The Minister for Industrial Relations has published draft regulations to increase the minimum financial guarantee to $1.1 million and reduce the scaling factor to 150%.
While the change to the scaling factor is entirely justifiable, the increase in the minimum guarantee is not.
RTWSA has repeatedly claimed that the increase is necessary due to the 'additional' non-redeemable liabilities represented by seriously injured cases and cost of economic loss lum sums. The facts are:
- Serious/catastrophic injuries did not start happening when the RTW Act commenced. Self-insurers have been managing them for many years, and redemption of those costs is seldom considered. In any case, such major injuries are few and far between and are factored into the calculation of guarantees.
- Economic loss liabilities will be taken into account in the normal actuarial assessments of self-insurer liabilities (and thus in the level of guarantees). Their presence in the scheme has no connection to the level of the minimum guarantee.
The increase would, in its first year, add about $260,000 to each affected self-insurer's non-current liabilities, with consequent effects on their ability to borrow, and thus grow and create jobs. RTWSA appears to have no concern for the wider economic effects of it's actions.
SISA members are encouraged to lobby the Minister to remove the minimum financial guarantee increase from the draft regulations.