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WorkSafe Victoria Annual Report 2016

Safe every day

WorkS

afe Victoria A

nnual Report 2016

October 2016

Robin Scott MP Minister for Finance

1 Macarthur Street East Melbourne Victoria 3002

Dear Minister

I am pleased to submit the 2015/16 WorkSafe Victoria Annual Report for presentation to the Parliament, as required by section 46 of the Financial Management Act 1994.

Yours sincerely

Paul Barker Chairman

About WorkSafe 2

Vision and mission 2

Strategy 2017 4

Report from the Chairman and Chief Executive 6

Board 8

Our organisation 9

Reporting on WorkSafe’s 2015/16 strategic priorities 10

Safety 12

Return to work 20

Service 24

Sustainability 30

Culture and place 38

Financial Report 44

Appendices 105

Appendix 1 Prosecutions 106

Appendix 2 Agent Performance Results 112

Appendix 3 Self-Insurance Report 116

Appendix 4 Governance and Compliance 121

Appendix 5 WorkSafe’s response to Ombudsman Victoria’s recommendations 134

Appendix 6 Disclosure Index 136

Letter to Minister and contents

1WorkSafe Victoria Annual Report 2016

Our vision: Victorian workers returning home safe every day. Our mission: Actively working with the community to deliver outstanding workplace safety and return to work, together with insurance protection.

About WorkSafe

WorkSafe: • strives to prevent workplace injuries,

illness and fatalities • provides benefits to injured workers

and helps them return to work • enforces Victoria’s occupational

health and safety and accident compensation laws (including relevant Commonwealth laws)

• provides reasonably priced workplace injury insurance for employers

• manages the Victorian workers compensation scheme by ensuring the prompt delivery of appropriate services and adopting prudent financial practices

• provides an emergency response service that operates 24 hours a day every day across Victoria.

2 WorkSafe Victoria Annual Report 2016

About WorkSafe

Our statutory obligations are covered in the following Acts of Parliament:

• Occupational Health and Safety Act 2004 – health, safety and welfare in the workplace

• Workplace Injury Rehabilitation and Compensation Act 2013 – workers compensation and the rehabilitation of injured workers

• Accident Compensation Act 1985 – workers compensation and the rehabilitation of injured workers

• Dangerous Goods Act 1985 – explosives and other dangerous goods

• Equipment (Public Safety) Act 1994 – high-risk equipment used in non-work-related situations

• Workers Compensation Act 1958 – workers compensation prior to 1985.

WorkSafe provides a range of benefits to injured workers, including:

• weekly payments • medical and allied health treatment • ambulance transport • hospital treatment • personal and household help • impairment lump sums • common law damages

WorkSafe also provides a range of income support, lump sum compensation and expenses reimbursement to dependents of workers who die as a result of a work-related injury.

Funding We are funded by WorkSafe insurance premiums paid by Victorian employers amounting to $2.071 billion in 2015/16. This was augmented by investment income totalling $430 million.

Our stakeholders Strong engagement with stakeholders helps us achieve our vision and mission. Our stakeholders include employee and employer representatives, medical and allied health providers, legal practitioners and industry bodies. Our collaborations with them take many forms and extend across many contexts. Their invaluable expertise informs our strategy, policies and program development to help deliver the best outcomes for Victorians.

Stakeholder committees mandated by legislation are the Occupational Health and Safety Advisory Committee and the WorkCover Advisory Committee. Other working groups and committees include:

• OHS Stakeholder Reference Group • Rehabilitation and Compensation

Working Group • Major Hazards Advisory Committee • Legal Liaison Group • Return to Work Working Group.

Occupational Health and Safety Advisory CommitteeThe Occupational Health and Safety Advisory Committee (OHSAC) is established under the Occupational Health and Safety Act 2004 (OHS Act) to advise the WorkSafe Board about promoting healthy and safe working environments and the operation and administration of the OHS Act and regulations.

WorkCover Advisory CommitteeThe WorkCover Advisory Committee (WAC) is established under the Workplace Injury Rehabilitation and Compensation Act 2013 (WIRC Act) to advise the WorkSafe Board about workers’ entitlement to compensation, return to work, rehabilitation, and the operation and administration of the WIRC Act and relevant regulations.


At the end of the fourth year of Strategy 2017, our results are mixed. With one year of our current strategy remaining, we are on track to deliver our long-term targets for safety, service and culture and place by 2017. Sustainability and return to work continue to be a challenge;

SafetyBaseline

11/12 resultYear 1

12/13 resultYear 2

13/14 result Year 3

14/15 result Year 4

15/16 target Year 4

15/16 result Strategy

2017 Target

Claims per million hours worked (CpMHW)1

8.23 7.72 7.37 7.34 7.12 6.95 10–15% improvement

Four-week CpMHW1 3.24 3.23 3.10 3.16 3.04 3.02 10–15% improvement

Performance highlight

Strong injury reduction rates

Return to workBaseline

11/12 resultYear 1

12/13 resultYear 2

13/14 result Year 3

14/15 result Year 4

15/16 target Year 4


2017 Target

Not yet at work six months after injury

21.90% 21.43% 19.96% 19.39% 18.81% 19.77% 10–15% improvement


More than 80% of workers are back within six months

1,000,000hours

Claims

7.34

7.12

6.95

4-week claims

3.16

3.04

3.02

while we expect to meet our return to work target by 2017, we are unlikely to meet the sustainability targets. However, the scheme remains financially sound, in particular, the funding ratio of 112 per cent remains within the target range of 82.5 to 117.5 per cent.

WorkSafe strives for safer workplaces, and continues to deliver low cost insurance. We remain committed to supporting injured workers in their recovery and return to sustainable and safe work.


19.77%

18.81%

6 months

19.39%

Strategy 2017


Strategy 2017

SustainabilityBaseline

11/12 resultYear 1

12/13 resultYear 2

13/14 result Year 3

14/15 result Year 4

15/16 target Year 4


2017 Target

Actuarial release $182m $179m $303m ($60m) $50m ($135m) $350m cumulative

Break even premium 1.282% 1.266% 1.205% 1.228% 1.214% 1.236% 1.200%

Performance from insurance operations

$385m $119m $483m $211m $396m $280m N/A3

Scheme remains financially sound but with some challenges

Culture and placeBaseline

11/12 resultYear 1

12/13 resultYear 2

13/14 result Year 3

14/15 result Year 4

15/16 target Year 4


2017 Target

Sustainable engagement index

77 77 69 75 78 79 Top quartile against

Australian National

Norm (ANN)

Strong improvement in staff engagement

Break even premium

1.228%

1.214%

1.236%

-$

+$

ServiceBaseline

11/12 resultYear 1

12/13 resultYear 2

13/14 result Year 3

14/15 result Year 4

15/16 target Year 4


2017 Target

Employer service 86.7% 87.1% 89.2% 90.0% 91.2% 90.4%2 87–90%

Worker service 83.1% 83.3% 83.9% 86.2% 88.0% 87.2%2 85–90%

Community service 70.9% 70.3% 70.3% 71.7% 72.7% 71.6% 71–75%


WorkSafe maintains high levels of service

Employer service 91

.2%

90.4

%

90.0

%

Worker service 88

.0%

87.2

%

86.2

%

Community service 72

.7%

71.6

%

71.7

%

(135m)

(60m)

50m

$0

Actuarial releasePerformance from insurance operations

396m 280m211m

$$

$

78%

79%

75% Sustainable

engagement index

1. Safety results for 2011/12 and 2012/13 differ from those reported in previous annual reports due to an ABS change to labour force data prior to January 2014.

2. 2014/15 results and 2015/16 results are not directly comparable. Changes were made in 2015/16 to the survey methodology used for agent service to workers and to employers.

3. Set by budgeting process.


Report from the Chairman and Chief Executive

In the fourth year of our five-year Strategy 2017, there have been strong injury reductions across Victorian workplaces. While our scheme remains financially sound, there are some challenges ahead in maintaining that position.

The way Victoria does business is changing. Industry is becoming more service oriented, marked by continued growth in the health sector. The way we work, driven by technology and the opportunities it provides, is already very different to our traditional models. Technology is also changing people’s expectations of how they engage with organisations and how they access information. Community expectations of our role in the complex issues of mental injury, bullying and occupational violence are also expanding, requiring us to reassess how we regulate workplace safety and how we deliver our services. To successfully navigate all of this, WorkSafe must remain innovative, relevant and trusted in the Victorian community.

We are continuing to experience pressure on our scheme sustainability from common law. The relocation to Geelong in 2017 through to 2018 will provide both opportunities and challenges.

With this in mind, we are working on Strategy 2030; thinking ahead so that we are prepared for the future. The strategy aims to position us to adapt to the changes that we are seeing in industry and the workplace, and to make the most of the opportunities that advances in technology provide.

in the workplace must be fitted with rollover protection devices. A Government rebate of $6 million will assist farmers to improve the safety of their quad bikes.

We have expanded our team of health and safety inspectors so we can reach more workplaces.

The review of the Occupational Health and Safety Regulations 2007 provides an opportunity to introduce more modern and streamlined regulations. The new regulations will be in place by June 2017, when the current regulations expire.

Return to workThis year 80.23 per cent of injured workers were able to return to work within six months, a slight reduction on last year.

The longer an injured worker is off work, the less likely it is that they will return to work. It is important that we continue to foster the early, sustainable and safe return to work after an injury.

Our ‘Health Benefits of Safe Work’ and ‘Better@Work’ programs continued in 2015/16. We also improved our streamlined employer services model which better aligns services with a worker’s degree of capacity, and reduces red tape.

ServiceWe measure the satisfaction of workers, employers and the community with the services we deliver. This includes our advisory service, the inspectorate and the agents. Our results for 2015/16 are in line with those of the previous year.

Throughout the strategy development, we will be consulting with our stakeholders to better understand and meet their needs.

SafetyThe number of workplace injuries fell in 2015/16 despite strong employment growth. In June 2016, the rate of workplace injuries was 6.95 claims per million hours worked, an improvement of 5.2 per cent on the previous year.

During the year, 31 people lost their lives at work. The death of a worker has a devastating effect on the person’s family, friends and colleagues, and impacts the wider community. Safety at work is vital and we all have a role in ensuring this is never compromised.

As the workplace health and safety regulator, we continue to focus our efforts where there is the greatest risk of harm.

WorkSafe is taking an active role in addressing workplace violence, especially the increasing risks faced by front line workers across the state. We are working in partnership across Government, with healthcare providers and with Victorian workplaces. Our focus is to address the underlying issues, while educating employers and workers on how to recognise the risks in order to prevent injury and harm.

Each week, 10 farmers are seriously injured, and quad bikes and tractors remain the leading causes of death and serious injury. We have revised our approach to quad bike use which means that, from next year, if there is a risk of rollover, quad bikes used




Over the past few years we have worked to improve the way our agents manage claims and deliver service and on reducing the administrative burden placed on injured workers, employers and our service providers. Following a tender process, WorkSafe’s new agent panel came into effect on 1 July 2016. It is designed to provide the best possible balance of skills, capability and innovation.

The recent Ombudsman Victoria Investigation into the management of complex workers compensation claims and WorkSafe oversight highlighted a number of cases where injured workers were not given the support and respect that they deserve. We accept the Ombudsman’s recommendations and are currently implementing them (refer Appendix 5).

Strategy 2030 will define the way we deliver our services in the future, providing more ways to access information and more tailored service support, enabled by technology.

SustainabilityPerformance from insurance operations for the year was $280 million. This result is $116 million below target and was impacted by our full year actuarial valuation which increased our projected claims costs by $135 million, mainly due to the impact of common law. We remain committed to ensuring that these benefits are sustainable and have implemented a number of measures to manage the increased costs associated with common law.

The net result of ($475) million was $763 million below budget after the impact of external factors, primarily due to unfavourable conditions experienced in investment markets as well as the impact of changes in economic assumptions including discount rates and inflation on claims liabilities.

Despite these lower than budgeted results and some ongoing challenges including growth in common law lodgements, an increase in more complex injuries and lower investment returns, our scheme remains financially sound. The funding ratio is 112 per cent, which is within the target range of 82.5 to 117.5 per cent.

A number of committees oversee the financial management of the WorkSafe scheme, including the Audit Committee and the Risk Committee. These committees are integral in ensuring the scheme’s integrity is maintained, we promote sound financial and risk management, and ensure the scheme is maintained in line with WorkSafe’s legal obligations.

Culture and placeOur employee engagement results improved again over the year.

The relocation of our head office to Geelong is underway; over 150 employees will work in Geelong in early 2017. The remaining head office team will join them to occupy our new building in 2018. This is a great opportunity for us to become part of the growing social insurance precinct in Geelong. The region is being revitalised with increased investment across many areas including arts and sports venues.

We are encouraged by the continuing engagement of our people and their commitment to delivering value for the community as we approach this period of change. We continue to support our people through this process.

Leadership change and consolidation this year has introduced some new faces to our Executive Leadership Team and we welcome them.

Thank youWe would like to thank the Board, our senior management team and everyone who works at WorkSafe for their tireless efforts this year. We thank our responsible Minister, Robin Scott MP, Minister for Finance. We would also like to thank our agents, and our stakeholders for their input and work during 2015/16, in assisting WorkSafe to deliver on its vision and mission and addressing the challenges the year presented. We will continue to take nothing for granted in our quest to keep Victorian workplaces the safest in Australia.

Paul Barker Chairman

Clare Amies Chief Executive


Board

Paul Barker, ChairmanB.Bus, FCA, AGIA and ACIS, MAICDAppointed September 2015

John WalterLLB (Hons), MBAAppointed March 2014

Clare Amies, Chief ExecutiveBA, BSW, MSW, Grad. Cert. Public Policy, AMP (Harvard), MAICD Appointed March 2015

Neil LucasPSM, JPAppointed August 2014

Ross McCannB.Eng (Chem) (Hons), FIChemE Appointed October 2013

Marlo BaragwanathLLB (Hons) BA, MSc (Public Administration & Public Policy) LSEAppointed August 2015

Paul KirkBEc, CA, RITA, MAICDAppointed October 2013


Board / Our organisation

Our organisation

As at 30 June 2016

Information Technology Shared Solutions (ITSS)

Ashley West

Head of ITSS

Chief Executive Clare Amies

Heath and Disability Strategy Group

Marion Nagle

Executive Lead

Joint TAC/VWA Collaboration

Insurance

Shane O’Dea

Executive Director

Legal Services

Leanne Hughson

General Counsel

Health and Safety

Marnie Williams

Executive Director

People and Culture

Cheryl Woollard

Executive Director

Risk

Alicia Colley

A/c Chief Risk Officer

Finance and Administration

Roger Arnold

Chief Financial Officer

Geelong Relocation Program

Stephen Parrish

Program Director

External Affairs

Linda Timothy

Executive Director

Strategy

David Watson

Executive Director


Optimise effectiveness, efficiency and value Through sound scheme management, we have maintained a record low average premium rate of 1.272 per cent, minimising the cost burden for employers, while encouraging them to improve health and safety behaviour and return injured workers to work. We continue to cut red tape across the scheme.

Target occupational violenceViolence in workplaces is unacceptable and the community is increasingly concerned about it. In 2015/16 WorkSafe committed itself to addressing the risks to frontline workers in Victoria’s hospitals and schools, particularly the risks associated with occupational violence and aggression.

The Violence in Healthcare Taskforce (the Taskforce), chaired by Clare Amies, WorkSafe’s Chief Executive, included members from the Australian Nursing and Midwifery Federation, the Department of Health and Human Services, a health service Chief Executive Officer, the Australian Medical Association, the Health and Community Services Union.

