating health practitioner.
Mental wellbeing There has been an increase in the Communications with injured workers number of injured workers with a and employers are being rewritten to Recovery and return to mental injury claim and this is improve clarity and further training in work after a mental injury reflected in our results. mental injury claims management is being provided to WorkSafe agent A range of initiatives are in place can be complex. Six case managers. to support a successful and safe months after lodging a return to work. The Getting Back We are strengthening our claim, approximately 45 campaign is targeting the health partnerships across government per cent of workers with care and social assistance industry and with mental health peak bodies. and equipping return to work (see page 27) a mental injury are not coordinators with the information back at work, compared they need to be an early and with approximately 18 effective support to injured workers. per cent of workers with a physical injury.
WorkSafe Victoria Annual Report 2017 25 Return to work
Improving support for Victorian Injured Workers Return to Work injured workers Outcomes Study Inspectorate Research is being undertaken to New tools to support injured workers improve long term outcomes and The Return to Work Inspectorate in their recovery and return to safe satisfaction for injured workers. This ensures employers and workers are work include: follows a Government commitment meeting their legal obligations. In 2016/17, the inspectorate intervened • Improvements to the WorkSafe and is being run over a number of on 1,005 claims and conducted 1,901 Incentive Scheme for Employers years to gain insights into the health, workplace visits. The inspectorate with a six month wage subsidy social and economic impacts of being also issued 229 improvement notices of up to $26,000 for employing off work due to a workplace injury. to employers for breaches of the law an injured worker. It will identify the factors including social, health, demographic and and achieved 367 voluntary • Digital training and knowledge medical management that influence compliances. management platform to improve recovery and return to work. the capability of Victoria’s The Return to Work Inspectorate occupational rehabilitation providers. Preliminary results have identified continues to collaborate with the OHS inspectorate. Proactive follow • A worker assistance program a number of processes and transition up of workplaces with new claims to cover incidental costs of points that can affect the recovery continues to find opportunities returning to work helps injured and return to work of injured workers. where early intervention will make workers overcome some of the Results and findings that support a difference in returning an injured barriers to returning to work with system and process improvements worker to safe work. a new employer. will be incorporated into Strategy 2030 as they become available. • The WorkSite Assessment initiative Measure 2015/16 2016/17 helps find alternative duties for Mobile Case Management workers after their injury by Following a pilot program to improve Visits 1,866 1,901 providing occupational physicians the support provided to injured access to the workplace to assess workers, face to face mobile case Claims 1,964 1,005 the suitability. management is being run at intervention WorkSafe’s agents. Face to face Improvement 271 229 mobile case management brings notices parties together to provide tailored support to workers in the first six Voluntary 466 367 months after injury. compliances
26 WorkSafe Victoria Annual Report 2017 Mental wellbeing We are exploring how the Early intervention coordinated response across (continued from page 25) A range of services and information government to support those are offered prior to claim We are strengthening affected by the Bourke Street acceptance to enable early tragedy in January can be applied intervention and to address barriers our partnerships across to improve post-traumatic mental that workers with a mental injury government and with health management. face in returning to work. This can mental health peak bodies. Return to Work Inspectorate include occupational rehabilitation or involvement of the Return to Work The Return to Work Inspectorate Trauma support and post- Inspectorate. This mobile case have further developed their mental traumatic stress disorder management approach provides health competencies over the last an opportunity to explain how the Post-traumatic stress disorder two years as part of a broader can be hard to correctly diagnose. scheme works, explore additional approach to managing mental injury expert services, agree to goals, We are working with general claims. Our inspectors are educating practitioners to improve early expectations and actions and help employers on their obligations in identify barriers and opportunities. diagnosis rates and ensure early relation to mental injury claims. access to the right treatments. This is being supported by the advice of the Clinical Advisory Group, which has representation from Phoenix Australia, The Royal Australian and New Zealand College of Psychiatrists, the Australian Psychology Society, the Royal Australian College of General Practitioners and WorkSafe.
WorkSafe Victoria Annual Report 2017 27 Service
Service WorkSafe is focused on the needs of workers and employers.
IT’S NEVER OK CAMPAIGN: Up to 95 per cent of healthcare workers have experienced verbal or physical assault. The ‘It’s never OK’ campaign seeks to drive action by encouraging the community to stop the behaviour, Aggression and healthcare workers to report the violence against behaviour, and employers to prevent health workers. the behaviour and value their workers. It’s never OK! 28 Results WorkSafe service Meeting the targets for the In 2016/17 WorkSafe services community perceptions of our We regularly ask employers and continued to be rated highly by education and enforcement activities workers to rate the services they have employers and workers. The ratings remains a challenge for us. This received from us and our agents, and for our inspectorate, inspectorate indicates a shift in what and how track the community perceptions of our advice and guidance, and insurance the community expects us to deliver education and enforcement activities. premium services were mostly an our services, which we aim to align The table below contains the improvement from last year or an through our new transformational WorkSafe direct service results. achievement of this year’s target. Strategy 2030. There were slight deteriorations in the Advisory service ratings, which we are currently working to improve.
Employer service 2015/16 result 2016/17 target 2016/17 result
Advisory 91.4% 92.5% 89.8%
Inspectorate 98.0% 95.0% 98.0%
Advice and guidance 97.0% 97.0% 96.4%
WorkSafe premium 89.4% 92.5% 90.0%
Worker service 2015/16 result 2016/17 target 2016/17 result
Advisory 93.5% 92.5% 88.8%
Inspectorate 97.6% 96.0% 97.6%
Advice and guidance 96.8% 96.0% 97.1%
Community service 2015/16 result 2016/17 target 2016/17 result
Expectation of Inspector visits 58.7% 63.5% 57.9%
Balance education and enforcement 67.2% 73.0% 69.3%
Catch law breakers 81.2% 85.2% 81.1%
Charges laid within 12 months of 90.8% 77.5% 81.9% investigation
Successful prosecutions 93.6% 90.0% 90.3%
WorkSafe Victoria Annual Report 2017 29 Service
Advisory Services In 2016/17 this included: Agent service WorkSafe aims to provide best • 3,214,464 website visits The new agent panel, which practice services to employers, commenced on 30 June 2016, • 12,091,179 visits to specific website workers and the community through achieved improved service results pages its advisory and client services. These for the year. services utilise multiple channels • 37,948 emails The table below contains the agent- including telephone, email • 191,716 telephone calls for advice direct service results. communication and the WorkSafe about OHS, rehabilitation and website to provide information. compensation.
Worker service Agent 2015/16* 2016/17
Allianz 78.7% 80.0%
CGU 80.8% 79.4%
Gallagher Bassett Services 72.9% 82.7%
QBE 76.2% –
Xchanging 82.5% 82.7%
EML – 82.9%
Scheme average 78.4% 81.3%
Employer service Agent 2015/16 2016/17
Allianz 88.0% 87.8%
CGU 86.5% 85.2%
Gallagher Bassett Services 83.9% 86.3%
QBE 83.8% –
Xchanging 89.2% 85.5%
EML – 88.3%
Scheme average 86.2% 86.4%
* There was a change to the components making up the 2016/17 results, which would have increased the 2015/16 result by an average of 0.8 percentage points.
30 WorkSafe Victoria Annual Report 2017 Our management of Restorative justice Digital Claim File compensation claims investigated The principles of restorative justice WorkSafe is moving from paper- The Victorian Ombudsman’s report can be used to repair harm that has based claims files to digital storage. on the management of complex been caused to an injured worker and The first phase of the project compensation claims by WorkSafe to avoid the potential for further harm delivered in 2016 digitised 60 and its insurance agents was tabled that might arise through disputation per cent of claims documents. in Parliament in September 2016. or enforcement processes. WorkSafe The second phase of the project It is important that injured Victorian has engaged an independent expert, extends the digital solution to all workers are treated fairly and get RMIT’s Centre for Innovative Justice, remaining claims documents and the support they need. A range of to identify opportunities to use is being progressively rolled out initiatives are underway to improve restorative justice conferencing to all claims agents throughout 2017. the delivery of services to injured within the WorkSafe scheme. This allows claims documents to be workers and to reduce disputation. accessible and shared between WorkSafe and our agents so that Agent claims managers have we can provide better, faster service undertaken training to reinforce to injured workers, employers and appropriate standards of health practitioners by instantly communication, and evidence- retrieving case information to respond based and timely decision making. to queries. Processes around reviewing adverse decisions have been updated. Work has started to move premium documentation to digital storage and A complaints management expert this is expected to be completed by has identified systemic issues and the end of 2017. Upon completion, opportunities that will deliver all inbound claims and premium improved service by WorkSafe and documents will be digital, centrally its agents. The Independent Medical stored and accessible. Examiner’s model was reviewed and changes to improve the model are being finalised. A best practice framework for complaints management across WorkSafe is being implemented. Mobile case management services to support injured workers to return to work have been piloted and a broader program is underway. More information relating to the progress of specific recommendation responses to the Victorian Ombudsman’s report can be found at Appendix 5.
WorkSafe Victoria Annual Report 2017 31 Service
WorkSafe website Retirement age alignment Stakeholder Engagement The WorkSafe website has been From July 2017, the age workers are Framework updated to simplify its usability, eligible for the Commonwealth Age Strong stakeholder engagement design and language. This is the Pension increases incrementally from enables us to work in a more first step in a larger plan to redesign 65 to 67 years by 2023. Changes effective way by capturing expertise, and replace the website over the to the definition of retirement age knowledge and experience from next year. It will make it easier for under the Accident Compensation outside the organisation and workers and employers to access Act 1985 and the Workplace Injury harnessing it to ensure we make the information they need. Rehabilitation and Compensation better decisions in relation to our Act 2013 will ensure that there will strategic directions, planning, policy be no gap between the age at which and operations. The Stakeholder a worker ceases to be entitled to Engagement Framework is a weekly payments and superannuation foundation document that sets out our contributions and the age at which approach to stakeholder engagement, they are eligible for the Commonwealth our values and guiding principles. Age Pension. The changes will apply to all injured workers who have an entitlement to weekly compensation payments, including workers who were injured or who lodged their claims prior to 1 July 2017.
32 WorkSafe Victoria Annual Report 2017 Accident Compensation Health literacy program Quality decision making Conciliation Service Improving the health literacy of Over the last two years, WorkSafe In December 2016 there was a injured workers and the community has been implementing the initiatives legislative change to enable the that surrounds them is a priority of the Quality Decision Framework. Accident Compensation Conciliation for WorkSafe. The health benefits An online claims management Service to operate as an independent of safe work concepts have been training system has been upgraded entity from WorkSafe. A Board of included in the Getting Back to include key themes of quality Management has been appointed campaign and in updates to the decision making. Guidance has been to oversee this entity, which will WorkSafe Vic Claim App. updated and the program to audit transition in October 2017. The ‘Pain Hub’ was launched in agents’ decision-making processes October 2016 on the Better Health has been extended. Changes to Channel to provide consumer-focused the agent performance framework information on conditions and increase their focus on quality and treatments including pain sustainable decisions. management. WorkSafe’s Clinical We continue to prioritise quality Panel collaborated with the decision making. There is a strong Department of Health and Human quality review cycle in place that Services in developing the content feeds into our claims management and on emphasising the role of work capability program. We will continue as part of recovery. Following the to work with stakeholders to improve success of this initiative, WorkSafe claims management communications. has been invited to have ongoing involvement as content partners with Our internal review process enables the Better Health Channel. Recent anyone who is directly affected by contributions include messages about certain decisions of WorkSafe and the role of work in recovery and its inspectors to request a review. In health on the Major Trauma Website. 2016/17, 1,296 decisions relating to health and safety were reviewed. A full breakdown of the internal review outcomes is included in Appendix 4.
WorkSafe Victoria Annual Report 2017 33 Sustainability
Sustainability A financially sustainable scheme is fundamental to our ongoing success and we continue working to maintain it through a combination of rigorous financial management and a robust workers compensation scheme.
REALLY BAD DAY CAMPAIGN: The ‘Really Bad Day’ campaign is focused primarily at employers and aims to increase awareness that WorkSafe inspectors will be visiting workplaces (anywhere, any day, anytime). Enforcing the law to help keep You can stop workplaces safe. really bad days. 34 Results Operational expenditure by core activities Our performance from insurance operations (PFIO) for the year was Core activity $’000 $233 million. This result is $96 million below target. This result was impacted Occupational 150,131 Health and Safety by our full year actuarial valuation, which increased our projected claims Insurance and 110 , 411 costs by $169 million. Claims Management The net result of $694 million was Dispute 50,980 $447 million above budget after the Resolution impact of external factors. This was Total Operating Expenses 311,522 primarily due to higher than budget investment returns, as well as the impact of changes in discount rates and inflation on claims liabilities, partially offset by the impact of legislative changes on claims liabilities.
The following table highlights the impact of external factors on WorkSafe’s result before short-term fluctuations and economic assumptions:
Financial results 2016/17 2015/16 2014/15 2013/14 2012/13
($m) ($m) ($m) ($m) ($m) Impact on result from internal factors
Performance from Insurance Operations 233.0 280.4 210.5 483.4 118 .7
WorkHealth and Research Institute initiatives – – – 12.1 5.6
Result from internal factors 233.0 280.4 210.5 495.5 124.3 Impact on result from external factors
Difference between actual returns and long-term 589.9 (621.4) 525.2 798.0 883.6 expected returns1
Change in inflation assumptions and discount rates2 582.2 (366.7) (156.5) (143.3) 532.5
Impact from legislative changes3 (446.3) – – – –
Tax (264.7) 232.4 (125.3) (326.4) (456.8)
Net Result 694.1 (475.3) 453.9 823.8 1,083.6
1. Favourable conditions experienced in the investment markets in 2016/17 resulted in the actual investment return being higher than the expected long-term rate of return. 2. There was a favourable impact from changes in economic assumptions (ie higher assumed discount rates partially offset by higher than expected actual inflation) used to determine claims liability in 2016/17. 3. The impact of the legislative changes arising from the Compensation Legislation Amendment Act 2016 resulted in an increase in claims incurred in 2016/17.
WorkSafe Victoria Annual Report 2017 35 Sustainability
Assets and liabilities WorkSafe Scorecard 2007–2017 As at 30 June 2017, WorkSafe’s total Average assets were $16.5 billion, compared premium Funding Net Actuarial Dividend with $15.1 billion at 30 June 2016. Year rate ratio result PFIO* release paid Our total liabilities were $13.7 billion, compared with $13.0 billion at 30 2016/17 1.272% 119 % $694m $233m ($169m) June 2016. The valuation determined that our funding ratio was 119 per 2015/16 1.272% 112 % ($475m) $280m ($135m) cent compared with 112 per cent at 30 June 2016. This was above the 2014/15 1.272% 120% $454m $211m ($60m) $242m target range of 82.5 to 117.5 per cent. 2013/14 1.298% 116 % $824m $483m $303m $59m
2012/13 1.298% 108% $1,084m $119 m $179m $193m
2 011/12 1.338% 96% ($676m) $385m $182m $147m
2 010/11 1.338% 108% $521m $294m $136m
2009/10 1.387% 100% $176m $654m $189m
2008/09 1.387% 97% ($1,254m) $277m $78m
2007/08 1.46% 120% ($587m) $958m $ 511m
2006/07 1.62% 134% $1,170m $729m $394m
*Performance from insurance operations
36 WorkSafe Victoria Annual Report 2017 Low cost insurance WorkSafe Injury insurance average premium rates Sound scheme management enabled us to maintain a record low average premium rate of 1.272 per cent of payroll in 2016/17, the second lowest in Australia. This premium rate will continue in 2017/18. This is the lowest rate in the scheme’s history and has been maintained at this level since 2014/15. Competitive workplace injury insurance premiums reflect low injury rates and good claims management. Employers continue to be able to take advantage of discount options for early payment. 0 0 07 0 0 10 11 12 1 1 1 1 17 In 2016/17, around 40 per cent of 0 07 0 0 10 11 12 1 1 1 1 17 1 employers took up the five per cent discount by paying in August and around 11 per cent took up the three per cent discount by paying in October.
WorkSafe Victoria Annual Report 2017 37 Sustainability
Protecting scheme • A worker who suffered a wrist injury Self-insurance and received workers compensation integrity payments subsequently engaged Self-insurers are approved by To maintain the integrity and in secondary employment whilst WorkSafe to manage their own sustainability of the WorkSafe compensation payments continued. workers compensation claims and scheme, it is critical that WorkSafe The worker later disclosed the WorkSafe continues to work with ensures employers and workers are secondary employment. The worker them to promote best practice in complying with their legal obligations pleaded guilty and, with conviction, safety and return to work. under the WIRC Act. WorkSafe he was released on adjourned There are 37 self-insurers ensures that employers pay their undertaking for 12 months to be operating in Victoria, representing insurance premiums and detects of good behaviour. The worker had approximately seven per cent of total fraud by health professionals and previously made full restitution scheme remuneration. workers. In 2016/17 there were of $35,358. 20 prosecutions under the WIRC • An injured worker was convicted In 2016/17: Act. The following are some of and sentenced to four months • two organisations were granted the significant prosecutions under imprisonment, suspended for twelve approval to self-insure and one this Act: months for fraudulently obtaining organisation ceased to be a • On appeal, an injured worker payments for compensation. He self-insurer was convicted and sentenced was ordered to pay restitution of • self-insurers achieved a sustained to four months imprisonment $53,222 by instalments of $400 return to work rate of 85.71 per cent a month. wholly suspended for nine months • the Injured Workers Survey service for fraudulently obtaining • A worker in receipt of weekly score was 69 per cent for all compensation payments and for payments as a result of a work- self-insurers. obtaining financial advantage by related back injury failed to disclose deception. He had previously paid that he had returned to work as a Further information can be found at $93,920 in restitution. taxi driver. He was convicted and Appendix 3. • An injured worker had returned to sentenced to a term of imprisonment work whilst still receiving payments of four months, wholly suspended for of compensation. The worker a period of 12 months, and ordered pleaded guilty and was convicted to pay restitution of $39,781. He and fined $3,000 and required was also convicted and fined $500 to pay restitution of $26,479.60. for failing to answer bail.
Compliance activity 2015/16 result 2016/17 target 2016/17 result
Number of completed investigations 151 130 132
Number of prosecutions 23 n/a 20
Audits of bills submitted by medical practitioners and allied 426 400 439 health providers
Investigations completed in 180 days 89% 90% 79%
38 WorkSafe Victoria Annual Report 2017 Statement of Common law Two new significant initiatives were also introduced in the year: Expectations Common law applications continue Common Law Worker Survey The Government has issued a to pose a risk to the financial viability Statement of Expectations setting out of the WorkSafe scheme, despite The Common Law Worker Survey WorkSafe’s contribution to reducing receiving lower than expected was completed by 350 injured red tape and improving regulatory lodgements during 2016/17. workers who had completed a practices, while ensuring that injured WorkSafe received 2,608 common common law claim. As a result of workers are not disadvantaged and law applications, 6.5 per cent fewer this survey, we have begun to improve that there is no reduction in worker than in 2015/16 (2,872). Whilst this the access that workers have to safety. WorkSafe is implementing is a positive result it is too early to information relating to common a range of red tape reduction determine whether it reflects a longer law. We are considering alternative initiatives including: term trend, as lodgements increased pathways (for example restorative significantly in the final quarter. At 30 justice) for workers to address their • Risk-based strategies applied June 2017 common law accounted underlying needs. to workplace visits, premium for 35 per cent of WorkSafe’s total compliance and support for scheme liability, with damages The survey results will establish a more seriously injured workers payments accounting for 25 per baseline for measuring improvements in worker experience in the future. • Reducing the regulatory burden cent and legal costs 10 per cent. through reforms to the OHS In 2016/17, 59.4 per cent of serious Common Law Working Group Regulations 2017 and Equipment injury cases were settled without A Common Law Working Group has (Public Safety) Regulations 2017, litigation with only 6.3 per cent been established to consider the long reduced self-insurer compliance resulting from a court judgment. term trend of increasing common law costs and streamlined employer In the same period 81 per cent of lodgements, the cost of delivering premium interactions damages claims were settled without common law benefits and how the • Compliance related assistance litigation with one per cent resulting interests of workers and employers and advice including from a court judgment. can be better served in relation to implementation of the digital claim common law. An independent chair, WorkSafe continues to focus on file, improvements to the Worker Mr John Price, has been appointed delivering common law benefits Claim App, face to face mobile and the representatives on the efficiently and cost effectively where claims management, integration Working Group are from a range it is satisfied a worker has an of the roles of general practitioners of organisations with an interest in entitlement to common law damages. and physiotherapists in certificates the sustainability of common law. Where it appears the employer was of capacity, improving health The working group will provide not at fault for the injury WorkSafe literacy and reducing disputes recommendations to the WorkCover has strongly defended those matters. • Stakeholder consultation and Advisory Committee. engagement in accordance with During the year about nine per cent the Stakeholder Engagement of common law applicants failed to Framework and through WorkSafe’s establish a serious injury, and about legislated stakeholder forums. 11 per cent of workers with an accepted serious injury failed to establish an entitlement to damages from their employer.
WorkSafe Victoria Annual Report 2017 39 Culture and place
Culture and place The health, safety and wellbeing of our employees are precursors to overall organisational health and success.
YOUNG WORKERS CAMPAIGN: From January 2012 to December 2014, more than 4,000 young Victorian workers were injured on the job. The Young Workers campaign Young workers: encourages workers to take action Think First, and speak up if they feel unsafe. Work Safe. 40 Results Geelong relocation WorkSafe has commissioned a new building at 1 Malop St Geelong. The Sustainable Engagement result The first group of 160 WorkSafe Incorporating the historic Dalgety for 2017 was 75, against a target of roles relocated to Geelong in January & Co. building, 1 Malop St will be 82. This result was higher than the 2017. These employees are located a modern, 14-level office building. Australian norm for all companies in interim accommodation while the This will be a state of the art (74) and a more positive result than new headquarters at 1 Malop St is development, with best practice those of other organisations going being built. The remaining head office design principles to allow a flexible through major change. employees are being supported with and agile way of working. 1 Malop a substantial decision-making and St will be targeting a 6-star green career transition package to make star rating, a 5.5 star rating under the their decision by the end of 2017. National Australian Built Environment WorkSafe head office employees Rating System and a gold standard will be in our new headquarters by WELL rating – a new international mid-2018. standard for healthy buildings. Employees who choose not to WorkSafe is exploring relocate with WorkSafe will also accommodation options for have access to redeployment within approximately 150 staff who the Victorian Public Sector and/or will remain in the Melbourne CBD. redundancy payments. Recruitment for roles has already commenced from the Geelong region and will ramp up significantly in the first half of 2018.
WorkSafe Victoria Annual Report 2017 41 Culture and place
Our culture Our achievements Our OHS performance WorkSafe is guided by five values: Highlights from 2016/17 include: Key OHS risks at WorkSafe include constructive, accountable, stress, motor vehicle accidents, • The new Enterprise Agreement, transparent, effective and caring. occupational violence and which will remain in place until These values underpin the work musculoskeletal injuries associated November 2020. The highlight of we do and guide us in our day with ergonomics in cars and the office the agreement was the introduction to day activities. environment. Our safety management of a new pay structure, which better system ensures safety is embedded We are committed to creating facilitates career progression, job across the employee lifecycle through a workplace that represents the design and supports Strategy 2030. on-boarding, induction, training diversity of the community and our • The Geelong Relocation Deed programs, consultative structures, stakeholders. We are also committed continues to provide financial and processes for incident and to providing our employees with support to our employees emergency management. a workplace that is free from transitioning to Geelong, assisting discrimination, harassment WorkSafe to maintain its operations The revised and updated integrated and bullying. and ensure knowledge transfer. Health Safety & Wellbeing Strategy outlines our approach to risk In December, WorkSafe launched • The integrated Health, Safety & reduction and management including: our Disability Action Plan 2017– Wellbeing Strategy was launched 2019. Since the launch of the plan in May 2017. Our approach to • Analysis of motor vehicle accident a number of initiatives have been employee support was recognised and incident data and researching progressed to reduce barriers and by the Australian Psychological potential technology-based risk deliver tangible outcomes for people Society as a joint winner of the controls to increase capacity to with disability. These initiatives have Workplace Excellence Award for locate employees working alone and focused on creating and sustaining Workplace Health and Wellbeing. positively impact driver behaviour, meaningful employment opportunities • Our strategic approach to diversity including fatigue management. for people with disability, and on included the introduction of a • Refresher training for field-based creating workplace premises that Project Coordinator Diversity and employees in managing difficult are accessible for all. Through Inclusion role, the launch of the people. delivery of initiatives under the plan, WorkSafe Disability Action Plan • Early intervention and support for we continue our commitment to safe 2017–19, acknowledgment of musculoskeletal injury risk and and inclusive workplace practices, key events such as Reconciliation ergonomics. both within our workforce and in Week and the launch of two partnership with stakeholders. new employee-led networks: the WorkSafe Pride Network and Women at WorkSafe. • The new performance development framework is designed to facilitate more meaningful regular conversations and enhance understanding and connectedness between WorkSafe goals and individual contribution, supported by a new user-friendly system, CHAT. Taking a strengths-based approach and based on positive psychology, the framework links strongly to our Health, Safety & Wellbeing Strategy. • SafetyMap Certification System: the annual external audit of our safety systems and processes confirmed them to be working effectively.
42 WorkSafe Victoria Annual Report 2017 Mental wellbeing • Our Health, Safety and Wellbeing through our Peer Support Strategy draws on our knowledge Network and an online portal, At WorkSafe, we are and experience as Victoria’s including wellbeing and strengths passionate about our workplace regulator to make our assessments, on site early workplace safe and to create an intervention support for both role in making work environment where our people work and non-work related health safe for all Victorians are able to perform at their best. matters, various development and this includes our It helps us to continue to prioritise sessions and coaching for the health, safety and wellbeing managers and employees across own employees. We of our people, to enhance our the business and confidential have a range of initiatives culture, and to benefit from the wellbeing support for our people that promote the mental proven connection between the and their families. wellbeing of our workforce and • Our new building in Geelong is health and wellbeing of our organisational performance. being built to have a gold standard our people. This strategy draws on the WELL rating, which addresses Victorian Government’s Mental how the building impacts and Health and Wellbeing Charter. influences human behaviours • There are a number of resources related to health and wellbeing. available to assist our people, This includes encouraging the particularly in this time of change integration of exercise and fitness with the relocation to Geelong and into everyday life and optimising the development of Strategy cognitive and emotional health 2030. The Mental Wellbeing through design, technology and Program offers on-site support treatment strategies.
WorkSafe Victoria Annual Report 2017 43 Culture and place
The following table reports our performance against key OHS performance indicators.
