The Victorian Government may legislate to ensure large companies pick up outstanding liabilities before switching to the Federal Government’s workers’ compensation scheme.

The move follows a landmark High Court ruling allowing telco Optus to self-insure nationally, clearing the way for other big companies to leave state workcover schemes and join the Federal Government’s Comcare scheme.

Victorian WorkCover Minister John Lenders says he is examining the decision and wants to ensure the Federal Government does not use constitutional loopholes to allow big business to switch to the Commonwealth scheme.

A spokesman for Mr Lenders told Sunrise Exchange News the state is exploring options to protect the viability of the Victorian WorkCover Authority (VWA). It’s understood to be investigating legislation that would ensure companies switching to Comcare don’t leave liabilities behind in the state scheme.

The VWA recently announced a net profit of $419 million on the back of a $287 million profit on insurance operations, and Mr Lenders “aims to protect that good financial position”.

Under the National Competition Policy, statutory schemes are required to repay tax to state governments through the federal taxation system. But Mr Lenders’ spokesman says such payment “is dependent on the market, and while the result is substantial, no payment will be made”. 

Meanwhile, the Australian Industry Group has called for reductions in WorkCover premiums following the strong VWA result. Its Victorian director, Timothy Piper, says the $419 million profit provides “considerable scope” for reductions in WorkCover premiums.

Insurance Council of Australia Deputy CEO Dallas Booth agrees. He says the National Competition Agreement, which was signed by the state governments in 1995, should be binding.

“Part of that agreement was an undertaking to move government enterprises to a competitively neutral position,” he said. “It should be binding and the National Competition Council is currently reviewing whether the state governments are adhering to the agreement.”