Systematically work to reduce hazards and prevent harm and workplace fatalities

In 2015/16, we worked to reduce hazards that harm and kill workers, raising the level of enforcement activity across all industries through a 13.5 per cent increase in inspector visits to Victorian workplaces.

We targeted the agriculture and construction industries because the risk of serious injury or death is high, increasing workplace visits by 122 per cent and 21 per cent respectively. We also targeted manufacturing, transport and health care and social services.

Raise the level of worker protectionDuring 2015/16, our enforcement capability was increased following two inspector intakes. The first involved the recruitment of 46 OHS and return to work inspectors and investigators. A further 14 inspectors were recruited in late 2015/16 to join the frontline in 2016/17.

Engage and leverage stakeholder expertise and participationDuring the year, engagement with stakeholders has been reinvigorated, both through our formal stakeholder forums, and less formally on strategic directions and operational matters. A greater focus was also placed on individual contact between stakeholder groups and members of WorkSafe’s senior leadership team and executive.

WorkSafe’s five year strategy, Strategy 2017, challenges us to achieve our mission of actively working with the community to deliver outstanding workplace safety and return to work, together with insurance protection. It sets targets across each of our key strategic priorities and a framework for raising the level of influence and impact WorkSafe has to make workplaces safer. It also seeks to improve the effectiveness and efficiency of the organisation, improving service levels for workers and employers, and reducing red tape.

In planning for 2015/16, we committed to making significant progress in a number of key areas:

Reporting on WorkSafe’s 2015/16 strategic priorities


Reporting on Worksafe’s 2015/16 strategic priorities

Work towards moving our headquarters to Geelong The work to relocate our headquarters to Geelong is underway. It is an exciting opportunity to be part of the growing personal injury insurance and disability sector in Geelong.

The next long term strategyWork has started on our next long-term strategy to build on the positive results of Strategy 2017. In developing this strategy, we will engage with our stakeholders and consider the best ways to meet the challenges of the modern workplace, community expectations of service delivery, changes to industry and government service models over the next decade and beyond.

Use of information and research to improve the workers compensation systemWorkSafe is committed to evidence-based research to improve worker protection.

WorkSafe collaborates with the Transport Accident Commission and Monash University, through the Institute for Safety, Compensation and Recovery Research, to fund independent research to gain improved insights into how to prevent harm and improve the delivery of workplace injury compensation. WorkSafe contributes approximately $3 million per annum to this initiative.

Examples of other major research include:

• the long term outcomes for injured workers

• a comprehensive mental health literacy intervention with Victoria Police

• the elements of a positive safety culture

• OHS lead indicators.

The Taskforce found a critical need for improved awareness and reporting of violence in our health system. It recommended a review of security procedures, simplified incident reporting, a public awareness campaign and continued support for the Health Service Violence Prevention Fund, a three year program to improve safety of staff in acute public health and acute mental health workplaces.

During 2015/16, WorkSafe met with a number of hospital boards to increase accountability for OHS matters at the highest leadership level to promote a sustainable safety culture in hospitals.

Refresh and renew our agency arrangementsFollowing a competitive tender process, our new agent panel was ready to commence in July 2016. The revised arrangements will ensure value for money in the agency arrangements and also raise the level and diversity of service offerings for employers and their workers.


Safety


Strategy 2017 resultsBaseline

2011/12 resultYear 1


2013/14 result Year 3


2015/16 target Year 4

2015/16 result

Claims per million hours worked (CpMHW)^

8.23 7.72 7.37 7.34 7.12 6.95

Four-week CpMHW^ 3.24 3.23 3.10 3.16 3.04 3.02

3.024-week claims

3.16

3.04

3.02

6.95Claims

7.34

7.12

6.95

1,000,000hours

Claims per million hours worked in 2015/16

Strong injury reduction rates

Safety

WorkSafe continues to focus on reducing workplace injuries to achieve its goal of ensuring all Victorian workers return home safely each day.

Our approach WorkSafe aims to prevent injury, disease and death across all Victorian workplaces. We support and educate people and organisations to make workplaces safe and investigate and prosecute those who don’t comply with OHS legislation.

We talk to our stakeholders, use public advertising campaigns, sponsorships, social media and industry events to build community awareness and influence workplace safety attitudes and social norms. We drive action and behaviour change, fund grants and consult with interested parties.

We use sophisticated and tailored interventions to target high-risk industries and hazards. Our inspectors target these industries and hazards as well as responding to incidents. We actively encourage compliance among employers and workers and strive to improve their attitudes to workplace health and safety.

ResultsIn 2015/16 there was significant reduction in the rate of workplace injury and disease. Claims per million hours worked reduced by 5.2 per cent, while four-week claims per million hours worked (an indicator of severity) reduced by 4.6 per cent from the 2014/15 results.

There were 31 fatalities in 2015/16; 11 in agriculture and eight in construction. This is a significant increase on 2014/15 when there were 20.

Total annual standard claims

08/09

09/10

10/11

11/12

12/13

13/14

14/15

15/16

28,4

12

28,5

61

29,3

14

29,2

61

28,0

03

26,5

88

26,2

86

26,7

57

Page 12 note^ Safety results for 2011/12 and 2012/13 differ from

those reported in previous annual reports due to an ABS change to labour force data prior to January 2014.


Recognising excellence The WorkSafe Awards are held annually, and celebrate best practice and innovation in workplace health and safety. In 2015/16, the winners were:

Best Solution to a Specific Workplace Health and Safety Issue:ANC Forestry Group Pty Ltd “Safer Logging Systems”

OHS Achievement Award: Timboon P–12 School “TAP into Farm Safety”

Health and Safety Invention of the Year: Whelans Group Investments “Ejekta Trailer”

Commitment to Workplace Health and Wellbeing: Warners Nursery

Health and Safety Representative of the Year: Sean Mathews, Eastern Health

Employer Excellence in Return to Work: City of Yarra

Return to Work Coordinator Excellence: Paula King, Dyson Group of Companies

Health and Safety WeekIn October, more than 3,000 people attended events across Victoria to gain the skills and practical tools needed to improve safety at their workplaces. Leadership in health and safety was a key theme in the event.

In response to a review of the 2015 event, from 2016 we will run Health and Safety Month to foster improved engagement and extend our audience.

International Workers Memorial Day to honour lost workersIn April 2016, the lives of 24 workers who died in Victorian workplaces were remembered in a tribute on International Workers Memorial Day. Laid out at the Victorian Trades Hall Council in Carlton, were 24 pairs of shoes to symbolise each workplace fatality since 28 April 2015. Minister for Finance, Robin Scott MP, led the tribute alongside Victorian Trades Hall Council Secretary, Luke Hilakari, and WorkSafe’s Chairman and Chief Executive.

Raising awarenessPublic awareness campaigns In 2015/16, major campaigns and sponsorships included:

• Mother’s Day – to reach, engage and motivate families to make safety an everyday priority.

• Farm Safety – to raise awareness of the extent of farm fatalities and generate a discussion about farm safety.

• Safety Values – to influence the attitudes and environment around safety within the workplace to encourage a better ‘safety culture’.

• Sponsorship of the Victorian Country Football League, the Victorian Country Netball League and the AFL Western Bulldogs Football Club, to raise the profile of workplace health and safety across regional Victoria.

• Enforcement – to increase awareness that WorkSafe inspectors were visiting workplaces and enforcing the law to keep workplaces safe; and to encourage employers to improve safety at their workplace.


Safety

Targeted hazard interventionsHighlights from our hazard-based programs this year:

Manual handlingAs one of the major causes of injury to workers, manual handling hazards were specifically targeted through a pilot program of inspections, and provision of guidance materials to smaller workplaces. This resulted in a 38 per cent increase in improvement notices relating to manual handling.

The increased importation and movement of goods through supply chains presents a growing risk to health and safety. New information and guidance encourages the elimination of manual handling risk upstream, by ensuring goods are packaged and shipped for efficient and safe unloading at their destination.

Funding to improve workplace health and safety In 2015/16, WorkSafe continued to financially support a number of initiatives designed to improve workplace health and safety including:

Stakeholder support• Personnel to coordinate and engage

on OHS issues on behalf of key employee and employer representative organisations.

• Grant funding to the Gippsland Asbestos and Related Diseases Support/Asbestos Council of Victoria to provide support and advocacy for people in the Latrobe Valley affected by asbestos.

• Grants to support programs to improve safety for workers with a focus on workplace bullying and young worker safety, and supporting injured workers to return to safe work. The Victorian Trades Hall Council’s Young Workers Centre will provide a hub for counselling, legal advice and education about workplace safety.

Small-medium employer support• The OHS Essentials Program

provides free OHS consultancy services to assist small and medium sized businesses (less than 200 staff) to improve safety and assist compliance with OHS legislation.

Injury prevention funds• WorkSafe provided funding to

Victorian Trades Hall Council for the OHS Reps @ Work website which provides important guidance and support to OHS Health and Safety Representatives.

Practical and innovative supportWorkSafe events program WorkSafe’s events program positively influenced the implementation of a world first risk control measure at the 2016 Formula One Grand Prix. Three purpose built materials hoists and bridging structures reduced manual handling by up to 80 per cent and eliminated the risk of a slip, trip or fall which not only improved safety, but also increased productivity.

WorkHealth Improvement Networks This program supports employers to address complex issues and it was expanded in 2015/16 to include 31 employers across public hospitals and manufacturing industries, two of the highest risk industries for workplace injury in the state.

In partnership with the Victorian Chamber of Commerce and Industry and the Department of Health and Human Services, the program generates new ways of tackling a range of complex OHS issues including musculoskeletal disorders, mental well-being and safety culture. It combines on-the-job health and safety training with human resources and health promotion, encouraging workplaces to work together to identify and implement solutions.


Health care and social assistance There is a high risk of injury in this industry, particularly for frontline workers. In 2015/16, we significantly increased our presence in hospitals, aged care facilities and children’s services focusing on manual handling, slips, trips and falls, and on occupational violence and aggression.

Inspector visits targeting priority areas including occupational violence and musculoskeletal injuries in the health care sector rose from 800 in 2014/15 to 1,869 in 2015/16.

WorkSafe is seeking to influence cultural change in health services to reduce the risk of bullying and harassment; over the past ten years we have run an extensive anti-bullying and harassment program. Collaboration across government on this issue is critical, and WorkSafe and the Department of Health and Human Services (DHHS) continue to work together.

Targeted industry interventionsHighlights from our industry-based programs this year:

Construction Construction is a high-risk industry. Over the past 10 years, 22 per cent of Victoria’s workplace fatalities have occurred in the construction industry, despite employing only nine per cent of the workforce.

In 2015/16 we conducted 10,356 visits to construction workplaces, up from 8,590 the previous year. The target for 2016/17 is 12,750 visits – 9,500 through the construction program and 3,250 by inspectors in regional multi-disciplinary teams. Initial results are pleasing: injury rates have fallen from 9.66 claims per million hours worked in June 2015, to 8.95 in June 2016.

We have particularly focused on areas that have the potential to cause death or serious injury to employees or the public – in particular housing/residential construction, concrete pumps, the installation of lifts, precast panels installation and scaffolding. We released eight industry specific guidance documents throughout the year.

Psychological healthWorkSafe’s approach is to promote positive mental health, reduce workplace risks through targeted prevention activities and provide support and assistance for those affected by stress disorders. Highlights include:

• An updated stress website and guidance material

• Increased visits in the education sector

• The Mental Wellbeing Collaboration Resource Centre is an innovative partnership with Superfriend and VicHealth that raises awareness of the role that leaders play in promoting positive mental health in the workplace

• The bullying prevention alliance is a partnership with the Bully Zero Australia Foundation and Brodie’s Law Foundation that delivered a series of engaging and emotive education and information sessions to younger workers.

AsbestosThe dangers associated with asbestos are well established and remain a high priority. We continue to work with others to minimise the risk of exposure to asbestos in the community. This year, we have worked on increasing awareness of safe work practices when removing or disturbing materials containing asbestos and on increasing awareness of in situ asbestos contained in older buildings.


Safety

AgricultureDespite agriculture only employing three per cent of Victorian workers, 30 per cent of Victoria’s workplace deaths happen on farms. Every week 10 farmers are seriously injured, and quad bikes and tractors remain the leading causes of death and serious injury.

Beginning in April 2016, WorkSafe’s agriculture public awareness campaign called on farmers to take a few moments to think about safety. Earlier this year, WorkSafe also began talking to the farming community about its plan to ensure that quad bikes used in the workplace have a suitably designed and tested rollover protection device fitted as part of approved measures to reduce risks to operators. A major quad bike safety awareness campaign is underway in regional media to support a $6 million rebate scheme announced by the State Government to fund quad bike rollover protective devices or alternative work vehicles.

Public sectorThe Public Sector OHS Leadership Group, chaired by the Minister for Finance, Robin Scott MP, convened its first meeting in August 2015. Its purpose is to foster healthy and safe workplaces through the commitment of senior public sector leaders.

The Health and Safety Leadership Group is supported by the Public Sector OHS Improvement Interdepartmental Committee (IDC). WorkSafe is working with the IDC to understand and improve organisational approaches to mental health and wellbeing across the public sector. We are developing ways to mitigate psychological risk and establish a common approach to the prevention and management of occupational violence.

In 2015/16, an audit of workplace bullying and harassment in the health sector was conducted by the Victorian Auditor-General’s Office, highlighting the need for a government-wide response. Four collaboration recommendations were made in the report to the DHHS, Victorian Public Sector Commission (VPSC) and WorkSafe to:

• share information and data• develop a sector wide framework

on positive cultures• support health sector boards to

understand their responsibilities• develop and promote KPIs for

health sector boards.

WorkSafe supports the recommendations and is working with the DHHS and VPSC to ensure that collaboration between the agencies is increased.


The following are some significant OHS prosecutions.

• A Victorian football club was convicted and fined a total of $200,000 for failing to provide and maintain a safe system of work in relation to its supplements program.

• A company was fined $45,000 and ordered to pay costs of $20,000 for failing to supervise its employees to ensure that safe operating procedures were followed when changing oil in deep fryers. As a result of this failure, an employee suffered third degree burns which required skin grafts.

• Two companies were convicted and fined $750,000 each for failing to provide safe systems of work that resulted in the death of a worker who fell approximately 40 meters when the mast of a piling rig collapsed.

• A company operating as a farm was fined $450,000 for allowing an unsupervised 15 year old person who was not certified or licensed to operate a forklift. The forklift tipped over, killing the operator.

• A building company was convicted and fined $300,000 for failing to brace or otherwise stabilise a brick wall which collapsed, killing a worker.

• A manufacturing company was convicted and fined $80,000 and ordered to pay costs of $3,975 when a guard was removed from a router resulting in a worker severing two fingers. The guard was removed despite WorkSafe issuing an improvement notice on the same item of plant in 2011, requiring the fitting of the guard over the blades of the router.

DeterrenceWorkSafe’s role in enforcing OHS and return to work legislation is important in driving safety improvements across the state.

Prosecution results and OHS regulatory performance In 2015/16, WorkSafe completed 110 OHS-related prosecutions and maintained its strong success rate of 94 per cent, imposed fines of $5,241,000 and entered into four enforceable undertakings pursuant to the Occupational Health and Safety Act 2004.

The Health and Safety Inspectorate provide information and education to show workplaces how to comply with OHS laws while ensuring there are consequences for breaches.

Manufacturing Manufacturing is the third largest industry in Victoria and has the highest injury rates, mostly from food products, transport and equipment and fabricated metals.

In 2015/16, we focused on regions with a high density of food product manufacturing, targeting manufacturing workplaces where injuries have previously occurred. The WorkHealth Improvement Networks project targeted manufacturing as one of its priority industries with 15 employers participating in the pilot program. Targeted inspections to the manufacturing sector on workplace layout, maintenance and traffic management were delivered.