Incidents/Hazards 2014/15 2015/16 2016/17
Number of hazards reported 104 58 52
Hazard – rate per 100 full-time employees (FTEs) 10.35 5.67 5.0
Number of incidents 143 145 121
Incident – rate per 100 FTEs 14.23 14.17 11. 6 3
Injury – non-compensable 27 52 34
Inspections 2014/15 2015/16 2016/17
Percentage of scheduled workplace inspections conducted 85% 80% 60%
Resolution of OHS issues arising from inspections/audits 100% 100% 100%
Number of Provisional Improvement Notices – – –
Number of improvement and prohibition notices – – –
Scheduled OHS Committee meetings completed 100% 93% 100%
Claims and return to work 2014/15 2015/16 2016/17
Number of claims (standardised) 16 10 10
Claims – rate per 100 FTEs 1.59 0.98 0.96
Number of time-loss claims 3 2 6
Time-loss claims – rate per 100 FTEs 0.30 0.196 0.577
Number of 13-week claims 1 1 1
13-week claims – rate per 100 FTEs 0.099 0.0978 0.0961
Number of fatality claims – – –
Estimated average cost per claim* $11,899 $49,441 $81,768
Number of claims with return to work plans initiated 11 5 6
Percentage of 13-week claims with return to work plans initiated 100% 100% 100%
*In previous years, this has been reported as Average cost per claim.
44 WorkSafe Victoria Annual Report 2017 Employee OHS Appraisal (% positive response) 2014/15 2015/16 2016/17
My work area is a safe place to work 94 94 92
Is adequate OHS training provided? 80 81 80
Is WorkSafe proactive on OHS matters? 70 75 77
Is reporting of incidents and injuries encouraged? 90 89 89
Is corrective action taken by management? 74 80 76
Is there meaningful consultation on OHS relevant matters? 69 76 72
Do work instructions, procedures etc address OHS issues? 82 83 84
My manager is committed to OHS improvements 78 83 81
Senior management cares about OHS and employee wellbeing 72 82 80
WorkSafe supports employees to make health & wellbeing a priority – 78 79
I understand where I can access support at work if I am not coping – 85 86
WorkSafe Victoria Annual Report 2017 45 Financial report
Financial report For the year ended 30 June 2017
46 How this report is structured The Victorian WorkCover Authority has presented its audited general purpose financial statements for the financial year ended 30 June 2017 in the following structure to provide users with the information about WorkSafe’s stewardship of resources entrusted to it.
Financial statements Comprehensive Operating Statement 5. Other assets and liabilities 77 Balance Sheet Other non-insurance assets and liabilities Statement of Changes in Equity 5.1 Other receivables Cash Flow Statement 5.2 Property, plant and equipment 5.3 Intangibles Notes to the financial statements 5.4 Other payables 5.5 Other provision 1. About this report 52 5.6 Commitments and contingencies The basis on which the financial statements have been prepared and compliance with reporting regulations. 6. Taxation and transactions with the State 84 2. Results from insurance operations 54 Items subject to taxation and transactions with the State Insurance related activities 6.1 Income tax 2.1 Underwriting result 6.2 Deferred tax 2.2 Premiums 6.3 Dividends 2.2.1 Premium revenue 7. Financial instruments and valuation 2.2.2 Premium receivables judgements 86 2.2.3 Premium creditors Financial instruments and fair value determination 2.3 Claims 7.1 Financial instruments 2.3.1 Claims expense 7.2 Off-setting of financial assets and financial 2.3.2 Outstanding claims liabilities 2.3.3 Recoveries revenue 7.3 Fair values 2.3.4 Recoveries receivable 8. Other disclosures 95 2.3.5 Actuarial assumptions and methods 8.1 Responsible persons 2.4 Authorised agent fees 8.2 Remuneration of executives 2.5 Insurance contracts – risk management policies 8.3 Related parties and procedures 8.4 Entity consolidated pursuant to section 53(1)(b) of 3. Investment portfolio and performance 68 the FMA Investment results and portfolio 8.5 Remuneration of auditors 8.6 Events after reporting date 3.1 Investment income and investment expenses 8.7 Australian Accounting Standards issued that are 3.2 Investments not yet effective 3.3 Cash and cash equivalents 8.8 Change in prior year classifications 3.4 Explanation of volatility of financial results 9. Statement by Chairman, Chief Executive 4. Cost of operations 73 and Chief Financial Officer 101 Operational activities 4.1 Other income 4.2 Other operating costs 4.3 Employee superannuation 4.4 Employee related provisions
WorkSafe Victoria Annual Report 2017 47 Financial report
Financial statements
Comprehensive Operating Statement For the financial year ended 30 June 2017
2017 2016 Note $000s $000s
Revenue and Income Premium revenue 2.2.1 2,213,806 2,071,422 Investment income 3.1 1,660,600 429,795 Recoveries revenue 2.3.3 132,328 152,395 Other income 4.1 21,268 24,592 Total revenue and income 4,028,002 2,678,204
Expenses Claims expense 2.3.1 (2,512,048) (2,838,128) Authorised agent fees 2.4 (227,953) (245,410) Investment expenses 3.1 (48,733) (45,952) Other operating costs 4.2 (280,453) (256,439) Total expenses (3,069,187) (3,385,929)
Result before income tax 958,815 (707,725) Tax (expense) income 6.1 (264,666) 232,454
Net result for the year 694,149 (475,271) Other comprehensive income – – Other comprehensive income, net of income tax – – Total comprehensive income for the year 694,149 (475,271)
The above comprehensive operating statement should be read in conjunction with the accompanying notes to the financial statements.
48 WorkSafe Victoria Annual Report 2017 Balance Sheet At 30 June 2017
2017 2016 Note $000s $000s
Current assets Cash in hand and at bank 3.3 40,325 26,987 Premium receivables 2.2.2 75,882 52,761 Investment assets 3.2 2,682,312 2, 611, 3 5 5 Recoveries receivable 2.3.4 49,080 47,769 Prepayments 8,199 6,410 Other receivables 5.1 5,759 5,836 Total current assets 2,861,557 2,751,118
Non-current assets Investment assets 3.2 13,093,466 11,532,903 Recoveries receivable 2.3.4 232,740 234,035 Property, plant and equipment 5.2 18,220 12,426 Intangibles 5.3 49,612 58,387 Deferred tax assets 6.2 262,338 527,005 Total non-current assets 13,656,376 12,364,756 Total assets 16,517,933 15,115,874
Current liabilities Premium creditors 2.2.3 65,992 55,848 Other payables 5.4 99,478 92,874 Outstanding claims 2.3.2 1,940,747 1,839,073 Investment related liabilities 3.2 553,729 500,120 Employee related provisions 4.4 36,075 36,095 Other provision 5.5 67 689 Total current liabilities 2,696,088 2,524,699
Non-current liabilities Outstanding claims 2.3.2 11,039,682 10,500,719 Investment related liabilities 3.2 105 2,233 Employee related provisions 4.4 3,729 3,697 Other provision 5.5 3,644 3,990 Total non-current liabilities 11,047,160 10,510,639 Total liabilities 13,743,248 13,035,338 Net assets 2,774,685 2,080,536
Equity Accumulated surplus 2,774,685 2,080,536 Total equity 2,774,685 2,080,536
The above balance sheet should be read in conjunction with the accompanying notes to the financial statements.
WorkSafe Victoria Annual Report 2017 49 Financial report
Statement of Changes in Equity For the financial year ended 30 June 2017
Total $000s
Balance at 1 July 2015 2,555,807 Net result for the year (475,271) Other comprehensive income – Total comprehensive income for the year (475,271) Balance at 30 June 2016 2,080,536 Net result for the year 694,149 Other comprehensive income – Total comprehensive income for the year 694,149 Balance at 30 June 2017 2,774,685
The above statement of changes in equity should be read in conjunction with the accompanying notes to the financial statements.
50 WorkSafe Victoria Annual Report 2017 Cash Flow Statement For the financial year ended 30 June 2017
2017 2016 Note $000s $000s
Cash flows from operating activities Premium received 2,419,035 2,269,484 Claims paid (1,864,700) (1,849,525) Self insurer re-entry settlement 1,393 – Claim recoveries received 127,927 137,789 Authorised and management agent fees (309,987) (334,910) Dividends and distributions received 428,276 565,393 Interest received 56,989 84,546 Health and safety licence fees received 4,910 4,916 Contribution to DTF Consolidated Fund for court use (4,293) (8,377) Sundry receipts 20,335 21,893 Goods and services tax paid to the ATO (155,396) (141,931) Income tax paid – (123,312) Payments to suppliers and employees (288,337) (262,475) Net cash flows from operating activities 3.3 436,152 363,491
Cash flows from investing activities Sale of investments 4,642,857 5,116,196 Purchase of investments (4,986,011) (5,282,240) Purchase of property, plant and equipment (8,996) (4,901) Proceeds from disposal of plant and equipment 61 – Payments for intangibles (6,425) (8,477) Net cash flows (used in) investing activities (358,514) (179,422) Net increase in cash and cash equivalents 77,638 184,069 Cash and cash equivalents at beginning of the year 1,621,083 1,435,650 Effects of exchange rate changes on cash held in foreign currencies (26,506) 1,364 Cash and cash equivalents at end of the year 3.3 1,672,215 1,621,083
The above cash flow statement should be read in conjunction with the accompanying notes to the financial statements.
WorkSafe Victoria Annual Report 2017 51 Financial report
1. About this report
WorkCover Authority Fund The WorkCover Authority Fund was established on 1 December 1992 under the Accident Compensation Act 1985 and is maintained by the Victorian WorkCover Authority. The Victorian WorkCover Authority is a statutory authority established by statute enacted by the Victorian State Parliament and domiciled in Australia. The Victorian WorkCover Authority trades under the name of WorkSafe Victoria (WorkSafe).
Basis of preparation These financial statements cover WorkSafe as an individual reporting entity and include the Victorian Asbestos Eradication Agency (VAEA), which has been consolidated into WorkSafe’s financial statements pursuant to a determination made by the Minister for Finance under section 53(1)(b) of the Financial Management Act 1994. The VAEA is not controlled by WorkSafe. All transactions and balances between consolidated entities are eliminated. The financial statements have been prepared on an accrual basis, and are based on historical costs and do not take into account changing money values, except for outstanding claims liabilities, recoveries receivable, employee benefits liabilities and leasehold restoration provision which are included at present value, and investments and property, plant and equipment which are included at fair value. Historical cost is based on the fair value of the consideration given in exchange for assets. Amounts have been rounded to the nearest thousand dollars, unless otherwise stated. The presentation currency of WorkSafe is the Australian dollar, which is also its functional currency. Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported. Unless otherwise stated, accounting policies selected have been consistently applied to all periods presented in the financial statements. Judgements, estimates and assumptions are required to be made about financial information being presented. The significant judgements in the preparation of these financial statements are disclosed in the notes where amounts affected by those judgements are disclosed. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revisions affect only that period, or in the period of the revision and future periods if the revisions affect both current and future periods. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements have been disclosed in Notes 2.3.4, 2.3.5 and 7.3.
52 WorkSafe Victoria Annual Report 2017 Compliance information These general purpose financial statements have been prepared in accordance with the Financial Management Act 1994 and applicable Australian Accounting Standards which include Interpretations, issued by the Australian Accounting Standards Board. For the purposes of preparing the financial statements, the Victorian State Government has determined that WorkSafe is a not-for-profit entity. Where appropriate, those paragraphs in the Australian Accounting Standards applicable to not-for-profit entities have been applied. The audited annual financial statements were authorised for issue in accordance with a resolution of the Board on 24 August 2017. Regulatory Context WorkSafe administers the following legislation: • Occupational Health and Safety Act 2004 – health, safety and welfare in the workplace • Workplace Injury Rehabilitation and Compensation Act 2013 – workers compensation and the rehabilitation of injured workers, where the injury occurred after 1 July 2014 • Accident Compensation Act 1985 – workers compensation and the rehabilitation of injured workers, where the injury occurred prior to 1 July 2014 • Dangerous Goods Act 1985 – explosives and other dangerous goods • Equipment (Public Safety) Act 1994 – high-risk equipment used in non-work-related situations • Workers Compensation Act 1958 – workers compensation prior to 1985. WorkSafe also administers regulations made under these Acts.
WorkSafe Victoria Annual Report 2017 53 Financial report
2. Results from insurance operations
Introduction to this section Structure WorkSafe has two important functions being prevention 2.1 Underwriting result of workplace injuries and helping injured workers back 2.2 Premiums into the workforce. 2.2.1 Premium revenue WorkSafe provides workplace injury insurance for 2.2.2 Premium receivables employers and manage the workers compensation 2.2.3 Premium creditors scheme in Victoria. 2.3 Claims The funding required to support WorkSafe’s functions are sourced from insurance premiums collected from 2.3.1 Claims expense employers within Victoria. 2.3.2 Outstanding claims This sections provides details of premium collected by 2.3.3 Recoveries revenue WorkSafe and expenditure incurred to perform its 2.3.4 Recoveries receivable functions. 2.3.5 Actuarial assumptions and methods 2.4 Authorised agent fees 2.5 Insurance contacts – risk management policies and procedures
2.1 Underwriting result
2017 2016 Note $000s $000s
Premium revenue 2.2.1 2,213,806 2,071,422 Underwriting expenses Gross claims incurred 2.3.1 (2,480,979) (2,806,465) Recoveries revenue 2.3.3 132,328 152,395 Net claims incurred (2,348,651) (2,654,070) Dispute resolution expenses 2.3.1 (31,069) (31,663) Authorised agent fees 2.4 (227,953) (245,410) Total underwriting expenses (2,607,673) (2,931,143) Underwriting result (393,867) (859,721)
54 WorkSafe Victoria Annual Report 2017 2.2 Premiums 2.2.1 Premium revenue
2017 2016 $000s $000s
Gross premium 2,230,804 2,102,981 Reassessment of prior years’ premium 47,010 34,624 Premium discount allowed (63,270) (58,024) Premium fines and penalties 10,290 9,815 Decrease (increase) in provision for impairment of premium debts 157 (154) Premium bad debts written-off (11,18 5) (17,820) 2,213,806 2,071,422
Premium revenue comprises amounts charged to employers by WorkSafe for WorkCover insurance. The earned portion of premiums received and receivable is recognised as revenue. Premium is treated as earned from the effective registration date and is recognised as revenue over the period. Included above is an estimated increase of $27.8 million (2016: $1.8 million) in relation to confirmed premium. Confirmed premium estimate makes allowance for employers who have not yet certified their remuneration. The premium increase or decrease that may result from the reassessment of prior year’s premium estimate (ie the difference between the actuarial estimation and actual certification) is taken up as a part of current year’s premium. The rateable remuneration estimate on which the confirmed premium estimate is based, is obtained through an independent actuary. Bad debts written-off during the year include unpaid premium for prior years. 2.2.2 Premium receivables
2017 2016 $000s $000s
Premium receivables 93,251 96,287 Provision for impairment (45,169) (45,326) 48,082 50,961 Confirmed premium estimate 27,800 1,800 75,882 52,761
Premium receivable amounts due from employers (being the amounts due excluding the provision for confirmed premium) are initially recognised at fair value. They are subsequently measured at fair value which is approximated to by taking the initially recognised amounts and reducing them for impairment as appropriate. The confirmed premium estimate at 30 June 2017 represents an increase in premium receivables of $27.8 million (2016: $1.8 million) based on the actuarial assessment. The average credit period for premium receivables is 30 days. Included within premium receivables at the reporting date are $50.36 million (2016: $54.52 million) of past due receivables and WorkSafe has provided provision for impairment for these receivables. WorkSafe does not hold any collateral over these balances. The average age of those receivables that are past due but not impaired is 71 days (2016: 70 days).
WorkSafe Victoria Annual Report 2017 55 Financial report
2017 2016 $000s $000s
Ageing of past due premium receivable 30 days past due 3,928 5,299 31 – 60 days past due 1,883 2,088 61 – 90 days past due 686 509 91 – 180 days past due 1,899 3,662 More than 180 days past due 41,964 42,958 50,360 54,516
A provision for impairment of receivables is established when there is objective evidence that WorkSafe will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows. The impairment charge is recognised in the comprehensive operating statement. WorkSafe provides fully for uncollected debts of the employers who are in administration, receivership, liquidation or bankruptcy, and those debts where events have occurred and/or historical experience exists, which indicates that recovery of the debt is considered unlikely. A provision is also made for other past due debts based on historical loss experience.
2017 2016 $000s $000s
Movement in provision for impairment Balance at beginning of the year 45,326 45,172 Amounts written-back during the year (773) (2,441) Increase in allowance recognised in comprehensive operating statement 616 2,595 Balance at end of the year 45,169 45,326
Unexpired risk liability All WorkCover insurance expires on 30 June and hence no unearned premium exists at the year end reporting date. Given no unearned premium exists at the year end reporting date a liability adequacy test is not undertaken at 30 June. A liability adequacy test assesses whether the unearned premium liability is sufficient to cover all expected future cash flows relating to future claims against current insurance contracts. 2.2.3 Premium creditors Premium creditors represent amounts owing to employers as a result of premium being in credit at the reporting date.
56 WorkSafe Victoria Annual Report 2017 2.3 Claims 2.3.1 Claims expense
2017 2016 Current Year Prior Years Total Current Year Prior Years Total $000s $000s $000s $000s $000s $000s
Gross claims paid 205,868 1,634,473 1,840,341 186,322 1,641,898 1,828,220 Movement in 2,823,360 (1,681,420) 1,141,940 2,597,554 (2,197,715) 399,839 outstanding claims Gross claims 3,029,228 (46,947) 2,982,281 2,783,876 (555,817) 2,228,059 incurred – undiscounted Discount and (440,960) (60,342) (501,302) (355,188) 933,594 578,406 discount movement Gross claims 2,588,268 (107,289) 2,480,979 2,428,688 377,777 2,806,465 incurred
Current year claims relate to risks borne in the current financial year. Prior year claims relate to a reassessment of the expense for risks borne in all previous financial years. The claim payments and movement in outstanding claims liability during the year by payment type are as follows:
2017 2016 Claims Liability Claims Liability Paid Movement Total Paid Movement Total $000s $000s $000s $000s $000s $000s
Weekly 669,448 587,187 1,256,635 632,413 106,719 739,132 compensation Medical including 404,556 5,757 410,313 369,285 282,299 651,584 medico-legal Impairment 87,360 (31,212) 56,148 90,546 1,150 91,696 benefits Common law 522,767 87,966 610,733 562,688 397,340 960,028 Other payment 157,603 (47,717) 109,886 173,288 36,143 209,431 types Claims handling – (9,702) (9,702) – 83,460 83,460 expenses Risk margin – 48,359 48,359 – 71,134 71,134 Self-insurer (1,393) – (1,393) – – – re-entry settlement Gross claims 1,840,341 640,638 2,480,979 1,828,220 978,245 2,806,465 incurred
Claims handling expenses are an allowance made for the expenses to be incurred in settling claims. The risk margin provides for the inherent uncertainty in the central estimate of the outstanding claims.
WorkSafe Victoria Annual Report 2017 57 Financial report
2017 2016 $000s $000s
Gross claims incurred 2,480,979 2,806,465 Dispute resolution expenses Certified payments to Accident Compensation Conciliation Service (ACCS) 14,966 15,566 Contribution to DTF Consolidated Fund for court use 8,587 8,377 Medical Panels costs 4,194 4,435 WorkCover Assist costs 2,232 2,218 Union Assist costs 1,090 1,067 31,069 31,663 Total claims expense recognised in the comprehensive operating statement 2,512,048 2,838,128
The estimated cost of claims includes expenses to be incurred in settling claims gross of the expected value of recoveries. Claims expense which includes the movement in the liability for outstanding claims, is recognised in respect of insurance business and uninsured employers. 2.3.2 Outstanding claims
2017 2016 $000s $000s
Summary of valuation Expected future claim payments (undiscounted) 13,504,135 12,477,268 Discount to present value (2,713,234) (2,288,347) 10,790,901 10,188,921 Claims handling expenses 1,220,978 1,230,680 12,011,879 11,419,601 Risk margin 968,550 920,191 Liability for outstanding claims 12,980,429 12,339,792 Current 1,940,747 1,839,073 Non-current 11,039,682 10,500,719 12,980,429 12,339,792
Refer to Note 2.3.5 for detailed disclosures of how the claim liability is estimated and actuarial assumptions applied.
2017 2017 2016 2016 2015 Liability Movement Liability Movement Liability $000s $000s $000s $000s $000s
Movement in outstanding claims liability Weekly compensation 3,385,340 587,187 2,798,153 106,719 2,691,434 Medical including medico-legal 2,555,777 5,757 2,550,020 282,299 2,267,721 Impairment benefits 442,397 (31,212) 473,609 1,150 472,459 Common law 3,608,895 87,966 3,520,929 397,340 3,123,589 Other payment types 798,493 (47,717) 846,210 36,143 810,067 Claims handling expenses 1,220,978 (9,702) 1,230,680 83,460 1,147,220 Risk margin 968,550 48,359 920,191 71,134 849,057 12,980,429 640,637 12,339,792 978,245 11,361,547
58 WorkSafe Victoria Annual Report 2017 Reconciliation of movement in discounted net outstanding claims liability
2017 2016 Gross Recoveries Net Gross Recoveries Net $000s $000s $000s $000s $000s $000s
Balance at 12,339,792 (281,804) 12,057,988 11,361,547 (271,617) 11,089,930 beginning of the year Effect of change (6 0 0 , 411) 5,272 (595,139) 492,968 (3,160) 489,808 in economic assumptions Effect of past 12,919 – 12,919 (127,001) 3,939 (123,062) inflation rate different to assumptions Effect of 645,324 6,471 651,795 136,147 (7,606) 128,541 changes in other assumptions Increase in 2,768,463 (128,813) 2,639,650 2,428,886 (127,486) 2,301,400 claims incurred in current accident year Release of risk (483,809) – (483,809) (482,362) – (482,362) margin and claims handling expenses Cost of prior 138,493 (15,258) 123,235 357,827 (18,082) 339,745 period claims moving closer to payment Incurred claims 2,480,979 (132,328) 2,348,651 2,806,465 (152,395) 2,654,070 recognised in the comprehensive operating statement Claim (payments) (1,840,341) 132,311 (1,708,030) (1,828,220) 142,208 (1,686,012) recoveries during the year Balance at end 12,980,429 (281,820) 12,698,609 12,339,792 (281,804) 12,057,988 of the year
WorkSafe Victoria Annual Report 2017 59 Financial report
The following tables show the development of gross and net undiscounted outstanding claims relative to the ultimate expected claims for the ten most recent accident years. Gross
Accident year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
$000s $000s $000s $000s $000s $000s $000s $000s $000s $000s $000s Estimate of ultimate claims cost: – At end of 1,662,551 1,664,184 1,820,572 2,023,875 2,106,262 2,179,643 2,118 , 6 3 0 2,235,807 2, 314 , 811 2,529,716 accident year – One year 1,624,733 1,720,922 1,882,276 2,007,352 2,104,767 2,008,636 2,107,834 2,228,919 2,409,244 later – Two years 1,631,119 1,707,164 1,836,844 1,958,725 2,064,478 1,983,982 2,056,635 2,287,387 later – Three years 1,605,039 1,671,093 1,803,577 1,942,964 2,041,238 1,960,339 2,084,681 later – Four years 1,597,988 1,637,270 1,800,487 1,930,671 2,050,669 1,936,883 later – Five years 1,572,369 1,656,463 1,801,084 1,971,275 2,124,491 later – Six years 1,562,952 1,631,301 1,784,148 1,949,871 later – Seven years 1,558,297 1,650,735 1,787,581 later – Eight years 1,548,871 1,649,787 later – Nine years 1,555,911 later Current 1,555,911 1,649,787 1,787,581 1,949,871 2,124,491 1,936,883 2,084,681 2,287,387 2,409,244 2,529,716 20,315,552 estimate of cumulative claims cost Cumulative (1,271,541) (1,268,697) (1,309,515) (1,351,628) (1,246,170) (998,593) (846,178) (711, 8 0 9) (488,817) (199,270) (9,692,217) payments Outstanding 284,369 381,090 478,066 598,243 878,321 938,290 1,238,504 1,575,578 1,920,428 2,330,446 10,623,335 claims – undiscounted 2007 and prior 2,880,800 years Total 13,504,135 outstanding claims – undiscounted Discount (2,713,234)
Claims 1,220,978 handling expenses Risk margin 968,550
Total gross outstanding claims per balance sheet 12,980,429
60 WorkSafe Victoria Annual Report 2017
Net
Accident year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
$000s $000s $000s $000s $000s $000s $000s $000s $000s $000s $000s Estimate of ultimate claims cost: – At end of 1,589,516 1,586,157 1,732,804 1,918,524 1,986,223 2,060,784 1,996,268 2,101,986 2,182,305 2,393,970 accident year – One year 1,550,542 1,635,318 1,782,741 1,902,261 1,987,432 1,890,925 1,983,244 2,096,658 2,276,919 later – Two years 1,548,512 1,616,939 1,737,719 1,855,485 1,947,150 1,863,242 1,931,906 2,155,537 later – Three years 1,517,241 1,579,024 1,707,638 1,839,386 1,922,210 1,838,918 1,958,459 later – Four years 1,508,310 1,546,271 1,703,178 1,820,899 1,930,712 1,817,542 later – Five years 1,484,389 1,564,933 1,698,766 1,860,879 2,004,565 later – Six years 1,474,210 1,536,864 1,683,741 1,839,273 later – Seven years 1,468,834 1,556,307 1,689,997 later – Eight years 1,461,418 1,557,030 later – Nine years 1,468,464 later Current 1,468,464 1,557,030 1,689,997 1,839,273 2,004,565 1,817,542 1,958,459 2,155,537 2,276,919 2,393,970 19,167,755 estimate of cumulative claims cost Cumulative (1,187,912) (1,181,556) (1,221,074) (1,256,743) (1,151,744) (913,569) (762,484) (629,887) (409,025) (119 ,16 9) (8,833,163) payments Outstanding 280,553 375,474 468,923 582,529 852,821 903,973 1,195,975 1,525,649 1,867,893 2,274,801 10,328,592 claims – undiscounted 2007 and prior 2,870,186 years Total 13,198,778 outstanding claims – undiscounted Discount (2,689,698)
Claims 1,220,978 handling expenses Risk margin 968,550
Total outstanding claims net of recoveries per balance sheet 12,698,608
WorkSafe Victoria Annual Report 2017 61 Financial report
2.3.3 Recoveries revenue
2017 2016 Current Year Prior Years Total Current Year Prior Years Total $000s $000s $000s $000s $000s $000s
Recoveries 79,628 52,683 132,311 78,317 63,891 142,208 received Movement in 55,645 (50,992) 4,653 54,189 (50,944) 3,245 recoveries receivable Recoveries 135,273 1,691 136,964 132,506 12,947 145,453 revenue – undiscounted Discount and (6,459) 1,823 (4,636) (5,020) 11, 9 6 2 6,942 discount movement Recoveries 128,814 3,514 132,328 127,486 24,909 152,395 revenue
Recoveries from the Transport Accident Commission, prior insurers and other third parties are recognised as revenue. 2.3.4 Recoveries receivable
2017 2016 $000s $000s
Expected future recoveries (undiscounted) 305,356 300,704 Discount to present value (23,536) (18,900) Recoveries receivable on incurred claims 281,820 281,804 Current 49,080 47,769 Non-current 232,740 234,035 281,820 281,804
Recoveries receivable are reported as assets and measured as the present value of the expected future receipts. The actuarial assessment of the recoveries receivable is in a manner similar to the assessment of outstanding claims (see Note 2.3.2). A provision for impairment is established when there is objective evidence that WorkSafe will not be able to collect all the recovery amounts.
