The Labor Government’s financial management credibility has taken yet another blow with the revelation that WorkCover’s unfunded liability actually blew out by a staggering $87 million in the first six months of this year.
According to WorkCover’s own figures, the unfunded liability at the end of 2010 was $865 million . The 2010-11 Auditor-General Report, released last week, shows that by the end of June it had risen sharply to $952 million.
The Government and WorkCover have been caught out with their deceptive media release claiming a $30 million reduction in the level of unfunded liability. WorkCover’s media release deliberately excluded any reference to the most recent actuary’s report of their unfunded liability in December 2010, only referring to the June 2010 figure rather than the most recent estimate.
Shadow Finance Minister Rob Lucas said the figures indicated there was no evidence so far that the Labor Government’s 2008 WorkCover reforms had achieved what the Government had claimed would be the case when the legislation was debated in Parliament:
“In closing, there are three points I would like to make. First, the government has accepted without qualification the full set of recommendations provided by Australia’s pre-eminent expert in this area. Secondly, an independent actuarial assessment has indicated that the review’s recommendations:
… satisfy the review terms of reference provided initiatives are undertaken and applied as recommended, that is , allowing a reduction in the average levy rate to the range of 2.25 per cent to 2.75 per cent from 1 July 2009, and an extinguishing of the unfunded liability over five to six years.”
– Hon Michael Wright MP, Second Reading Speech, Workers Rehabilitation and Compensation (Scheme Review) Amendment Bill, 28 February 2008.
“This massive $87 million blowout in just six months supports the finding of the Cossey Review that the initial improvement in the financial health of the fund was overwhelmingly due to the use of redemptions up until 30 June 2010 rather than the legislative changes.
“South Australia now has the worst performing scheme in the nation in terms of return to work rates for injured workers and levy rates for employers, as well as an unfunded liability heading back to $1 billion.
“By any measure, it is clear that the Labor Government’s management of WorkCover has been a disaster.”