Pleasingly, reported injuries in the manufacturing industry reduced by more than 7 per cent in the year.

Transport, postal and warehousingInspection activities were aimed at prevention of the most common hazards in warehousing; manual handling, slips, trips and falls, and mobile plant.

Dangerous goods transportThe transportation of dangerous goods continues to increase. Inspections aimed to ensure health and safety risks were appropriately identified and managed through a combination of education and compliance.


Safety

Key developmentsHazelwoodIn response to the Hazelwood coal mine fire in the Latrobe Valley, which burned for 45 days in February 2014, the Victorian Government established a Hazelwood Mine Fire Inquiry.

In November 2015, the Government released the Implementation Monitor’s Annual Report, covering the status of actions in the Implementation and Monitoring Plan produced by the inquiry, which was found to be satisfactory for all recommendations which WorkSafe was a lead agency.

WorkSafe continues to be an active member of the Coal Mine Emergency Management Taskforce, convened by Emergency Management Victoria.

FiskvilleThe Parliamentary Inquiry into the Country Fire Authority Training College at Fiskville handed down its report in May 2016, which contained recommendations for WorkSafe.

OHS compliance and enforcement review Earlier this year the Government established an independent panel to review Victoria’s OHS compliance and enforcement. The panel is examining WorkSafe’s policies and activities to ensure Victoria’s OHS laws and standards are being complied with, enforced and communicated. The review has released a public discussion paper and will consider all feedback before a final report to Government later in the year. WorkSafe welcomed the review and has participated in its work.

Compliance measures 2013/14 2014/15 2015/16

Annual workplace visits* 41,566 40,711 46,259

Prosecution success rate 88% 93% 94%

Investigations proceeding to prosecution charges within 12 months

75% 83% 91%

Completed investigations proceeding to legal review outcome

67% 66% 71%

Prosecutions commenced 107 114 119

* In the 2015 Annual Report, the number of workplace visits was incorrectly stated at 39,998. The correct number is 40,711.


Return to work








2015/16 result


21.90% 21.43% 19.96% 19.39% 18.81% 19.77%

More than 80% of workers are back within six months

19.3

9%18

.81%

19.7

7%6months


Return to work

Raising awareness campaign – Getting BackOur return to work campaign aimed to change behaviour, making returning to work as part of recovery from injury a social norm. The campaign encouraged injured workers to get back to safe work sooner, highlighting the key roles many Victorians play in helping injured workers get back to work.

Improving support for injured workersThis year we implemented a number of initiatives to ensure we are continually striving to better support injured workers and their employers through recovery. These included:

• broadening the influence and reach of our inspectors

• better use of occupational rehabilitation

• improving the capability of our agents and occupational rehabilitation support

• generating public awareness through targeted campaigns

• using research to better understand barriers to return to work.

Health Benefits of Safe Work program Health Benefits of Safe Work is a three year program that engages with general practitioners and acknowledges their central role in treating and supporting injured workers to return to work. The program recognises that behaviour change requires a long-term multi-pronged approach. A range of initiatives have been implemented, including targeted education and support, raising awareness about the evidence of the health benefits of work and peer to peer conversations about medically appropriate certification.

The redesigned certificate of capacity has been well received with 87 per cent of WorkSafe providers now using the new certificate.

ResultsIn 2015/16, 80.23 per cent of injured workers returned to work within six months, a slight reduction on last year and less than our target of 81.19 per cent. Our return to work inspectors conducted 1,866 visits.

Our approach Early and sustainable return to safe work is achieved through the successful efforts of the injured worker and employer, with timely support from treating health practitioners, the agent and occupational rehabilitation providers. This is underpinned by a legislative framework that places obligations on employers and workers.

We target our interventions where there is the most need for support using a range of tools and information to assist all parties in their roles. We are making better use of research, early intervention, improved agent capability and occupational rehabilitation support.

WorkSafe is committed to ensuring injured workers have a safe, sustainable return to work. This delivers extensive community-wide benefits.


Occupational Rehabilitation Approval frameworkIn July 2015, WorkSafe implemented a framework for approval of occupational rehabilitation providers which will drive improvement in sustainable and safe return to work for injured workers. It seeks innovation, delivers a more tailored flexible service model, and promotes effective relationships between WorkSafe and approved providers.

New operating model for Health and Disability Strategy GroupThe Health and Disability Strategy Group was established in 2006/07 as a shared undertaking between WorkSafe and the TAC to support healthcare providers to achieve the best health outcomes for injured workers and those injured in transport accidents. To support its new 2020 organisational strategy, TAC is integrating these functions into its claims management. WorkSafe will build on the achievements made over the past ten years by this shared group as we fully integrate the function into our own organisation.

Better@WorkBetter@Work focuses on supporting small and medium sized employers whose injured workers are most at risk of remaining off work six months after an injury. Better@Work has been effective in prompting WorkSafe’s agents to consider earlier occupational rehabilitation involvement to optimise return to work intervention. It has also raised expectations about the quality and frequency of interactions between parties. These principles have now largely been adopted, improving early intervention and support for injured workers.

New Employer Services ModelWorkSafe implemented a streamlined New Employer Occupational Rehabilitation Services model on 1 July 2015. Services aim to reduce red-tape around enrolling injured workers in training courses; identify transferable skills to consider options for future return to work assistance; explore capacity potential and employment goals; or assist active job seeking when a worker has a clear capacity.

Research into return to workFollowing a Government commitment, WorkSafe commissioned the Institute for Safety, Compensation and Recovery Research to research the health, social and economic outcomes of long-term injured workers, particularly those off work for more than six months, through a three-part study that commenced in late 2015.

The first part of the study will focus on interviews with injured workers and key stakeholders to gain a better understanding of the issues during the claims process. The second part involves data analysis to identify factors impacting return to work. The final part of the study will follow up with workers three to four years after injury.

Findings from the research will be used to develop future programs to improve the compensation experience and better support injured workers.


Return to work

Measure 2014/15 result 2015/16 result

Visits 1,758 1,866

Claims intervention 1,694 1,964

Improvement notices 118 271

Voluntary compliances 385 466

Return to Work InspectorateThe Return to Work Inspectorate ensures employers and workers are meeting their legal obligations. In 2015/16, the Inspectorate conducted 1,866 workplace visits and intervened on 1,964 claims. The inspectorate also issued 271 improvement notices to employers for breaches of the law and achieved 466 voluntary compliances.

In 2015/16, WorkSafe’s return to work and OHS inspectorates increased their collaboration in an effort to improve both return to work outcomes and early intervention where there have been psychological injuries associated with workplace bullying.


Service


Service







2015/16 result

Employer service 86.7% 87.1% 89.2% 90.0% 91.2% 90.4%*

Worker service 83.1% 83.3% 83.9% 86.2% 88.0% 87.2%*

Community service 70.9% 70.3% 70.3% 71.7% 72.7% 71.6%

90.4%Employer service

91.2

%

90.4

%

90.0

%

87.2%Worker service

88.0

%

87.2

%

86.2

%

71.6%Community service

72.7

%

71.6

%

71.7

%WorkSafe maintains high levels of service

WorkSafe strives to improve the prevention and insurance services we provide to workplaces and to injured workers through better injury recovery and a safer return to work.

WorkSafe service

Employer service 2014/15 result 2015/16 target 2015/16 result

Advisory 92.8% 92.5% 91.4%

Inspectorate 97.4% 95.0% 98.0%

Advice and guidance 96.6% 97.0% 97.0%

WorkSafe premium 88.8% 92.0% 89.4%

Worker service 2014/15 result 2015/16 target 2015/16 result

Advisory 93.8% 92.5% 93.5%

Inspectorate 97.5% 96.0% 97.6%

Advice and guidance 97.1% 96.0% 96.8%

Community service 2014/15 result 2015/16 target 2015/16 result

Expectation of Inspector visits 61.0% 63.0% 58.7%

Balance education and enforcement 66.5% 70.8% 67.2%

Catch law breakers 82.2% 84.1% 81.2%

Charges laid within 12 months of investigation

83.3% 75.0% 90.8%

Successful prosecutions 92.6% 90.0% 93.6%

ResultsWe measure our service, and that of our agents, by asking employers and workers to rate the services they received, as well as their perceptions of our education and law enforcement activities. This table contains the results for our direct services.

Advisory and Licensing ServicesWorkSafe aims to provide best practice services to employers, workers and the community through its advisory and licensing services. These services utilise multiple channels including telephone, email communication and the WorkSafe website to provide information and process licences. In 2015/16 this included:

• 2,907,222 website visits• 9,538,625 visits to specific website

pages• 59,837 emails• 184,679 telephone calls for advice

about OHS, rehabilitation and compensation

• approximately 107,000 licences processed.

Page 24 note* 2014/15 results and 2015/16 results are not

directly comparable. Changes were made in 2015/16 to the survey methodology used for agent service to workers and to employers.


Agent service to injured workers

2014/15 result 2015/16 result

Allianz 76.4% 78.7%

CGU 76.6% 80.8%

Gallagher Bassett Services 73.0% 72.9%

QBE 75.7% 76.2%

Xchanging 79.5% 82.5%

Scheme average 76.2%* 78.4%

Agent service to employers

2014/15 result 2015/16 result

Allianz 83.3% 88.0%

CGU 85.0% 86.5%

Gallagher Bassett Services 82.4% 83.9%

QBE 83.3% 83.8%

Xchanging 86.3% 89.2%

Scheme average 84.1%* 86.2%

* 2014/15 results and 2015/16 results are not directly comparable. The survey methodology used for agent service to workers and to employers was changed in 2015/16 from service attributes to key events. Comparative results for 2014/15 based on a parallel series are 79.0 per cent for worker service and 87.6 per cent for employer service.

Agent service performanceIn 2015/16, agent service to employers and injured workers were measured based on their performance during key claim events. This changed from the service attributes measure used in 2014/15 in order to improve agents’ ability to deliver service improvements. Consequently, the 2014/15 and 2015/16 results shown in the table are not directly comparable.


Service

Our management of compensation claims investigated In September 2015, the Victorian Ombudsman launched an ‘own motion’ investigation into the management of complex compensation claims by WorkSafe and its insurance agents. This followed 370 complaints in 2014/15, mostly related to decisions, processes and payments. The investigation considered;

• whether WorkSafe agents have unreasonably denied liability or terminated entitlements for injured workers in response to financial incentives from WorkSafe,

• how agents use independent medical examinations, and

• whether WorkSafe is effectively overseeing its agents’ claims management.

The report was tabled in Parliament on 12 September 2016. The Government and WorkSafe accepted all the recommendations. A list of recommendations to WorkSafe, including WorkSafe’s responses can be found at Appendix 5.

Reviewing our agent panel As of 4pm on 30 June 2016, following a competitive tender process, our new agent panel comprises:

• Allianz Australia Workers’ Compensation (Victoria) Limited (Allianz)

• CGU Workers Compensation (Vic) Limited (CGU)

• EML Vic Pty Ltd (EML) • Gallagher Bassett Services Workers

Compensation Vic Pty Ltd (GB)• Xchanging Integrated Services

Victoria Pty Ltd (Xchanging)

QBE Australia (QBE) ceased to be a WorkSafe agent and transferred its WorkCover insurance registrations and claims to EML and Xchanging. A dedicated transition team oversaw a range of programs to support and monitor the transition process.


Dispute reductionWorkSafe is committed to continually improving the operation of the workers compensation scheme. That means striving to reduce the number of disputes and systematically improving the service provided to injured workers and employers.

To achieve this, a comprehensive strategy was developed in consultation with agents and stakeholders, to positively influence the factors causing disputes. Since June 2014, there has been a reduction of almost 12% in conciliation lodgements. The strategy can be broken into five key areas:

• Agent Prioritisation and Performance Management

• Capability• Systems and processes • Regular review and quality control • External review and stakeholder

engagement.

Our internal review process enables anyone who is directly affected by certain decisions of WorkSafe Inspectors to request a review.

WorkHealth Advisory Group WorkHealth was a landmark investment in the health of the workforce and a significant catalyst for change. Nearly 800,000 individual health checks were performed in 38,000 workplaces between 2008 and 2013.

In April 2015 the WorkHealth Advisory Group was established by the Minister for Finance to advise on expanding and enhancing the WorkHealth program to focus on mental health, while maintaining the momentum on physical health.


Service

Internal review outcomes*

Health and safety 2014/15 2015/16

Inspector’s decision affirmed (no change) 70* 43

Inspector’s decision set aside 65 102

Inspector’s decision varied (other than compliance date) 45 59

Compliance date only changed 881 1,077

Extension refused 48 17

Application refused 0 0

Application withdrawn 68* 77

Application ineligible / not reviewable 9 10

Total health and safety 1,186 1,385

Licensing 2014/15 2015/16

Decision affirmed 5 1

Decision set aside 0 1

Application invalid 0 1

Application withdrawn 0 0

Total licensing 5 3

Return to work 2014/15 2015/16

Decisions set aside 3 3

Compliance date only changed 2 1


Varied 0 1

Invalid 3* 1

Withdrawn 1* 0

Total return to work 12 8

* There are some differences in the internal review outcomes reported in the 2015 Annual Report compared to the 2014/15 figures reported above. Some errors were discovered in a reconciliation which have now been corrected.


Sustainability


Sustainability







2015/16 result

Actuarial release $182m $179m $303m ($60m) $50m ($135m)

Break even premium 1.282% 1.266% 1.205% 1.228% 1.214% 1.236%

Performance from insurance operations (PFIO)

$385m $119m $483m $211m $396m $280m

Scheme remains financially sound but with some challenges

($135m) Actuarial release

1.236%Break even premium

1.228%

1.214%

1.236%

-$

+$

(135m)

(60m)

303m100m179m

50m

$0

396m 280m211m

$$

$

$280mPFIO

The combination of rigorous financial management and a robust workers compensation scheme allows us to deliver the best possible support for injured workers and helps keep premiums low to minimise the cost burden for employers.

Operating expenditure by core activities

Core activity $’000

18%

34%

48%

Occupational Health & Safety $138,870

Insurance & Claims Management $98,214

Dispute Resolution $51,018

Total Operating Expense $288,102

ResultsIn 2015/16, a number of factors continued to place pressure on the WorkSafe scheme. These pressures included volatility in investment markets and the impact of broader economic uncertainty.

Our performance from insurance operations (PFIO) for the year was $280 million. This result is $116 million below target. This result was impacted by our full year actuarial valuation which increased our projected claims costs by $135 million.

The net result of ($475) million was $763 million below budget after the impact of external factors, primarily due to unfavourable investment returns as well as the impact of changes in discount rates and inflation on claims liabilities.

Overall liabilities continue to increase, driven by pressure on common law.


The following table highlights the impact of external factors on WorkSafe's result before short-term fluctuations and economic assumptions:

Financial results 2011/12 $m

2012/13 $m

2013/14 $m

2014/15 $m

2015/16 $m

Impact on results from internal factors

Performance from insurance operations 385.0 118.7 483.4 210.5 280.4

WorkHealth and research institute initiatives 24.0 5.6 12.1 – –

Result from internal factors 409.0 124.3 495.5 210.5 280.4

Impact on result from external factors

Difference between actual returns and long-term expected returns1

(318.3) 883.6 798.0 525.2 (621.4)

Change in inflation assumptions and discount rates2

(1,070.2) 532.5 (143.3) (156.5) (366.7)

Tax 303.9 (456.8) (326.4) (125.3) 232.4

Net Result (675.6) 1,083.6 823.8 453.9 (475.3)

1 Unfavourable conditions experienced in the investment markets in 2015/16 resulted in the actual investment return being lower than the expected long-term rate of return.