62 WorkSafe Victoria Annual Report 2017 2.3.5 Actuarial assumptions and methods WorkSafe provides WorkCover insurance which is long-tail in nature, meaning that claims may not be reported until many years after the injury and are typically settled more than one year after being reported. Significant estimates and judgements are made by WorkSafe’s independent valuation actuary in respect of outstanding claims liability amounts disclosed in the financial statements. These estimates and judgements are continually being evaluated and are based on historical experience, as well as enhancements to actuarial modelling techniques. The key areas of significant estimates and judgements and the methodologies used to determine key assumptions are set out below. Provision is made for the estimated cost of claims incurred but not settled at the reporting date, including the cost of claims incurred but not reported to WorkSafe. WorkSafe takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established. The estimation of outstanding claims liabilities is based largely on the assumption that past developments are an appropriate predictor of the future and involves a variety of actuarial techniques that analyse experience, trends and other relevant factors. Various types of payments made by WorkSafe are grouped into a number of benefit categories and are analysed separately. It is then followed by calculations that take into account of inflation, discount rates and various assumptions, etc. This is illustrated below:
• Various actuarial models are applied to estimate future claim payments (can be a combination of methods depending on the benefit type and extent of development of past incident period). Actuarial modelling technique include: – payments per claim incurred model – payments per active claim model Modelling – payments per claim settled model – annuity based individual claim model.
• Prior claims experience is analysed and this provides a basis for assumptions to be used in the actuarial models. • Assumptions selected include allowances for uncertainties which may create distortions in the experience including: – changes in WorkSafe processes which might accelerate or slow down the development and/ or recording of paid or incurred claims, compared with the statistics from previous periods Assumptions – changes in the legal environment – the effects of inflation – medical and technological developments. • Assumptions are selected to produce actuarial projections that are unbiased and central.
• The actuarial projections are converted to inflated values, taking into account assumptions about future inflation. • The inflated estimated liability is discounted to its present value. Discount rates are based on the risk free rates. This is the net central estimate of the outstanding claims liability. Results • A risk margin is applied to achieve a 75% probability of adequacy. This is the provision.
WorkSafe Victoria Annual Report 2017 63 Financial report
Actuarial assumptions The following assumptions have been made in determining the outstanding claims liabilities:
2017 2016
Average claim frequency (claims per worker) 0.91% 0.96% Average claim size $73,438 $65,714 • Average weekly size $26,538 $21,604 • Average common law size $23,770 $22,546 • Average all other payments size $23,130 $21,563 Expense rate 11. 3 % 12.1% Discount rate • Weighted average discount rate (0 – 20 years) 2.73% 2.15% • Long-term discount rate (21+ years) 4.58% 5.50% Inflation rate • Weighted average AWE inflation rate (0 – 20 years) 3.43% 3.46% • Long-term AWE inflation rate (21+ years) 3.29% 3.75% • Weighted average CPI inflation rate (0 – 20 years) 2.12% 2.50% • Long-term CPI inflation rate (21+ years) 2.03% 2.50% Average weighted term to settlement from balance date 6.1 years 6.2 years Risk margin 8.0% 8.0%
Process used to determine assumptions A description of the processes used to determine these assumptions is provided below: Average claim frequency Claim frequency for the current underwriting year is estimated by projecting the number of claims incurred and dividing this by the number of workers for the year. The average claim frequency is not used directly in the valuation models but provides a high level indicator of claim experience. Average claim size The average claim size is in respect of the current underwriting year and takes into account the expected payments for each payment type (eg weekly, medical, impairment benefits, common law, other), as well as the proportion of total injured workers who receive each benefit. The figures shown in the above table are in current values, ie in dollars at the respective balance date before the impact of inflation to the time of payment and discounting the resultant payments back to the valuation date. The average claim size is further broken down into two key components; the costs of weekly compensation and common law compensation (including legal costs) per claim. This takes into account the number of injured workers expected to access the particular compensation as well as the amount of compensation expected to be paid. For completeness, the average sizes of other compensations are also shown. Expense rate The claims handling expense allowance is calculated as a proportion of total projected claim payments of the scheme at the balance date based on recent historical experience. Discount rate Discount rates adopted are “risk-free” rates, set by reference to traded Commonwealth Government securities. For years 21 onwards there are few risk-free securities on issue with term to maturity beyond this point. Therefore, the long-term discount rates are set with reference to historical observed discount rates, as well as the real rate of return above inflation. Inflation rate Economic inflation assumptions are set by reference to current bank and other economic forecasters.
64 WorkSafe Victoria Annual Report 2017 Average weighted term to settlement The average weighted term to settlement is calculated separately by benefit type based on historical settlement patterns. It is an outworking of the models rather than an explicit assumption and represents the average inflated and discounted term of payments in the outstanding liability from the balance date to payment. Risk margin The risk margin provides for the inherent uncertainty in the central estimate of the outstanding claims. An overall risk margin is determined allowing for the relative uncertainty of the outstanding claims estimate. Uncertainty is analysed for each benefit type taking into account potential uncertainties relating to the actuarial models and assumptions, the quality of the underlying data used in the models, the general insurance environment, and the impact of legislative reform. The estimate of uncertainty is greater for long-tail business when compared to short-tail business due to the longer time until settlement of outstanding claims. The assumptions regarding uncertainty are applied to the net central estimates in order to arrive at an overall provision which is intended to have a 75% probability of adequacy. Sensitivity analysis – insurance contracts WorkSafe’s valuation actuary conducts sensitivity analyses to quantify the exposure to risk of changes in the key underlying variables. The valuations included in the reported results are calculated using certain assumptions about these variables as disclosed above. The movement in any key variable will impact the financial performance and equity of WorkSafe. The table below describes how a change in each assumption will affect the insurance liabilities and shows an analysis of the sensitivity of the net result and equity to changes in these assumptions.
Variable Impact of movement in variable Average weekly size The average weekly size per claim will vary with the number of injured workers receiving weekly compensation and the amount of that compensation. The amount of compensation depends not only on the amount paid per week but more significantly on the durations for which injured workers receive this compensation. Increases or decreases in any of these components will result in a corresponding impact on claims expense. The ± 1% movement shown in the impact table below represents a 1% increase or decrease in all future estimated weekly payments included in the outstanding claims liability. Average common law size The average common law size per claim will vary with the number of injured workers receiving common law compensation and the amount of that compensation (including legal costs). Increases or decreases in any of these components will result in a corresponding impact on claims expense. The ± 1% movement shown in the impact table below represents a 1% increase or decrease in all future estimated common law payments included in the outstanding claims liability. Expense rate An estimate for the internal costs of handling claims is included in the outstanding claims liability. An increase or decrease in the expense rate assumption would have a corresponding impact on claims expense. Discount rates The outstanding claims liability is calculated by reference to expected future payments. These payments are discounted to adjust for the time value of money. An increase or decrease in the assumed discount rate will have an opposing impact on claims expense. Inflation rates Expected future payments are inflated to take account of expected future cost increases. An increase or decrease in the assumed levels of future inflation would have a corresponding impact on claims expense.
WorkSafe Victoria Annual Report 2017 65 Financial report
The impact on net result and equity, had changes in the key variables occurred at the end of the reporting period, is summarised in the table below:
2017 2016 Net Result Equity Net Result Equity $000s $000s $000s $000s
Recognised amounts per the financial statements 694,149 2,774,685 (475,271) 2,080,536
Variable Movement Average weekly size +1% 668,556 2,749,092 (496,425) 2,059,382 –1% 719,742 2,800,278 (454,117) 2,101,690 Average common law size +1% 666,866 2,747,402 (501,889) 2,053,918 –1% 721,432 2,801,968 (448,653) 2,107,154 Expense rate +1% 613,222 2,693,758 (551,668) 2,004,139 –1% 775,076 2,855,612 (398,874) 2,156,933 Weighted average discount rate (0–20 years) +0.5% 931,729 3,012,265 (244,469) 2,311,338 –0.5% 442,086 2,522,622 (720,462) 1,835,345 Long-term discount rate (21+years) +0.5% 712,026 2,792,562 (456,664) 2,099,143 –0.5% 674,735 2,755,271 (495,446) 2,060,361 Weighted average AWE & CPI inflation rate (0–20 years) +0.5% 447,287 2,527,823 (712,186) 1,843,621 –0.5% 929,106 3,009,642 (249,936) 2,305,871 Long-term AWE & CPI inflation rate (21+ years) +0.5% 674,335 2,754,871 (495,965) 2,059,842 –0.5% 712,527 2,793,063 (456,054) 2,099,753
The impact of changes in the key variables on net result and equity represents the impact on the net outstanding claims liability inclusive of risk margin.
2.4 Authorised agent fees
2017 2016 $000s $000s
Authorised agent fees 225,740 243,327 Management agent fees 2,213 2,083 227,953 245,410
Authorised agents operating under an instrument of appointment issued pursuant to the Workplace Injury Rehabilitation and Compensation Act 2013 are paid fees for acting on behalf of WorkSafe in the issuing of WorkCover insurance, collection of premiums and the administration of claims. The agent remuneration includes performance based components. Under section 494 of the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is empowered to administer the Workers Compensation Act 1958. Management agent fees represent amounts paid for managing liabilities under the 1958 Act, and the payments made to the TAC for the management of WorkSafe claims of injured workers with catastrophic injuries.
66 WorkSafe Victoria Annual Report 2017 2.5 Insurance contracts – risk management policies and procedures The financial condition and operation of WorkSafe is affected by a number of key risks including insurance, interest rate, credit, market, liquidity, financial and operational risks. WorkSafe’s policies and procedures in respect of managing these risks are set out below. Objectives in managing risks arising from insurance contracts and policies mitigating those risks WorkSafe has an objective to manage insurance risk thus reducing the volatility of insurance premiums and performance from insurance operations. In addition to the inherent uncertainty of insurance risk, which can lead to significant variability in the loss experience, the net result for WorkSafe is significantly affected by short-term market and economic factors external to the organisation as explained in Note 3.4. WorkSafe has developed, implemented and maintained a sound and prudent risk management strategy that encompasses all aspects of its operations. The strategy sets out WorkSafe’s policies and procedures, processes and controls in relation to the management of likely financial and non-financial risks. Key aspects of the processes in place to mitigate risks include: • the use of sophisticated management information systems, which provide reliable and up-to-date data on the risks to which the business is exposed at any point in time • the use of detailed internal monitoring tools which link actuarial valuation projections with the management information systems to monitor claim patterns • adherence to reliable procedures for pricing risk • an investment allocation strategy which seeks to optimise returns within the balance sheet risk parameters adopted by WorkSafe. Terms and conditions of insurance business The terms and conditions of the WorkCover insurance scheme administered by WorkSafe were established under the Accident Compensation Act 1985 and have continued operation under the Workplace Injury Rehabilitation and Compensation Act 2013. Cover is for annual periods ending 30 June each year. The terms and conditions of the scheme are the same for all insured employers. Concentration of insurance risk WorkSafe underwrites WorkCover insurance for Victorian employers. The employers are diversified by sector, industry, size and geographic location. Concentration of insurance risk principally arises from major sites or centres of employment such as the Melbourne CBD. Such issues are considered when determining scheme financing strategies. Interest rate risk Assets and liabilities arising from insurance contracts entered into are directly exposed to interest rate risk. Changes in interest rates affect the valuation of WorkSafe’s assets and liabilities. Credit risk Assets and liabilities arising from insurance contracts are stated in the balance sheet at the amounts that best represent the maximum credit risk exposure at the reporting date. There are no significant concentrations of credit risk.
WorkSafe Victoria Annual Report 2017 67 Financial report
3. Investment portfolio and performance
Introduction to this section This section is structured as follows: This section includes the investments that are held by 3.1 Investment income and investment expenses WorkSafe that are also utilised to fund the functions, 3.2 Investments as well as the associated returns, outlined in Section 2. 3.3 Cash and cash equivalents 3.4 Explanation of volatility of financial results
3.1 Investment income and investment expenses
2017 2016 $000s $000s
Gross investment income Dividends and distributions 425,652 5 6 5 , 511 Interest 49,347 83,063 Change in fair value of investments at fair value through the comprehensive operating 1,185,601 (218,779) statement: Total investment income 1,660,600 429,795 Investment expenses (48,733) (45,952) Net investment income 1,611,867 383,843
Change in fair value of investments is the difference between the fair value of the investments at 30 June 2016 or the cost of acquisition (for investments purchased during the year), and sales proceeds or their fair value at 30 June 2017. Dividend income is recognised when WorkSafe’s right to receive payment has been established, whilst interest revenue is recognised on an accrual basis. Trust distribution income is recognised when the market prices are quoted ex-distribution for listed trusts. Unlisted trust distribution income is recognised when the trustee declares distributions. Interest represents interest earned on deposits and money market securities, together with coupon interest. Investment expenses are fees paid to the Victorian Funds Management Corporation (VFMC) under the Client Funds Management Service Agreement and other sundry professional fees incurred by WorkSafe in relation to management of the investment portfolio. The net return on the investment portfolio for the year was 11.57% (2016: 3.04%).
3.2 Investments Summary of investments integral to general insurance activities carried at fair value through the comprehensive operating statement WorkSafe’s investment activity is undertaken pursuant to the Workplace Injury Rehabilitation and Compensation Act 2013, the Borrowing and Investment Powers Act 1987 and formal approvals issued by the Treasurer of Victoria. WorkSafe’s investment portfolio is managed by the VFMC in accordance with the Prudential Standard covering Victorian insurance agencies. All WorkSafe investments must be placed with the VFMC. WorkSafe’s responsibility is to set investment objectives for the VFMC after considering such matters as WorkSafe’s capital needs, pricing and the Government’s risk preferences. The WorkSafe Board is not responsible for the management or prudential supervision of the investments – the management responsibility rests with the VFMC and the prudential supervision responsibility rests with the Department of Treasury and Finance (DTF). The investment approach that is determined by the VFMC for WorkSafe is documented in a detailed Investment Risk Management Plan (IRMP) which is approved by the Treasurer. The IRMP is prepared by the VFMC and addresses issues concerning strategy, portfolio construction, benchmarks and risk management.
68 WorkSafe Victoria Annual Report 2017 Investment performance, including comparisons to market benchmarks, is reported to the WorkSafe Board. The Board’s standing Risk Committee reviews strategic financial risks and balance sheet matters, including the examination of investment objectives and portfolio performance. Each six months, the VFMC Board certifies that the investment portfolio has been managed in accordance with the approved IRMP and WorkSafe’s investment objectives. A certification is also provided to the DTF annually. The investment portfolio consists of a range of asset exposures including: cash and nominal bonds to cover short-term risk and liquidity needs; inflation linked assets that more closely match WorkSafe’s liability characteristics; equities to provide for long-term growth; and other assets that provide diversification benefits across the general portfolio. As a part of the VFMC’s investment strategy, contracts are entered into which require WorkSafe to contribute additional future capital (partly paid shares and units). While these future obligations amounted to $1,215.79 million (2016: $1,432.56 million), capital call to subscribe outstanding at the reporting date was $2.32 million (2016: nil). WorkSafe’s investments at the reporting date comprises:
2017 2016 $000s $000s
Investment assets Cash and cash equivalents 1,631,890 1,594,096 Cash collateral and margin accounts 7,269 63,828 Receivables 768,387 837,781 Derivative assets 372,461 292,458 Equity and managed investment schemes 12,768,385 10,480,278 Debt securities 227,386 875,817 15,775,778 14,144,258
Investment related liabilities Cash collateral and margin accounts (263,485) (186,305) Payables (233,136) (228,953) Derivative liabilities (57,213) (87,095) (553,834) (502,353) 15,221,944 13,641,905
2017 2016 $000s $000s
Current Investment assets 2,682,312 2, 611, 3 5 5 Investment related liabilities (553,729) (500,120) 2,128,583 2,111,235
Non-current Investment assets 13,093,466 11,532,903 Investment related liabilities (105) (2,233) 13,093,361 11,530,670 15,221,944 13,641,905
WorkSafe Victoria Annual Report 2017 69 Financial report
WorkSafe has determined that all investments are held to back WorkCover insurance liabilities. Investments are designated at fair value through the comprehensive operating statement on the basis that the investments are managed as a portfolio based on their fair values, and have their performance evaluated in accordance with documented risk management and investment strategies. Initial recognition is at cost in the balance sheet, with attributable transaction costs expensed as incurred. Subsequent measurement is at fair value with any resultant realised and unrealised gains or losses recognised in the comprehensive operating statement. The details of categories of financial instruments and the methods and assumptions used to estimate fair value are included in Note 7.3. Investments that are due to mature, expire or be realised within twelve months of reporting date are classified as current investments for the purposes of classification in the balance sheet. While this classification policy may result in a reported working capital deficit, included in non-current investments is a large proportion of liquid securities which the VFMC can use to ensure sufficient liquidity is available to meet WorkSafe’s operating requirements. Investments are derecognised when the rights to receive future cash flows from the assets have expired, or have been transferred, and WorkSafe has transferred substantially all the risks and rewards of ownership. The details on how WorkSafe manages its exposure to financial risks are included in Note 7.1.
3.3 Cash and cash equivalents Reconciliation of cash and cash equivalents For the purposes of the cash flow statement, cash and cash equivalents include cash in hand and highly liquid investments that have short periods to maturity and are readily convertible to cash at the option of WorkSafe. Cash and cash equivalents at the end of the financial year as shown in the cash flow statement are reconciled to the related items in the balance sheet as follows:
2017 2016 $000s $000s
Cash in hand and at bank 40,325 26,987 Investments – Cash and cash equivalents1 1,631,890 1,594,096 1,672,215 1,621,083
Note: 1. Included in cash and cash equivalents at 30 June 2017 is the net amount of $256.22 million (2016: $122.48 million), representing cash received as collateral and cash held with brokers against future repayment obligations under derivative contracts.
70 WorkSafe Victoria Annual Report 2017 2017 2016 $000s $000s
Reconciliation of net result to net cash flows from operating activities Net result for the year 694,149 (475,271) Change in fair value of investments at fair value through the comprehensive operating (1,185,601) 218,779 statement Depreciation on property, plant and equipment 4,731 6,091 Amortisation on intangibles 15,946 15,789 Loss on disposal of plant and equipment 59 238 Write-down of intangibles – 337 Movements in provisions due to changes in discount rates (681) 762
Changes in assets and liabilities: (Increase) in premiums receivable (23,121) (7,888) Decrease in investment income receivable 10,622 1,369 (Increase) in recoveries receivable (17) (10,187) Decrease in sundry receivable 78 118 (Increase) in prepayments (1,789) (532) Decrease (increase) in net deferred tax assets 264,667 (241,947) Increase (decrease) in premium creditors 10,144 (428) Increase (decrease) in other payables 6,603 (14,498) Increase in outstanding claims 640,637 978,245 (Decrease) in tax liabilities – (113 , 6 81) (Decrease) increase in provisions (275) 6,195 Total adjustments (257,997) 838,762 Net cash flows from operating activities 436,152 363,491
WorkSafe Victoria Annual Report 2017 71 Financial report
3.4 Explanation of volatility of financial results This note provides additional analysis of the result before income tax of $958.82 million (2016: $(707.73) million). Given the long-term nature of the WorkSafe scheme both from investment and outstanding claims perspectives, the net result for WorkSafe is significantly affected by short-term market and economic factors external to the organisation. External factors contribute to the difference between actual returns and the long-term estimated returns established by management, and also include major changes in economic assumptions and legislative changes. External factors can cause significant variations in reported results from year to year as illustrated below. Accordingly for internal management reporting purposes, WorkSafe monitors and measures its financial performance based on performance from insurance operations (PFIO) without the impact of external factors. This approach is considered a more appropriate indicator for measuring financial performance and is adopted for reporting to the Victorian State Government. The impact of external factors on the financial result is explained below:
2017 2016 $000s $000s
Impact on result from internal factors Performance from insurance operations 233,049 280,425
Impact on result from external factors Difference between actual investment returns and long-term expected returns 589,918 (621,404) Changes in inflation assumptions and discount rates 582,220 (366,746) Legislative changes (446,372) – Result before income tax 958,815 (707,725)
Favourable conditions experienced in the investment markets in the 12 months to 30 June 2017 resulted in the actual investment return being higher than the expected long-term rate of return. The net return on the investment portfolio for the year was 11.57% (2016: 3.04%), compared to the long-term estimated return established by management of 7.50% (2016: 7.50%) per annum based on its investment strategy. There was a decrease of $595.14 million in the net outstanding claims liability at 30 June 2017 due to the higher assumed discount rates. This decrease was partially off-set by an increase in claims liability of $12.92 million due to actual inflation in the 12 months to 30 June 2017 being higher than expected. There was an increase of $446.37 million in claims liability at 30 June 2017 resulting from legislative changes relating to the Compensation Legislation Amendment Act 2016. At 30 June 2016 there was an increase of $489.81 million in the net outstanding claims liability due to the lower assumed discount rates. The increase was partially off-set by a reduction in claims liability of $123.06 million due to actual inflation in the 12 months to 30 June 2016 being lower than expected.
72 WorkSafe Victoria Annual Report 2017 4. Cost of operations
Introduction to this section This section contains the disclosures: This section provides details of other non-insurance 4.1 Other income income and cost earned/incurred by WorkSafe in its 4.2 Other operating costs day-to-day operating activities. 4.3 Employee superannuation 4.4 Employee related provisions
4.1 Other income
2017 2016 $000s $000s
Self-insurer receipts 12,348 12,759 Health & safety license income 4,910 4,916 Fines and penalties 2,781 5,545 Asset rental income – ACCS 572 701 Sundry receipts 657 671 21,268 24,592
Fines and penalties income is recognised upon receipt of the payment. WorkSafe receives rental income from ACCS for the use of its plant and equipment.
4.2 Other operating costs
2017 2016 $000s $000s
Employee and related1 155,881 134,844 Information technology 23,374 26,128 Professional services 15,545 13,355 Marketing and communication 14,085 14,041 Occupancy and utilities 20,540 19,612 Research and external funding 14,376 10,469 Bad and doubtful debts written (back) off (1) 5 Movements in provisions due to changes in discount rates (681) 762 Depreciation 4,731 6,091 Amortisation 15,946 15,789 Loss on disposal of plant and equipment 59 238 Write-down of intangibles – 337 Other expenses2 16,598 14,768 280,453 256,439
Note: 1. Employee and related costs include $2.21 million (2016: $3.81 million) of termination benefits. 2. Other expenses include $14.80 million (2016: $14.34 million) of operating lease rentals.
Other operating costs include $23.69 million (2016: $9.56 million) associated with the implementation of Geelong relocation program.
WorkSafe Victoria Annual Report 2017 73 Financial report
4.3 Employee superannuation Superannuation is provided for employees via the following schemes:
2017 2016 $000s $000s
Defined contribution plans VicSuper 7,300 8,264 Other 7,021 5,361 14,321 13,625
Defined benefit plans Emergency Services Superannuation Scheme 1,584 1,678 15,906 15,303
WorkSafe does not recognise any defined benefit liability under the Emergency Services Superannuation Scheme, as WorkSafe has no legal or constructive obligation to pay future benefits relating to its employees. WorkSafe’s only obligation is to pay superannuation contributions as they fall due and this is expensed when incurred. The Department of Treasury and Finance discloses the State’s defined benefit liabilities in its financial report. The amount charged to the comprehensive operating statement in respect of defined benefit superannuation plan represents the contributions made by WorkSafe to the superannuation plans in respect of the current services of current WorkSafe employees. Employee superannuation includes contributions paid under salary sacrifice arrangements. At 30 June 2017, contributions outstanding were $nil (2016: $nil).
74 WorkSafe Victoria Annual Report 2017 4.4 Employee related provisions
2017 2016 $000s $000s
Current Annual leave Unconditional and expected to be settled wholly within 12 months 5 ,117 4,759 Unconditional and expected to be settled wholly after 12 months 5,292 4,827 10,409 9,586
Long service leave Unconditional and expected to be settled wholly within 12 months 3,238 9,795 Unconditional and expected to be settled wholly after 12 months 16,809 9,340 20,047 19,135
Termination benefits Unconditional and expected to be settled wholly within 12 months 808 2,946 31,264 31,667
On-costs Unconditional and expected to be settled wholly within 12 months 1,302 2,259 Unconditional and expected to be settled wholly after 12 months 3,509 2,169 4,811 4,428 Total current provisions 36,075 36,095
Non-current Long service leave 3,210 3,201 On-costs 519 496 Total non-current provisions 3,729 3,697 Total provisions 39,804 39,792
2017 $000s
Reconciliation of movement in on-cost provisions Balance at beginning of the year 4,924 Additional provisions recognised 2,378 Reductions arising from payments (1,872) Unwinding of discount and effect of changes in discount rates (100) Balance at end of the year 5,330
WorkSafe Victoria Annual Report 2017 75 Financial report
Wages, salaries and annual leave Liabilities for wages, salaries and annual leave are recognised in payables and provision for employee benefits as current liabilities, because WorkSafe does not have an unconditional right to defer settlements of these liabilities. Depending on the expectation of the timing of settlement, liabilities for wages, salaries and annual leave are measured at: • undiscounted value – if WorkSafe expects to wholly settle within 12 months • present value – if WorkSafe does not expect to wholly settle within 12 months. Long service leave Unconditional long service leave (LSL) is disclosed as a current liability, even where WorkSafe does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. The components of this current LSL liability are measured at: • undiscounted value – if WorkSafe expects to wholly settle within 12 months • present value – if WorkSafe does not expect to wholly settle within 12 months. Conditional LSL is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value. Termination benefits Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee decides to accept an offer of benefits in exchange for the termination of employment. WorkSafe recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value. On-costs Provisions for superannuation, payroll tax and WorkCover insurance premium are recognised separately from the provision for employee benefits.
76 WorkSafe Victoria Annual Report 2017 5. Other assets and liabilities
Introduction to this section This section contains the following disclosures: This section includes other assets and liabilities that are 5.1 Other receivables employed by WorkSafe to support its day-to-day 5.2 Property, plant and equipment operating activities. 5.3 Intangibles 5.4 Other payables 5.5 Other provisions 5.6 Commitments and contingencies
5.1 Other receivables
2017 2016 $000s $000s
Contractual Sundry receivables 5,764 5,842 Provision for impairment (5) (6) 5,759 5,836
The average credit period for sundry receivables is 28 days. Included within sundry receivables at 30 June 2017 are $0.34 million (2016: $0.10 million) of past due receivables. WorkSafe provides fully for all receivables over 360 days because historical experience indicates that sundry receivables that are past due beyond 360 days are generally not recoverable. WorkSafe does not charge interest on overdue receivables nor hold collateral over these balances. The average age of those receivables that are past due but not impaired was 132 days (2016: 188 days).
