Sheahan report shrinks compensation entitlements
by Peter Mac The Sheahan report on aspects of the new NSW workers' compensation scheme has recommended cuts to the entitlements of injured workers taking action under common law against their employers. Earlier this year the NSW Carr Labor Government announced that it intended cutting workers' compensation entitlements under the current Workcover scheme, despite the scheme having made a total profit of $365 million. Labor politicians subsequently crossed a union picket line outside State Parliament House in order to push through new legislation. The NSW Labor Council at first took a militant stand, then caved in under pressure from the Government. Part of the resulting deal made between the Government and the Labor Council included deferring decisions on a number of outstanding matters until receipt of the findings of an enquiry to be headed by Justice Sheahan. Rather than concentrating on funding and other measures to prevent injuries or to enforce health and safety regulations, the deal appears to have been principally directed to underpinning the financial position of employers and insurers. The Sheahan enquiry has now announced its findings, and it's bad news for the workers of NSW. Among other things, the report recommends that the right to recover non- economic losses be limited to the statutory (i.e. government) scheme, and that employees should have no rights to pursue non-economic common law claims against employers. Sheahan's conclusions are based on a bland acceptance of the Carr Government's figure of $50 million per annum in funding for the new scheme. Sheahan states frankly that there is no way of knowing whether this will be adequate for future claims. Accordingly, his recommendations drastically cut the capped amount available for claims for non-economic damages in the near future. He admits this will need to be increased in order to avoid further disadvantaging those seeking to make claims. Sheahan notes that "this enquiry has no way of knowing how much if any of this recommendation can be accomplished out of the $50million proposed to be allocated to benefit improvement, but the increases needed should occur as soon as they can responsibly be made, in financial terms, having regard to the position of the scheme from time to time." He also recommends that the amount of damages claimable against an employer under common law be capped at $250,000 and that this figure only be implemented "as soon as responsibly possible". He further recommended that economic losses be limited to past and future loss of earnings, that they be calculated to age 65 only. In a move that will have savage implications for injured workers he recommended that only workers assessed as having 20 percent "whole person" impairment and 30 percent loss of earnings should be entitled to claim for economic loss damages, and that the recovery of economic losses should preclude the receipt of further statutory benefits. The 20 percent level rules out almost all injured workers. In defending his recommendation, Justice Sheahan noted "as injured workers have substantial additional benefits under the statutory scheme, and as the Government is committed to their improvement as the financial capacity of the scheme improves ... the cap figure of $250,000, indexed over time, is appropriate for the employment injury sector." Sheahan's astonishingly vague and equivocal statements in the report are not improved by his additional comment that "... those advocating the interests of workers, must ... accept that the adjustment (i.e. to improve the level of capped benefits claimable in the short term)... is not capable of immediate achievement." The Sheahan Report in effect supports the increasingly blatant role of the NSW Government in the deregulation of the labour market. It will probably be greeted with great satisfaction by employers, insurers and the State Government, but it's certain to be received with justifiable rage by workers and unions alike.