2 There was an unfavourable impact from changes in economic assumptions (i.e. lower assumed discount rates partially offset by lower than expected actual inflation) used to determine claims liability in 2015/16.


Sustainability

WorkSafe Scorecard 2006–2016

Year Average premium rate

Funding ratio Net result PFIO* Actuarial release

Dividend paid

2005/06 1.80% 119% $1,003m $476m $260m

2006/07 1.62% 134% $1,170m $729m $394m

2007/08 1.46% 120% ($587m) $958m $511m

2008/09 1.387% 97% ($1,254m) $277m $78m

2009/10 1.387% 100% $176m $654m $189m

2010/11 1.338% 108% $521m $294m $136m

2011/12 1.338% 96% ($676m) $385m $182m $147m

2012/13 1.298% 108% $1,084m $119m $179m $193m

2013/14 1.298% 116% $824m $483m $303m $59m

2014/15 1.272% 120% $454m $211m ($60m) $242m

2015/16 1.272% 112% ($475m) $280m ($135m)

* Performance from insurance operations

Assets and liabilitiesAs at 30 June 2016, WorkSafe’s total assets were $14.7 billion, compared with $14.3 billion at 30 June 2015. Our total liabilities were $12.6 billion, compared with $11.7 billion at 30 June 2015. The valuation determined that our funding ratio was 112 per cent (compared with 120 per cent at 30 June 2015). This was within the target range of 82.5 to 117.5 per cent.


WorkSafe Injury insurance average premium rates

1.80% 1.62% 1.46%

1.387%

1.387%

1.338%

1.338%

1.272%

1.272%

1.298%

1.298%

1.272%

08/09

07/08

06/07

05/06

09/10

10/11

11/12

12/13

13/14

14/15

15/16

16/17

Low cost insuranceSound scheme management enabled us to maintain a record low average premium rate of 1.272 per cent of payroll in 2015/16, the second lowest in Australia. This premium rate will continue in 2016/17.


Sustainability

During the year there were 23 prosecutions under the WIRC Act.

The following are some significant compensation-related prosecutions:

• A medical provider was sentenced in the County Court (on appeal) and was convicted and placed on a Community Corrections Order for two years, and ordered to perform 350 hours of community work. He was fined $5,000, ordered to pay costs of $4,937.90 and restitution to WorkSafe of $44,539.78 for offences including fraudulently obtaining additional payments.

• An injured worker was convicted and sentenced to an effective aggregate term of imprisonment of eight months, wholly suspended for 24 months, and ordered to pay restitution of $80,000 and costs of $1,000. The ruling came after it was found the injured worker had deliberately misrepresented his medical symptoms and level of incapacity for work to his treating medical practitioners, rehabilitation consultants and WorkCover agent by failing to disclose that he was playing sport.

Protecting scheme integrityCritical to maintaining the integrity and sustainability of the WorkSafe scheme, is our ability to ensure employers and workers are complying with their legal obligations under the WIRC Act. This includes ensuring employers pay their insurance premiums and detecting fraud by health professionals and workers.

• An injured worker was convicted and sentenced to a term of imprisonment of four months, wholly suspended for 12 months, for fraudulently obtaining payments of compensation, and convicted and fined $500 for providing false information relating to his injury compensation claim. He was also ordered to pay costs of $1,000 and restitution of $87,391.40.

• On appeal, an injured worker was convicted and sentenced to 12 months imprisonment, wholly suspended with an operational period of 24 months, and ordered to pay restitution of $101,944.60 for fraudulently obtaining compensation payments.

• A meat processing and packing company was convicted on one charge for failing to forward a claim for weekly payments within 10 days of receipt, and on one charge for failing to apply for registration as an employer with WorkSafe within legislated timeframes. The company was fined $20,000 as part of an aggregate order.

Compliance activity 2014/15 result 2015/16 target 2015/16 result

Number of completed investigations 169* 150 151

Number of prosecutions completed 16 n/a 23

Audits of bills submitted by medical practitioners and allied health providers 466 400 426

Investigations completed in 180 days 91% 90% 89%

*The number of completed investigations was reported as 133 in the 2015 Annual Report in error.


Self-insuranceSelf-insurers are approved by WorkSafe to manage their own workers compensation claims and are some of the largest employers in Victoria. Employers are eligible to apply for self-insurance in Victoria once they have met prescribed minimum requirements relating to corporate structure and financial viability. Once declared eligible, WorkSafe then determines whether the employer is 'fit and proper' to be a self-insurer.

There are 38 self-insurers operating in Victoria, representing approximately 8 per cent of total scheme remuneration. There were no new self-insurers in 2015/16.

In 2015/16, 70 per cent of injured workers expressed satisfaction with the service they received from their self-insurer. Due to the differences between the self-insurers survey methodology and that of WorkSafe agents, it is not possible to make a direct comparison between the respective 2015/16 service results.

In 2015/16, self-insurers achieved a sustained return to work rate of 83.9 per cent, which represents a slight improvement on the 2014/15 result of 82.7 per cent.

WorkSafe continues to work with self-insurers to promote best practice in safety and return to work.

Electronic Document and Records Management System (EDRMS)WorkSafe receives over four million documents and files per year, which are processed and filed on physical files, regardless of whether they arrive in physical or digital form. EDRMS Phase 1 (EDRMS1) was completed in late 2015, at a cost of $25.3 million. EDRMS1 established and proved the technology for electronic claims document management for all new invoices and certificates of capacity.

By 30 June 2016, EDRMS1 transferred almost 2.5 million documents per annum (including over one million emails) from printing, filing and archiving to digital storage.

In 2016/17, WorkSafe plans to extend the EDRMS to all remaining claims documents so they may be digitally stored, and accessible and shared between WorkSafe and our agents.


Sustainability

In 2015/16, 64 per cent of serious injury cases were settled without litigation, with only six per cent resulting from a court judgement. In the same period 83 per cent of damages were settled without litigation, and one per cent resulted from a court decision.

Looking ahead we will continue to work with stakeholders, the courts and service providers including law firms to ensure injured workers get the support they require without having to go to court, and to further enhance our dispute prevention and resolution processes. We will seek to better identify workers who are eligible for common law and deliver common law benefits fairly and in a timely manner.

Common lawCommon law applications have grown by about five per cent per annum over the past five years. This growth, especially for less serious injuries, remains a challenge to sustainability and places pressure on breakeven premium. In 2015/16 WorkSafe received around 2,683 applications for common law damages.

WorkSafe has implemented a number of initiatives to manage the increasing costs associated with common law claims, including:

• continuing to work with the community, employers and workers to reduce the occurrence and severity of work-related injuries

• providing better support for injured workers, resulting in earlier and sustained return to work

• improved claims management decisions

• commencing a number of projects designed to understand and manage emerging common law issues

• commencing a serious injury hearing pilot. With the agreement of both parties, some proceedings will be heard in court at about three months from commencement, rather than the 16 months of recent years.


Culture and place


Culture and place







2015/16 result

Sustainable engagement index 77 77 69 75 78 79

Strong improvement in staff engagement 78

%

79%

75% 79%

Sustainable engagement index

Our people play a crucial role in delivering our vision to return workers home safe every day. This underpins our success and drives the results we achieve for workplaces across the state.

Geelong relocation The relocation of our headquarters to Geelong is an exciting opportunity for WorkSafe and our people, as well as strengthening the growing insurance and personal injury sector in Geelong.

By the end of 2018, more than 700 WorkSafe employees and contractors will be based at our new headquarters. We will then be one of Geelong’s largest employers. The first group of employees will relocate to temporary accommodation in 2016/17. In mid-2018, our remaining head office employees will follow.

Building works have commenced on our new head office at 1 Malop Street in Geelong, which will incorporate sustainable design and is targeting a 6-star green star rating and a 5.5 star rating under the National Australian Built Environment Rating System.

We will provide support for those for whom relocation is not a viable option, including career transition support and expert job search guidance, access to redeployment options within the Victorian Public Sector and/or redundancy payments.

Employees who move with the head office to Geelong will receive financial assistance to relocate or to commute from Melbourne to Geelong.

Our cultureWorkSafe is guided by five values: constructive, accountable, transparent, effective and caring. These values underpin the work we do and guide us in our day to day activities.

We are committed to creating a workplace that represents the diversity of the community and our stakeholders. We are also committed to providing our employees with a workplace that is free from discrimination, harassment and bullying.

ResultsWorkSafe’s 2016 Sustainable Engagement result (an output of our annual Employee Opinion Survey) of 79 was above the annual target. Other results from the survey saw an improvement in all categories with standouts in change management, leadership and direction and communication.


SafetyMap Certification SystemWorkSafe is accredited under the SafetyMap Certification System. In April 2016 we participated in a full recertification audit. An external auditor assessed compliance against 83 criteria across nine sites. Our systems and processes were confirmed to be working efficiently and no non-conformance issues were identified.

• WorkSafe’s new employer brand, ‘We Make WorkSafe’, was launched in June 2016, built on significant employee research over the past 12 months. The employer brand will help to promote WorkSafe as a progressive business where people can make a positive impact on our organisation and the community.

• With an increased focus on the importance of mental wellbeing, we launched an integrated wellbeing strategy which will be implemented in 2016/17.

Our achievementsAs part of our focus on culture and place, a number of initiatives occurred during the year.

• The Senior Leader Culture and Change Program supports and builds our senior leaders’ capability to effectively lead organisational transformation.

• High levels of support and engagement activities were undertaken for the employees in the first relocation group that is relocating in 2016/17. They included decision making and career transition support, Geelong Expo, Geelong office experience, employee reference groups and Geelong champions.

• A number of targeted leadership development programs were offered including mentoring, coaching and a Graduate Certificate in Management.

• The Indigenous Cadetship Program pilot ran from July 2015 until November 2015. The program, for indigenous students, was developed in collaboration with the Institute of Koorie Education (Deakin University).


Culture and place

WorkStar AwardsThe annual WorkStar Awards recognise people in our workforce who reflect ‘superstar’ qualities through something they've done in any of our six reward and recognition categories over the past year. Congratulations to our six WorkStar Award winners for 2015.

WorkStar Award winnersOur values: Robert Kelly

Leadership:Jean Bailey

Collaboration: Sarah Cortier, Angie Deegan, Kristyn Hanna

Health, safety and wellbeing: Wayne Brown

Innovation: Ashley Bracken, Ryan Green, Rachael Sinclair, Meg Tempest, Stephen Wardle

Service: Amy Mulvey and Danica Harris


Our OHS performanceThe following table reports our performance against key OHS performance indicators.

Incidents/Hazards 2013/14 2014/15 2015/16

Number of hazards reported 71 104 58

Hazard – rate per 100 full-time employees (FTEs) 7.30 10.35 5.67

Number of incidents 160 143 145

Incident – rate per 100 FTEs 16.46 14.23 14.17

Injury – non-compensable 20 27 52

Inspections

Percentage of scheduled workplace inspections conducted 80% 85% 80%

Resolution of OHS issues arising from inspections/audits 100% 100% 100%

Number of Provisional Improvement Notices 1 – –

Number of improvement and prohibition notices – – –

Scheduled OHS Committee meetings completed 90% 100% 93%

Claims and return to work 2013/14 2014/15 2015/16

Number of claims (standardised) 25 16 10

Claims – rate per 100 FTEs 2.57 1.59 0.98

Number of time-loss claims 9 3 2

Time-loss claims – rate per 100 FTEs 0.92 0.30 0.196

Number of 13-week claims 4 1 1

13-week claims – rate per 100 FTEs 0.41 0.099 0.0978

Number of fatality claims – – –

Average cost per claim $41,671 $12,683 $24,418

Number of claims with return to work plans initiated 16 11 5

Percentage of 13-week claims with return to work plans initiated 100% 100% 100%


Culture and place

Employee OHS Appraisal (% positive response) 2013/14 2014/15 2015/16

My work area is a safe place to work 92 94 94

Is adequate OHS training provided? 78 80 81

Is WorkSafe proactive on OHS matters? 71 70 75

Is reporting of incidents and injuries encouraged? 88 90 89

Is corrective action taken by management? 72 74 80

Is there meaningful consultation on OHS relevant matters? 67 69 76

Do work instructions, procedures etc address OHS issues? 78 82 83

My manager is committed to OHS improvements 81 78 83

Senior management cares about OHS and employee wellbeing* – 72 –

WorkSafe supports employees to make health & wellbeing a priority* – – 78

I understand where I can access support at work if I am not coping* – – 85

* Following a review of the survey in 2016 to better align our desired culture and strategy, some questions were changed and other were discontinued.


Financial Report

Contents

Comprehensive Operating Statement 45

Notes to, and forming part of, the Financial Statements 49

Statement by the Chairman, Chief Executive and Chief Financial Officer 101

Victorian Auditor-General’s Report 102


Financial Report

Comprehensive Operating StatementFor the financial year ended 30 June 2016

2016 2015

Notes $000s $000s

Revenue and Income

Premium revenue 8 2,071,422 1,941,994

Investment income 9 429,795 1,493,987

Recoveries revenue 11 (a) 152,395 177,872

Other income 10 24,592 24,036

Total revenue and income 2,678,204 3,637,889

Expenses

Claims expense 11 (b) (2,838,128) (2,529,975)

Authorised agent fees 12 (245,410) (247,252)

Investment expenses 9 (45,952) (43,765)

Other operating costs 13 (256,439) (237,674)

Total expenses (3,385,929) (3,058,666)

Result before income tax (707,725) 579,223

Tax income (expense) 16 (a) 232,454 (125,364)

Net result for the year (475,271) 453,859

Other comprehensive income – –

Other comprehensive income, net of income tax – –

Total comprehensive income for the year (475,271) 453,859

The comprehensive operating statement should be read in conjunction with the accompanying notes to the financial statements.


Balance Sheet As at 30 June 2016

2016 2015

Notes $000s $000s

Current assets

Cash and cash equivalents 27 (a) 26,987 –

Receivables 17 52,761 44,868

Investments 18 2,196,783 1,912,692

Recoveries receivable 19 47,769 46,995

Prepayment 6,410 5,878

Other receivables 20 5,836 5,959

Total current assets 2,336,546 2,016,392

Non-current assets

Investments 18 11,532,903 11,741,328

Recoveries receivable 19 234,035 224,622

Property, plant and equipment 21 12,426 12,910

Intangibles 22 58,387 68,206

Deferred tax assets 16 (c) 527,005 285,058

Total non-current assets 12,364,756 12,332,124

Total assets 14,701,302 14,348,516

Current liabilities

Cash and cash equivalents 27 (a) – 10,824

Payables 23 148,722 163,648

Outstanding claims 24 (a) 1,839,073 1,995,252

Derivative liabilities 18 85,548 100,484

Tax liabilities 16 (b) – 113,681

Provisions 25 36,784 29,791

Total current liabilities 2,110,127 2,413,680

Non-current liabilities

Outstanding claims 24 (a) 10,500,719 9,366,295

Derivative liabilities 18 2,233 5,011

Provisions 25 7,687 7,723

Total non-current liabilities 10,510,639 9,379,029

Total liabilities 12,620,766 11,792,709

Net assets 2,080,536 2,555,807

Equity

Reserves 26 – –

Accumulated surplus 26 2,080,536 2,555,807

Total equity 2,080,536 2,555,807

The balance sheet should be read in conjunction with the accompanying notes to the financial statements.