2017 2016 $000s $000s
Movement in provision for impairment Balance at beginning of the year 6 1 (Decrease) increase in allowance recognised in the comprehensive operating statement (1) 5 Balance at end of the year 5 6
WorkSafe Victoria Annual Report 2017 77 Financial report
5.2 Property, plant and equipment
2017 2016 $000s $000s
Gross carrying amounts and accumulated depreciation Freehold land and buildings 4,940 51 Accumulated depreciation (15) – 4,925 51 Leasehold improvements 37,217 37,393 Accumulated depreciation (29,019) (29,920) 8,197 7,473 Computer equipment 18,282 16,975 Accumulated depreciation (14,355) (12,701) 3,926 4,274 Furniture and equipment 10,277 9,864 Accumulated depreciation (9,107) (9,236) 1,170 628 Total property, plant and equipment 70,716 64,283 Total accumulated depreciation (52,496) (51,857) Balance at end of the year, at fair value 18,220 12,426
Movements in Freehold Land Leasehold Computer Furniture and carrying amounts and Buildings Improvements Equipment Equipment Total $000s $000s $000s $000s $000s
30 June 2017 Balance at beginning 51 7,473 4,274 628 12,426 of the year Additions 4,889 3,435 1,442 880 10,646 Disposals – (52) (37) (32) (121) Depreciation expense (15) (2,658) (1,753) (305) (4,731) Balance at end of 4,925 8,198 3,926 1,171 18,220 the year
30 June 2016 Balance at beginning – 8,924 3,101 885 12,910 of the year Additions 51 2,793 2,790 211 5,845 Disposals – (238) – – (238) Depreciation expense – (4,006) (1,617) (468) (6,091) Balance at end of 51 7,473 4,274 628 12,426 the year
78 WorkSafe Victoria Annual Report 2017 Property, plant and equipment are measured initially at cost and subsequently at fair value less accumulated depreciation and impairment. Fair value is determined based on management’s assessment and for property, external valuations every 5 years. The cost of leasehold improvements is capitalised as an asset and depreciated over the remaining term of the lease. This includes the fair value of any dismantling, removal or restoration costs, where an obligation existed at the time of entering the contract for the premises to be returned to their original state upon vacation of the premises. Depreciation Depreciation is provided on a straight-line basis on plant and equipment to write off those assets over their estimated useful lives to WorkSafe to the assets’ estimated residual value. The depreciation rate applied to computer equipment is 33 1/3 % (2016: 33 1/3 %) and the rate applied to furniture and equipment is 20% (2016: 20%). Leasehold improvements to buildings are written-off over their estimated useful lives to WorkSafe or the remaining lease term, whichever is the lesser, using the straight-line method. The remaining lease terms range from 1 to 15 years (2016: 1 to 7 years). The estimated useful lives, residual values and depreciation methods are reviewed at the year end reporting date and adjusted if appropriate. Freehold land is not depreciated. Buildings have an estimated useful life of 40 years. Any gain or loss on disposal is recognised in the comprehensive operating statement. Impairment of assets Assets are assessed annually for indications of impairment except for: • financial instrument assets • deferred tax assets. If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written-off by a charge to the comprehensive operating statement. The recoverable amount is measured at the higher of depreciated replacement cost and fair value less costs to sell. It is deemed that, in the event of a loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made.
WorkSafe Victoria Annual Report 2017 79 Financial report
5.3 Intangibles
2017 2016 $000s $000s
Computer software Cost Balance at beginning of the period 150,370 144,400 Additions 7,171 6,307 Write-down of intangibles – (337) Balance at end of the year 157,541 150,370
Accumulated amortisation and impairment losses Balance at beginning of the year (91,983) (76,194) Amortisation expense (15,946) (15,789) Balance at end of the year (107,929) (91,983)
Carrying amounts Balance at beginning of the year 58,387 68,206 Balance at end of the year 49,612 58,387
Intangible assets represent identifiable non-monetary assets without physical substance. Intangible assets are recognised at cost. Costs incurred subsequent to initial recognition are capitalised when it is expected that additional future economic benefits will flow to WorkSafe. Amortisation is allocated to intangible assets with finite useful lives on a systematic basis over the assets’ useful lives. The amortisation period and the amortisation method for intangible assets with a finite useful life are reviewed at least at each year end. In addition an assessment is made at each year end reporting date to determine whether there are indicators that the intangible assets concerned are impaired. If so, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. All intangible assets of WorkSafe have definite useful lives. The useful lives range from 2 to 10 years (2016: 2 to 10 years). Internally-generated intangible assets representing internally developed software are recognised only from the point that it is probable that the expected future economic benefits attributable to the asset will flow to WorkSafe and that the cost of the item can be measured reliably. Where no internally-generated intangible asset can be recognised, development expenditure is expensed in the period as incurred. Internally-generated intangible assets are stated at cost less accumulated amortisation and impairment, and are amortised on a straight-line basis over their useful lives from the date the assets are available for use. Impairment losses are included in the comprehensive operating statement. Included in intangibles is the cost of software development in progress of $5.81 million (2016: $6.19 million). No amortisation has been allocated to software development in progress as the related software was not yet available for use at the reporting date.
80 WorkSafe Victoria Annual Report 2017 5.4 Other payables
2017 2016 $000s $000s
Contractual Other payables for supplies and services 96,733 90,898
Statutory Goods & services and fringe benefits taxes payable 2,745 1,976 99,478 92,874
The normal settlement terms of WorkSafe’s payables are 30 days. Payables consist of: • contractual payables, such as accounts payable, which represent liabilities for goods and services provided to WorkSafe prior to the end of the financial year that are unpaid, and arise when WorkSafe becomes obliged to make future payments in respect of the purchase of those goods and services • statutory payables, such as goods and services tax and fringe benefits tax payables. Contractual payables are classified as financial instruments and measured at amortised cost. Statutory payables are recognised and measured similarly to contractual payables, but are not classified as financial instruments because they do not arise from a contract. Goods and services tax Income, expenses and assets are recognised net of the amount of associated goods and services tax (GST), unless the GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included as part of the receivables or payables in the balance sheet. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the ATO are classified as operating cash flows.
WorkSafe Victoria Annual Report 2017 81 Financial report
5.5 Other provision
2017 $000s
Leasehold restoration provision Balance at beginning of the year 4,679 Additional provisions recognised 291 Reductions resulting from payments (574) Reductions resulting from re-measurement or settlement without cost (726) Unwinding of discount and effect of changes in discount rates 41 Balance at end of the year 3,711 Current 67 Non-current 3,644 3,711
The provision for leasehold restoration represents the fair value of the dismantling, removal or restoration costs estimated to be required to be paid upon vacating the leased premises, where the obligation under these lease contracts for the premises to be returned to its original state existed at the time of entering into the lease. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows, using a discount rate that reflects the time value of money and risks specific to the provision.
82 WorkSafe Victoria Annual Report 2017 5.6 Commitments and contingencies
2017 2016 $000s $000s
Operating lease commitments Future minimum lease payments under non-cancellable operating lease arrangements Due within one year 28,671 2 3 ,118 Due later than one year and less than five years 63,188 68,522 Due later than five years 136,798 140,700 Total operating lease commitments (inclusive of GST) 228,657 232,340 GST recoverable from the ATO (20,787) (21,122) Total operating lease commitments (exclusive of GST) 207,870 211,218
Operating leases relate to leasehold premises, vehicles and office equipment with lease terms between 1 and 15 years (2016: 1 and 5 years). Operating lease payments are charged as an expense in the comprehensive operating statement on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Some operating lease contracts contain market review clauses in the event that WorkSafe exercises its option to renew. WorkSafe does not have an option to purchase the leased assets at the expiry of the lease periods.
2017 2016 $000s $000s
Other operating commitments Amounts payable under non-cancellable other operational contractual arrangements Due within one year 13,850 10,875 Due later than one year and less than five years 5,003 14,545 Total other operating commitments (inclusive of GST) 18,853 25,420 GST recoverable from the ATO (1,714) (2, 311) Total other operating commitments (exclusive of GST) 17,139 23,109
Other operating commitments include those operating and capital commitments arising from non-cancellable contractual sources and are disclosed at their nominal value, inclusive of GST. Contingent assets and contingent liabilities WorkSafe had no contingent assets at the reporting date (2016: nil). WorkSafe will be relocating its head office to Geelong by June 2018. As a part of this transition some employees have confirmed their intention to relocate to Geelong in 2017, and will be entitled to relocation benefits in accordance with a relocation deed. While the ultimate relocation benefits to which the employees are entitled will be contingent on the specific relocation decisions made by the individual employees, WorkSafe could incur a liability of up to $9 million (2016: $11 million) in respect of these benefits over the next 2 years. Contingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value, inclusive of GST.
WorkSafe Victoria Annual Report 2017 83 Financial report
6. Taxation and transactions with the State
Introduction to this section This section contains the following disclosures: WorkSafe is required to pay income tax equivalent under 6.1 Income tax the National Tax Equivalent Regime in accordance with 6.2 Deferred tax Section 88 (3D) of the State Owned Enterprise Act 1992. 6.3 Dividends This section provides tax related information and transactions with the State.
6.1 Income tax
2017 2016 $000s $000s
Current income tax Current tax (expense) income (40,719) 164,765 Adjustments in respect of current income tax of prior years (3,001) 4,647
Deferred income tax Relating to origination and reversal of temporary differences (220,946) 63,042 Tax (expense) income reported in the comprehensive operating statement (264,666) 232,454
The tax expenses or income represents the tax payable on the current year’s taxable income or tax loss based on the prevailing income tax rate, adjusted for changes in deferred tax assets and liabilities.
2017 2016 $000s $000s
Reconciliation of accounting result to tax (expense) income Result before income tax 958,815 (707,725)
At the statutory income tax rate of 30% (2016: 30%) (287,645) 212,318 Adjustments in respect of current income tax of prior years (3,001) 4,647 Franking credits and withholding tax on dividends received 32,197 25,994 Imputation gross-up on dividends received (9,659) (7,905) Other 3,442 (2,600) Tax (expense) income reported in the comprehensive operating statement (264,666) 232,454
2017 2016 $000s $000s
Tax liabilities Balance at beginning of the year – (113,681) Movements during the year: Income tax paid – 123,173 Income tax of prior years – (9,492) Balance at end of the year – –
84 WorkSafe Victoria Annual Report 2017 6.2 Deferred tax
2017 2016 $000s $000s
Deferred tax assets Claims handling expense included in outstanding claims 395,655 398,733 Provisions not currently deductible 26,683 27,039 Accruals not currently deductible 924 1,058 Unutilised tax losses 107,038 164,765 530,300 591,595
Deferred tax liabilities Unrealised gains on investments (259,412) (54,161) Difference in depreciation of plant and equipment and amortisation of intangibles (8,550) (10,429) (267,962) (64,590) Net deferred tax assets 262,338 527,005
Deferred tax is accounted for in respect of temporary differences between the carrying amount of assets and liabilities in the financial statements for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates that are expected to apply when the assets and liabilities are realised or settled, based on tax rates that have been enacted or substantially enacted by the reporting date. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax off-sets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities which affect neither taxable income nor accounting result. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Deferred tax assets and liabilities are off-set as WorkSafe settles its current tax assets and liabilities on a net basis.
6.3 Dividends Pursuant to section 516 of the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is required to pay to the State Government a dividend determined by the Treasurer. In determining the dividend policy applicable to WorkSafe, the Treasurer must have regard to the solvency margin determined to maintain the long-term financial viability of the scheme. An obligation to pay a dividend only arises after a formal determination is made by the Treasurer following consultation between WorkSafe, the Minister and the Treasurer.
WorkSafe Victoria Annual Report 2017 85 Financial report
7. Financial instruments and valuation judgements
Introduction to this section This section contains the following disclosures: This section sets out WorkSafe’s financial instrument 7.1 Financial instruments specific information, including exposures to financial 7.2 Off-setting of financial assets and financial risks, and disclosures of those items that require a higher liabilities level of judgement to be applied in their fair value 7.3 Fair values determination.
7.1 Financial instruments WorkSafe’s financial assets and liabilities are exposed to a variety of financial risks: credit risk, liquidity risk and market risk. Credit risk Credit risk refers to the risk that an issuer or a counterparty will default on its contractual obligations resulting in financial loss to WorkSafe. The VFMC manages counterparty credit risk by conducting due diligence on counterparties and will only deal with counterparties of high quality with substantial balance sheets. Agreements also contain provisions for the agreements to be reviewed or rescinded upon the occurrence of specified events relating to counterparty credit and liquidity. The following analysis excludes trade receivables and non-trade receivables. The details of trade receivables that are past their due dates are included in Note 2.2.2. WorkSafe’s maximum exposure to credit risk at the reporting date in relation to each class of financial asset is the carrying amount of those assets as indicated in the balance sheet. Concentrations of credit risk The VFMC manages credit risk by diversifying the exposure amounts with particular issuers and counterparties and operating in liquid markets. WorkSafe does not have any significant concentration of credit risk on an industry, regional or country basis. The investment strategy for WorkSafe is to ensure a diversified portfolio. The table below provides information regarding the credit risk exposure of WorkSafe by classifying assets according to the VFMC’s credit ratings of counterparties.
30 June 2017 Investment Grade Non-investment Total Grade $000s $000s $000s
Financial assets Cash in hand & at bank 40,325 – 40,325 Investments – Cash and cash equivalents 1,631,890 – 1,631,890 Debt securities 227,386 – 227,386 Derivative assets – 372,461 372,461 Investments – Receivables – 768,387 768,387 1,899,601 1,140,848 3,040,449
30 June 2016 $000s $000s $000s
Financial assets Cash in hand & at bank 26,987 – 26,987 Investments – Cash and cash equivalents 1,594,096 – 1,594,096 Debt securities 821,449 54,368 875,817 Derivative assets – 292,458 292,458 Investments – Receivables – 837,781 837,781 2,442,532 1,184,607 3,627,139
86 WorkSafe Victoria Annual Report 2017 Assets classified with Standard and Poor’s credit ratings of AAA to BBB– (long-term) or A–1+ to A–3 (short-term) are classified as investment grade. Non-investment grade assets include assets that fall outside the range of Standard and Poor’s investment grade credit ratings as well as non-rated assets that are within the risk parameters outlined in the Investment Risk Management Plan. Liquidity risk Liquidity risk arises from WorkSafe being unable to meet financial obligations as they fall due. WorkSafe has a payment policy of settling financial obligations within 30 days. The VFMC uses a combination of cash and futures portfolios plus a large proportion of listed securities to ensure sufficient liquidity is available at all times to meet WorkSafe’s operating requirements. The following table summarises the maturity profiles of WorkSafe’s financial liabilities. The table includes the liquidity analysis in relation to contractual (as opposed to statutory) financial liabilities. While the liability for outstanding claims is the most significant liability for which payments will need to be made in the future, they are excluded from the definition of a financial instruments under AASB 139 Financial Instruments: Recognition and Measurement. Details on the average term to settlement for the claims liabilities portfolio are included in Note 2.3.5.
Less than 30 June 2017 3 months 4–12 months 1–5 years 5+ years Total $000s $000s $000s $000s $000s Non-statutory 115 ,19 0 47,535 – – 162,725 payables Derivative liabilities 51,549 5,559 105 – 57,213 Investments – 233,136 – – – 233,136 Payables 399,875 53,094 105 – 453,074
30 June 2016 $000s $000s $000s $000s $000s Non-statutory 89,590 57,156 – – 146,746 payables Derivative liabilities 68,602 16,260 2,233 – 87,095 Investments – 228,953 – – – 228,953 Payables 387,145 73,416 2,233 – 462,794
Market risk Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: market interest rates (interest rate risk), foreign exchange (currency risk) and market prices (price risk). When establishing the investment asset allocation, the VFMC considers input from actuaries to ensure that the investment mix is appropriate to service future WorkSafe liabilities and that projected outcomes are in line with the overall investment objectives and remain within the risk parameters approved by the Treasurer. Interest rate risk Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The VFMC seeks to manage the interest rate risk through an asset allocation strategy for the investment portfolio, which acts as an economic hedge against the insurance liabilities of WorkSafe. To the extent that these assets and liabilities can be matched, unrealised gains and losses on the remeasurement of liabilities resulting from interest rate movements will be off-set by unrealised losses or gains on the remeasurement of investment assets. The VFMC may use financial derivatives to manage the interest rate risk associated with the portfolio.
WorkSafe Victoria Annual Report 2017 87 Financial report
A summary of WorkSafe’s exposure to interest rate risk on financial instruments is as follows:
30 June 2017 30 June 2016 Variable Fixed Non-interest Variable Fixed Non-interest Rate Rate Bearing Total Rate Rate Bearing Total $000s $000s $000s $000s $000s $000s $000s $000s
Financial assets Cash in hand and 40,325 – – 40,325 26,987 – – 26,987 at bank Premium – – 48,082 48,082 – – 50,961 50,961 receivables Investments – Derivative – – 372,461 372,461 152 1,310 290,996 292,458 assets – Other 1,370,601 227,386 13,308,709 14,906,696 1,552,970 776,150 11,10 7, 42 2 13,436,542 investments Sundry – – 5,759 5,759 – – 5,836 5,836 receivables 1,410,926 227,386 13,735,011 15,373,323 1,580,109 777,460 11,455,215 13,812,784
Financial liabilities Non-statutory – – 162,725 162,725 – – 146,746 146,746 payables Derivative – 761 56,452 57,213 1,364 596 85,135 87,095 liabilities 761 219,177 219,938 1,364 596 231,881 233,841 Net financial 1,410,926 226,625 13,515,834 15,153,385 1,578,745 776,864 11,223,334 13,578,943 assets
Interest rate sensitivity A 0.5% movement in interest rates (or discount rates) is used by WorkSafe’s actuaries to present the sensitivities of the actuarial claims liabilities to management to allow them to monitor interest rate risk on liabilities. This percentage has been used to present the impact on interest sensitive investments. These movements are attributable to WorkSafe’s exposure to interest rates on its variable rate investments and its fair value movement on its fixed rate investments. At the reporting date, if interest rates had moved 0.5% up or down and all other variables were held constant, WorkSafe’s net result and equity would change as follows:
2017 2016 $000s $000s Impact on net result and equity from a movement in interest rates Increase of 0.5% (5,476) (18,229) Decrease of 0.5% 5,476 18,229
Foreign currency risk All foreign currency transactions are converted to Australian currency at the rates of exchange applicable at the dates of the transactions. Investments held at reporting date in foreign currencies are converted to Australian currency using the exchange rate at balance sheet date. Gains or losses arising on foreign currency transactions are included in investment income in the period in which they arise. Foreign currency risk is the risk that the fair value of a financial instrument will fluctuate because of changes in foreign exchange rates. WorkSafe is exposed to foreign exchange risk through its investments which are denominated in foreign currency, and anticipated future transactions.
88 WorkSafe Victoria Annual Report 2017 The VFMC manages foreign exchange risk in accordance with the approved IRMP and uses financial derivatives to control exposures. The proportion of foreign exchange risk which is hedged is reviewed regularly to ensure that the net exposure is maintained at a level which is consistent with the overall investment objectives. WorkSafe’s exposure is mainly via the major currencies such as United States dollar, Japanese yen, the Euro and British pound. Foreign currency sensitivity The foreign exchange sensitivity has been prepared on the basis of WorkSafe’s direct investments and not on a look- through basis for investments held indirectly through unit trusts. Consequently the disclosure of currency risk may not represent the true currency risk profiles of WorkSafe where the unit trust has significant investments which have exposure to the currency markets. The following table details the WorkSafe’s sensitivity to a 10% increase or decrease in the Australian Dollar against the relevant foreign currencies with all other variables held constant.
2017 2016 $000s $000s Impact on net result and equity from a movement in foreign exchange rates Increase of 10% 111, 5 4 4 104,645 Decrease of 10% (136,333) (127,900)
Price risk Price risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market prices whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. Such factors may include changes in the performance of the economies, markets and securities in which the VFMC invests. WorkSafe is exposed to price risk through its investments in listed and unlisted shares and managed investment schemes. The VFMC manages price risk through diversification and careful selection of securities within the strategic asset allocation for each class of asset. WorkSafe’s sensitivity to equity price risk is set out below. Price risk sensitivity At reporting date, if the value of WorkSafe’s investment had been 10% higher or lower and all other variable held constant year end, WorkSafe’s net result and equity would change as follows:
2017 2016 $000s $000s
Impact on net result and equity from a movement in listed and unlisted investment prices Increase of 10% 1 3 Decrease of 10% (1) (3)
Unlisted investment prices Increase of 10% 899,770 747,818 Decrease of 10% (899,770) (747,818)
WorkSafe Victoria Annual Report 2017 89 Financial report
7.2 Off-setting of financial assets and financial liabilities The following table identifies financial assets and liabilities which have been off-set in the balance sheet in accordance with AASB 132 Financial Instruments: Presentation and those which have not been off-set in the balance sheet but are subject to enforceable master netting agreements with trading counterparties or similar agreements (ie off-setting agreements and any related financial collateral in accordance with AASB 7 Financial Instruments).
Amount not Set-off in the Balance Sheet Net Amounts Amounts Subject Collateralised Net Amount Presented in the to Master Netting Obligation Balance Sheet Agreements $000s $000s $000s $000s
30 June 2017 Derivative assets 372,461 (55,109) (255,378) 61,974 Derivative liabilities (57,213) 55,109 942 (1,162) Total 315,248 – (254,436) 60,812
30 June 2016 Derivative assets 292,458 (68,561) (181,597) 42,300 Derivative liabilities (87,095) 68,561 440 (18,094) Total 205,363 – (181,157) 24,206
7.3 Fair values This section sets out information on how WorkSafe determined fair value for financial reporting purposes. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value hierarchy All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy as follows, based on the lowest level input that is significant to the fair value measurement as a whole: Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2 – Valuation techniques for which the input that is significant to the fair value measurement is directly or indirectly observable. Level 3 – Valuation techniques for which the input that is significant to the fair value measurement is unobservable. For the purpose of fair value disclosures, WorkSafe has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. In addition, WorkSafe determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation at the end of each reporting period.
90 WorkSafe Victoria Annual Report 2017 The following table shows the fair values of financial assets and financial liabilities, including their fair value hierarchy:
30 June 2017 Level 1 Level 2 Level 3 Total $000s $000s $000s $000s
Financial assets Cash in hand and at bank 40,325 – – 40,325 Premium receivables – 48,082 – 48,082 Investment assets Cash and cash equivalents 1,631,890 – – 1,631,890 Cash collateral and margin accounts 7,269 – – 7,269 Receivables 768,387 – – 768,387 Derivative assets 184 372,277 – 372,461
Equity and managed investment schemes Cash – – – – Australian equities 21 1,859,170 – 1,859,191 International equities 65,632 4,408,351 – 4,473,983 Private equity – – 65,930 65,930 Inflation linked bonds – 1,677,061 – 1,677,061 Infrastructure – 495 961,244 961,739 Property – – 1,145,662 1,145,662 Diversified fixed income – 1,436,284 134,565 1,570,849 Non traditional strategies – 223,925 790,045 1,013,970 65,653 9,605,286 3,097,446 12,768,385
Debt securities – 227,386 – 227,386 Sundry receivables – 5,759 – 5,759 2,513,708 10,258,790 3,097,446 15,869,944
Financial liabilities Non-statutory payables – 162,725 – 162,725 Investment related liabilities Cash collateral and margin accounts 263,485 – – 263,485 Payables 233,136 – – 233,136 Derivative liabilities 1,068 56,145 – 57,213 497,689 218,870 – 716,559 Net financial assets 2,016,019 10,039,920 3,097,446 15,153,385
WorkSafe Victoria Annual Report 2017 91 Financial report
30 June 2016 Level 1 Level 2 Level 3 Total $000s $000s $000s $000s
Financial assets Cash in hand and at bank 26,987 – – 26,987 Premium receivables – 50,961 – 50,961 Investment assets Cash and cash equivalents 1,594,096 – – 1,594,096 Cash collateral and margin accounts 63,828 – – 63,828 Receivables 837,781 – – 837,781 Derivative assets 2,667 289,791 – 292,458
Equity and managed investment schemes Cash – 86,546 – 86,546 Australian equities 37 1,500,118 – 1,500,155 International equities – 3,860,783 – 3,860,783 Private equity – 137,120 83,536 220,656 Inflation linked bonds – 1,590,393 – 1,590,393 Infrastructure – 591 756,313 756,904 Property – – 936,517 936,517 Diversified fixed income – 572,982 87,006 659,988 Non traditional strategies – 162,933 705,403 868,336 37 7, 911, 4 6 6 2,568,775 10,480,278
Debt securities 2,224 873,593 – 875,817 Sundry receivables – 5,836 – 5,836 2,527,620 9,131,647 2,568,775 14,228,042
Financial liabilities Non-statutory payables – 146,746 – 146,746 Investment related liabilities Cash collateral and margin accounts 186,305 – – 186,305 Payables 228,953 – – 228,953 Derivative liabilities 689 86,406 – 87,095 415,947 233,152 – 649,099 Net financial assets 2,111,673 8,898,495 2,568,775 13,578,943
92 WorkSafe Victoria Annual Report 2017 Transfer between categories No amounts were transferred between Level 1 and Level 2 during the year ended 30 June 2017 (2016: $nil). Fair value determination The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate fair value. Cash and cash equivalents (including discount securities): Cash and cash equivalents consist primarily of deposits with banks and highly liquid financial assets with maturity dates less than three months, together with units held in cash funds/trusts. Cash equivalents are assets that are subject to an insignificant risk in the change in fair value and are used to manage short term commitments. Amounts classified as cash and cash equivalents are recorded at face value, except for discount securities which are recorded at market value. WorkSafe categorises these instruments as Level 1. Cash collateral and margin accounts: Cash collateral refers to amounts held as security against future counterparty performance. These assets are recorded at face value and categorised as Level 1. Margin accounts represent cash held with a broker or central counterparties against open futures contracts and/or other derivatives. Receivables/payables: Miscellaneous receivables/payables include interest income, GST obligations, investment expenses, etc. and are carried at the full value of the entitlement. Amounts due to/from brokers represent outstanding settlement amounts arising from the purchase/sale of securities and are carried at the settlement amount pending. This is deemed fair value given the short term nature of these balances and the items are categorised as Level 1. Derivative assets and liabilities: Derivatives are originally recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date with gain or loss recognised in the comprehensive operating statement. Fair value is derived from the prices published by recognised exchanges or, for over-the-counter instruments, generally accepted valuation techniques. WorkSafe classifies these instruments as either Level 1 or Level 2. Equity and managed investment schemes: Holdings in unlisted funds/trusts are recorded at fair value as determined by the fund manager or valuations by other skilled independent third parties. WorkSafe reviews the level of valuation uncertainty typically associated with the assets managed by the fund/trust, whether there are redemption restrictions, the pricing frequency and whether there is an active market. Depending on the outcome of these reviews, the assets may be classified as either Level 2 or Level 3. Debt securities: The fair value of debt securities is established by using observable inputs such as recently executed transaction prices in securities of the issuer or comparable issuers and yield curves. Adjustments are made to the valuations when necessary to recognise differences in a particular instrument’s terms or credit worthiness. To the extent that the significant inputs are observable, WorkSafe categorises these investments as Level 2. Reconciliation of Level 3 fair value movements The following table presents the changes in Level 3 instruments (financial assets) for the year ended 30 June 2017 and 30 June 2016:
2017 2016 $000s $000s
Investments Balance at beginning of the year 2,568,775 2,551,185 Gains/(losses) recognised in the comprehensive operating statement 110 , 3 5 4 (21,590) Purchases 681,562 375,680 Sales (263,245) (336,500) Balance at end of the year 3,097,446 2,568,775 Total losses for the year included in gains for assets held at end of the year (18,964) (41,110)
WorkSafe Victoria Annual Report 2017 93 Financial report
Estimation uncertainty The Level 3 financial assets relate to private equities and managed investment schemes that are managed by the VFMC on behalf of WorkSafe. A majority of these investments are held via third party pooled investment vehicles, and as such WorkSafe is not privy to the detailed assumptions or valuation techniques used to value the underlying investment assets. WorkSafe is reliant on third parties for these valuations and the quantitative information regarding significant unobservable inputs used in the fair value measurement cannot be assessed. An example of the key inputs and assumptions typically considered is shown below.
