The South Australian scheme, with good guidance from the management of Return-to-Work South Australia has been operating relatively well in recent times, unlike many of the schemes in the rest of Australia, but in particular, Victoria and New South Wales.

The Return to Work figures in South Australia are exceptionally good and much better than those achieved in Victoria and New South Wales. 80% of South Australian workers who are injured in the workplace returned to work within 13 weeks and 96.7% returned to work within 26 weeks.

Contrast the Operation of the Scheme in South Australia with the New South Wales and Victorian Work Cover Schemes which are Fundamentally Broken.

Icare in New South Wales is suffering and is making radical changes. Over the last 5 years psychiatric claims have risen by 40% and consume 38% of total scheme costs. It is predicted that psychiatric claims will rise from the present 10,000 to 80,000 claims over the next 5 years.

Psychiatric injury claims in the Victorian scheme have doubled since 2018 and as early as 2022 the annual report forecast that 50% of all weekly income support paid by the WorkCover scheme to injured workers was expected to be for mental injury claims. That has proven to be the case and legislative change in March 2024 was effected to deal with the problem.

This is in stark contrast to the performance of the Return to Work scheme in South Australia, where mental injury claims have minimal impact. In fact, the only cohort of claims to have increased in South Australia are those related to noise induced hearing loss and initiatives are being put in place that should see noise induced hearing loss claims decrease in South Australia in the next financial year.

What Does this Mean for South Australia and how can we Leverage our Advantage

The Malinauskas government two years ago launched an advertising blitz highlighting Victoria’s exorbitant business taxes in a bid to lure firms here. Using the tag “business is better in SA” the advertisement spruiks South Australia’s lower fees, payroll tax reprieves and premium office space that is “37% cheaper than Melbourne”.

In December 2024 the Business Council of Australia (“BCA”) declared South Australia to be the best place in Australia to do business, citing the cost of regulation, payroll taxes, planning and land use, approvals process and, in third spot, property taxes and licencing.

The Business Council of Australia Chief executive Brian Black had this to say:

“South Australians have made it clear that they want their state to be destination number one for business, and other jurisdictions need to take note if they want to remain competitive in attracting business investment.”

On the other hand, the BCA ranks Victoria in bottom position overall, with the populous state consistently behind most other jurisdictions in most measures.

The BCA had this to say:

“Victoria has the most work to be done on cost and regulation,”.

“It’s property tax settings were the least competitive nationally, and it also ranked uncompetitively in terms of payroll tax costs and business licencing requirements”.

The BCA went on to single out Victoria’s land tax regime for criticism:

“Victoria is furthest behind with the third highest land tax rate and the highest stamp duty rates”.

“Victoria also ranks lowest for both land tax and stamp duty for small expanding businesses”.

Recently the Commonwealth Bank’s State of the States report saw South Australia climb from fourth to second overall with an increase in consumer spending, business investment, and construction activity. The rankings saw Victoria plummet from second to fourth and New South Wales from fifth to sixth.

Whilst obviously the advantages that the state has in relation to those issues identified by the BCA and the State of the States Report are extremely important selling points there is one that we have in South Australia that is consistently overlooked and the importance of this advantage should not be understated. The key advantage that we have is the ability for employers who qualify for self-insurance to be able to obtain self-insurance and manage their own claims.

It is time to look more closely at this advantage because of the fact that it demonstrably works.

What is Self-Insurance?

Self-insurance in workers compensation terms describes the employers that fund and manage their own claims.  They pay a small levy to cover costs associated with the administration of the scheme.

Each of Australia’s other states, whether state monopolies or competitive markets, allow self-insurance but only grudgingly.

Self-insurance status in South Australia is difficult to obtain with significant financial criteria to be met but there are minimal financial requirements for self-insurance.  There is a need for financial guarantees, excess of loss insurance and very strict requirements around injury management, resources and standards and occupational health and safety resources and standards.

Self Insurers of South Australia (“SISA”), in the annual report for 2021-22, maintained that: “We can say with some degree of confidence that serious injury numbers among our private sector members have not been as great a concern as is the case for the rest of the scheme… large employers are in a better position to offer suitable work as early as possible for those with potentially higher levels of impairment, thus preserving the connection with the workplace; (self-insurers) provide a different model for managing claims from day one.”

In general, self-insurance has a number of advantages, including:

• the potential for significant financial savings;
• an improved safety focus;
• better control over claims;
• accountability of senior management;
• more control over costs;
• increased awareness of occupational health and safety;
• better day-to-day management of claims and results through early intervention; and
• better control of human resources.

Very rarely does a self-insurer elect to give up its status and return to the scheme, as experience and successive studies have found.

Facts About Self Insurance

• self-insurers consistently perform better than the scheme;
• viability of the scheme would not be adversely affected, if at all, if all employers who meet the criteria for self-insurance become self-insured;
• self insurers rate of disputation is less than the scheme average.

These facts compel a conclusion that the scheme as a whole would be immeasurably improved if the attainment and maintenance of self-insurance was encouraged and promoted.

It is logical to propose that the transfer of liabilities from the scheme to the newly self-insured employer would improve the funding position of the scheme (which is already 100% funded) and the funding position of the scheme would improve on a long term basis because significant levels of industry risk would be removed.

Advantage South Australia?

Clearly we have some significant advantages if we want to entice much needed businesses to relocate to South Australia. With AUKUS on the horizon, we are going to need a dramatic increase in technology, engineering and tradespeople. We need to sell our advantages and those advantages are:

• in South Australia, the economy is reasonably stable;
• housing is still low cost compared with the eastern states;
• lifestyle and climate are attractive;
• the general economic outlook in South Australia is more positive by far than Victoria and New South Wales, due in part to the likely increase in employment numbers due to an expectation of increased defence related work; and
• our Return to Work scheme is stable with little prospect of an increase in premium and, importantly, good return to work rates.

The environment, coupled with a supportive approach to self-insurance under the management of Michael Francis, CEO of Return to Work South Australia is one which must be attractive to large organisations now based in Victoria in particular, who are looking across the border for opportunities in the manufacturing sector in South Australia, as well as multi-national organisations. The outstanding performance of self-insurers in this scheme is a considerable advantage that we have not taken enough benefit from.

We should highlight this advantage and use it along with the BCA and State of the States results as a practical way for interstate business to improve financial performance by relocating to South Australia and taking advantage of the accelerated growth which will come from increased opportunities in defence, mining and processing of energy transition minerals and renewable energy.

Self-Insurance

Self- insurance works for both workers and employers.

It can be reasonably argued that self-insurance is the ultimate form of experience rating.

Self-insurers have the best incentive to maximise safety as they bear the entire financial cost of accidents. This incentive benefits workers and is evidenced by the fact that 36% of the scheme (that is the percentage of the scheme by remuneration which is self insured) carries only 19% of the scheme’s liabilities. It is logical to argue that the single most effective method of improving the performance of the scheme would be to increase the number of self-insurers.