Financial Report

Statement of Changes in Equity For the financial year ended 30 June 2016

Research Reserve

Accumulated Surplus

Total Equity

Notes $000s $000s $000s

Balance at 1 July 2014 129,537 2,214,110 2,343,647

Total comprehensive income for the year

Net result for the year – 453,859 453,859

Other comprehensive income – – –

Total comprehensive income for the year – 453,859 453,859

Transactions with owners, recorded directly in equity

Transfer from reserves during the year 26 (129,537) 129,537 –

Dividend paid – (241,699) (241,699)

Total transactions with owners (129,537) (112,162) (241,699)

Balance at 30 June 2015 – 2,555,807 2,555,807

Total comprehensive income for the year

Net result for the year – (475,271) (475,271)

Other comprehensive income – – –

Total comprehensive income for the year – (475,271) (475,271)

Transactions with owners, recorded directly in equity

Transfer from reserves during the year 26 – – –

Dividend paid – – –

Total transactions with owners – – –

Balance at 30 June 2016 – 2,080,536 2,080,536

The statement of changes in equity should be read in conjunction with the accompanying notes to the financial statements.


Cash Flow Statement For the financial year ended 30 June 2016

2016 2015

Notes $000s $000s

Cash flows from operating activities

Premium received 2,269,484 2,164,796

Claims paid (1,849,525) (1,900,631)

Self insurers re-entry (exit) settlements – (6,631)

Claim recoveries received 137,789 149,240

Authorised and management agent fees (334,910) (317,403)

Dividends received 565,393 357,419

Interest received 84,546 156,208

Health and Safety licence registration fees received 4,916 5,496

Contribution to DTF Consolidated Fund for court use (8,377) (8,153)

Distributions from prior insurers under liquidation – 1,376

Sundry receipts 21,893 20,215

Goods and services tax paid to the ATO (141,931) (132,503)

Income tax paid (123,312) –

Payments to suppliers and employees (262,475) (257,669)

Net cash flows from operating activities 27 (b) 363,491 231,760

Cash flows from investing activities

Sale of investments 5,116,196 10,711,832

Purchase of investments (5,286,527) (11,498,439)

Purchase of plant and equipment (4,901) (729)

Payments for intangibles (8,477) (9,580)

Net cash flows (used in) investing activities (183,709) (796,916)

Cash flows from financing activities

Dividend paid – (241,699)

Net cash flows (used in) financing activities – (241,699)

Net increase (decrease) in cash and cash equivalents 179,782 (806,855)

Cash and cash equivalents at beginning of the year 1,330,199 2,118,524

Effects of exchange rate changes on cash held in foreign currencies

1,364 18,530

Cash and cash equivalents at end of the year 27 (a) 1,511,345 1,330,199

The cash flow statement should be read in conjunction with the accompanying notes to the financial statements.


Financial Report

Notes to the Financial Statements For the financial year ended 30 June 2016

1. WorkCover Authority Fund

The WorkCover Authority Fund was established on 1 December 1992 under the Accident Compensation Act 1985 and is maintained by the Victorian WorkCover Authority. The Victorian WorkCover Authority uses the trading name of WorkSafe Victoria (WorkSafe).

2. Workplace Injury Rehabilitation and Compensation Act 2013

The Accident Compensation Act 1985 and the Accident Compensation (WorkCover Insurance) Act 1993 were recast into a single act, the Workplace Injury Rehabilitation and Compensation Act 2013, which became operational on 1 July 2014.

3. Summary of Significant Accounting Policies

Statement of complianceThese general purpose financial statements have been prepared in accordance with the Financial Management Act 1994 and applicable Australian Accounting Standards (AAS) which include Interpretations, issued by the Australian Accounting Standards Board (AASB). For the purposes of preparing the financial statements, the Victorian State Government has determined that WorkSafe is a not-for-profit entity. Where appropriate, those AAS paragraphs applicable to not-for-profit entities have been applied.

The audited annual financial statements were authorised for issue in accordance with a resolution of the Board on 26 August 2016.

Basis of accounting preparation and measurementThe financial statements cover WorkSafe as an individual reporting entity. WorkSafe is a statutory authority established by statute enacted by the Victorian State Parliament and domiciled in Australia.

The financial statements have been prepared on an accrual basis, and are based on historical costs and do not take into account changing money values, except for outstanding claims liabilities, recoveries receivable, employee leave liabilities and leasehold restoration provisions which are included at present value, and investments and plant and equipment which are included at fair value. Historical cost is based on the fair value of the consideration given in exchange for assets.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2 – Valuation techniques for which the input that is significant to the fair value measurement is directly or indirectly observable.

• Level 3 – Valuation techniques for which the input that is significant to the fair value measurement is unobservable.

For the purpose of fair value disclosures, WorkSafe has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. In addition, WorkSafe determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the input that is significant to the fair value measurement as a whole) at the end of each reporting period.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

The accounting policies set out below have been applied in preparing the financial statements for the year ended 30 June 2016 and the comparative information for the year ended 30 June 2015.


The preparation of financial statements in conformity with AAS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying WorkSafe’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements have been disclosed in Notes 3(c), 3(f), 3(g), 4 and 33(f). Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revisions affect only that period, or in the period of the revision and future periods if the revisions affect both current and future periods.

Correction of prior period classification errorDuring the financial year, the classification of gains and losses arising from certain equity swap exposures in WorkSafe’s investment portfolio were reviewed. As a result, such gains and losses have been classified and reported as realised gains and losses, rather than as interest income, to represent more accurately the nature of the underlying transactions. The following line items in respect of the financial year ended 30 June 2015 have been restated to align with this correction:

A. Cash Flow Statement

As previously reported

Correction As restated

$000s $000s $000s

Cash flows from operating activities

Interest received 223,816 (67,608) 156,208

Net cash flows from operating activities 299,368 231,760

Cash flows from investing activities

Sale of investments 10,644,224 67,608 10,711,832

Net cash flows (used in) investing activities (864,524) (796,916)

Net decrease in cash and cash equivalents (806,855) (806,855)

B. Note 9 Investment Income



$000s $000s $000s

Gross investment income

Changes in fair values of investments at fair value through the comprehensive operating statement:

– Realised gain 576,463 67,608 644,071

Total change in fair value of investments 913,903 981,511

Interest 228,029 (67,608) 160,421

Gross investment income 1,493,987 1,493,987


Financial Report

C. Note 27(a) Reconciliation of cash and cash equivalents



$000s $000s $000s

Net result for the year 453,859 453,859

Changes in fair values of investments at fair value through the comprehensive operating statement

(913,903) (67,608) (981,511)

Total adjustments (154,491) (222,099)


Australian Accounting Standards issued but not yet effectiveThe AASB has issued the following new or revised Australian Accounting Standards, which are applicable to WorkSafe:

AASB Title Operative Date

2015–6 Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-Profit Public Sector Entities [AASB 10, AASB 124 & AASB 1049]

1 July 2016

9 Financial Instruments 1 January 2018

2010–7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)

1 January 2018

16 Leases 1 January 2019

AASB 2015-6 extends the scope of AASB 124 Related Party Disclosures to not-for-profit public sector entities and includes application guidance for the entities. While the preliminary assessment has not identified any material impact arising from the adoption of AASB 9 and AASB 2010-7, these standards will continue to be monitored and assessed. The key changes introduced by AASB 16 include the recognition of most operating leases on balance sheet. WorkSafe will apply these standards for the annual reporting periods beginning on or after the operative date set out above.

The following significant accounting policies have been adopted in the preparation and presentation of the financial statements:

(a) Insurance premiumPremium revenue comprises amounts charged to employers by WorkSafe for WorkCover insurance. The earned portion of premiums received and receivable is recognised as revenue. Premium is treated as earned from the effective registration date and is recognised as revenue over the period.

At year end, a provision is made for confirmed premium based on certification of employer remuneration and is assessed by an independent actuary. The actuary uses historical data at points in time and the most recent certified remuneration for the current year in assessing the final remuneration estimate. The premium increase or decrease that may result from the reassessment of prior year’s premium estimate (i.e. the difference between the actuarial estimation and actual certification) is taken up as a part of current year’s premium.

(b) Unexpired risk liabilityAll WorkCover insurance expires on 30 June and hence no unearned premium exists at the year end reporting date.

Given no unearned premium exists at the year end reporting date a liability adequacy test is not undertaken at 30 June. A liability adequacy test assesses whether the unearned premium liability is sufficient to cover all expected future cash flows relating to future claims against current insurance contracts.


(c) Assets backing general insurance liabilitiesWith the exception of property, plant and equipment and intangibles, WorkSafe has determined that all assets are held to back WorkCover insurance liabilities and their accounting treatments are described below.

InvestmentsWorkSafe’s investment portfolio is managed by the Victorian Funds Management Corporation (VFMC) through internal management, fund managers and a Master Custodian. The Master Custodian holds the investments and conducts settlements pursuant to instructions from the VFMC’s internal management and the fund managers.

Investments are designated at fair value through the comprehensive operating statement on the basis that the investments are managed as a portfolio based on their fair values, and have their performance evaluated in accordance with documented risk management and investment strategies (see Note 18). Initial recognition is at cost in the balance sheet, with attributable transaction costs expensed as incurred. Subsequent measurement is at fair value with any resultant realised and unrealised gains or losses recognised in the comprehensive operating statement.

The following methods and assumptions are used to determine the fair value of investments:

• financial instruments traded in an organised financial market (traded securities) – current quoted market price for the instrument. Quoted market prices are used to value listed shares, options, debentures and other equity and debt securities

• financial instruments not readily traded in an organised financial market – the present value of contractual future cash flows. Cash flows are discounted using standard valuation techniques at the applicable market yield having regard to the timing of the cash flows.

Details of fair value for the different types of investment assets are listed below:

• cash assets and deposits held at call with banks are carried at face value, which approximates to their fair value• investments in discounted money market instruments are valued at their quoted mid price at the reporting date, as

with fine trading spreads in this market, there is an ability to transact at mid price• shares, fixed interest securities, options and units in trusts listed on stock exchanges or traded in an open market are

stated at their quoted bid price at the reporting date• futures contracts listed on recognised exchanges are valued using the quoted settlement price• units in unlisted trusts are recorded at fair value as determined by the fund manager or valuations by other skilled

independent third parties. In determining fair value, observable market transactions of the units and the underlying assets are used where available and applicable; some of the underlying assets of the trusts are valued using valuation models that include inputs which are not based on observable market data.

All purchases and sales of investments that require delivery of the asset within the time frame established by regulation or market convention (‘regular way’ transactions) are recognised at trade date, being the date on which the commitment is made to buy or sell the asset. In cases where the period between trade and settlement exceeds this time frame, the transaction is recognised at settlement date.

Investments are derecognised when the rights to receive future cash flows from the assets have expired, or have been transferred, and WorkSafe has transferred substantially all the risks and rewards of ownership.

Investments that are due to mature, expire or be realised within twelve months of reporting date are classified as current investments for the purposes of classification in the balance sheet. While this classification policy may result in a reported working capital deficit, included in non-current investments is a large proportion of liquid securities which the VFMC also uses to ensure sufficient funds are available at all times to meet WorkSafe’s operating requirements.

Dividend income is recognised when WorkSafe’s right to receive payment has been established, whilst interest revenue is recognised on an accrual basis. Trust distribution income is recognised when the market prices are quoted ex-distribution for listed trusts. Unlisted trust distribution income is recognised when the trustee declares distributions.

Changes in fair value of investments at reporting date, as compared with their fair value at the previous reporting date, or fair value at acquisition if acquired during the financial year, are recognised as investment income or loss. Realised gains or losses on the termination of derivative positions and unrealised gains or losses on changes in fair value are included in investment income or loss.


Financial Report

ReceivablesPremium receivable amounts due from employers (being the amounts due excluding the provision for confirmed premium) are initially recognised at fair value. They are subsequently measured at fair value which is approximated to by taking the initially recognised amount and reducing it for impairment as appropriate.

A provision for impairment of receivables is established when there is objective evidence that WorkSafe will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows. The impairment charge is recognised in the comprehensive operating statement.

Amounts owing to employers as a result of premium being in credit at reporting date are shown as premium creditors (Note 23).

(d) Foreign currency transactions and balancesForeign currency transactions are converted to Australian currency at the rates of exchange applicable at the dates of the transactions. Investments held at reporting date in foreign currencies are converted to Australian currency using the rates of exchange ruling at that date. Gains or losses arising on foreign currency transactions are included in investment income in the period in which they arise.

(e) Derivative financial instruments The VFMC and its managers use derivative financial instruments such as foreign exchange contracts, futures, swaps and options to more effectively manage the risks associated with investing in large institutional portfolios. Derivatives are originally recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date with gain or loss recognised in the comprehensive operating statement.

The fair value of forward exchange contracts is calculated by reference to current forward exchange rates for contracts with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values for similar instruments.

(f) ClaimsClaims expense which includes the movement in the liability for outstanding claims, is recognised in respect of insurance business and uninsured employers.

The liability for outstanding claims is measured as the central estimate of the present value of expected future payments against claims incurred at the reporting date under WorkCover insurance contracts issued by WorkSafe, with an additional risk margin to allow for the inherent uncertainty in the central estimate.

The ultimate liability arising from claims made under insurance contractsProvision is made for the estimated cost of claims incurred but not settled at the reporting date, including the cost of claims incurred but not yet reported to WorkSafe.

The estimated cost of claims includes direct expenses to be incurred in settling claims gross of the expected value of recoveries. WorkSafe takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing claims provisions, it is likely that the final outcome will prove to be different from the original liability established.

The estimation of claims incurred but not reported (IBNR) is generally subject to a greater degree of uncertainty than the estimation of the cost of settling claims already notified to WorkSafe, where more information about the claim event is generally available. IBNR claims may often not be apparent to the insured until many years after the event giving rise to the claims has happened. In calculating the estimated cost of unpaid claims WorkSafe’s valuation actuary uses a variety of estimation techniques, generally based upon statistical analyses of historical experience, which assume that the development pattern of the current claims will be consistent with past experience. Allowance is made, however, for changes or uncertainties which may create distortions in the underlying statistics or which might cause the cost of unsettled claims to increase or reduce when compared with the cost of previously settled claims including:

• changes in WorkSafe processes which might accelerate or slow down the development and/or recording of paid or incurred claims, compared with the statistics from previous periods

• changes in the legal environment• the effects of inflation• medical and technological developments.


Where possible, WorkSafe’s valuation actuary adopts multiple techniques to estimate the required level of provisions. This assists in giving greater understanding of the trends inherent in the data being projected. The projections given by the various methodologies also assist in setting the range of possible outcomes. The most appropriate estimation technique is selected taking into account the characteristics of the benefit type and the extent of the development of each accident year.

Specific assumptions used in deriving the outstanding claims liability are detailed in Note 4.

(g) Recoveries receivableRecoveries from the Transport Accident Commission, prior insurers and other third parties are recognised as revenue. Recoveries receivable are reported as assets and measured as the present value of the expected future receipts. The actuarial assessment of the recoveries receivable is in a manner similar to the assessment of outstanding claims (see Note 3 (f)). A provision for impairment is established when there is objective evidence that WorkSafe will not be able to collect all the recovery amounts.

(h) Dispute resolution expensesClaims expense also includes the cost associated with resolving disputes with claimants. Dispute resolution expenses comprise payments made to the Department of Treasury and Finance for courts management functions, the Accident Compensation Conciliation Service for conciliation matters arising out of WorkCover insurance claims, and the cost relating to Medical Panels, Union Assist and WorkCover Assist.

(i) Operating leasesWorkSafe has continuing obligations under operating lease agreements for certain buildings, motor vehicles and office equipment. Operating lease payments are charged as an expense in the comprehensive operating statement on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(j) Income taxIn accordance with Section 88 (3D) of the State Owned Enterprises Act 1992 WorkSafe is required to pay income tax equivalent under the National Tax Equivalent Regime.