Key inputs and assumptions subject to estimation uncertainty
Asset Class Valuation Techniques Key Inputs and Assumptions Infrastructure Discounted cash flows. • risk free discount rates investments • risk premium • asset utilisation rates • capital expenditure forecasts • operating costs • other estimated future cash flows Private Equity Multiples of earnings, discounted cash flow, market • identification of appropriate comparables investments equivalents and other market accepted methodologies. • estimated future profits Property investments Discounted cash flow, capitalisation and direct • risk free rate, risk premium comparison methodologies. • estimated future cash flows • future economic and regulatory conditions Fixed interest Diversified fixed interest investments – Third party • appropriate credit spread and other risk premium investments pricing servicers, which source prices from brokers and • future risk free rate market makers. and • estimated future cash flows Non-traditional strategies investments – Prices quoted • identification of appropriate comparable assets Non-traditional on an exchange or traded in a dealer market. strategies • life expectancy estimates and mortality probabilities investments Less liquid fixed interest and non-traditional strategies • future economic and regulatory conditions investments – Discounted cash flow, amortised cost, direct comparison and others.
94 WorkSafe Victoria Annual Report 2017 8. Other disclosures
Introduction to this section This section contains the following disclosures: This section includes additional material disclosures 8.1 Responsible persons required by accounting standards or otherwise, for the 8.2 Remuneration of executives understanding of this financial report. 8.3 Related parties 8.4 Entity consolidated pursuant to section 53(1)(b) of the FMA 8.5 Remuneration of auditors 8.6 Events after reporting date 8.7 Australian Accounting Standards issued that are not yet effective 8.8 Change in prior year classifications
8.1 Responsible persons In accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994 (FMA), the responsible persons who held office during the financial year were: Responsible Minister Robin Scott MP, Minister for Finance Board members Mr Paul Barker (Chairman) Ms Clare Amies (Chief Executive) Ms Marlo Baragwanath (until 3 November 2016) Mr Doug Kearsley (appointed 4 April 2017) Mr Paul Kirk (until 8 October 2016) Mr Neil Lucas Mr Ross McCann Dr Samantha Smith (appointed 18 October 2016) Mr John Walter (until 24 March 2017) The number of responsible persons of WorkSafe whose remuneration falls within the following bands was:
Income Band 2017 2016 $ 0 – 9,999 1 1 10,000 – 19,999 2 – 30,000 – 39,999 1 – 40,000 – 49,999 1 – 50,000 – 59,999 2 3 70,000 – 79,999 – 1 90,000 – 99,999 – 1 130,000 – 139,999 1 – 460,000 – 469,999 – 1 520,000 – 529,999 1 –
The compensation detailed above excludes the salaries and benefits the Portfolio Minister receives. The Minister’s remuneration and allowances is set by the Parliamentary Salaries and Superannuation Act 1968 and is reported within the Department of Parliamentary Services’ Financial Report.
WorkSafe Victoria Annual Report 2017 95 Financial report
8.2 Remuneration of executives Remuneration of executives The number of executive officers, other than the responsible minister and Board members, and their total remuneration during the reporting period are shown in the table below. Total annualised employee equivalents provides a measure of full time equivalent executive officers over the reporting period. The number of executives may vary from year to year due to the timing of appointments, resignations and the composition of executives. The remuneration of executives (including key management personnel in 8.3 below) is as follows:
20171 $000s
Short-term employee benefits 2,457 Post-employment benefits 226 Other long-term benefits 77 Total remuneration 2,760 Total number of executives 11 Total annualised employee equivalents2 8.4
Notes: 1. No comparatives have been reported because this is the first year implementation of Financial Reporting Direction (FRD) 21C and remuneration in the prior year was determined in line with the basis and definition under FRD 21B. 2. Annualised employee equivalent is based on the time fraction worked over the reporting period.
8.3 Related parties WorkSafe is a controlled entity of the State of Victoria. The Victorian Asbestos Eradication Agency (VAEA) has been consolidated into WorkSafe’s financial statements pursuant to the determination made by the Minister for Finance under section 53(1)(b) of the FMA. Key management personnel of WorkSafe comprise the responsible minister, Board members and members of the executive leadership team. Key management personnel of the VAEA comprise its Board members. The remuneration of key management personnel is as follows:
20171 $000s
Short-term employee benefits 3,269 Post-employment benefits 291 Other long-term benefits 95 Total remuneration 3,656
Notes: 1. No comparatives have been reported because this is the first year implementation of Financial Reporting Direction (FRD) 21C and remuneration in the prior year was determined in line with the basis and definition under FRD 21B.
Related parties of WorkSafe and the VAEA include all key management personnel and their close family members and personal business interests (controlled entities, joint ventures and entities they have significant influence over).
96 WorkSafe Victoria Annual Report 2017 Transactions with key management personnel and other related parties
30 June 20171 Name of Nature of Details of Total Value of Outstanding Committed Terms and Counterparty Relationship Transaction Transactions Balances at Amount at Conditions 30 June 2017 30 June 2017 $000s $000s $000s Victorian Arts Mr Paul Barker is Grant funding – – (36) Standard Centre a Victorian Arts Centre Trust member Leadership Ms Clare Amies Training and (56) – – Standard Victoria is a Leadership conferences Victoria Council member Transport Mr John Walter Recovery of 79,500 – – Based on Accident and Mr Paul Kirk compensation independent Commission were TAC board paid actuarial (TAC) members valuation Dr Samantha Management of (1,861) – – Standard Smith is a TAC catastrophic board member claims Cost 7,538 705 – Standard reimbursement receivable Cost (5,357) (923) – Standard reimbursement payable Corrs Chambers Mr John Walter is Legal services (359) – – Standard Westgarth a partner of Corrs Chambers Westgarth Victorian Funds Mr John Walter’s Investment (30,598) – – Standard Management spouse is a management Corporation VFMC board fees (VFMC) member
Note: 1. No comparatives are required by AASB 124 Related Party Disclosures as this is the first year of application. Transactions with key management personnel and other related parties are made on normal commercial terms and conditions. Conflicts of interest are overcome where warranted, by the key management personnel declaring their interests and abstaining from final decision making.
WorkSafe Victoria Annual Report 2017 97 Financial report
30 June 2017 Name of Nature of Details of Total Value of Outstanding Committed Terms and Counterparty Relationship Transaction Transactions Balances at Amount at Conditions 30 June 2017 30 June 2017 $000s $000s $000s Personal Injury Mr Shane O’Dea Membership fees 42 – – Standard Education is a PIEF board Foundation member Sponsorship and 17 – – Standard (PIEF) training Service charges 248 62 – Standard Cost 1,080 294 – Standard reimbursement receivable Institute for Mr David Watson Funding 3,155 – 3,151 Standard Safety, is an ISCRR Compensation board member and Recovery Research (ISCRR)
8.4 Entity consolidated pursuant to section 53(1)(b) of the FMA The financial effects of the VAEA, which has been consolidated into WorkSafe’s financial statements, are as follows.
WorkSafe VAEA Eliminations Consolidated 2017 2016 2017 2016 2017 2016 2017 2016 $000s $000s $000s $000s $000s $000s $000s $000s Total income from transactions 4,028,002 2,678,204 477 – (477) – 4,028,002 2,678,204 Net result from transactions 694,149 (475,271) – – – – 694,149 (475,271) Total assets 16,517,933 15,115,874 – – – – 16,517,933 15,115,874 Total liabilities 13,743,248 13,035,338 – – – – 13,743,248 13,035,338
8.5 Remuneration of auditors
2017 2016 $000s $000s
Victorian Auditor-General’s Office – Audit of WorkSafe’s financial statements 315 331 315 331
98 WorkSafe Victoria Annual Report 2017 8.6 Events after reporting date No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of WorkSafe, the results of those operations, or the state of affairs of WorkSafe in future financial years.
8.7 Australian Accounting Standards issued that are not yet effective The Australian Accounting Standards Board (AASB) has issued the following new or revised Australian Accounting Standards, which are applicable to WorkSafe:
AASB Title Operative Date 9 Financial Instruments 1 January 2018 2010–7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) 1 January 2018 16 Leases 1 January 2019 17 Insurance Contracts 1 January 2021
The preliminary assessment has not identified any material impact arising from the adoption of AASB 9 and AASB 2010–7, and these standards will continue to be monitored and assessed. The key changes introduced by AASB 16 include the recognition of most operating leases on balance sheet. Rather than expensing the lease payments, depreciation of right-of-use assets and interest on lease liabilities will be recognised in the income statement with marginal impact on the operating result. AASB 17 establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued. It replaces AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. The impact of adopting AASB 17 has not been fully assessed. WorkSafe will apply these standards for the annual reporting periods beginning on or after the operative date set out above.
WorkSafe Victoria Annual Report 2017 99 Financial report
8.8 Change in prior year classifications WorkSafe’s investments at 30 June 2017 have been classified and presented based on the reporting methodology of the new investment master custodian appointed during the financial year. Cash collateral and margin accounts, payables and derivative liabilities have been separately classified and reported. Investment balances at 30 June 2016 have been restated in line with this change in classifications and the impact on the prior year’s balance sheet is as follows:
30 June 2016 As Previously Restatement As Restated Reported $000s $000s $000s
Current assets Investment assets 2,196,783 414,572 2, 611, 3 5 5 Other current assets 139,763 – 139,763 Total current assets 2,336,546 414,572 2,751,118
Current liabilities Derivative liabilities (85,548) 85,548 – Investment related liabilities – (500,120) (500,120) Other current liabilities (2,024,579) – (2,024,579) Total current liabilities (2,110,127) (414,572) (2,524,699)
Non-current liabilities Derivative liabilities (2,233) 2,233 – Investment related liabilities – (2,233) (2,233) Other non-current liabilities (10,508,406) – (10,508,406) Total non-current liabilities (10,510,639) – (10,510,639)
Cash and cash equivalents have been stated by the new master custodian at fair value, in lieu of historical cost. In addition, liabilities associated with collateral repayment obligations, margin account balances with futures brokers and certain investment related receivables have been excluded due to the restrictions that exist on these items. Cash and cash equivalents at 30 June 2015 and 2016 have been restated and the impact on the prior year’s cash flow statement is as follows:
30 June 2016 As Previously Restatement As Restated Reported $000s $000s $000s Net cash flows from operating activities 363,491 – 363,491
Cash flows from investing activities Sale of investments 5,116,196 – 5,116,196 Purchase of investments (5,286,527) 4,287 (5,282,240) Others (13,378) – (13,378) Net cash flows (used in) investing activities (183,709) 4,287 (179,422) Net increase in cash and cash equivalents 179,782 4,287 184,069 Cash and cash equivalents at beginning of the year 1,330,199 105,451 1,435,650 Effects of exchange rate changes on cash held in foreign currencies 1,364 – 1,364 Cash and cash equivalents at end of the year 1,511,345 109,738 1,621,083
100 WorkSafe Victoria Annual Report 2017 9. Statement by Chairman, Chief Executive and Chief Financial Officer
The attached financial statements of the Victorian WorkCover Authority have been prepared in accordance with Direction 5.2 of Standing Directions of the Minster for Finance under the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements. We further state that, in our opinion, the information set out in the comprehensive operating statement, balance sheet, statement of changes in equity, cash flow statement and accompanying notes, presents fairly the financial transactions during the year ended 30 June 2017 and the financial position of the Victorian WorkCover Authority at 30 June 2017. At the time of signing, we are not aware of any circumstances which would render any particulars included in the financial statements to be misleading or inaccurate. We authorise the attached financial statements for issue on 24 August 2017.
Paul Barker Clare Amies Roger Arnold Chairman Chief Executive Chief Financial Officer
Dated at Melbourne this 24th day of August 2017
WorkSafe Victoria Annual Report 2017 101 Financial report
102 WorkSafe Victoria Annual Report 2017 WorkSafe Victoria Annual Report 2017 103 Appendices
Appendices
104 Appendix 1: Prosecutions
OHS Prosecution Outcomes 2016/17 Date of Defendant A.C.N. Result Fine outcome Rewai McPhee N/A Pleaded Guilty – Fined without conviction $1,000.00 14/6/17 Sovereign Hill Museums Association 004 688 733 Pleaded Guilty – Fined without conviction $25,000.00 29/6/17 Icon Construction Pty Ltd 104 099 238 Pleaded Guilty – Fined without conviction $50,000.00 28/6/17 Ellerslie Hop Estate Pty Ltd 004 272 922 Pleaded Guilty – Fined without conviction $20,000.00 28/6/17 Leeming Furniture Pty Ltd 153 726 099 Pleaded Guilty – Convicted and fined $22,500.00 28/6/17 John Arthur Bradley N/A Pleaded Guilty – Convicted and fined $1,000.00 22/6/17 FX National Pty Ltd 600 701 451 Pleaded Guilty – Convicted and fined $15,000.00 16/6/17 Budget Demolition & Recyclers Pty Ltd 087 317 379 Pleaded Guilty – Convicted and fined $25,000.00 15/6/17 Belgravia Health & Leisure Group Pty 005 087 463 Enforceable Undertaking with conditions $0.00 8/6/17 Ltd Kingspan Environmental Pty Ltd 108 491 881 Pleaded Guilty – Fined without conviction $25,000.00 8/6/17 Covino Farms Pty Ltd 147 316 970 Pleaded Guilty – Convicted and fined $15,000.00 7/6/17 Covino Farms Pty Ltd 147 316 970 Pleaded Guilty – Convicted and fined $70,000.00 7/6/17 Monty Group Pty Ltd 108 944 350 Pleaded Guilty – Fined without conviction $10,000.00 1/6/17 Schenker Australia Pty Ltd 000 410 211 Pleaded Guilty – Fined without conviction $35,000.00 30/5/17 Southern Star Windows Pty Ltd 100 012 431 Pleaded Guilty – Fined without conviction $20,000.00 23/5/17 Beyston Group Pty Ltd 137 828 267 Pleaded Guilty – Convicted and fined $20,000.00 18/5/17 Signal & Hobbs Pty Ltd 158 848 885 Pleaded Guilty – Without conviction, placed $0.00 18/5/17 on an undertaking to be of good behaviour with a special condition Adams Printers Pty Ltd 004 521 126 Pleaded Guilty – Fined without conviction $15,000.00 12/5/07 Australian Home Care Services Pty Ltd 082 554 630 Enforceable Undertaking with conditions $0.00 11/ 5/17 G.W. Colla Pty Ltd 059 313 656 Charge 1: Pleaded Guilty – Fined without $25,000.00 10/5/17 conviction Charge 2: Pleaded Guilty – Convicted and fined Fishers Supermarkets Pty Ltd 169 928 429 Pleaded Guilty – Without conviction, placed $0.00 5/5/17 on an undertaking to be of good behaviour with a special condition J.B. Caravans Pty Ltd 153 020 047 Pleaded Guilty – Convicted and fined $40,000.00 4/5/17 Southern Generators & Electrical Pty 081 870 895 Pleaded Guilty – Fined without conviction $20,000.00 2/5/17 Ltd Stadelmann Enterprises Pty Ltd 006 250 228 Pleaded Guilty – Fined without conviction $40,000.00 24/4/17 Pro Guardrail Pty Ltd 161 624 246 No Plea Taken (ex parte) – Convicted and $15,000.00 20/4/17 fined Mornington Peninsula Shire Council N/A Enforceable Undertaking with conditions $0.00 13/4/17 Future Bake Australia Pty Ltd 121 397 126 Pleaded Guilty – Fined without conviction $10,000.00 13/4/17 AGFAB Engineering Pty Ltd 078 529 469 Pleaded Guilty – Fined without conviction $25,000.00 12/4/17 Fusion Workforce Pty Ltd 117 930 944 Pleaded Guilty – Fined without conviction $15,000.00 4/4/17 Australian Paper Recovery Pty Ltd 100 624 842 Pleaded Guilty – Without conviction, placed $0.00 4/4/17 on an undertaking to be of good behaviour with a special condition Taronga Arch Pty Ltd 065 864 904 Pleaded Guilty – Fined without conviction $3,000.00 3/4/17
WorkSafe Victoria Annual Report 2017 105 Appendix 1
OHS Prosecution Outcomes 2016/17 Date of Defendant A.C.N. Result Fine outcome Welsh’s Pty Ltd 083 153 048 Enforceable Undertaking with conditions $0.00 3/4/17 Brendan Foster Roofing and Plumbing 607 478 768 Enforceable Undertaking with conditions $0.00 3/4/17 Pty Ltd Geotech Group Services Pty Ltd 159 005 491 Pleaded Guilty – Fined without conviction $25,000.00 3/4/17 R.S. Connell & Sons Pty Ltd 006 504 785 Pleaded Guilty – Fined without conviction $25,000.00 31/3/17 MIG Australia Pty Ltd 138 693 624 Pleaded Guilty – Fined without conviction $7,500.00 31/3/17 Metricon Homes Pty Ltd 005 108 752 Pleaded Not Guilty – Fined without $15,000.00 30/3/17 conviction P.J. Cook Investments Pty Ltd 082 312 927 Pleaded Guilty – Fined without conviction $4,000.00 29/3/17 All Saints Estate Pty Ltd 083 133 135 Pleaded Guilty – Fined without conviction $20,000.00 28/3/17 Midfield Meat International Pty Ltd 065 864 904 Pleaded Guilty – Convicted and fined $47,000.00 21/3/17 Specified Electrical Process Heating Co 006 453 649 Enforceable Undertaking with conditions $0.00 20/3/17 Pty Ltd Nepean Builders Pty Ltd 135 100 953 Pleaded Guilty – Convicted and fined $6,500.00 6/3/17 CLM Infrastructure Pty Ltd 131 091 971 Pleaded Guilty – Fined without conviction $50,000.00 3/3/17 Gamma Doura Australia Pty Ltd 138 602 623 Pleaded Guilty – Fined without conviction $5,000.00 2/3/17 Australia Auto Export Co. Pty Ltd 604 337 742 Pleaded Guilty – Convicted and fined $50,000.00 2/3/17 Northern Meat & Poultry Services Pty 070 073 871 Pleaded Guilty – Fined without conviction $8,000.00 23/2/17 Ltd Pinnacle Bakery & Integrated 161 203 005 Pleaded Guilty – Fined without conviction $40,000.00 23/2/17 Ingredients Pty Ltd Yarra Valley Waste Management Pty Ltd 106 134 089 Pleaded Guilty – Without conviction, placed $0.00 22/2/17 on an undertaking to be of good behaviour with a special condition On Spot Bin Hire and Demolition Pty 165 099 249 Pleaded Guilty – Without conviction, placed $0.00 22/2/17 Ltd on an undertaking to be of good behaviour with a special condition Seymour Rural Equipment Pty Ltd 005 689 814 Pleaded Guilty – Fined without conviction $20,000.00 10/2/17 Goldsmith Civil & Environmental Pty Ltd 127 510 472 Pleaded Not Guilty – Fined without $15,000.00 8/2/17 conviction BRB Modular Pty Ltd 114 678 349 Enforceable Undertaking with conditions $0.00 7/2/17 Natex (Australia) Engineering Pty Ltd 004 388 112 Pleaded Guilty – Fined without conviction $21,000.00 2/2/17 Stable Australia Pty Ltd 006 667 358 Pleaded Guilty – Fined without conviction $25,000.00 2/2/17 Syndet Works Pty Ltd 005 491 387 Pleaded Guilty – Fined without conviction $10,000.00 2/2/17 Patties Foods Ltd 007 157 182 Enforceable Undertaking with conditions $0.00 1/2/17 Independent Extrusions Pty Ltd 099 482 961 Pleaded Guilty – Without conviction, placed $0.00 12/1/17 on an undertaking to be of good behaviour with a special condition Purity Developments Pty Ltd 136 390 531 Pleaded Guilty – Convicted and fined $25,000.00 12/1/17 T & R Contracting Shepparton Pty Ltd 603 888 606 Pleaded Guilty – Convicted and fined $60,000.00 12/1/17 Vegco Pty Ltd 058 693 413 Pleaded Guilty – Fined without conviction $5,000.00 21/12/16 Pacific Metal Group Pty Ltd 130 588 546 Pleaded Guilty – Convicted and fined $84,000.00 21/12/16 Toll Transport Pty Ltd 006 604 191 Pleaded Guilty – Convicted and fined $1,000,000.00 14/12/16 Diversion 1 of 2016/17 N/A No Plea Taken – Diversion $0.00 9/12/16 Dixie Cummings Enterprises Pty Ltd 006 530 749 Pleaded Guilty – Fined without conviction $40,000.00 8/12/16 J.T. Dixon (Geelong) Pty Ltd 007 261 065 Pleaded Guilty – Convicted and fined $26,000.00 7/12/16 Mainline Developments Pty Ltd 120 540 258 Pleaded Guilty – Convicted and fined $30,000.00 5/12/16
106 WorkSafe Victoria Annual Report 2017 OHS Prosecution Outcomes 2016/17 Date of Defendant A.C.N. Result Fine outcome Epping Transport Pty Ltd 126 847 587 Pleaded Not Guilty – Fined without $10,000.00 28/11/16 conviction Aurora Construction Materials Pty Ltd 126 837 483 Pleaded Not Guilty – Fined without $25,000.00 28/11/16 conviction Bowen & Pomeroy Pty Ltd 004 174 887 Enforceable Undertaking with conditions $0.00 28/11/16 Spotlight Stores Pty Ltd 005 180 861 Pleaded Guilty – Without conviction, placed $0.00 24/11/16 on an undertaking to be of good behaviour with a special condition Hayden Bromley Building Pty Ltd 145 365 288 Pleaded Guilty – Without conviction, placed $0.00 18/11/16 on an undertaking to be of good behaviour with a special condition Robot Trading Co. Pty Ltd 004 910 552 Pleaded Guilty – Fined without conviction $90,000.00 16/11/16 Midfield Meat International Pty Ltd 079 457 933 Enforceable Undertaking with conditions $0.00 15/11/16 Eliana Construction and Developing 132 817 362 Pleaded Not Guilty – Convicted and fined $116,000.00 9/11/16 Group Pty Ltd Buller Ski & Snowboard School Pty Ltd 056 466 347 Pleaded Guilty – Fined without conviction $1,000.00 2/11/16 Popina (Vic.) Pty Ltd 007 326 263 Pleaded Guilty – Convicted and fined $30,000.00 25/10/16 Raymond John Brown N/A Pleaded Guilty – Fined without conviction $13,000.00 25/10/16 P.P.K. Demolition Pty Ltd 097 618 098 Pleaded Guilty – Fined without conviction $45,000.00 24/10/16 Visy Board Proprietary Limited 005 787 913 Pleaded Guilty – Fined without conviction $35,000.00 17/10/16 Maroondah City Council N/A Enforceable Undertaking with conditions $0.00 6/10/16 Mettle Pty Ltd 079 475 933 Enforceable Undertaking with conditions $0.00 3/10/16 ABD Group Pty Ltd 109 588 589 Pleaded Not Guilty – Convicted and fined $80,000.00 29/9/16 Shred-X Pty Ltd 123 767 153 Pleaded Guilty – Fined without conviction $20,000.00 8/9/16 Agman Nominees Proprietary Ltd 005 453 387 Pleaded Guilty – Convicted and fined $20,000.00 8/9/16 Golden City Support Services Inc. VIC Pleaded Not Guilty – Convicted and fined $10,000.00 26/8/16 A009388D Chairlink Pty Ltd 106 332 012 Pleaded Guilty – Without conviction, placed $0.00 11/8/16 on an undertaking to be of good behaviour with a special condition Precision Plastering (VIC) Pty Ltd 108 444 828 Pleaded Guilty – Convicted and fined $25,000.00 10/8/16 Langdon Building Pty Ltd 115 409 437 Pleaded Guilty – Fined without conviction $6,000.00 9/8/16 Concept Dimensions Pty Ltd 601 911 415 Pleaded Guilty – Fined without conviction $2,500.00 3/8/16 Australian Box Recycling Pty Ltd 081 095 472 No Plea Taken (ex parte) – Convicted and $800,000.00 22/7/16 fined Modern Towing and Salvage (Aust) Pty 070 654 830 Pleaded Guilty – Convicted and fined $20,000.00 7/7/16 Ltd G & K O’Connor Pty Ltd 005 934 029 Pleaded Guilty – Without conviction, placed $0.00 26/7/16 on an undertaking to be of good behaviour with a special condition Robert Grumley N/A Pleaded Guilty – Fined without conviction $15,000.00 6/7/16
WorkSafe Victoria Annual Report 2017 107 Appendix 1
Compensation Prosecution Outcomes 2016/17 Defendant A.C.N. Result Fine Restitution MINUTOLO, Carolina N/A Pleaded Guilty – Convicted. Community $0.00 $57,769.73 Correction Order for period of 24 months with conditions. Ordered to pay restitution of $57,769.73. LANGDON, Mark N/A Pleaded Guilty – Convicted and sentenced $0.00 $93,920.00 to 4 months imprisonment, wholly suspended for 9 months. He had previously paid $93,920.00 in restitution. ARSHAD, Shamas N/A Pleaded Guilty – Convicted and fined $3,000.00 $26,479.60 $3,000.00 and ordered to pay costs of $1,000.00 (Paid full restitution of $26,479.60 before Court). Wealth Within Services Pty Ltd 127 478 959 No Plea Taken (ex parte) – Convicted and $3,000.00 $0.00 fined $3,000.00 and ordered to pay costs of $2,716.00. Diversion 3 of 2016/17 N/A No Plea Taken – Diversion. $0.00 $0.00 BALLIS, Lisa N/A Pleaded Guilty – without conviction. Placed $0.00 $22,587.81 on a Community Correction Order for a period of 18 months with conditions. Ordered to pay restitution of $22,587.81 and costs of $1,000.00. Diversion 2 of 2016/17 N/A No Plea Taken – Diversion. $0.00 $0.00 WEST, Grant Clayton N/A Pleaded Guilty – convicted and fined $5,000.00 $14,162.00 $5,000.00 and ordered to pay restitution of $14,162.00 and costs of $1,520.00. LITTLE, Garry Robert N/A Pleaded Guilty – Convicted and fined an $3,750.00 $14,400.00 aggregate sum of $3,750.00 (restitution of $14,400.00 has already been paid by the Accused). B.D.K. Group Pty Ltd 155 445 275 Pleaded Guilty – Without conviction, fined $2,000.00 $0.00 $2,000.00 and ordered to pay $1,486.00 costs. SCHULTES, Roy N/A Pleaded Guilty – With conviction, released $0.00 $35,358.00 on an adjourned undertaking for 12 months to be of good behaviour. Paid full restitution costs before Court. LOIZIDES, Peter N/A Pleaded Guilty – Convicted and sentenced $0.00 $53,222.40 to 4 months imprisonment, suspended for 12 months. Ordered to pay restitution of $53,222.40 by instalments of $400.00 per month. THOMPSON, Dale Paul N/A Pleaded Guilty – Convicted and sentenced $0.00 $20,000.00 to 2 months imprisonment, wholly suspended for 12 months. Ordered to pay $20,000.00 restitution. COFFEY, Brittany N/A Pleaded Guilty – Without conviction, $0.00 $10,733.09 released on an adjourned undertaking for 12 months to be of good behaviour and ordered to pay $100.00 to the Court Fund and $10,733.09 restitution. MICALLEF, Raelene N/A Pleaded Guilty – Convicted and sentenced $0.00 $30,000.00 to an imprisonment term of 45 days, wholly suspended for 12 months. (Payment of $30,000.00 restitution made prior to Court.) HOLCOMBE, Mark N/A Pleaded Guilty – Convicted and fined $3,000.00 $7,500.00 $3,000.00 and ordered to pay $7,500.00 compensation.
