Licensed corporation - s 4(1)

Licensed corporation - s 4(1)

“Licensed corporation” is defined in s 4(1) of the SRC Act:

“licensed corporation” means a corporation that is the holder of a licence that is in force under Part VIII;

Part VIIIB of the SRC Act

Part VIIIB was inserted into the SRC Act by the Commonwealth Employees' Rehabilitation and Compensation Amendment Act 1992 (No.264/1992), commencing on 24 December 1992.  Part VIIIB establishes arrangements whereby certain corporations may apply to the Commission for a licence to self-insure and/or manage their workers' compensation liabilities, within the framework of the Commonwealth legislation rather than the various State workers compensation schemes.

Access to the scheme is limited to Commonwealth authorities undergoing corporatisation or privatisation and to certain private sector corporations that are carrying on business in competition with a Commonwealth authority or a privatised Commonwealth authority.

Two classes of licence are available:

• Class A:  The corporation self-insures.  Claims are managed by a Comcare subsidiary established in accordance with the Act (QWL Corporation Pty Ltd);
• Class B:  The corporation self-insures and has the option of managing its own claims or contracting claims management with a private sector agency or a Comcare subsidiary.

Second Reading Speech - Licensed corporations

The Second Reading Speech to the Commonwealth Employees' Rehabilitation and Compensation Amendment Bill 1992 discussed the purpose of the new Part VIIIB:

The Bill proposes amendments to the Commonwealth Employees' Rehabilitation and Compensation Act 1988 to implement more recommendations of the 1991 Brown review of the Comcare program. . . .

The amendments to the Act which would be made by this Bill would build on the changes that have already been made the Commonwealth workers compensation scheme.  The main purpose of the Bill before the House is to allow the Act to extend to certain corporations outside the Commonwealth public sector.  The Government has adopted this course so that former Commonwealth authorities, such as the combined Qantas-Australian Airlines, which have been or are about to be privatised, can choose to remain covered by Commonwealth legislation.

So that these former Commonwealth authorities are not advantaged by their access to the scheme, the Bill will also allow the Act to apply to those private sector corporations which are in competition with a privatised Commonwealth authority.  For very similar reasons, the Government has decided to extend the option of cover under the Act to private sector corporations which are in competition with any Commonwealth authority, regardless of whether the authority has been, or is to be, privatised.

To reflect the widened ambit of the Act, its title will be changed to the Safety Rehabilitation and Compensation Act 1988.  The amendments will result in corporations which may be granted cover under the Act having access to a nationwide workers compensation scheme.  The Government believes that this will further the progress of micro-economic reform and lead to greater efficiencies by reducing the administrative burdens on corporations which currently have to operate in several workers compensation jurisdictions around the country.

Cover under the Commonwealth scheme will be optional for those corporations which are eligible.  No privatised Commonwealth authority or private sector corporation will be required to take up cover under the Act.  Each corporation will make a decision based on its own commercial judgement.

These changes will effectively implement the second part of recommendation 13 of the Brown review that Comcare should be able to cover fully privatised former Commonwealth authorities.  Recommendation 13 also proposed that Comcare should be allowed to manage claims in jurisdictions other than the Commonwealth.  However, the Government has decided to allow the Act to extend only to private sector corporations which are in competition with a Commonwealth authority or a former Commonwealth authority.

The extension of the Act has been discussed with State and Territory governments, which have been assured that it will not exclude privatised Commonwealth Statutory corporations and other private sector corporations from their responsibilities under the State and Territory occupational health and safety legislation.  Safeguards will be built into the licensing arrangements to ensure these responsibilities are met.

The Commonwealth is also concerned to ensure that the extension of the Act does not adversely affect the operations of State and Territory workers compensation arrangements.  This has been the subject of discussion with the States and Territories, and is to receive further consideration through a formal joint Commonwealth and State-Territory review.  It is envisaged that this review will be completed by the end of April 1993.  The Act will be implemented only in respect of privatised and continuing Commonwealth authorities until the review is completed.

The licensing arrangements contained in this Bill are similar in many respects to those contained in the Commonwealth Employment (Miscellaneous Amendments) Act 1992 that applied to Commonwealth authorities generally.  The Bill provides for two classes of licence - a class A licence and a class B licence.

A class A licence will allow corporations to self-insure.  The management of claims by employees of class A licensed corporations will be carried out by a subsidiary of Comcare.  A class B licence will allow the corporation to self-insure and to make appropriate arrangements for the management of claims by its employees.  Those arrangements may be, for example, claims management by the corporation itself, by a Comcare subsidiary, or by a third party.

Under the Bill, the Minister for Industrial Relations must be satisfied that a private sector corporation is in competition with a Commonwealth authority or former Commonwealth authority before it can be considered for a licence.  The actual decision whether a corporation should be granted a licence, and the nature of any conditions that may be attached to the licence, will be for the Commission to make.

Both classes of licence will require a corporation to self-insure.  It will be a condition of each licence, therefore, that the corporation will obtain bank or other guarantees to ensure that the corporation's liabilities will be met.  In addition, the Commission will need to be satisfied before granting a licence that satisfactory arrangements have been made to ensure that employees of the corporation will continue to receive their entitlements if the corporation is wound up.

Before granting a class B licence to a corporation, the Commission will need to be satisfied that the persons who will be performing the claims management function on its behalf are likely to be able to meet the standards imposed by the Commission for the management of claims and the rehabilitation of injured employees.  Licensed corporations will also be required to comply with any direction of the Commission, either generally or in respect of a particular matter or class of matters.

The Commission will be able to impose conditions on a corporation's licence which are similar to those which may apply to a Commonwealth authority.  For example, to ensure that employees of licensed corporations receive an independent assessment of their claims, a licence may be subject to a condition that the reconsideration of claims made by a corporation's employees be carried out by employees of the Commonwealth or by a Comcare subsidiary.

Licensed corporations and Comcare subsidiaries will be required to determine claims for compensation in the same manner as Comcare.  That is, they are to be guided by equity, good conscience and the substantial merits of the case without regard to technicalities.

Employees of licensed corporations who are dissatisfied with decisions made in relation to their claims will be able to seek review of those decisions by the Administrative Appeals Tribunal in the same way as employees of the Commonwealth.  The Bill contains several amendments to part 6 of the Act to allow this to occur.  The respondent in such proceedings will be the licensed corporation.  However, Comcare will be entitled to become a party to proceedings involving licensed corporations and, to ensure consistency of representations made to tribunals and the courts, the Commission may direct the corporation not to put certain submissions to a tribunal or the court.

Comcare will not become directly involved in the administration of claims made by employees of licensed corporations.  Claims management services provided by Comcare to either class A or class B of licence holders will be undertaken by subsidiaries of Comcare.  These subsidiaries will have their own board of management and separate accounts, and will be subject to the same taxation and regulatory requirements applying to private sector corporations.  Comcare subsidiaries will be audited by the Auditor-General.

In the case of class B licensed corporations, Comcare subsidiaries will have to compete with other parties for the right to perform claims management functions.  These new arrangements will therefore enhance the competitive environment within which Comcare operates.

The Commission will be able to investigate apparent breaches of licence conditions by corporations or their claims administrators.  If the Commission is satisfied that a breach has occurred, it may revoke the licence.  The Bill deals in detail with the effect of revocation of a licence.