The tax expense or income represents the tax payable on the current year’s taxable income or tax loss based on the prevailing income tax rate, adjusted for changes in deferred tax assets and liabilities.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates that are expected to apply when the assets and liabilities are realised or settled, based on tax rates that have been enacted or substantially enacted by the reporting date.

Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax off-sets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities which affect neither taxable income nor accounting result.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are off-set as WorkSafe settles its current tax assets and liabilities on a net basis.

(k) DividendsPursuant to Section 516 of the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is required to pay to the State Government a dividend determined by the Treasurer. In determining the dividend policy applicable to WorkSafe, the Treasurer must have regard to the solvency margin determined to maintain the long-term financial viability of the scheme.

An obligation to pay a dividend only arises after a formal determination is made by the Treasurer following consultation between WorkSafe, the Minister and the Treasurer.

(l) Other incomeFines and penalties income is recognised upon receipt of the payment.


Financial Report

(m) Property, plant and equipmentProperty, plant and equipment are measured initially at cost and subsequently at fair value less accumulated depreciation and impairment. Fair value is determined based on management’s assessment and for property, external valuations every 5 years.

The cost of leasehold improvements is capitalised as an asset and depreciated over the remaining term of the lease. This includes the fair value of any dismantling, removal or restoration costs, where an obligation existed at the time of entering the contract for the premises to be returned to their original state upon vacation of the premises.

(n) DepreciationDepreciation is provided on a straight-line basis on plant and equipment to write off those assets over their estimated useful lives to WorkSafe to the assets’ estimated residual value. The depreciation rates applied to each of the asset classes are as follows:

2016 2015

Computer equipment 331/3% 331/3%

Furniture and equipment 20% 20%

Leasehold improvements to buildings are written-off over their estimated useful lives to WorkSafe or the remaining lease term, whichever is the lesser, using the straight-line method. The remaining lease terms range from 1 to 7 years (2015: 1 to 6 years).

The estimated useful lives, residual values and depreciation methods are reviewed at the year end reporting date and adjusted if appropriate.

Freehold land is not depreciated.

Any gain or loss on disposal is recognised in the comprehensive operating statement.

(o) Impairment of assetsAssets are assessed annually for indications of impairment except for:

• financial instrument assets• deferred tax assets.

If there is an indication of impairment, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount. Where an asset’s carrying value exceeds its recoverable amount, the difference is written-off by a charge to the comprehensive operating statement.

The recoverable amount is measured at the higher of depreciated replacement cost and fair value less costs to sell. It is deemed that, in the event of a loss of an asset, the future economic benefits arising from the use of the asset will be replaced unless a specific decision to the contrary has been made.


(p) Intangible assetsIntangible assets represent identifiable non-monetary assets without physical substance.

Intangible assets are recognised at cost. Costs incurred subsequent to initial recognition are capitalised when it is expected that additional future economic benefits will flow to WorkSafe.

Amortisation is allocated to intangible assets with finite useful lives on a systematic basis over the assets’ useful lives. The amortisation period and the amortisation method for intangible assets with a finite useful life are reviewed at least at each year end. In addition an assessment is made at each year end reporting date to determine whether there are indicators that the intangible assets concerned are impaired. If so, the assets concerned are tested as to whether their carrying value exceeds their recoverable amount.

All intangible assets of WorkSafe have definite useful lives. The useful lives range from 2 to 10 years (2015: 1 to 10 years).

Internally-generated intangible assets representing internally developed software are recognised only from the point that it is probable that the expected future economic benefits attributable to the asset will flow to WorkSafe and that the cost of the item can be measured reliably.

Where no internally-generated intangible asset can be recognised, development expenditure is expensed in the period as incurred.

Internally-generated intangible assets are stated at cost less accumulated amortisation and impairment, and are amortised on a straight-line basis over their useful lives from the date the assets are available for use. Impairment losses are included in the comprehensive operating statement.

(q) Other assetsOther assets are stated at amounts due less any provision for impairment.

(r) PayablesPayables consist of:

• contractual payables, such as accounts payable, which represent liabilities for goods and services provided to WorkSafe prior to the end of the financial year that are unpaid, and arise when WorkSafe becomes obliged to make future payments in respect of the purchase of those goods and services

• statutory payables, such as goods and services tax and fringe benefits tax payables.

Contractual payables are classified as financial instruments and measured at amortised cost. Statutory payables are recognised and measured similarly to contractual payables, but are not classified as financial instruments because they do not arise from a contract.

(s) Employee benefitsAccrual and provision are made for benefits accruing to employees in relation to wages and salaries, annual leave and long service leave for services rendered to the reporting date.

Wages and salaries, annual leaveLiabilities for wages and salaries and annual leave are recognised in payables and provision for employee benefits as current liabilities, because WorkSafe does not have an unconditional right to defer settlements of these liabilities. Depending on the expectation of the timing of settlement, liabilities for wages and salaries and annual leave are measured at:

• undiscounted value – if WorkSafe expects to wholly settle within 12 months• present value – if WorkSafe does not expect to wholly settle within 12 months.

Long service leave Liability for long service leave (LSL) is recognised in the provision for employee benefits. Unconditional LSL is disclosed in the financial statements as a current liability, even where WorkSafe does not expect to settle the liability within 12 months because it will not have the unconditional right to defer the settlement of the entitlement should an employee take leave within 12 months. The components of this current LSL liability are measured at:

• undiscounted value – if WorkSafe expects to wholly settle within 12 months• present value – if WorkSafe does not expect to wholly settle within 12 months.

Conditional LSL is disclosed as a non-current liability. There is an unconditional right to defer the settlement of the entitlement until the employee has completed the requisite years of service. This non-current LSL liability is measured at present value.


Financial Report

Termination benefitsTermination benefits are payable when employment is terminated before the normal retirement date, or when an employee decides to accept an offer of benefits in exchange for the termination of employment. WorkSafe recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

On-costsProvisions for on-costs such as superannuation, payroll tax and WorkCover insurance premium are recognised separately from the provision for employee benefits.

Defined contribution superannuation plansContributions to defined contribution superannuation plans are expensed when incurred.

Defined benefit superannuation plansThe amount charged to the comprehensive operating statement in respect of defined benefit superannuation plan represents the contributions made by WorkSafe to the superannuation plans in respect of the current services of current WorkSafe employees. Superannuation contributions are made to the plans based on the relevant rules of each plan.

WorkSafe does not recognise any defined benefit liability in respect of the superannuation schemes because it has no legal or constructive obligation to pay future benefits relating to its employees; its only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance administers and discloses the State’s defined benefit liabilities in its annual financial statements.

(t) Other provisionsOther provisions are recognised when WorkSafe has a present obligation, the future sacrifice of economic benefits is probable, and the amount of the provision can be measured reliably.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows, using discount rate that reflects the time value of money and risks specific to the provision.

(u) Goods and services taxIncome, expenses and assets are recognised net of the amount of associated goods and services tax (GST), unless the GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included as part of the receivables or payables in the balance sheet.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the ATO are classified as operating cash flows.

(v) CommitmentsCommitments include those operating and capital commitments arising from non-cancellable contractual sources and are disclosed at their nominal value, inclusive of GST.

(w) Contingent assets and contingent liabilitiesContingent assets and contingent liabilities are not recognised in the balance sheet, but are disclosed by way of a note and, if quantifiable, are measured at nominal value, inclusive of GST.


(x) Events after reporting dateAssets, liabilities, income or expenses arise from past transactions or other past events. Where the transactions result from an agreement between WorkSafe and other parties, the transactions are only recognised when the agreement is irrevocable at or before the reporting date. Adjustments are made to amounts recognised in the financial statements for events which occur after the reporting date and before the date the statements are authorised for issue, where those events provide information about conditions which existed at the reporting date. Note disclosure is made about events between the reporting date and the date the statements are authorised for issue where the events relate to conditions which arose after the reporting date and which may have a material impact on the results of subsequent periods.

(y) Rounding of amountsAmounts have been rounded to the nearest thousand dollars, unless otherwise stated.

(z) Presentation and functional currenciesThe presentation currency of WorkSafe is the Australian dollar, which is also its functional currency.

4. Actuarial Assumptions and Methods

WorkSafe provides WorkCover insurance which is long-tail in nature, meaning that claims are typically settled more than one year after being reported.

Significant estimates and judgements are made by WorkSafe’s valuation actuary in respect of certain key asset and liability amounts disclosed in the financial statements. These estimates and judgements are continually being evaluated and are based on historical experience, as well as enhancements to actuarial modelling techniques.

The key areas of significant estimates and judgements and the methodologies used to determine key assumptions are set out below.

Provision is made for the estimated cost of claims incurred but not settled at the reporting date, including the cost of claims incurred but not reported to WorkSafe.

The estimation of outstanding claims liabilities is based largely on the assumption that past developments are an appropriate predictor of the future and involves a variety of actuarial techniques that analyse experience, trends and other relevant factors. The process commences with the actuarial projection of the future claim payments and claims handling costs incurred to the reporting date. Various types of payments made by WorkSafe are grouped into a number of benefit categories and analysed separately.

The modelling approaches that are used to analyse and project the various benefit types fall into four broad categories:

• payments per claim incurred model• payments per active claim model• payments per claim settled model• annuity based individual claim model.

Estimated future claim payments and associated claims handling costs are obtained by examining the results from the above methods. Where possible and appropriate, multiple actuarial methods will be applied to estimate future claim payments. This assists in providing a greater understanding of the trends inherent in the past data. The projections obtained from various methods also assist in setting the range of possible outcomes. The most appropriate method, or even a combination of methods, is selected taking into account the characteristics of each benefit type and the extent of the development of each past accident period.

This resulting selected estimate is made without bias toward over or under estimation and as such, is considered to be a net central estimate of outstanding claims liabilities that has an approximately equal chance of proving adequate as not. The estimated liability is converted to inflated values, taking into account assumptions about future inflation. The present value of this liability is then calculated, by discounting the inflated cash flows to allow for future returns on the underlying assets using appropriate risk-free discount rates (i.e. rates set with reference to Commonwealth Government securities). An estimate of future claim payments is undertaken separately for both gross claim payments and recoveries.


Financial Report

(a) Actuarial assumptionsThe following assumptions have been made in determining the outstanding claims liabilities:

2016 2015

Average claim frequency (claims per worker) 0.96% 0.98%

Average claim size $65,714 $60,967

• Average weekly size $21,604 $20,489

• Average common law size $22,546 $19,850

• Average all other payments size $21,563 $20,628

Expense rate 12.1% 12.3%

Weighted average discount rate (0 – 20 years) 2.15% 3.05%

Long-term discount rate (21+ years) 5.50% 5.50%

Weighted average AWE inflation rate (0 – 20 years) 3.46% 3.70%

Long-term AWE inflation rate (21+ years) 3.75% 3.75%

Weighted average CPI inflation rate (0 – 20 years) 2.50% 2.50%

Long-term CPI inflation rate (21+ years) 2.50% 2.50%

Average weighted term to settlement from balance date 6.2 years 5.9 years

Risk Margin 8.0% 8.0%

(b) Process used to determine assumptionsA description of the processes used to determine these assumptions is provided below:

Average claim frequencyClaim frequency for the current underwriting year is estimated by projecting the number of claims incurred and dividing this by the number of workers for the year. The average claim frequency is not used directly in the valuation models but provides a high level indicator of claim experience.

Average claim sizeThe average claim size is in respect of the current underwriting year and takes into account the expected payments for each payment type (e.g. weekly, medical, impairment benefits, common law, other), as well as the proportion of total injured workers who receive each benefit. The figures shown in the above table are in current values, i.e. in dollars at the respective balance date before the impact of inflation to the time of payment and discounting the resultant payments back to the valuation date.

The average claim size is further broken down into two key components; the costs of weekly compensation and common law compensation (including legal costs) per no fault claim. This takes into account the number of injured workers expected to access the particular compensation as well as the amount of compensation expected to be paid. For completeness, the average size of all other compensation is also shown.

Expense rateThe claims handling expense allowance is calculated as a proportion of total projected claim payments of the scheme at the balance date based on recent historical experience.

Discount rateDiscount rates adopted are “risk-free” rates, set by reference to traded Commonwealth Government securities. For years 21 onwards there are few risk-free securities on issue with term to maturity beyond this point. Therefore, the long-term discount rates are set with reference to historical observed discount rates, as well as the real rate of return above inflation.

InflationEconomic inflation assumptions are set by reference to current bank and other economic forecasters.


Average weighted term to settlementThe average weighted term to settlement is calculated separately by benefit type based on historical settlement patterns. It is an outworking of the models rather than an explicit assumption and represents the average inflated and discounted term of payments in the outstanding liability from the balance date to payment.

Risk marginThe overall risk margin was determined allowing for the relative uncertainty of the outstanding claims estimate. Uncertainty was analysed for each benefit type taking into account potential uncertainties relating to the actuarial models and assumptions, the quality of the underlying data used in the models, the general insurance environment, and the impact of legislative reform.

The estimate of uncertainty is greater for long-tail business when compared to short-tail business due to the longer time until settlement of outstanding claims. The assumptions regarding uncertainty are applied to the net central estimates in order to arrive at an overall provision which is intended to have a 75% probability of adequacy.

(c) Sensitivity analysis – insurance contractsSummaryWorkSafe’s valuation actuary conducts sensitivity analyses to quantify the exposure to risk of changes in the key underlying variables. The valuations included in the reported results are calculated using certain assumptions about these variables as disclosed above. The movement in any key variable will impact the financial performance and equity of WorkSafe. The table below describes how a change in each assumption will affect the insurance liabilities and shows an analysis of the sensitivity of the net result and equity to changes in these assumptions.

Variable Impact of movement in variable

Average weekly size The average weekly size per no fault claim will vary with the number of injured workers receiving weekly compensation and the amount of that compensation. The amount of compensation depends not only on the amount paid per week but more significantly on the durations for which injured workers receive this compensation. Increases or decreases in any of these components will result in a corresponding impact on claims expense. The ± 1% movement shown in the impact table below represents a 1% increase or decrease in all future estimated weekly payments included in the outstanding claims liability.

Average common law size The average common law size per no fault claim will vary with the number of injured workers receiving common law compensation and the amount of that compensation (including legal costs). Increases or decreases in any of these components will result in a corresponding impact on claims expense. The ± 1% movement shown in the impact table below represents a 1% increase or decrease in all future estimated common law payments included in the outstanding claims liability.

Expense rate An estimate for the internal costs of handling claims is included in the outstanding claims liability. An increase or decrease in the expense rate assumption would have a corresponding impact on claims expense.

Discount rates The outstanding claims liability is calculated by reference to expected future payments. These payments are discounted to adjust for the time value of money. An increase or decrease in the assumed discount rate will have an opposing impact on claims expense.

Inflation rates Expected future payments are inflated to take account of expected future cost increases. An increase or decrease in the assumed levels of future inflation would have a corresponding impact on claims expense.