108 WorkSafe Victoria Annual Report 2017 Compensation Prosecution Outcomes 2016/17 Defendant A.C.N. Result Fine Restitution ANYANG, Anyang Curech N/A Pleaded Guilty – Convicted and sentenced $0.00 $46,272.33 to an imprisonment term of 3 months, wholly suspended for 15 months. Ordered to pay compensation of $46,272.33 (under s599). MMPF Pty Ltd 160 078 204 Pleaded Guilty – Convicted and fined $500.00 $0.00 $500.00 and ordered to pay costs of $1,366.00. PANDHER, Lakvir Singh N/A Pleaded Guilty – Convicted and sentenced $500.00 $39,781.00 to an imprisonment of 4 months, wholly suspended for a period of 12 months. Ordered to pay restitution of $39,781.00. BORG, Adrian N/A Pleaded Guilty – Convicted and fined $1,000.00 $15,000.00 $1,000.00 Accused paid restitution of $15,000.00 and costs of $1,200.00 at Court.
Enforceable Undertakings 2016/17 Belgravia Health & Leisure Group Pty Ltd On 6 June 2017, Belgravia Health & Leisure Group entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 4 September 2015 involving an employee who was seriously injured whilst tree felling. Australian Home Care Services Pty Ltd On 11 May 2017, Australian Home Care Services entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 18 May 2015 involving a resident who had been left unattended on a tilt table by his carer and subsequently fell, breaking both legs. Mornington Peninsula Shire Council On 13 April 2017, Mornington Peninsula Shire Council entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 13 April 2015 involving an infant who was struck in the forehead when a heater guard fell whilst the infant was attending a Maternal Child Health Centre. Welsh’s Pty Ltd On 3 April 2017, Welsh’s entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 17 August 2015 involving persons working on a roof without appropriate fall protection. Brendan Foster Roofing and Plumbing Pty Ltd On 3 April 2017, Brendan Foster Roofing and Plumbing entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 17 August 2015 involving persons working on a roof without appropriate fall protection. Specified Electrical Process Heating Co Australia Pty Ltd On 20 March 2017, Specified Electrical Process Heating entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 7 September 2015 involving an employee who suffered a degloving injury to his right arm. BRB Modular Pty Ltd On 7 February 2017, BRB Modular entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 7 August 2015, involving demolition where there was a risk posed to persons of being struck by debris. Patties Food Ltd On 1 February 2017, Patties Foods entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 15 June 2015, involving an employee sustaining superficial burns. Bowen & Pomeroy Pty Ltd On 28 November 2016, Bowen & Pomeroy entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 5 June 2015 involving an employee who suffered an amputation to his ring finger and little finger and a crush injury in middle and index fingers. Midfield Meat International Pty Ltd On 15 November 2016, Midfield Meat entered into an Enforceable Undertaking with WorkSafe Victoria in relation to incidents that occurred between 5 June 2014 and 20 October 2014 involving four persons who contracted Q-fever while working at the Midfield Meat abattoir in Warrnambool.
WorkSafe Victoria Annual Report 2017 109 Appendix 1
Enforceable Undertakings 2016/17 Maroondah City Council On 6 October 2016, Maroondah City Council entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 17 February 2015 involving an employee whose foot became entangled in with the blades of the scarifier while they were energized. He suffered serious injuries to his foot and toes. Mettle Pty Ltd On 3 October 2016, Mettle entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 7 August 2016 involving an employee who was injured cleaning a pressure cooker when he opened the lid and was engulfed in steam.
2016/17 Statistics OHS Prosecution success rate 90% Completed investigations proceeding to legal review outcome 68% OHS Investigations proceeding to prosecution within 12 months 82% Number of OHS prosecutions commenced (counted by defendant) 138 Number of compensation prosecutions commenced (counted by 24 defendant) Number of completed OHS prosecutions (counted by defendant) 103 Excludes Committal outcomes Includes successful and unsuccessful prosecutions Number of completed AC Act and WIRC Act prosecutions (counted by 20 Excludes Committal outcomes defendant) Number of OHS Cautions 28 Number of Compensation Cautions 16 Number of PI Code of Conduct Cautions 3 Total Cautions 47
110 WorkSafe Victoria Annual Report 2017 Requests to WorkSafe for prosecutions to be brought pursuant to section 131 of the Occupational Health and Safety Act 2004 (OHS Act) In 2016/17, WorkSafe received nine requests for a prosecution to be brought for an alleged offence against the OHS Act under section 131(1). Three of these requests were deemed invalid. Pursuant to section 131(2), within three months of the request being made, WorkSafe must advise the person in writing whether prosecution proceedings will be brought. In 2016/17 six valid requests were made: • Two investigations were completed within three months. • One investigation was completed within 93 days. This investigation related to an old matter involving failure to provide safe systems of work which resulted in a burns injury. The investigation was complex, requiring evidence from numerous witnesses. The matter resulted in charges being laid. • One investigation was completed in 100 days. This investigation related to an allegation of bullying. The investigation was complex. • Two investigations are continuing beyond three months as the matter involves numerous allegations of bullying. The investigations are complex. Pursuant to section 131(3), where WorkSafe advises a person that prosecution will not be brought, the person may request that WorkSafe refer the matter to the Director of Public Prosecutions (DPP) for advice on whether a prosecution should be brought (section 131(4)): 11 matters were referred to the DPP in 2016/17. The DPP recommended not to prosecute in all 11 matters. Requests to WorkSafe for prosecutions to be brought pursuant to sections 242AC and 252AA of the Accident Compensation Act 1985 (AC Act) and sections 577 and 607 of the Workplace Injury Rehabilitation and Compensation Act 2013 (WIRC Act) Where WorkSafe has not brought prosecution proceedings within six months of an alleged offence against the AC Act or the WIRC Act, a person may request that WorkSafe bring a prosecution pursuant to sections 242AC or 252AA of the AC Act or pursuant to sections 577 or 607 of the WIRC Act. In 2016/17, WorkSafe received one request to bring a prosecution pursuant to section 607 of the WIRC Act. One section 607 matter was referred to the DPP in 2016/17. The decision is still pending.
WorkSafe Victoria Annual Report 2017 111 Appendix 2
Appendix 2: Agent performance results
Agent performance 2016/17 This appendix includes data on agent performance which WorkSafe Victoria uses to assess the performance of its authorised agents for remuneration purposes and for general performance management. The information is provided to inform employers and the public on aspects of the performance of WorkSafe’s authorised agents. The information does not purport to be all-inclusive or contain all information which employers may require to make an informed assessment as to the selection of an agent. Employers should make their own independent assessment of the capabilities of each agent and, where appropriate, seek professional advice. Note that the market allocation of agents may differ between years due to employers transferring agents and/or from entries or exits to self-insurance or other schemes. These movements can impact the trend performance indicated in this appendix. Further, no trend information is available for EML, as this is their first year as an agent.
Claims management and return to work
Agent Timeliness of employer notification to agent Return to Work Index % received within 12 days % not returning to work within 6 months Result Trend Result Trend Allianz 93.7% Improved 20.1% Deteriorated CGU 93.6% Steady 21.9% Deteriorated EML 92.6% N/A 24.2% N/A GBS 96.2% Steady 22.6% Deteriorated Xchanging 94.7% Steady 19.9% Deteriorated Scheme 94.3% Steady 21.5% Deteriorated
Return to Work Index Trend information Improved Performance in current year has improved by more than 2% of that in the previous year Steady Performance in current year is within +/– 2% of the previous year Deteriorated Performance in current year has deteriorated by more than 2% of that in the previous year
Agent Duration – % of workers on weekly payments at 13 weeks 26 weeks 52 weeks 134 weeks Result Trend Result Trend Result Trend Result Trend Allianz 42.3% Deteriorated 25.9% Deteriorated 10.2% Deteriorated 2.0% Steady CGU 40.5% Steady 23.2% Steady 9.3% Steady 1.6% Steady EML 39.4% N/A 26.2% N/A 12.4% N/A 3.4% N/A GBS 40.0% Deteriorated 25.0% Deteriorated 9.5% Deteriorated 2.2% Improved Xchanging 38.4% Steady 23.4% Steady 8.5% Steady 1.9% Improved Scheme 40.3% Steady 24.7% Deteriorated 9.8% Deteriorated 2.1% Steady
Note: a lower percentage represents higher performance
Duration Trend information Improved Performance in current year has improved by more than 4% of that in the previous year Steady Performance in current year is within +/– 4% of the previous year Deteriorated Performance in current year has deteriorated by more than 4% of that in the previous year
112 WorkSafe Victoria Annual Report 2017 Service and processing
Agent Worker levels of service Employer levels of service Valid conciliation – non-compliance complaints Service attribute score Number of valid Number of valid complaints per $10m Result Trend Result Trend complaints result billed premium Allianz 80.0% Steady 87.8% Steady 6 0.1 CGU 79.4% Steady 85.2% Steady 4 0.1 EML 82.9% N/A 88.3% N/A 2 0.1 GBS 82.7% Improved 86.3% Steady 3 0.1 Xchanging 82.7% Steady 85.5% Deteriorated 4 0.1 Scheme 81.3% Steady 86.4% Steady 19 0.1
Worker and employer service Trend information Improved Performance in current year has improved by more than 4% of that in the previous year Steady Performance in current year is within +/– 4% of the previous year Deteriorated Performance in current year has deteriorated by more than 4% of that in the previous year
Timeliness of employer Agent Timeliness % of payments direct to injured workers reimbursements weekly payments – medical reimbursements – calendar days to pay 75% % paid within 7 days % paid within 11 days of employer reimbursements Result Trend Result Trend Result Trend Allianz 99.26% Steady 86.9% Deteriorated 7 Improved CGU 98.62% Steady 92.6% Deteriorated 7 Improved EML 97.91% Steady 86.8% N/A 8 N/A GBS 98.67% Steady 91.1% Steady 7 Improved Xchanging 98.03% Steady 90.3% Deteriorated 7 Improved Scheme 98.56% Steady 89.8% Deteriorated 7 Improved
Agent Timelines of processing provider accounts % paid within 30 days of receipt of invoice % paid within 70 days of service Result Trend Result Trend Allianz 92.6% Deteriorated 82.3% Deteriorated CGU 98.3% Steady 82.5% Deteriorated EML 96.9% N/A 82.6% N/A GBS 97.1% Steady 82.3% Steady Xchanging 96.8% Steady 82.1% Deteriorated Scheme 96.2% Steady 82.4% Steady
Timeliness of processing (excluding employer reimbursements) Trend information Improved Performance in current year has improved by more than 2% of that in the previous year Steady Performance in current year is within +/– 2% of the previous year Deteriorated Performance in current year has deteriorated by more than 2% of that in the previous year
WorkSafe Victoria Annual Report 2017 113 Appendix 2
Timeliness of employer reimbursements Trend information Improved Performance in current year has improved by more than 2 calendar days of that in the previous year Steady Performance in current year is within +/– 2 calendar days of the previous year Deteriorated Performance in current year has deteriorated by more than 2 calendar days of that in the previous year
Agent fees Authorised agents operating under an instrument of appointment which WorkSafe issues pursuant to the Workplace Injury Rehabilitation and Compensation Act 2013 are paid fees for acting on behalf of WorkSafe in the issuing of WorkCover insurance, collection of insurance and the administration of claims. The agent remuneration includes performance-based components. It also allows for the reduction of an agent’s fees upon the occurrence of an event such as a failure to meet performance criteria. Reductions Applicable to 2016/17 None as at June 2017
114 WorkSafe Victoria Annual Report 2017 Definitions
Measure Definition Timeliness of employer notification to The proportion of claims, with 20 days lost time duration or more, received by the agent agent from the employer with remuneration greater than $1 million and within 12 days of the employer receiving the claim from an injured worker. Measure includes claims received between 1 July 2016 and 30 April 2017. Return to Work Index The proportion of injured workers recorded as working on the date six months after lodgement of their claim (Insurer Received date). Measure only includes claims received between 1 December 2015 to 30 November 2016 (inclusive), with greater than 10 days of weekly compensation paid. See note (1). Duration on weekly payments at 13 and Duration is measured as the number of workers receiving 13/ 26 weeks of compensation 26 weeks expressed as a proportion of workers who have received at least 10 days of compensation. See note (1). Duration on weekly payments at 52 Duration is measured as the number of workers who have exceeded 52 weeks of weeks compensation for claims received on or after 1 April 2013 expressed as a proportion of workers who have received at least 10 days of compensation for claims reported between 1 April 2014 and 31 March 2016 inclusive. See note (1). Duration on weekly payments at 134 Duration is measured as the number of workers who have exceeded 134 weeks of weeks compensation for claims received on or after 1 September 2011 expressed as a proportion of workers who have received at least 10 days of compensation for claims reported between 1st September 2012 and 31 August 2014 inclusive. See note (1). Injured worker levels of service from the The Injured Worker Survey is measured against service events, that is, the average agent performance across six key events. These figures are based on an independent survey of approximately 417 workers a month (ie 5,000 a year) who received weekly benefits within the three month period leading up to the survey month. See note (2). Employer levels of service from the The Employer Survey is measured against service attributes, that is, the average agent performance across 12 service dimensions. These figures are based on an independent survey of 1,200 employers who had at least one claim that received any type of payment or that was entitled to weekly compensation in the three months prior to the survey (which is conducted on a monthly basis throughout the year). See note (3). Valid conciliation non-compliance This measure shows the number of valid complaints which were made against the agent complaints and have been registered on the WorkSafe Conciliation Compliance Database between 1 July 2016 and 30 June 2017. The measure is also expressed as the number of complaints per $10 million of billed premium to allow for agent market share. The total number of disputes referred for conciliation between 1 July 2016 and 30 June 2017 as recorded on the WorkSafe computer system is 11,118. Timeliness of weekly payments direct to The timeliness of payment of weekly payments direct to injured workers is assessed as the injured workers percentage of payments made within seven calendar days from a notification of payment requirement being received by the Scheme. See note (4). Timeliness of medical reimbursements The timeliness of payment of medical reimbursements direct to injured workers is assessed direct to injured workers as the percentage of payments made within 11 calendar days of a request for payment being received by the Scheme from the injured worker. See note (4). Timeliness of employer reimbursements The timeliness of reimbursements of weekly payments to employers is assessed as the number of days it takes to make 75% of payments. See note (4). Timeliness of processing provider The timeliness of payment to providers for treatment provided to injured workers is accounts – % paid within 30 days of assessed as the percentage of accounts paid within 30 calendar days of receipt by the invoice Scheme. See notes (4) and (5).
Notes (1) This assessment takes into account the differing mix of claims that agents manage. (2) The survey is accurate to within +/–3% at 95% confidence level for each agent. (3) The survey is accurate to within +/–5% at 95% confidence level for each agent. (4) There may be instances where the agent is reliant on further information from third parties to make a payment. (5) Accounts for this measure are counted slightly differently from other measures. If there are multiple service dates on the same account, it is counted multiple times. Other than the injured worker and employer surveys, audits and timeliness of employer notification to agent, all assessments were made at 30 June 2017.
WorkSafe Victoria Annual Report 2017 115 Appendix 2
Market share as at 30 June 2017 Agent % of policies % of remuneration % of premium Allianz 32% 24% 23% CGU 26% 25% 26% EML 11% 13% 13% GBS 14% 20% 19% Xchanging 16% 18% 19% Scheme 100% 100% 100%
Notes Policies refers to the employers with WorkCover Insurance managed by each agent. Remuneration refers to the salaries and wages (including superannuation) paid by employers managed by each agent. Premium refers to the premium payable for the 2016/17 year for employers managed by each agent. Due to rounding, market share may not equate to 100%.
Agent name Full description Allianz Allianz Australia Workers’ Compensation (Victoria) Limited CGU CGU Workers Compensation (Vic) Limited EML EML Vic Pty Ltd GBS Gallagher Bassett Services Workers Compensation Vic Pty Ltd Xchanging Xchanging Integrated Services Victoria Pty Ltd trading as Xchanging
116 WorkSafe Victoria Annual Report 2017 Agent performance metrics 2017/18 Each year WorkSafe sets a number of performance measures for the agent panel. These measures are intended to align agent performance with WorkSafe’s goals of delivering improvements in return to work and service, while driving quality case management and ensuring the overall sustainability of the scheme. Table 1 provides a comparison of measures from 2016/17 and 2017/18. Table 2 summarises the package of metrics that have been set for the 2017/18 year. Table 3 provides a brief description of the measures. Agents can earn payments capped at a specified level for achieving the targets for defined measures. The payments are measured as a percentage of the Agent Premium Base Fee which agents are paid for the portfolio of WorkCover registrations that they manage for the year. Where an agent does not meet the target set they many incur a remuneration reduction. Conversely, where they exceed the target, they may receive an incentive payment. As a guide, a one per cent payment equates to approximately $1.6 million. The amount that agents will either earn in incentives or repay in remuneration reductions will depend on their Agent Premium Base Fee and their performance. In response to the 2016 Ombudsman Victoria report (see Appendix 5), WorkSafe Victoria has placed an increased weighting on measures that promote quality decision making and sustainable outcomes for our injured workers. In addition to greater weighting on quality and sustainable outcomes, there is also a link between quality and the associated outcome measure to ensure that agents are only incentivised for making quality and sustainable decisions. Table 1: Comparison of allocation of weighting proposed for 2017/18 compared to prior year
2017 1 201 17 R u ta na l t er e ual t
*Measures are designed to work together as a package and many measures impact both quality and sustainability.
WorkSafe Victoria Annual Report 2017 117 Appendix 2
Table 2: Agent Performance Metrics Package for 2017/18
Measure Incentive Remuneration Reduction Return to Work Measures 26 Week Back @ Work* 8.0% (4.0%) 104 Week Back @ Work 1.5% (1.0%) 52 Weekly Measure 3.0% (2.0%) Mobile Case Management Measure 1.5% 0.0% Service / Quality Measures Injured Worker Survey – Events Index 8.0% (4.0%) Quality Decision Measure 5.5% (5.5%) Impairment Benefit Timeliness Measure 1.0% (0.5%) Processing Sustainability Measure 1.0% 0.0% Sustainability Measures Second Entitlement Review 2.5% (1.0%) Long Tail Claims Management 2.0% 0.0% Treatment Measure 3.0% (2.0%) Premium Collection Measure 2.0% 0.0% Impairment Benefit Sustainability Measure 1.5% 1.5% Impairment Benefit Information Collection Measure 1.0% (1.0%) Agent Innovation Measure Agent Specific Innovation Measure 1.0% 0.0
*The 26 Week Back @ Work measure is measured over a number of ways assessing the different mix of claims eg mental injury vs physical injury.
118 WorkSafe Victoria Annual Report 2017 Table 3: Definitions of Agent Performance Metrics for 2017/18
Measure Definition 26 Week Back @ Work Assesses the proportion of injured workers working six months after the claims were received by the agent and where that work is sustained for a minimum period of three weeks. Measure only includes claims received between 1 December and 30 October inclusive, with greater than 10 days of weekly compensation paid. 104 Week Back @ Work Assesses the proportion of injured workers recorded as working on the date 104 weeks after lodgement of their claim (Insurer Received date) where the worker not working at six months following the lodgement of their claim. Mobile Case Management Assesses agents where a face to face engagement occurs with any combination of parties (worker, employer and treating health practitioner) with the aim of achieving a safe and sustainable return to work. 52 Weekly Measure Measures the number of workers who have exceeded 52 weeks of compensation for claims received on or after 1 April 2014 expressed as a proportion of workers who have received at least 10 days of compensation for claims reported between 1 April 2015 and 31 March 2017 inclusive. Injured Worker Service – Events Index Measures average performance of agents across six key service events. The Index is calculated on an independent survey of approximately 420 workers a month (ie approximately 5,000 a year) who received weekly benefits within the three month period leading up to the survey month. Quality Decision Measure Assesses the agent’s performance on the quality of decisions made for initial eligibility on standard time loss claims, medical and like entitlements, and all weekly compensation adverse decisions including the second entitlement decision (130 week). Impairment Benefit Timeliness Measure Assesses an agent’s performance against compliance with legislative timeframes for the progressing and decision on an Impairment Benefit claim. Processing Sustainability Measure Supports the introduction of WorkSafe’s Electronic Document Records Management System to electronically track invoices and weekly compensation reimbursement. This measure is focused on the prompt payment of electronic invoices to providers. Agent Innovation Measure An agent initiated measure, which utilises an agent-led innovation aimed at improving durable return to work and/or service for injured workers, employers and the scheme. Second Entitlement Review Measure Assesses the number of workers who have exceeded 134 weeks of compensation for claims received on or after 1 July 2012 expressed as a proportion of workers who have received at least 10 days of compensation for claims reported between 1 September 2013 and 31 August 2015 inclusive. This measure is linked to the quality decision measure and agents must achieve the minimum requirement of quality to be able to access incentives in this measure. In addition to the link to the quality decision, the agent must not have any wrongly disentitled workers to be able to access income under this measure. Long Tail Claims Management Assesses agent performance in reducing the number of active weekly payments claims from mature accident years relative to WorkSafe’s independent actuarial projections. The measure includes claims from the 1985 to 2012 accident years. Treatment Measure Assesses agents on their ability to pay for the right treatment at the right time on the right claims at a reasonable cost. Premium Collection Measure Assesses an agent’s performance on the timely collection of premium by 30 June 2017. Impairment Benefit Sustainability Measure This measure encourages adherence to an upper limit of both the percentage of injured workers to receive an impairment benefit and the average whole person impairment of the benefit payable for high and low risk impairment benefit claims and hearing loss impairment benefit claims. Impairment Benefit Collection Measure Assesses the agent’s performance against a work practice aimed at ensuring agents collect relevant information on receipt of an impairment benefit application to support quality and timely decision making.
WorkSafe Victoria Annual Report 2017 119 Appendix 3
Appendix 3: Self-insurance report
Overview Self-insurers form part of the WorkSafe workers compensation scheme. Their status is derived from the Workplace Injury Rehabilitation and Compensation Act 2013. Employers are eligible to apply for self-insurance in Victoria if they satisfy prescribed minimum requirements of financial strength and viability. As at 30 June 2017, there are 37 self-insurers operating in Victoria. This represents approximately 7.3 per cent of total scheme remuneration (forecast using 2015/16 remuneration).
Applications and approvals during 2016/17 Applications for self-insurance are made to WorkSafe. WorkSafe has the power to approve or refuse any application. In determining whether an applicant is suitable, WorkSafe must be satisfied that the applicant is ‘fit and proper’ to be a self-insurer. In this regard, WorkSafe examines the applicant’s: • financial viability • capacity to administer claims for compensation • incidence of injuries to workers and the cost of claims in respect of such injuries • safety of working conditions • compliance with the Act and Regulations • compliance with any terms and conditions (where the application is for re-approval), and • any other matters that WorkSafe thinks fit. Approval as a self-insurer is then subject to certain prescribed terms and conditions specified in Ministerial Orders, as well as any terms and conditions determined by WorkSafe. Initial approval takes effect for a period of three years. Renewal of approval has traditionally been for a period of four years, unless WorkSafe, in its discretion, determines that approval has effect for six years. This longer period of approval is designed to reward good performance in the area of health and safety, injury management and return to work. In 2016/17, two organisations were granted approval to self-insure: • Food Investments Pty Limited commenced on 12 September 2016 • Municipal Association of Victoria was granted ‘conditional’ approval to establish a local government workers compensation self-insurance scheme, which is expected to commence on 1 November 2017. In 2016/17 FPW Holdings Australia Pty Ltd ceased its approval to be a self-insurer on 23 June 2017. In 2016/17, six organisations were successful in their application for renewal of approval to self-insure: • BHP Billiton Ltd from 31 August 2016 for a period of six years • Melbourne Water Corporation from 31 August 2016 for a period of four years • Westpac Banking Corporation from 31 August 2016 for a period of six years • Myer Holdings Ltd from 31 October 2016 for a period of six years • BP Australia Group Pty Ltd from 31 December 2016 for a period of four years, and • CSR Ltd from 31 March 2017 for a period of six years.
Return to work rate In 2016/17, self-insurers achieved a sustained return to work rate of 85.71 per cent, which represents a slight improvement on the 2015/16 result of 83.9 per cent.
120 WorkSafe Victoria Annual Report 2017 Service WorkSafe’s Injured Worker Survey includes injured workers covered by self-insurers. In 2016/17, the service score was 69 per cent for all self-insurers. This result represents a slight decline when compared to the previous year and was lower than the equivalent service score for WorkSafe agents (75 per cent).1 1. Due to the differences between the self-insurers survey methodology and that of WorkSafe agents, it is not possible to make a direct comparison between the respective 2016/17 service results. This average has been calculated to provide an approximate comparison only.
