SA businesses at risk of paying an extra $100m a year in insurance costs after Supreme Court ruling
SA employers could be slugged an extra $100m a year in workers’ compo insurance, Treasurer Rob Lucas has warned, after a court ruling.
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South Australian business owners risk paying an extra $100m in insurance fees as the government tries to save the worker compensation scheme from being wiped out by an avalanche of new claims.
Treasurer Rob Lucas says 20,000 jobs could be axed from the economy unless the government wins a last-ditch appeal to the High Court of Australia on a landmark legal ruling.
Return To Work SA has been forced to set aside $1bn in potential liabilities after a Supreme Court decision opened the floodgates for workers seeking compensation for additional injuries that may arise as a result of the first injury suffered in a workplace accident.
The average insurance premium rate for businesses this financial year is 1.7 per cent, but Mr Lucas has warned it could increase to more than 2 per cent in 2022-23 to make up for $1.1bn of liabilities being set aside.
He has blamed the potential hike on a decision by the full sitting of the Supreme Court in the case of Shane Summerfield, who suffered a broken leg at work and required the replacement of his left hip as a result of the injury.
Following the injury, Mr Summerfield also suffered serious lower back issues.
In May 2019 the SA Employment Tribunal ruled Mr Summerfield was able to apply for compensation for the lower back injury despite it not being the same injury, because it had the same cause as the hip replacement and broken leg.
Return To Work appealed the decision in the Supreme Court – but was dismissed, with Justice Tim Stanley acknowledging the broader definition could result in more workers being classified as seriously injured.
Speaking in parliament on Tuesday, Mr Lucas said an extra $100m in insurance premiums would need to be generated each year if Return to Work lost its High Court appeal.
“Should the appeal be unsuccessful, future unanticipated additional lump sum and serious injury payments will place significant upwards pressure on the average premium rate,” he said.
“These additional costs, to employers, not tax payers, would likely cost the South Australian economy 20,000 jobs over the next five years.”
Return to Work posted a $418.9m loss last financial year.
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