Financial Report

The impact on net result and equity, had changes in the key variables occurred at the end of the reporting period, is summarised in the table below:

Net Result Equity Net Result Equity

2016 2016 20151 20151

$000s $000s $000s $000s

Recognised amounts per the financial statements (475,271) 2,080,536 453,859 2,555,807

Variable Movement

Average weekly size +1% (496,425) 2,059,382 433,512 2,535,460

–1% (454,117) 2,101,690 474,206 2,576,154

Average common law size +1% (501,889) 2,053,918 430,245 2,532,193

–1% (448,653) 2,107,154 477,473 2,579,421

Expense rate +1% (551,668) 2,004,139 383,702 2,485,650

–1% (398,874) 2,156,933 524,016 2,625,964

Weighted average discount rate (0 – 20 years)

+0.5% (244,469) 2,311,338 652,898 2,754,846

–0.5% (720,462) 1,835,345 242,949 2,344,897

Long-term discount rate (21+ years) +0.5% (456,664) 2,099,143 469,137 2,571,085

–0.5% (495,446) 2,060,361 437,293 2,539,241

Weighted average AWE and CPI inflation rates (0 – 20 years)

+0.5% (712,186) 1,843,621 249,350 2,351,298

–0.5% (249,936) 2,305,871 648,752 2,750,700

Long-term AWE and CPI inflation rates (21+ years)

+0.5% (495,965) 2,059,842 436,933 2,538,881

–0.5% (456,054) 2,099,753 469,573 2,571,521

1 The impact of changes in the key variables on net result and equity represents the impact on the net outstanding claims liability inclusive of risk margin. The sensitivity impact at 30 June 2015 has been revised to reflect this basis of including risk margin.

5. Insurance Contracts – Risk Management Policies and Procedures

The financial condition and operation of WorkSafe is affected by a number of key risks including insurance, interest rate, credit, market, liquidity, financial and operational risks. WorkSafe’s policies and procedures in respect of managing these risks are set out below.

(a) Objectives in managing risks arising from insurance contracts and policies mitigating those risksWorkSafe has an objective to manage insurance risk thus reducing the volatility of insurance premiums and performance from insurance operations. In addition to the inherent uncertainty of insurance risk, which can lead to significant variability in the loss experience, the net result for WorkSafe is significantly affected by short-term market and economic factors external to the organisation as explained in Note 7.

WorkSafe has developed, implemented and maintained a sound and prudent risk management strategy that encompasses all aspects of its operations.

The strategy sets out WorkSafe’s policies and procedures, processes and controls in relation to the management of likely financial and non-financial risks.


Key aspects of the processes in place to mitigate risks include:

• the use of sophisticated management information systems, which provide reliable and up-to-date data on the risks to which the business is exposed at any point in time

• the use of detailed internal monitoring tools which link actuarial valuation projections with the management information systems to monitor claim patterns

• adherence to reliable procedures for pricing risk• an investment allocation strategy which seeks to optimise returns within the balance sheet risk parameters adopted by

WorkSafe.

(b) Terms and conditions of insurance businessThe terms and conditions of the WorkCover insurance scheme administered by WorkSafe were established under the Accident Compensation Act 1985 and have continued operation under the Workplace Injury Rehabilitation and Compensation Act 2013. Cover is for annual periods ending 30 June each year. The terms and conditions of the scheme are the same for all insured employers.

(c) Concentration of insurance riskWorkSafe underwrites WorkCover insurance for Victorian employers. The employers are diversified by sector, industry, size and geographic location. Concentration of insurance risk principally arises from major sites or centres of employment such as the Melbourne CBD. Such issues are considered when determining scheme financing strategies.

(d) Interest rate riskAssets and liabilities arising from insurance contracts entered into are directly exposed to interest rate risk. Changes in interest rates affect the valuation of WorkSafe’s assets and liabilities.

(e) Credit riskAssets and liabilities arising from insurance contracts are stated in the balance sheet at the amounts that best represent the maximum credit risk exposure at the reporting date. There are no significant concentrations of credit risk.

6. Underwriting Result

2016 2015

Notes $000s $000s

The underwriting result is extracted from the comprehensive operating statement and is as follows:

Premium revenue 8 2,071,422 1,941,994

Underwriting expenses

Net claims incurred 11(a) (2,654,070) (2,321,450)

Dispute resolution expenses 11(b) (31,663) (30,653)

Authorised agent fees 12 (245,410) (247,252)

Total underwriting expenses (2,931,143) (2,599,355)

Underwriting result (859,721) (657,361)


Financial Report

7. Explanation of Volatility of Financial Results

This note provides additional analysis of the result before income tax of $(707.73) million (2015: $579.22 million).

Given the long-term nature of the WorkSafe scheme both from investment and outstanding claims perspectives, the net result for WorkSafe is significantly affected by short-term market and economic factors external to the organisation. External factors contribute to the difference between actual returns and the long-term estimated returns established by management, and also include major changes in economic assumptions and legislative changes. External factors can cause significant variations in reported results from year to year as illustrated below.

Accordingly for internal management reporting purposes, WorkSafe monitors and measures its financial performance based on performance from insurance operations without the impact of external factors. This approach is considered a more appropriate indicator for measuring financial performance and is adopted for reporting to the Victorian State Government.

The impact of external factors on the financial result is explained below.

2016 2015

$000s $000s

Impact on result from internal factors:

– Performance from insurance operations 280,425 210,536

Impact on result from external factors:

– Difference between actual investment returns and long-term expected returns (i) (621,404) 525,163

– Changes in inflation assumptions and discount rates (ii) (366,746) (156,476)


Notes:(i) Unfavourable conditions experienced in the investment markets in the 12 months to 30 June 2016 resulted in the

actual investment return being lower than the expected long-term rate of return. The net return on the investment portfolio for the year was 3.04% (2015: 11.77%), compared to the long-term estimated return established by management of 7.50% (2015: 7.50%) per annum based on its investment strategy.

(ii) There was an increase of $489.81 million in the net outstanding claims liability at 30 June 2016 due to the lower assumed discount rates. This increase was partially off-set by a decrease in claims liability of $123.06 million due to actual inflation in the 12 months to 30 June 2016 being lower than expected. At 30 June 2015 there was an increase of $331.94 million in the net outstanding claims liability due to the lower assumed discount rates. The increase was partially off-set by a reduction in claims liability of $175.46 million due to actual inflation in the 12 months to 30 June 2015 being lower than expected.


8. Premium Revenue

2016 2015

$000s $000s

Gross premium (i) 2,102,981 1,982,177

Reassessment of prior years' premium 34,624 10,886

Premium discount allowed (58,024) (52,448)

Premium fines and penalties 9,815 10,037

(Increase) decrease in provision for impairment of premium debts (154) 4,604

Premium bad debts written-off (ii) (17,820) (13,262)

2,071,422 1,941,994

Notes:(i) Gross premium revenue includes an estimated increase of $1.8 million (2015: decrease of $3.6 million) in relation

to confirmed premium. Confirmed premium estimate makes allowance for employers who have not yet certified their remuneration (see Notes 3 (a) and 17). The rateable remuneration estimate on which the confirmed premium estimate is based, is obtained through an independent actuary PricewaterhouseCoopers Actuarial Limited.

(ii) Bad debts written-off during the year include unpaid premium for prior years.

9. Investment Income

2016 2015

$000s $000s

Changes in fair values of investments at fair value through the comprehensive operating statement:

– Realised gain (i) 3,551 644,071

– Unrealised (loss) gain (222,330) 337,440

Total change in fair value of investments (ii) (218,779) 981,511

Dividends (i) 565,511 352,055

Interest (i) & (iii) 83,063 160,421

Total investment income 429,795 1,493,987

Investment expenses (iv) (45,952) (43,765)

Net investment income (v) 383,843 1,450,222

Notes:(i) During the financial year ended 30 June 2015, the VFMC undertook a significant structural change to

WorkSafe’s investment portfolio where investments in Australian and international equities and inflation linked bonds were realised and unitised into VFMC trusts. Interest, dividends and realised gains earned by the VFMC trusts are distributed amongst the unit holders. WorkSafe reports these trust distributions as dividends, resulting in higher dividends being reported in the current financial year.

(ii) This is the difference between the fair value of the investments at 30 June 2016 or the cost of acquisition (for investments purchased during the year), and sales proceeds (realised) or their fair value at 30 June 2016 (unrealised).

(iii) Interest represents coupon interest earned and net settlements on swap contracts.(iv) Fees paid to the VFMC under the Client Funds Management Service Agreement and other sundry professional

fees incurred by WorkSafe in relation to management of the investment portfolio.(v) The net return on the investment portfolio for the year was 3.04% (2015: 11.77%).


Financial Report

10. Other Income

2016 2015

$000s $000s

Self-insurer receipts 12,759 13,106

Occupational Health & Safety licensing income 4,916 5,496

Fines and penalties 5,545 2,906

Distributions from prior insurers under liquidation – 1,376

Asset rental income – ACCS (i) 701 653

Sundry receipts 671 499

24,592 24,036

Note:(i) WorkSafe receives rental income from Accident Compensation Conciliation Service (ACCS) for the use of its

plant and equipment.

11. Claims Costs

2016 2015

Current Year

Prior Years Total

Current Year

Prior Years Total

$000s $000s $000s $000s $000s $000s

(a) Net claims incurred

Gross claims incurred

Gross claims paid 186,322 1,641,898 1,828,220 184,106 1,704,906 1,889,012

Movement in outstanding claims 2,597,554 (2,197,715) 399,839 2,504,819 (2,146,569) 358,250

Gross claims incurred – undiscounted

2,783,876 (555,817) 2,228,059 2,688,925 (441,663) 2,247,262

Discount and discount movement (355,188) 933,594 578,406 (433,369) 685,429 252,060

Gross claims incurred (Note 11 (b))

2,428,688 377,777 2,806,465 2,255,556 243,766 2,499,322

Recoveries revenue

Recoveries received (78,317) (63,891) (142,208) (79,740) (73,012) (152,752)

Movement in recoveries receivable (54,189) 50,944 (3,245) (54,082) 32,494 (21,588)

Recoveries revenue – undiscounted

(132,506) (12,947) (145,453) (133,822) (40,518) (174,340)

Discount and discount movement 5,020 (11,962) (6,942) 7,019 (10,551) (3,532)

Recoveries revenue (127,486) (24,909) (152,395) (126,803) (51,069) (177,872)

Net claims incurred 2,301,202 352,868 2,654,070 2,128,753 192,697 2,321,450

Current year claims relate to risks borne in the current financial year. Prior year claims relate to a reassessment of the expense for risks borne in all previous financial years.


The net claims incurred of $2,654.07 million (2015: $2,321.45 million) is impacted by both internal and external factors as noted below:

2016 2015

$000s $000s

Claims incurred – internal (i) 2,287,324 2,164,974

Claims incurred – external (ii) 366,746 156,476

Net claims incurred 2,654,070 2,321,450

Notes:(i) The 30 June 2016 “claims incurred – internal” is $122.35 million (2015: $425.96 million) higher than the prior year

due mainly to the changes in claims costs assumptions to reflect the unfavourable claims experience.

(ii) As outlined in Note 7 (ii), the “claims incurred – external” reflects the combined impact of changes in assumed rates of inflation and discount on the claims liability.

The claim payments and movement in outstanding claims liability (Note 24 (b)) during the year by payment type are as follows:

2016 2015

Claims Paid

Liability Movement Total

Claims Paid

Liability Movement Total

$000s $000s $000s $000s $000s $000s

Weekly compensation 632,413 106,719 739,132 631,766 (92,770) 538,996

Medical including medico-legal 369,285 282,299 651,584 362,475 210,223 572,698

Impairment benefits 90,546 1,150 91,696 95,665 25,364 121,029

Common law 562,688 397,340 960,028 622,310 270,679 892,989

Other payment types 173,288 36,143 209,431 170,165 92,213 262,378

Claims handling expenses (i) – 83,460 83,460 – 58,910 58,910

Risk margin (ii) – 71,134 71,134 – 45,691 45,691

Self-insurer (re-entry) exit settlements

– – – 6,631 – 6,631

Gross claims incurred 1,828,220 978,245 2,806,465 1,889,012 610,310 2,499,322

Notes:

(i) Claims handling expenses is an allowance made for the direct expenses to be incurred in settling claims.

(ii) The risk margin provides for the inherent uncertainty in the central estimate of the outstanding claims.


Financial Report

2016 2015

$000s $000s

(b) Claims expense

Gross claims incurred (Note 11 (a)) 2,806,465 2,499,322

Certified payments to ACCS 15,566 15,140

Contribution to DTF Consolidated Fund for court use 8,377 8,153

Medical Panels costs 4,435 4,181

WorkCover Assist costs 2,218 2,183

Union Assist costs 1,067 996

Dispute resolution expenses 31,663 30,653

Total claims expense recognised in the comprehensive operating statement

2,838,128 2,529,975

12. Authorised Agent Fees

2016 2015

$000s $000s

Authorised agent fees (i) 243,327 245,253

Management agent fees (ii) 2,083 1,999

245,410 247,252

Notes:

(i) Authorised agents operating under an instrument of appointment issued pursuant to the Accident Compensation Act 1985 or the Workplace Injury Rehabilitation and Compensation Act 2013 are paid fees for acting on behalf of WorkSafe in the issuing of WorkCover insurance, collection of premiums and the administration of claims. The agent remuneration includes performance based components.

(ii) Under Section 494 of the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is empowered to administer the Workers Compensation Act 1958. Management agent fees represent amounts paid for managing liabilities under the 1958 Act, and the payments made to the TAC for the management of WorkSafe claims of injured workers with catastrophic injuries.


13. Other Operating Costs

2016 2015

$000s $000s

Employee and related 134,844 123,203

Information technology 26,128 23,999

Professional services 13,355 11,522

Marketing and communication 14,041 14,011

Occupancy and utilities 19,612 20,027

Research and external funding 10,469 8,949

Bad and doubtful debts written-off 5 1

Movements in provisions due to changes in discount rates 762 647

Depreciation 6,091 5,744

Amortisation 15,789 15,613

Loss on disposal of plant and equipment 238 –

Write-down of intangibles 337 –

Other expenses 14,768 13,958

256,439 237,674

Note:

Other operating costs includes $9.56 million (2015: $2.13 million) associated with the implementation of Geelong relocation program.

14. Total Expenses

2016 2015

$000s $000s

Total expenses include:

Depreciation on plant and equipment 6,091 5,744

Amortisation on intangibles 15,789 15,613

21,880 21,357

Operating lease rentals

– Premises 10,090 10,172

– Motor vehicles 3,965 3,869

– Office equipment 283 305

14,338 14,346

Employee benefit expense

– Post employment benefits:

Defined contribution plans 13,625 12,961

Defined benefit plans 1,678 1,673

15,303 14,634

– Termination benefits 3,811 (598)

– Other employee benefits 113,063 106,225

116,874 105,627


Financial Report

15. Remuneration of Auditors

2016 2015

$000s $000s

Auditor of the entity:

Audit of the financial statements – Victorian Auditor-General’s Office 331 321

331 321

16. Income Tax

2016 2015

$000s $000s

(a) Tax income (expense)

Major components of tax income (expense) for the financial years ended 30 June 2016 and 2015 are:

Current income tax

– Current tax income (expense) 164,765 (310,807)

– Adjustments in respect of current income tax of prior years 4,647 10,532

Deferred income tax

– Relating to origination and reversal of temporary differences 63,042 174,911

Tax income (expense) reported in the comprehensive operating statement 232,454 (125,364)

A reconciliation of tax income (expense) applicable to accounting result before income tax at the statutory income tax rate, to tax income (expense) calculated at WorkSafe’s effective income tax rate for the financial years ended 30 June 2016 and 2015 is as follows:

2016 2015

$000s $000s


At the statutory income tax rate of 30% (2015: 30%) 212,318 (173,767)

– Adjustments in respect of current income tax of prior years 4,647 10,532

– Adjustment in respect of securities sold during the year – 23,840

– Franking credits and withholding tax on dividends received 25,994 19,915

– Imputation gross-up on dividends received (7,905) (5,974)

– Other (2,600) 90

Tax income (expense) reported in the comprehensive operating statement 232,454 (125,364)


2016 2015

$000s $000s

(b) Tax (liabilities) recoveries

Balance at beginning of the year (113,681) 139

Movements during the year:

– Income tax for current year – (113,820)

– Income tax paid 123,173 –

– Income tax of prior years (9,492) –

Balance at end of the year – (113,681)

2016 2015

$000s $000s

(c) Deferred tax

Deferred tax at 30 June 2016 and 30 June 2015 relate to the following:

Deferred tax assets

– Claims handling expense included in outstanding claims 398,733 371,724

– Provisions not currently deductible 27,039 24,923

– Accruals not currently deductible 1,058 2,010

– Unutilised tax losses 164,765 –

591,595 398,657

Deferred tax liabilities

– Unrealised gains on investments (54,161) (101,959)

– Difference in depreciation of plant and equipment and amortisation of intangibles (10,429) (11,640)

(64,590) (113,599)

Net deferred tax assets 527,005 285,058

17. Receivables

2016 2015

$000s $000s

Premium receivable 96,287 93,640

Provision for impairment (45,326) (45,172)

50,961 48,468

Confirmed premium estimate 1,800 (3,600)

52,761 44,868

Of the total receivables balance, premium receivable of $50.96 million (2015: $48.47 million) have known counterparties, while the confirmed premium estimate is actuarially assessed. The confirmed premium estimate at 30 June 2016 represents an increase in premium billed of $1.8 million (2015: decrease of $3.6 million) based on the actuarial assessment. The average credit period for premium receivable is 30 days.