List of self-insurers as at 30 June 2017
Self-insurers as at 30 June 2017 Employer ALCOA OF AUSTRALIA LIMITED ALCOA OF AUSTRALIA LIMITED AMCOR LTD AMCOR FLEXIBLES (AUSTRALIA) PTY LTD AMCOR FLEXIBLES (PORT MELBOURNE) PTY LTD AMCOR LTD ARRIUM LIMITED AUSTUBE MILLS PTY LTD ONESTEEL RECYCLING PTY LIMITED ONESTEEL REINFORCING PTY LIMITED ONESTEEL TRADING PTY LIMITED ONESTEEL WIRE PTY LIMITED SSX SERVICES PTY LIMITED AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED BHP BILLITON LIMITED BHP BILLITON LIMITED BLUESCOPE STEEL LIMITED BLUESCOPE DISTRIBUTION PTY LTD BLUESCOPE STEEL (AIS) PTY LTD BLUESCOPE STEEL LIMITED FIELDERS MANUFACTURING PTY LTD LYSAGHT BUILDING SOLUTIONS PTY LTD ORRCON DISTRIBUTION PTY LTD BP AUSTRALIA GROUP PTY LTD AIR REFUEL PTY LTD B P AUSTRALIA PTY LTD CENTREL PTY LTD ELITE CUSTOMER SOLUTIONS PTY LTD NO. 1 RIVERSIDE QUAY PROPRIETARY LIMITED BRAMBLES LIMITED BRAMBLES INDUSTRIES LIMITED CHEP AUSTRALIA LIMITED CHEP PALLECON SOLUTIONS PTY LTD KEGSTAR PTY LIMITED BRICKWORKS LTD AUSTRAL PRECAST (VIC) PTY LTD AUSWEST TIMBERS PTY LTD BRICKWORKS LTD BRISTILE ROOFING (EAST COAST) PTY LTD DANIEL ROBERTSON PTY LTD NUBRIK CONCRETE MASONRY PTY LTD NUBRIK PTY LTD RIX ROOFING PTY LTD
WorkSafe Victoria Annual Report 2017 121 Appendix 3
Self-insurers as at 30 June 2017 Employer BROADSPECTRUM LIMITED APP CORPORATION PTY LIMITED BROADSPECTRUM (AUSTRALIA) PTY LTD BROADSPECTRUM SERVICES PTY LTD ICD (ASIA PACIFIC) PTY LIMITED O.G.C. SERVICES PTY LTD TEN RIVERS PTY LTD CARTER HOLT HARVEY BUILDING PRODUCTS PTY LIMITED CARTER HOLT HARVEY LVL PTY LIMITED CARTER HOLT HARVEY PINEPANELS PTY LIMITED CARTER HOLT HARVEY WOODPRODUCTS (CENTRAL AND NORTHERN REGIONS) PTY LIMITED
CARTER HOLT HARVEY WOODPRODUCTS AUSTRALIA PTY LIMITED CROWN RESORTS LIMITED BETFAIR PTY LIMITED CAPITAL CLUB PTY LTD CROWN MELBOURNE LIMITED CROWN RESORTS LIMITED CSR LIMITED AFS SYSTEMS PTY LTD BRICKS AUSTRALIA SERVICES PTY LIMITED CSR LIMITED EXXONMOBIL AUSTRALIA PTY LTD ESSO AUSTRALIA PTY LTD MOBIL EXPLORATION & PRODUCING AUSTRALIA PTY LTD MOBIL OIL AUSTRALIA PTY LTD MOBIL REFINING AUSTRALIA PTY LTD FOOD INVESTMENTS PTY LIMITED GEORGE WESTON FOODS LIMITED FORD MOTOR COMPANY OF AUSTRALIA LIMITED FORD MOTOR COMPANY OF AUSTRALIA LIMITED FPW HOLDINGS AUSTRALIA PTY LTD GOODMAN FIELDER CONSUMER FOODS PTY LIMITED QUALITY BAKERS AUSTRALIA PTY LIMITED HANSON AUSTRALIA (HOLDINGS) PROPRIETARY LIMITED HANSON CONSTRUCTION MATERIALS PTY LTD HANSON LANDFILL SERVICES PTY LTD HYMIX AUSTRALIA PTY LIMITED INGHAMS GROUP LIMITED INGHAMS ENTERPRISES PTY LIMITED MARS AUSTRALIA PTY LTD MARS AUSTRALIA PTY LTD MELBOURNE WATER CORPORATION MELBOURNE WATER CORPORATION MONDELEZ AUSTRALIA HOLDINGS PTY LIMITED MONDELEZ AUSTRALIA PTY LIMITED MYER HOLDINGS LIMITED FSS RETAIL PTY LTD MYER PTY LTD SASS & BIDE PTY LTD SASS & BIDE RETAIL PTY LTD WAREHOUSE SOLUTIONS PTY LTD PAPER AUSTRALIA PTY LTD PAPER AUSTRALIA PTY LTD PHILIP MORRIS (AUSTRALIA) LIMITED PHILIP MORRIS LIMITED
122 WorkSafe Victoria Annual Report 2017 Self-insurers as at 30 June 2017 Employer PRIMARY HEALTH CARE LIMITED HEALTHCARE IMAGING SERVICES (VICTORIA) PTY LIMITED IDAMENEO (NO 125) PTY LTD IDAMENEO (NO.789) LTD SIDAMENEO (NO. 456) PTY LTD SPECIALIST DIAGNOSTIC SERVICES PTY LTD SPECIALIST VETERINARY SERVICES PTY LTD THE TRUSTEE FOR ARTLU UNIT TRUST QANTAS AIRWAYS LIMITED ACCUMULATE LOYALTY SERVICES LIMITED EASTERN AUSTRALIA AIRLINES PTY LIMITED EXPRESS FREIGHTERS AUSTRALIA (OPERATIONS) PTY LIMITED
JETSTAR AIRWAYS PTY LIMITED
JETSTAR GROUP PTY LTD
JETSTAR SERVICES PTY LIMITED
Q CATERING LIMITED
QANTAS AIRWAYS LIMITED
QANTAS DOMESTIC PTY LIMITED
QANTAS GROUND SERVICES PTY LIMITED
QANTAS INFORMATION TECHNOLOGY LTD
QANTAS ROAD EXPRESS PTY LIMITED
QF CABIN CREW AUSTRALIA PTY LIMITED
SUNSTATE PTY LTD VII PTY LTD ROBERT BOSCH (AUSTRALIA) PROPRIETARY LIMITED ROBERT BOSCH (AUSTRALIA) PROPRIETARY LIMITED ROYAL AUTOMOBILE CLUB OF VICTORIA (RACV) LIMITED R.A.C.V. FINANCE LIMITED RACV INSURANCE SERVICES PTY LTD ROYAL AUTOMOBILE CLUB OF VICTORIA (RACV) LIMITED SPICERS LIMITED PAPERLINX SERVICES PTY LTD SPICERS AUSTRALIA PTY LTD TOLL HOLDINGS LIMITED TOLL HOLDINGS LIMITED TOLL IPEC PTY LTD TOLL NORTH PTY LTD TOLL TRANSPORT PTY LIMITED TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED UNILEVER AUSTRALIA (HOLDINGS) PROPRIETARY LIMITED TEA TOO PTY. LTD. UNILEVER AUSTRALIA (HOLDINGS) PROPRIETARY LIMITED UNILEVER AUSTRALIA LIMITED UNILEVER AUSTRALIA SUPPLY SERVICES LIMITED UNILEVER AUSTRALIA TRADING LIMITED
WorkSafe Victoria Annual Report 2017 123 Appendix 3
Self-insurers as at 30 June 2017 Employer UNIVERSITY OF MELBOURNE AUSTRALIAN MUSIC EXAMINATIONS BOARD (VIC) LIMITED MELBOURNE DENTAL CLINIC LTD MELBOURNE UNIVERSITY PUBLISHING LIMITED MU STUDENT UNION LIMITED NOSSAL INSTITUTE LIMITED UNIVERSITY OF MELBOURNE UOM COMMERCIAL LTD VIVA ENERGY AUSTRALIA GROUP PTY LTD VIVA ENERGY AUSTRALIA PTY LTD VIVA ENERGY REFINING PTY LTD ZIP AIRPORT SERVICES PTY LTD WESFARMERS LIMITED AUSTRALIAN VINYLS CORPORATION PTY LTD BLACKWOODS TRAINING PTY LTD BULLIVANTS PTY LIMITED BUNNINGS GROUP LIMITED CHEF FRESH PTY LTD COLES FINANCIAL SERVICES PTY LTD COLES GROUP LIMITED COLES SUPERMARKETS AUSTRALIA PTY LTD COREGAS PTY LTD CSBP LIMITED EUREKA OPERATIONS PTY LTD GREENCAP PTY LTD J. BLACKWOOD & SON PTY LTD KMART AUSTRALIA LIMITED LAWVALE PTY LTD LIQUORLAND (AUSTRALIA) PTY LTD MODWOOD TECHNOLOGIES PTY LTD OFFICEWORKS BUSINESSDIRECT PTY LTD OFFICEWORKS LTD PROTECTOR ALSAFE PTY LTD TARGET AUSTRALIA PTY LTD THE WORKWEAR GROUP PTY LTD TRIMEVAC PTY LTD TYRE AND AUTO PTY LTD WESFARMERS CHEMICALS ENERGY & FERTILISERS LIMITED WESFARMERS FINANCE PTY LTD WESFARMERS LIMITED
124 WorkSafe Victoria Annual Report 2017 Self-insurers as at 30 June 2017 Employer WESTPAC BANKING CORPORATION ASGARD WEALTH SOLUTIONS LTD BT FINANCIAL GROUP PTY LIMITED HASTINGS MANAGEMENT PTY LIMITED WESTPAC BANKING CORPORATION WESTPAC FINANCIAL CONSULTANTS LIMITED WOOLWORTHS LTD LANGTONS PTY LTD PHILIP LEONG STORES PTY LIMITED QUEENSLAND PROPERTY INVESTMENTS PTY LTD RETAIL FM PTY LTD WOOLSTAR PTY LIMITED WOOLWORTHS LTD
WorkSafe Victoria Annual Report 2017 125 Appendix 4
Appendix 4: Governance and compliance
Board of Management The WorkSafe Board of Management is established under section 24 of the Accident Compensation Act 1985 and continued under section 502 of the Workplace Injury Rehabilitation and Compensation Act 2013. The Board presently consists of six Directors, each of whom is appointed by the Governor in Council. One of the Directors is also the appointed Chief Executive. The Board sets the framework for the achievement of WorkSafe’s objectives and the execution of its functions. The Board does this by overseeing strategic planning, policy development, auditing and compliance, prudent financial management, fostering stakeholder relationships and reviewing management performance. Management of the operations and administration of WorkSafe is delegated by the Board to the Chief Executive who manages and controls the affairs of WorkSafe in accordance with the policies and practices set by the Board.
Directors The Directors serving on the Board at 24 August 2017 are: Paul Barker Chairman B.Bus, FCA, AGIA and ACIS, MAICD Appointed September 2015 Clare Amies Chief Executive BA, BSW, MSW, Grad. Cert. Public Policy, AMP (Harvard), MAICD Appointed March 2015 Ross McCann AM BEng (Chem) (Hons), FIChemE Appointed October 2013 Neil Lucas PSM, JP Appointed August 2014 Dr Samantha Smith DBA, MA, BBus (Mktg), GAICD Appointed 18 October 2016 Doug Kearsley BSc(Math) (Hons), GDip (Operations Research) Appointed 4 April 2017 Directors whose term expired or resigned during 2016/17 were: Paul Kirk (1 July 2016 to 8 October 2016) John Walter (1 July 2016 to 24 March 2017) Marlo Baragwanath (1 July 2016 to 3 November 2016) Further information relating to Board Members can be found on the WorkSafe website.
Directors’ access to Independent Legal Advice WorkSafe provides a budget for Directors to obtain independent legal advice in respect of their individual obligations as Directors.
126 WorkSafe Victoria Annual Report 2017 Conflict of Interest Directors are governed in respect of conflicts of interest by the relevant provisions of the Public Administration Act 2004 and binding codes issued by the Victorian Public Sector Commission. The Directors are also required by section 31 of the Accident Compensation Act 1985 (section 511 of the Workplace Injury Rehabilitation and Compensation Act 2013) to declare any pecuniary interest in any matter being considered by the Board or in any other matter in which WorkSafe is concerned. The Board is provided at each of its meetings with a consolidated list of the personal interests disclosed by Directors. Directors are required to complete a declaration of private interests upon appointment and annually whilst remaining a director and from 1 July 2016 were required to provide a declaration of related party transactions.
Board Committees The Board is supported by three committees chaired by independent non-executive Directors. Audit Committee WorkSafe Board Members of the Audit Committee as at 24 August 2017: Doug Kearsley (Chair), Paul Barker, Neil Lucas, and Ross McCann AM. The Chief Executive also attends. The Audit Committee assists the Board to fulfil its oversight responsibilities relating to: • the integrity, effectiveness and quality of WorkSafe’s financial reporting and disclosures; • the effectiveness of WorkSafe’s risk management framework; • the independence, work plan, and effectiveness of WorkSafe’s External Auditor; • the External Auditor’s annual audit of WorkSafe’s financial statements; • the qualifications, engagement, fees, scope of work and effectiveness of WorkSafe’s Internal Audit function; and • WorkSafe’s compliance with relevant laws, regulations, standards and codes including the Financial Management Act 1994 (Vic), Standing Directions of the Minister for Finance under the Financial Management Act 1994 and audit requirements under the Prudential Standard for Victorian Government Insurance Agencies 2015. Risk Committee WorkSafe Board Members of the Risk Committee as at 24 August 2017: Doug Kearsley (Chair), Paul Barker, Neil Lucas, and Ross McCann AM. The Chief Executive also attends. The Risk Committee assists the Board to fulfil its oversight responsibilities relating to: • the implementation, operation and adequacy of the risk management and internal control framework that WorkSafe uses to identify and manage key business, financial, fraud and regulatory risks; and • WorkSafe compliance with relevant laws, regulations, standards and codes including the Prudential Insurance Standard for Victorian Government Insurance Agencies (with the exclusion of audit requirements which are overseen by the Audit Committee), the Victorian Funds Management Corporation (VFMC) and Centralised Investment Model, and the Victorian Government Risk Management Framework (with the exclusion of the attestation requirements which are overseen by the Audit Committee). Remuneration Committee WorkSafe Board Members of the Remuneration Committee as at 24 August 2017: Paul Barker (Chair), Neil Lucas, Dr Samantha Smith. The WorkSafe Board Remuneration Committee assists the Board to fulfil its oversight responsibilities by ensuring that WorkSafe has executive remuneration policies guidelines and practices that are consistent with Government policy.
WorkSafe Victoria Annual Report 2017 127 Appendix 4
Board and Committee Meetings Number attended/eligible to attend
Directors Board Audit Risk Remuneration Paul Barker 7/7 4/4 3/3 2/2 John Walter 5/6 1/1 2/2 2/2 Neil Lucas 7/7 4/4 2/2 2/2 Marlo Baragwanath 2/3 1/1 1/1 1/1 Paul Kirk 3/3 1/1 1/1 Ross McCann AM 7/7 3/4 3/3 Dr Samantha Smith 5/5 Doug Kearsley 1/1 Clare Amies 6/7
Risk Management Compliance with the Victorian Government Risk Management Framework and Processes Standing Direction 4.5.5 of the Financial Management Act 1994 requires public sector agencies to provide an annual attestation of compliance with the mandatory risk management process requirements set out in the Victorian Government Risk Management Framework (issued in 2007, last updated March 2015) and Processes. The Audit Committee of the Victorian WorkCover Authority has considered the Statement by the Chief Executive on compliance with the Victorian Government Risk Management Framework and the Executive Team’s internal risk attestation process. On this basis, I, Paul Barker, Chairman of the Victorian WorkCover Authority Board certify that the Victorian WorkCover Authority has complied with the Ministerial Standing Direction 4.5.5 – Risk Management Framework and Processes. The Victorian WorkCover Authority Audit Committee verifies this, on the basis that the Audit Committee has considered the Statement by the Chief Executive on compliance with the Victorian Government Risk Management Framework and Processes and the Executive Team’s internal risk attestation.
Paul Barker Chairman Victorian WorkCover Authority Date signed: 24 August 2017
Victorian WorkCover Authority trading as WorkSafe Victoria.
128 WorkSafe Victoria Annual Report 2017 Compliance This section includes disclosures required by the Financial Management Act 1994, the Accident Compensation Act 1985, the Workplace Injury Rehabilitation and Compensation Act 2013, the Protected Disclosure Act 2012, the Carers Recognition Act 2012 and the Freedom of Information Act 1982. It also includes voluntary disclosure of additional regulatory compliance information. Manner of establishment and relevant Minister WorkSafe was established by section 18 of the Accident Compensation Act 1985 as in force immediately before 1 July 2014 as a body corporate with perpetual succession. The Hon. Robin Scott MP was appointed the Minister for Finance in December 2014, with responsibility to manage Victoria’s occupational health and safety laws, and the accident compensation scheme. Accountability of WorkSafe Pursuant to section 492 of the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is required to exercise its powers and perform its functions under the Workplace Injury Rehabilitation and Compensation Act 2013, the Accident Compensation Act 1985, the Workers Compensation Act 1958, the Occupational Health and Safety Act 2004, the Equipment (Public Safety) Act 1994 and the Dangerous Goods Act 1985. Pursuant to section 495 of the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is subject to the general direction and control of the Minister and any specific written directions given by the Minister. The Minister cannot give a direction in relation to a specific person. Ministerial Directions Two Ministerial Directions were given under section 495 of the WIRC Act during the financial year 2016/17: • Administration of Benefits to Affected Persons Involved in the Bourke Street Tragedy on 20 January 2017 on Behalf of the Bourke Street Fund (http://www.gazette.vic.gov.au/gazette/Gazettes2017/GG2017G009.pdf) on 2 March 2017. • Formal direction to begin preparations to establish the Victorian Asbestos Eradication Agency before the end of 2016. WorkSafe’s objectives, functions and powers WorkSafe’s primary objectives, functions and powers are found in sections 492, 493 and 494 of the Workplace Injury Rehabilitation and Compensation Act 2013 and sections 2, 7 and 8 of the Occupational Health and Safety Act 2004. These Acts are available from WorkSafe’s website. WorkSafe’s role in the community WorkSafe is the regulator of occupational health and safety and the accident compensation scheme in Victoria and its objectives and functions include (amongst others): • providing insurance to employers • receiving, assessing and determining claims for payment of compensation to injured workers • conducting and defending legal proceedings before courts and tribunals • assisting employers and workers in achieving healthy and safe working environments • promoting the effective occupational rehabilitation of injured workers and their early return to work • developing and implementing programs to provide incentives for employers to implement measures to eliminate or reduce risks to health and safety and to otherwise improve occupational health, safety and welfare, and • promoting public awareness and discussion of occupational health and safety and providing information services to workers, employers and the Victorian community. Access to information WorkSafe discloses a large volume of information online, by print publishing, and through its metropolitan and regional offices. It also provides information services in person and/or by phone, through its Advisory Services, annual report, website, library at 222 Exhibition Street, and any of its own or its authorised agents’ offices across Victoria.
WorkSafe Victoria Annual Report 2017 129 Appendix 4
The Freedom of Information Act 1982 In addition to organisational structure, governance and compliance, this section shows how WorkSafe makes information readily available to workers and the public in accordance with Part II of the Freedom of Information Act 1982. The Freedom of Information Act 1982 gives members of the public the right, subject to certain exemptions, to apply for access to information held by WorkSafe and/or to correct their personal information if it is incomplete, incorrect or out of date. The Freedom of Information Act 1982 applies to documents created by WorkSafe, as well as those created by other organisations, which are in the possession of WorkSafe and its authorised agents. For requests under the Freedom of Information Act 1982, applicants may use the online form provided at www.foi.vic.gov.au. In 2016/17 WorkSafe and its agents received 1,116 freedom of information requests. The Freedom of Information Commissioner received 23 applications for review and complaints and the Victorian Civil and Administrative Tribunal received eight applications for review, all of which are current and carried over into the next financial year. Details on the outcome of reviews by the FOI Commissioner and the Victorian Civil and Administrative Tribunal are available on the FOI Commissioner’s website and annual report. The Freedom of Information Act 1982 is just one of the processes available to the public to access WorkSafe documents or information. WorkSafe has processes in place to provide information to workers and the public outside the formal FOI process. Most communications or exchange of information with third parties occurs in the normal course of our business and with injured workers directly, or through our authorised agents, or under the Workplace Injury Rehabilitation and Compensation Act 2013. As part of normal claim management and administration, injured workers may access information in relation to their claim under section 9 of the Workplace Injury Rehabilitation and Compensation Act 2013 directly from the agents or their employer (including a self-insurer) or in accordance with other provisions of the Workplace Injury Rehabilitation and Compensation Act 2013. In 2016/17 18,043 requests for information in relation to workers’ injury claims were received by agents under the Workplace Injury Rehabilitation and Compensation Act 2013. Organisation and functions Information about WorkSafe and its structure, business units, authorised agents, objectives, functions, powers, the legislation it administers and requests for access to information made under the Freedom of Information Act 1982 or the Workplace Injury Rehabilitation and Compensation Act 2013 can be found in the annual report and/or on the WorkSafe website. Publications including policies, manuals, guidelines, codes of practice, brochures and other materials are available on the WorkSafe website. Legislation administered by WorkSafe is also available on the website.
130 WorkSafe Victoria Annual Report 2017 Categories of documents Records are managed using a cataloguing system called HPE Records Manager, are organised by subject and type (form, policy, guidance, etc.) and filed by business area and subject matter. Injury claims are filed by name and managed by authorised agents in accordance with WorkSafe’s record management policy and authorities and standards issued by the Public Record Office Victoria under the Public Records Act 1973. Categories of records/files include: • Actuarial • Annual reports • Complaints • Compliance • Compliance Codes • Contracts • Correspondence, including ministerial • Dangerous Goods • Dispute Management • Enforcement Group • Financial • Freedom of Information requests • Health and Disability Services, including Clinical and Independent Medical Examiner services • Health and Safety • Human Resources (employee records) • Information Technology Shared Solutions • Injury claims (managed by authorised agents) • Insurance, including self-insurance, and premium • Investigations • Legislation and policy • Legal and litigation • Licensing applications and renewals • Policies, procedures and manuals, including the Online Claims Manual • Programs or events (eg WorkSafe Awards) • Prosecution • Return to work • Risk • Service requests • Scheme Performance, including data and statistics • Strategic and operational planning • Workplace visit entry reports, improvement and prohibition notices. Health and safety WorkSafe is responsible for improving health, safety and welfare in Victorian workplaces under the Occupational Health and Safety Act 2004 and associated legislation. Information held by WorkSafe is separated into the categories of personal or case files, operational and policy files (on legislation or particular aspects of legislation) and correspondence files. Current files are stored at WorkSafe’s head office in Exhibition Street or at one of its regional offices.
WorkSafe Victoria Annual Report 2017 131 Appendix 4
Insurance WorkSafe is responsible for the compensation and rehabilitation of injured workers and managing employer workplace injury insurance and premiums under the Workplace Injury Rehabilitation and Compensation Act 2013. The rehabilitation and compensation scheme is administered by a number of authorised agents on behalf of WorkSafe. These agents are currently responsible for a range of functions including premium collection, claim lodgement and the delivery of benefits to, and rehabilitation of workers. Therefore, personal or case files of workers are held by the agents who manage their claims. Other operational and policy files are stored at WorkSafe’s offices in Exhibition Street, Melbourne. Examples of the types of documents to which members of the public usually apply for access are: • documents relating to their personal information, for example a particular worker’s injury claim, or a workplace complaint made against an individual or company • documents of a non-personal nature, for example details on WorkSafe’s processes or decisions, or information on an incident at a workplace. Not all documents are automatically made available in response to a request. A concerned person may check WorkSafe’s website or contact the Advisory Service to enquire as to whether the information they require is available for inspection or whether the person should apply for it under the provisions of the Freedom of Information Act 1982. Making a Request Workers’ injury claim files If you are a worker who has claimed compensation and wish to access documents in relation to your injury claim file you can contact the agent managing your claim to apply for documents under section 9 of the Workplace Injury Rehabilitation and Compensation Act 2013. Under this Act agents are required to process and respond to a request within 28 days from the date they receive the request. Information in relation to the injury claim access to information process is available on the WorkSafe website – Online Claims Manual. Workplace Injury Insurance Premium Information Documents relating to employer premiums are held by the agents. Certain documents can be released by the agents without the need to use the Freedom of Information Act 1982 process. Employers should contact the agent managing their WorkCover insurance to request access to particular documents. Other Information For information not related to a worker’s injury claim file or an employer’s premium, requests must be made in writing and should be addressed to: Freedom of Information WorkSafe Victoria GPO Box 4306 Melbourne Victoria 3001 Requests under the Freedom of Information Act 1982 must be made in writing, or using the online form provided at www.foi.vic.gov.au. A statutory fee of $27.90 from 1 July 2016 (which increased to $28.40 from 1 July 2017) is payable for each request and must be paid by credit card online, or enclosed with the letter of request (cheques should be made payable to WorkSafe Victoria). The fee may be waived if the applicant requests and provides evidence as to why payment of the fee would cause them financial hardship. Additional costs for access to documents may also be incurred, such as for photocopying (eg 20 cents per each A4 size black and white paper) and search time. Decisions are made under the Freedom of Information Act 1982 by the Principal Officer or authorised Freedom of Information Officers in accordance with the requirements of sections 26 and 51 of theFreedom of Information Act 1982. The Freedom of Information team may be contacted for general queries on (03) 9641 1555. Further Information Further information and forms are available online at www.worksafe.vic.gov.au. Online publications and Library WorkSafe produces a wide range of publications, many of which can be accessed on its website or by attending its library. The library has an extensive collection of publications. Members of the public are welcome to use the collection, but must first make an appointment by telephone on (03) 9641 1548 or 1800 671 004. The library operates from the Ground Floor 222 Exhibition Street Melbourne.
132 WorkSafe Victoria Annual Report 2017 Protected disclosures WorkSafe has established procedures under Part 9 of the Protected Disclosure Act 2012. The purpose of these procedures is to facilitate the making of disclosures and the protection of people who make disclosures from reprisals. The procedures are available on WorkSafe’s website.
Application for Internal Review
Internal review outcomes 2015/16 2016/17 Health and safety Inspector’s decision affirmed (no change) 43 44 Inspector’s decision set aside 102 74 Inspector’s decision varied (other than compliance date) 59 59 Compliance date only changed 1,077 1,000 Extension refused 17 22 Application refused 0 5 Application withdrawn 77 81 Application ineligible/not reviewable 10 11 Total health and safety 1,385 1,296
Internal review outcomes 2015/16 2016/17 Licensing Decision affirmed 1 3 Decision set aside 1 0 Application invalid 1 0 Application withdrawn 0 0 Total licensing 3 3
Internal review outcomes 2015/16 2016/17 Return to work Decisions set aside 3 1 Compliance date only changed 1 1 Decision affirmed 2 4 Varied 1 0 Invalid 0* 0 Withdrawn 1* 3 Total return to work 8 9
* These results were reported incorrectly in the 2016 Annual Report.
Victorian Civil and Administrative Tribunal applications During the year there were seven applications to VCAT for review of Internal Review Unit decisions. Of these, two were resolved between the parties and the applications to VCAT withdrawn. There are five matters currently in VCAT: one was heard in June and is pending a decision, and the remaining four have scheduled court dates in 2017/18.
WorkSafe Victoria Annual Report 2017 133 Appendix 4
Environmental performance WorkSafe is committed to reducing its environmental footprint and consistently manages sustainability through resource conservation, pollution prevention and promoting awareness among employees and stakeholders. WorkSafe proactively manages our environmental footprint through employee participation. Initially this began with an official Green Office Program which is now simply part of the way WorkSafe operates. The provision of bicycle and end of trip facilities (eg showers and lockers) promotes riding to work as an everyday event, sensor lighting throughout the tenancy reduces electricity consumption, the gradual introduction of electronic document management is reducing paper and storage, and our recycle and compost programs are highly successful. Our electricity and paper usage continues to be monitored and minimised. All redundant mobile phones, IT and camera equipment are donated to a range of charitable entities for recycling if they cannot be re-used within our offices. WorkSafe also recycles batteries, CDs, DVDs and other media.
2015/16 2016/17 Electricity (kWh) 2,864,124 2,697,871 Paper consumption (reams) 17,557 19,751 Paper consumption (reams) per FTE 17.16 15.50 Recycled paper (reams) 16,327 18,766 Recycled paper (%) 92.99 95.01
Note: Electricity (kWh) was previously reported as a monthly average. It is now reported as a yearly actual with 2015/16 restated.
Local Jobs First – Victorian Industry Participation Policy The Victorian Industry Participation Policy Act 2003 requires departments and public sector bodies to report on the implementation of the Local Jobs First – Victorian Industry Participation Policy (Local Jobs First – VIPP). Departments and other public sector bodies are required to apply the Local Jobs First – VIPP for all procurement activities valued at $3 million or more in metropolitan Melbourne and for state-wide projects, and $1 million or more for procurement activities based in regional Victoria. During 2016/17, WorkSafe applied Local Jobs First – VIPP to three procurements totalling $19.4 million. Two projects were assessed as having no contestable products or services. One project was assessed as contestable, requiring the completion of a VIPP Plan. The committed outcomes from the Local Jobs First – VIPP includes: • an 86 per cent of local content requirement • a commitment to support 80 jobs (Annualised Employee Equivalent (AEE)), representing three new jobs and the retention of 77 existing jobs (AEE), and • the commencement of two new apprentices/trainees and the retention of four existing apprentices/trainees.
National Competition Policy Review of Legislative Restrictions In accordance with its National Competition Policy commitments, the Victorian Government commissioned a review of Victoria’s accident compensation legislation in 1998. The review identified three main restrictions on competition; the mandatory nature of the insurance, monopoly provision and centralised premium setting. Pursuant to section 490 of the Workplace Injury Rehabilitation and Compensation Act 2013, the Minister must before 1 July 2015 and once every five years after that, cause a review on any matter relating to the setting of premiums. The review is to be undertaken by an independent expert review body. An independent review of premium setting was begun prior to 1 July 2015 by the Department of Treasury and Finance and has now been finalised. Any key findings and recommendations will be considered for potential implementation for the 2017/18 financial year. The Minister may also cause a review on any matter relating to self-insurer contributions to be undertaken by an independent expert body.
134 WorkSafe Victoria Annual Report 2017 Competitive neutrality Under the Victorian Government’s Competitive Neutrality Policy, WorkSafe is listed as a Public Financial Enterprise. Therefore, in accordance with the obligations set out in the Competition Principles Agreement, WorkSafe pays the full suite of Commonwealth and State taxes or tax equivalents where applicable. WorkSafe is not a borrower in its own right and therefore is not subject to the Financial Accommodation Levy.
The Building Act 1993 WorkSafe’s policy with respect to new building works, and alterations to existing buildings, is to comply with the Building Act 1993 as if WorkSafe is not exempt from compliance as a public authority (as provided in section 217(3) of the Building Act 1993). Some buildings occupied by WorkSafe may have been constructed or altered under exemptions for public bodies which applied at the time. WorkSafe is unaware of any material non-compliance with the current building standards for buildings of their nature and age.
The Carers Recognition Act 2012 WorkSafe has taken all practical measures to comply with its obligations under the Carers Recognition Act 2012. These include considering the carer relationships principles set out in the Act when setting policies which affect employees in care relationships. WorkSafe has employment policies including the provision of carers leave, flexible working hours, purchased leave and the ability to work from home which comply with the statement of principles in the Act.
Additional information available on request To the extent applicable, the information listed in Financial Reporting Direction 22, issued by the Minister for Finance, is available on request subject to provisions of the Freedom of Information Act 1982.
Merit and equity, and employment and conduct principles WorkSafe is committed to the application of principles of merit and equity in the employment process. These principles ensure applicants are assessed and evaluated fairly and equitably on the basis of key selection criteria and required competencies. All decision making recognises WorkSafe’s code of conduct, organisation values and relevant policies and processes. All WorkSafe employees have access and support available to them via the Equal Employment Opportunity Contact Officers.
WorkSafe Workforce data 30 June 2016 30 June 2017 Total number of employees 1,061 1,074 Full time equivalent 1,023 1,040 Males 531 521 Females 530 553 Full time 946 960 Part time 115 114 Average age 45 46
Workforce by WorkSafe classification band Band 1 Band 2 Band 3 Band 4 Band 5 Band 6 Other 30 June 2017 6 58 140 330 357 89 94 30 June 2016 7 55 120 344 369 89 77
WorkSafe Victoria Annual Report 2017 135 Appendix 4
Proactive wellbeing services As part of our integrated approach to health, safety and wellbeing, in 2016/17 there was significant activity relating to both leadership development and employee empowerment, focussing on mental wellbeing as part of a holistic wellbeing offering. Our strategic approach is aligned with the whole of Government ‘Leading the Way’ commitment and recognises that the health, safety and wellbeing of our employees is a foundation for our success as an organisation. Our integrated approach also includes a strong focus on maintaining our safety systems and supporting our employees through our early intervention support program for both work related and non-work related injuries and health issues.
People leader training attendance 2016/17 People Leaders Forum – Leading for wellbeing session 180 People leaders – Leading for wellbeing induction 52 The Leadership Series 18 Total 250
Wellbeing briefing attendance 2016/17 Regional briefings – employees 225 Team strengths workshops 20 Workforce capability – group sessions 250 Total 495
Wellbeing Central: portal use 2016/17 Registrations 681 WorkWell assessments 450 VIA Strengths assessments 469
Executive physical health checks 2016/17 Executives 7
Physical wellbeing attendance 2016/17 Fitness squads 1,213 Swim pass 933 Gym subsidy reimbursements 137 Walking group 230 Flu vaccination 363
Financial wellbeing attendance 2016/17 On-site health insurance 84 On-site superannuation 23 Retirement planning (Changing Gears) 19
Community/social wellbeing participation 2016/17 Social club members 480 Volunteering days accessed by employees 49 Vacation care session attendees 674
136 WorkSafe Victoria Annual Report 2017 Early intervention case management
Case management Cases open at 1 July 2016 Cases closed throughout 2016/17 Work related 34 84 Non-work related 37 148 Total 71 232
Exceptional sick leave 2016/17 Number of employees 2 Days 136
Exceptional sick leave is granted in the event of a serious or terminal illness of an employee, which results in the employee being absent from work for an extended period of time, and where the employee has exhausted their personal leave balance.
Mental wellbeing support Total participants 2015/16 Total participants 2016/17 Resilience training 73 87 Critical incident follow up 43 18 Employee assistance program 74 118 Peer support officer training – 25 Peer support officer support 28 53
Our OHS performance The following reports our performance against lead safety performance indicators.
Induction/training completed in three months 2016/17 result New employees 109/139 Induction refresher (bi-annual) n/a
Representation 2016/17 Designated Work Groups 32 Health and Safety Representatives 31 Deputy Health and Safety Representatives 18 First Aid Officers (L2) 47 First Aid Officers (L3) 16 Emergency Wardens 89 Peer Support Officers 53 Equal Employment Opportunity Contact Officers 18 Designated Work Groups Management Representatives 29
Safety systems Target 2016/17 Committee meetings 12 12
Ergonomic assessments completed 2016/17 Initial workstation set up support sessions 73 Office workstation assessments 39 Vehicle assessments 14
WorkSafe Victoria Annual Report 2017 137 Appendix 4
Consultancy expenditure Consultancy expenditure over $10,000 In 2016/17, there were nine consultancies where the total fees payable to the consultants were $10,000 or greater (excluding GST). The total expenditure during 2016/17 in relation to these consultancies was $2.899 million (excluding GST). Details of individual consultancies are outlined below.
Total approved Expenditure Future expenditure 2016/17 expenditure Consultant Purpose of consultancy (excl. GST) (excl. GST) (excl. GST) $000s $000s $000s Bracton Consulting Services Pty Ltd Review of scheme design for Strategy 20 20 – 2030 Catherine Anne Marshall Review of ISCRR to evaluate performance 98 48 50 and manner in which it aids WorkSafe Strategy Deloitte Touche Tohmatsu Advice for strategic policy review, reform 3,786 2,566 1,220 and project development, and development of preliminary business case for WorkSafe long term strategy Direct Focus Consulting Pty Ltd Review of procurement processes and 69 34 – procedures Hay Group Pty Limited Development of executive remuneration 20 20 – strategy Iconinc Holdings Pty Ltd Benchmarking and development of strategy 127 127 – for External Affairs SenateSHJ Development of ‘Dynamic City Strategy’ for 35 20 15 Geelong Silverstone Edge Pty Ltd Evaluation of the target organisation state 50 45 5 Silverstone Edge Pty Ltd Workforce planning 30 18 12
Consultancy expenditure under $10,000 In 2016/17, there were no consultancies where the total fees payable to the consultant was less than $10,000 (excluding GST).
Information and Communication Technology (ICT) Expenditure For the 2016/17 reporting period, WorkSafe had a total ICT expenditure of $45.48 million, with the details shown below:
Business As Usual ICT expenditure Non-Business As Usual ICT expenditure Total Total Operational expenditure Capital expenditure $000s $000s $000s $000s 33,302 12,177 5,739 6,438
138 WorkSafe Victoria Annual Report 2017 Advertising Details of advertising and communications expenditure (for campaigns with a media spend of $150,000 or greater)
Campaign name Campaign Start/end dates Advertising Advertising Research Other Total summary media production and campaign campaign expenditure expenditure evaluation expenditure expenditure expenditure Regional TV, press, radio, 1 July – 195,534 7,653 203,187 sponsorships digital 1 October 2016 (football and and April – netball – June 2017 One Goal) Enforcement TV, press, radio, 2 October 2016 2,028,088 105,826 24,778 15,476 2,174,168 (Bad Days) cinema, outdoor, – 30 June 2017 digital (‘always on’ approach) Mother’s Day Press, radio, 30 April – 14 May 192,143 58,720 24,778 0 275,642 digital 2017 Farm Safety – TV, press, radio, 4 September 420,062 27,554 44,778 79,040 571,434 Quad Bikes outdoor, digital 2016 – 30 April 2017 Return to Work TV, press, radio, 21 August 2016 2,087,038 27,630 24,778 23,916 2,163,362 (Getting Back) outdoor, digital – 30 June 2017 (‘always on’ approach) Occupational TV, cinema, radio, 5 June – 31 July 487,323 1,141,837 77,905 52,092 1,759,157 Violence and outdoor, digital 2017 Aggression in Healthcare Father’s Day Press, radio, 21 August – 12 189,686 750 190,436 digital September 2016 Culturally and Radio, outdoor, 16 October 2016 323,473 78,358 111, 3 5 0 30,244 543,424 Linguistically digital – 30 June 2017 Diverse (CALD) TOTAL 5,923,346 1,448,328 308,367 200,768 7,880,810
WorkSafe Victoria Annual Report 2017 139 Appendix 5
Appendix 5: WorkSafe’s response to the Ombudsman Victoria’s Investigation into the management of complex workers compensation claims and WorkSafe oversight The Victorian Ombudsman handed down her report Investigation into the management of complex workers compensation claims and WorkSafe oversight on 12 September 2016. The Ombudsman made 17 recommendations, the first two of which were to Government. The remaining 15 recommendations were made to WorkSafe. WorkSafe accepted these recommendations and in the 2016 Annual Report outlined the timeframes in which WorkSafe would address the recommendations and confirmed that recommendation 17 had been completed. The following table provides a summary of the key activities WorkSafe has undertaken to address the recommendations.
Recommendation Timing Status / key activities Recommendation to WorkSafe 3 Consider how the overall operation By 30 Status: Completed – ongoing business as usual activity of the scheme can better target its June 2017 resources and oversight to ensure WorkSafe initiatives quality decision-making in the The activities undertaken to address a number of recommendations will improve cohort of complex cases where quality decision making and WorkSafe’s oversight of decisions. disputes frequently arise. • Recommendations 7, 8 and 10 have been implemented and specifically relate to improving the decision making process and oversight of complex claims. • Recommendations 4 and 6 relate to improving WorkSafe’s complaints management framework and dispute management oversight which will improve WorkSafe’s ability to identify and address systemic complaints issues. • Training developed to support recommendation 12 includes an introduction to quality decisions and will be the first of several modules addressing quality decision making in agents. WorkSafe has consulted with agents to identify longer term opportunities within the legislative framework to streamline processes and ensure a more client centric and individualised approach to claims management. The key initiatives are: • a review of the initial claim process to develop a more client centric process, which acknowledges the worker’s injury and focuses on return to work and recovery • flexible treatment pathways to limit delays and barriers in the treatment approval process that have a negative impact on worker engagement • improving letters to workers and employers to ensure that communication is clear, concise and targeted. Agent initiatives Agents committed to a range of actions to address the issues identified in the Ombudsman’s report and are reporting to WorkSafe on their specific progress at their six-monthly agent liaison meetings. Among the activities that agents committed to and have implemented are: • changes to internal practices related to agent performance incentives • targeted training in specific areas including to reinforce appropriate communication standards • evidence-based, continuous improvement training including reviewing and updating existing processes to support appropriate and evidence-based, timely decision making • in consultation with WorkSafe, reviewed and made changes to their processes to undertake senior reviews of adverse decisions.
140 WorkSafe Victoria Annual Report 2017 Recommendation Timing Status / key activities Recommendation to WorkSafe 4 Implement a system to record, By 31 Status: In progress – on track collate and track complaints, December feedback, discussions with agents 2017 WorkSafe has implemented a continuous improvement complaints program and outcomes, and use this data to: which is now managed as part of business as usual activities. Two key elements of the program are: a. identify and remedy complaint patterns and systemic issues • reporting to internal governance forums on complaints trends on a monthly basis to ensure WorkSafe maintains awareness of high-level trends in b. assist identifying trends in agent complaints volumes and sources of complaints decision-making practices and potential systemic issues in the • a quarterly “deep dive” to assess for themes, significant failures, improvement scheme opportunities, etc. c. conduct ongoing audits of WorkSafe is continuing to make broader improvements in its complaint samples of claims disputed at management performance through a number of levers: conciliation, Medical Panels and • further enhancements to the website including designing and building an court where the decision was on-line form to facilitate the lodgement of complaints for internal and external changed. use • enhancing corporate reporting on complaints to build into the continuous improvement strategy • training and supportive guidance for WorkSafe employees • strengthening corporate governance over complaints and continuous improvement to improve its service delivery to all stakeholders. WorkSafe staff participated in a Good Complaint Handling for the Public Sector session run by the Ombudsman’s office and also met with the Ombudsman’s office to discuss other training programs they have developed, or are in the process of developing. 5 Provide conciliation officers access By 31 Status: In progress – on track on request to the relevant agent December claim files to enable better informed 2017 WorkSafe has met with the Accident Compensation Conciliation Service conciliation outcomes. (ACCS) to confirm their experience and expectations about information provided to them by agents for conciliation purposes. The ACCS advised that they believe the existing process is adequately supported by current legislation and protocols. It is noted that the legislation only provides for access to information that is relevant to the matter in dispute. The ACCS did not believe that having access to the entire claim file generally would improve timeliness of decisions or outcomes. Documents are generally provided by agents to the ACCS electronically. WorkSafe’s program to digitise claims files is on track to be completed by December 2017. This will increasingly allow agents faster access to documents and allow them to provide relevant documents to the ACCS in a more streamlined manner. 6 Review all claims subject to a By 31 Status: Completed – ongoing business as usual activity direction at conciliation to identify December opportunities to improve agent 2017 Improvements have been made to the way WorkSafe monitors directions made practices. at conciliation hearings at the Accident Compensation Conciliation Service, including incorporating reporting into internal governance forums. The improved monitoring provides WorkSafe with greater visibility of these claims and enables us to identify and, where appropriate, rectify any systemic issues. 7 Use its power to issue a written By 31 Status: Completed – ongoing business as usual activity direction to an agent where it December identifies that an agent's decision is 2017 WorkSafe’s Audit Protocol was updated in October 2016 to reflect the steps unreasonable and/or unsustainable, that WorkSafe will take where there is evidence that an agent’s decision was and the agent refuses to withdraw not based on or supported by the relevant facts and legislative provisions and, it. as a result, the worker may have been disadvantaged by the decision. WorkSafe continues to monitor adverse decisions through monthly health checks and audits. We will continue to identify ways to use information from our complaints framework to also ensure that workers are not wrongly disentitled.
WorkSafe Victoria Annual Report 2017 141 Appendix 5
Recommendation Timing Status / key activities Recommendation to WorkSafe 8 Update the Claims Manual to By 31 Status: Completed – ongoing business as usual activity outline WorkSafe’s expectations in October relation to the 130 week test and 2016 The Claims Manual was updated in October 2016 to state WorkSafe’s use of the ‘indefinite ground’ expectation on when the “indefinite ground” should be used to determine a including: worker’s entitlement at the end of the second entitlement period (130 week test). a. that a medical opinion that is not definitive (ie states ‘possibly’, WorkSafe is monitoring appropriate use of the “indefinite ground” through ‘may’ or ‘should have a capacity’ ongoing health checks and audits. and/or provides no clear reason or justification) is not sufficient to meet the test. b. WorkSafe's expectations around timeframes. 9 Review the weightings given to the By 1 July Status: Completed – ongoing business as usual activity financial rewards and penalty 2017 measures for 2017–18 to ensure The Ombudsman’s recommendations reinforced the need for WorkSafe to that there is sufficient focus on continue work commenced in 2013 to enhance the agent financial incentives good quality and sustainable which ensure agents are rewarded for sustainable, quality decision-making. decision-making. Improvements in decision-making are reflected in a reduction in lodgements at the Accident Compensation Conciliation Service and Magistrates’ Court. In 2017/18, there is an increase in the weightings specifically allocated to quality measures. In addition, links exist between the outcome measures and the associated quality measure so that should an issue of a disentitled worker be identified; the agent performance on the outcome measure is adjusted to reflect this. 10 Amend its quality decision-making By 1 July Status: Completed – ongoing business as usual activity audit procedure so that agents 2017 cannot be rewarded for a decision WorkSafe’s updated Audit Protocol, setting out the process where a Review upon which a review or appeal panel Panel is unable to reach a unanimous decision, has been in place since October cannot reach a unanimous view. 2016. If the panel does not reach a unanimous decision the agent does not receive a positive incentive for that decision. WorkSafe continues to monitor instances where a Review Panel has not reached a unanimous decision. 11 Amend the scope of the Return to By 1 July Status: Completed – ongoing business as usual activity Work Index audits to ensure that it 2017 rewards agents for genuine and The 26 Week Back @ Work measure (previously the Return to work index) has sustainable return to work been amended to reflect a return to work not just at a point in time but to outcomes. ensure the return to work is sustained for at least three weeks following the assessment point. The Return to work index audit will reflect this change. 12 In consultation with the agents, By 1 July Status: Completed – ongoing business as usual activity provide training to agent staff on 2017 the financial reward and penalty In conjunction with agents, WorkSafe has developed training materials which measures, including their purpose provide a holistic view of the agent remuneration package, its key components and their relationship to good and how it links to quality decision-making and service delivery. All relevant administrative decision- making agent staff are required to have completed the training by 30 September 2017. (referred to in the Claims Manual) The training material will be refreshed regularly in line with the changes to the on claims and offers at conciliation agent remuneration package. 13 Publish information on each of the By 31 Status: Completed – ongoing business as usual activity financial reward and penalty October measures at the start of each 2016 Since 2007, WorkSafe has published information about agents’ performance financial year. for remuneration purposes each year in the WorkSafe Annual Report. This year an overview of the agents’ key performance indicators against the financial reward and penalty measures for 2017/18 is also included (see Appendix 2).
142 WorkSafe Victoria Annual Report 2017 Recommendation Timing Status / key activities Recommendation to WorkSafe 14 Implement changes to the current By 1 July Status: Completed – ongoing business as usual activity IME system to. 2017 Through an analysis and consultation process, WorkSafe determined that a a. prevent agents from selectively worker choice model (recommendation 14b) could not be effectively using ‘preferred IMEs’ or implemented by the required time frames but could be considered as part of a b. provide injured workers a choice broader reform on the Independent Medical Examiners (IME) model. of the IME with the appropriate To implement recommendation 14a WorkSafe: speciality, by whom they are examined. • has improved reporting and oversight of agent’s selection of IMEs to ensure that the selection is fair and equitable within the constraints of the worker’s location and availability, the IME speciality required and the urgency of the exam • requires agents to conduct internal audits to ensure adequate controls are in place to monitor the selection of IMEs • implemented a trial (in August 2017) centralising within WorkSafe a proportion of IME bookings to assess the viability of this option. 15 Amend its IME complaint handling By 1 July Status: Completed – ongoing business as usual activity policy to provide scope for 2017 examination of complaints where a WorkSafe has made the following changes to the process managing complaints worker does not provide consent for about IMEs: the complaint to be provided to the • all complaints are captured in the complaints tracking system regardless of IME, which may include the referral whether the worker has provided consent to contact the IME of the matters raised to the IME • verbal consent from the worker has replaced the need to obtain written quality assurance divisions for consent to commence the complaint process intelligence gathering purposes • complaints data is being used to inform the selection of IMEs for quality assurance. 16 Amend the IME quality assurance By 1 July Status: Completed – ongoing business as usual activity process to: 2017 WorkSafe has strengthened the IME quality assurance process to further a. ensure IMEs subject to a high improve the standard of IME reports. This includes: number of complaints are peer reviewed • the selection of IMEs for quality assurance review is now informed by the frequency and nature of IME complaints b. document the process by which WorkSafe will review an individual • a process to ensure claims are reviewed where an IME’s report is found to be claim file where significant significantly deficient deficiencies are identified in • a process linking the IME complaints / quality assurance process with relation to an IME’s report, to WorkSafe’s policy on directing agents where a worker is identified as wrongly ensure a worker’s entitlements disentitled. have not been unreasonably rejected or terminated based on the report. 17 Review the injured worker’s case Completed Status: Completed detailed in case study 3 to ensure the worker has not been incorrectly The claim was reviewed in September 2016. disentitled to compensation.
WorkSafe Victoria Annual Report 2017 143 Appendix 6
Appendix 6: Disclosure index The Annual Report of WorkSafe Victoria is prepared in accordance with all relevant Victorian legislations and pronouncements. This index has been prepared to facilitate identification of WorkSafe’s compliance with statutory disclosure requirements.
Legislation Requirement Page ref Legislation Requirement Page ref Ministerial Directions and Financial Reporting Directions Ministerial Directions and Financial Reporting Directions Report of operations Compliance attestation and declaration Charter and purpose SD 3.7.1 Attestation for compliance with 128 Ministerial Standing Direction FRD 22H Manner of establishment and the 129 relevant Ministers SD 5.2.3 Declaration in report of operations 9 FRD 22H Purpose, functions, powers and duties 129 Financial statements FRD 22H Key initiatives and projects throughout Declaration FRD 22H Nature and range of services provided 130–132 SD 5.2.2 Declaration in financial statements 101 Management and structure Other requirements under Standing Directions 5.2 FRD 22H Organisational structure 13 SD 5.2.1(a) Compliance with Australian accounting 53 standards and other authoritative Financial and other information pronouncements FRD 10A Disclosure index 144 SD 5.2.1(a) Compliance with Ministerial Directions 101 FRD 22H Employment and conduct principles 135 Other disclosures as required by FRDs in notes to the financial FRD 22H Occupational health and safety policy 42–45 statements 136–137 F R D 11A Disclosure of ex gratia expenses n/a FRD 22H Summary of the financial results for 35–36 FRD 21C Disclosures of responsible persons 95–96 the year and executive officers in the financial FRD 22H Significant changes in financial 49 report position during the year FRD 103F Non-financial physical assets 80 FRD 22H Major changes or factors affecting throughout F R D 110A Cash flow statements 51 performance F R D 112 D Defined benefit superannuation 74 FRD 22H Subsequent events 99 obligations Freedom FRD 22H Application and operation of 130 Legislation of Information Act 1982 Freedom of Information Act 1982 130 FRD 22H Compliance with building and 135 maintenance provisions of Building Act Building Act 1993 135 1993 Protected Disclosure Act 2012 133 FRD 22H Statement on National Competition 135 Policy Carers Recognition Act 2012 135 FRD 22H Application and operation of the 133 Victorian Industry Participation Policy Act 2003 134 Protected Disclosure Act 2012 Financial Management Act 1994 53 FRD 22H Application and operation of the 135 Carers Recognition Act 2012 FRD 22H Details of consultancies over $10,000 138 FRD 22H Details of consultancies under 138 $10,000 FRD 22H Disclosure of government advertising 139 expenditure FRD 22H Disclosure of ICT expenditure 138 FRD 22H Statement of availability of other 135 information FRD 25C Victorian Industry Participation Policy 134 disclosures SD 5.2 Specific requirements under Standing 9 Direction 5.2
144 WorkSafe Victoria Annual Report 2017 Advisory Service Head Office Local Offices Phone 222 Exhibition Street North 03 9641 1444 Melbourne VIC 3000 Essendon Fields Toll-free Phone 03 9223 6888 1800 136 089 03 9641 1555 Shepparton Email Toll-free 03 5831 8260 [email protected] 1800 136 089 Wangaratta Website 03 5721 8588 worksafe.vic.gov.au West Twitter @WorkSafe_Vic Ballarat 03 5338 4444 Facebook facebook.com/worksafevictoria Bendigo 03 5443 8866 Geelong 03 5226 1200 Mildura 03 5021 4001 Warrnambool 03 5564 3200
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