Financial Report

Included within premium receivable at the reporting date are $54.52 million (2015: $54.95 million) of past due receivables. WorkSafe has provided for $45.33 million (2015: $45.17 million) of these debts. WorkSafe does not hold any collateral over these balances. The average age of those receivables that are past due but not impaired is 70 days (2015: 71 days).

2016 2015

$000s $000s

Ageing of past due premium receivable

30 days past due 5,299 3,367

31 – 60 days past due 2,088 1,808

61 – 90 days past due 509 414

91 – 180 days past due 3,662 2,560

More than 180 days past due 42,958 46,800

54,516 54,949

WorkSafe provides fully for uncollected debts of the employers who are in administration, receivership, liquidation or bankruptcy, and those debts where events have occurred and/or historical experience exists, which indicates that recovery of the debt is considered unlikely. A provision is also made for other past due debts based on historical loss experience.

2016 2015

$000s $000s

Movement in provision for impairment

Balance at beginning of the year 45,172 49,776

Amounts written-off during the year (2,441) (192)

Increase (decrease) in allowance recognised in comprehensive operating statement

2,595 (4,412)

Balance at end of the year 45,326 45,172

18. Investments

Summary of investments integral to general insurance activities carried at fair value through the comprehensive operating statement WorkSafe’s investment activity is undertaken pursuant to the Workplace Injury Rehabilitation and Compensation Act 2013, the Borrowing and Investment Powers Act 1987 and a Prudential Standard issued by the Treasurer of Victoria.

Under this arrangement, WorkSafe’s responsibility is to set investment objectives for the VFMC after considering such matters as WorkSafe’s capital needs, pricing and the Government’s risk preferences. The WorkSafe Board is not responsible for the management or prudential supervision of the investments – the management responsibility rests with the VFMC and the prudential supervision responsibility rests with the Department of Treasury and Finance (DTF). All WorkSafe investments must be placed with the VFMC.

The investment approach that is determined by the VFMC for WorkSafe is documented in a detailed Investment Risk Management Plan (IRMP) which is approved by the Treasurer. The IRMP is prepared by the VFMC and addresses issues concerning strategy, portfolio construction, benchmarks and risk management.

Investment performance, including comparisons to market benchmarks, is reported to the WorkSafe Board. The Board’s standing Risk Committee reviews strategic financial risks and balance sheet matters, including the examination of investment objectives and portfolio performance. Each six months, the VFMC Board certifies that the investment portfolio has been managed in accordance with the accepted IRMP and WorkSafe’s investment objectives. A certification is also provided to the DTF annually.


The investment portfolio consists of a range of asset exposures including: cash and nominal bonds to cover short-term risk and liquidity needs; inflation linked assets that more closely match WorkSafe’s liability characteristics; equities to provide for long-term growth; and other assets that provide diversification benefits across the general portfolio.

As a part of the VFMC’s investment strategy, contracts are entered into which require WorkSafe to contribute additional future capital (partly paid shares and units). While these future obligations amounted to $1,432.56 million (2015: $796.52 million), no calls to subscribe were outstanding at the reporting date (2015: nil).

2016 2015

$000s $000s

Cash 498,637 504,725

Australian equities 1,590,595 1,527,236

International equities 4,898,072 4,901,252

Private equity 272,848 272,526

Inflation linked bonds 1,590,480 1,578,900

Infrastructure 761,140 691,931

Property 944,434 978,134

Diversified fixed income 1,529,147 1,647,469

Insurance 318,673 271,248

Non traditional strategies 1,233,222 1,165,998

Overlays (i) 4,657 9,106

13,641,905 13,548,525

Note:

(i) The VFMC uses derivatives and other investments, including share price and bond futures, swaps and forward currency contracts, to manage exposures resulting from changes in interest rates, foreign currencies, equity price risks, and exposures arising from forecast transactions. Overlays represent the unrealised gains or losses on various derivative and swap positions in interest rate, foreign currency and equity markets

2016 2015

$000s $000s

Current

Investments 2,196,783 1,912,692

Derivative liabilities (85,548) (100,484)

2,111,235 1,812,208

Non-current

Investments 11,532,903 11,741,328

Derivative liabilities (2,233) (5,011)

11,530,670 11,736,317

13,641,905 13,548,525

Cash and cash equivalents

Cash and deposits at call 1,484,358 1,341,023

Other investments and derivative liabilities 12,157,547 12,207,502

13,641,905 13,548,525


Financial Report

Where fund managers use derivative contracts for efficient portfolio management, such positions are backed by holdings in equivalent securities, cash and discount securities. Included in cash and discount securities are the fund managers’ aggregate liquid positions.

The investments, both current and non-current, except those in the unlisted equities, unlisted trusts and certain derivative contracts, are readily convertible to cash assets.

19. Recoveries Receivable

2016 2015

$000s $000s

The recoveries receivable contained in the financial statements is obtained through independent actuarial valuation by PricewaterhouseCoopers Actuarial Limited.

Expected future recoveries (undiscounted) 300,704 297,460

Discount to present value (18,900) (25,843)

Recoveries receivable on incurred claims 281,804 271,617

Current 47,769 46,995

Non-current 234,035 224,622

281,804 271,617

20. Other Receivables

2016 2015

$000s $000s

Contractual

Sundry receivables (i) 5,842 5,960

Provision for impairment (ii) (6) (1)

5,836 5,959

Notes:

(i) The average credit period for sundry receivables is 28 days. Included within sundry receivables at 30 June 2016 are $0.10 million (2015: $0.04 million) of past due receivables. WorkSafe provides fully for all receivables over 360 days because historical experience indicates that sundry receivables that are past due beyond 360 days are generally not recoverable. WorkSafe does not charge interest on overdue receivables nor hold collateral over these balances. The average age of those receivables that are past due but not impaired was 188 days (2015: 83 days).

(ii) Movement in provision for impairment

2016 2015

$000s $000s

Balance at beginning of the year 1 –

Increase in allowance recognised in operating statement 5 1

Balance at end of the year 6 1


21. Property, Plant and Equipment

2016 2015

$000s $000s

Gross carrying amounts and accumulated depreciation

Freehold land 51 –

Leasehold improvements 37,393 35,698

Accumulated depreciation (29,920) (26,774)

7,473 8,924

Computer equipment 16,975 14,370


4,274 3,101

Furniture and equipment 9,864 9,924


628 885

Total plant and equipment 64,283 59,992


Balance at end of the year, at fair value 12,426 12,910

Freehold Land

Leasehold Improvements

Computer Equipment

Furniture and Equipment Total

$000s $000s $000s $000s $000s

Movements in carrying amounts

30 June 2016

Carrying amount at beginning of the year – 8,924 3,101 885 12,910

Additions 51 2,794 2,790 211 5,846

Disposals – (238) – – (238)

Depreciation expense – (4,007) (1,617) (468) (6,092)

Carrying amount at end of the year 51 7,473 4,274 628 12,426

30 June 2015

Carrying amount at beginning of the year – 11,867 3,883 1,408 17,158

Additions – 361 800 335 1,496

Disposals – – – – –

Depreciation expense – (3,304) (1,582) (858) (5,744)

Carrying amount at end of the year – 8,924 3,101 885 12,910


Financial Report

22. Intangibles

2016 2015

$000s $000s

Computer software

– At cost 150,371 144,400

– Accumulated amortisation (91,984) (76,194)

Balance at end of the year 58,387 68,206

Included in intangibles is the cost of software development in progress of $6.19 million (2015: $20.18 million). No amortisation has been allocated to software development in progress as the related software was not yet available for use at the reporting date.

Computer Software

$000s

Movements in carrying amounts

30 June 2016

Carrying amount at beginning of the year 68,206

Additions 6,307

Write-down of intangibles (337)

Amortisation expense (15,789)

Carrying amount at end of the year 58,387

30 June 2015

Carrying amount at beginning of the year 73,514

Additions 10,305

Write-down of intangibles –

Amortisation expense (15,613)

Carrying amount at end of the year 68,206

23. Payables

2016 2015

$000s $000s

Contractual

– Premium creditors 55,848 56,276

– Other creditors and accruals for supplies and services 90,898 105,373

146,746 161,649

Statutory

– Goods & Services and Fringe Benefits Taxes payable 1,976 1,999

148,722 163,648

The normal settlement terms of WorkSafe’s payables are 30 days.


24. Outstanding Claims

2016 2015

$000s $000s

(a) Summary of valuation

The outstanding claims liability contained in the financial statements is obtained through independent actuarial valuation by PricewaterhouseCoopers Actuarial Limited.

Expected future claim payments (undiscounted) (i) 12,477,268 12,128,938

Discount to present value (i) (2,288,347) (2,763,668)

10,188,921 9,365,270

Claims handling expenses 1,230,680 1,147,220

11,419,601 10,512,490

Risk margin 920,191 849,057

Liability for outstanding claims 12,339,792 11,361,547

Current 1,839,073 1,995,252

Non-current 10,500,719 9,366,295

12,339,792 11,361,547

Note:(i) The undiscounted expected future claim payments and the discount to present value at 30 June 2015 have been

revised to be consistent with the current year’s basis of discount allocation. The revision results in an increase of $64.6 million in both undiscounted expected future claim payments and discount to present value, and has no impact on the discounted expected future claim payments at 30 June 2015.

2016 2016 2015 2015 2014

Liability $000s

Movement $000s

Liability $000s

Movement $000s

Liability $000s

(b) Movement in outstanding claims liability

Weekly compensation 2,798,153 106,719 2,691,434 (92,770) 2,784,204

Medical including medico-legal 2,550,020 282,299 2,267,721 210,223 2,057,498

Impairment benefits 473,609 1,150 472,459 25,364 447,095

Common law 3,520,929 397,340 3,123,589 270,679 2,852,910

Other payment types 846,210 36,143 810,067 92,213 717,854

Claims handling expenses (i) 1,230,680 83,460 1,147,220 58,910 1,088,310

Risk margin (ii) 920,191 71,134 849,057 45,691 803,366

12,339,792 978,245 11,361,547 610,310 10,751,237

Notes:(i) Claims handling expenses are an allowance made for the direct expenses to be incurred in settling claims. (ii) The risk margin provides for the inherent uncertainty in the central estimate of the outstanding claims.


Financial Report

(c) Reconciliation of movement in discounted net outstanding claims liability

2016 2015

Gross $000s

Recoveries $000s

Net $000s

Gross $000s

Recoveries $000s

Net $000s

Brought forward at beginning of the year

11,361,547 (271,617) 11,089,930 10,751,237 (246,497) 10,504,740

Effect of change in economic assumptions

492,968 (3,160) 489,808 337,016 (5,075) 331,941

Effect of past inflation rate different to assumptions

(127,001) 3,939 (123,062) (176,098) 634 (175,464)

Effect of changes in other assumptions

136,147 (7,606) 128,541 135,805 (34,681) 101,124

Increase in claims incurred in current accident year

2,428,886 (127,486) 2,301,400 2,255,789 (126,803) 2,128,986

Release of risk margin and claims handling expenses

(482,362) – (482,362) (476,591) – (476,591)

Cost of prior year claims moving closer to payment

357,827 (18,082) 339,745 423,401 (11,947) 411,454

Incurred claims recognised in the comprehensive operating statement

2,806,465 (152,395) 2,654,070 2,499,322 (177,872) 2,321,450

Claim (payments) recoveries during the year

(1,828,220) 142,208 (1,686,012) (1,889,012) 152,752 (1,736,260)

Carried forward at end of the year

12,339,792 (281,804) 12,057,988 11,361,547 (271,617) 11,089,930


(d) Claims development table

The following tables show the development of gross and net undiscounted outstanding claims relative to the ultimate expected claims for the ten most recent accident years.

(i) Gross

Accident year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total$000s $000s $000s $000s $000s $000s $000s $000s $000s $000s $000s

Estimate of ultimate claims cost:

– At end of accident year

1,657,693 1,662,551 1,664,184 1,820,572 2,023,875 2,106,262 2,179,643 2,118,630 2,235,807 2,314,811

– One year later 1,594,356 1,624,733 1,720,922 1,882,276 2,007,352 2,104,767 2,008,636 2,107,834 2,228,918

– Two years later 1,555,131 1,631,119 1,707,164 1,836,844 1,958,725 2,064,478 1,983,982 2,056,635

– Three years later 1,579,787 1,605,039 1,671,093 1,803,577 1,942,964 2,041,238 1,960,339

– Four years later 1,555,099 1,597,988 1,637,270 1,800,487 1,930,671 2,050,669

– Five years later 1,568,361 1,572,369 1,656,463 1,801,084 1,971,275

– Six years later 1,557,755 1,562,952 1,631,301 1,784,148

– Seven years later 1,574,978 1,558,297 1,650,735

– Eight years later 1,580,881 1,548,871

– Nine years later 1,581,420

Current estimate of cumulative claims cost

1,581,420 1,548,871 1,650,735 1,784,148 1,971,275 2,050,669 1,960,339 2,056,635 2,228,918 2,314,811 19,147,821

Cumulative payments (1,192,059) (1,234,282) (1,215,469) (1,228,900) (1,222,540) (1,089,388) (819,688) (647,878) (471,713) (186,446) (9,308,363)

Outstanding claims – undiscounted

389,361 314,589 435,266 555,248 748,735 961,281 1,140,651 1,408,757 1,757,205 2,128,365 9,839,458

2006 and prior years 2,637,810

Total outstanding claims – undiscounted 12,477,268

Discount (2,288,347)

Claims handling expenses 1,230,680

Risk margin 920,191

Total gross outstanding claims per balance sheet (Note 24 (c)) 12,339,792

(ii) Net

Accident year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total$000s $000s $000s $000s $000s $000s $000s $000s $000s $000s $000s

Estimate of ultimate claims cost:

– At end of accident year

1,566,845 1,589,516 1,586,157 1,732,804 1,918,524 1,986,223 2,060,784 1,996,268 2,101,986 2,182,305

– One year later 1,518,226 1,550,542 1,635,318 1,782,741 1,902,261 1,987,432 1,890,925 1,983,244 2,096,658

– Two years later 1,478,738 1,548,512 1,616,939 1,737,719 1,855,485 1,947,150 1,863,242 1,931,906

– Three years later 1,493,532 1,517,241 1,579,024 1,707,638 1,839,386 1,922,210 1,838,918

– Four years later 1,464,500 1,508,310 1,546,271 1,703,178 1,820,899 1,930,712

– Five years later 1,476,952 1,484,389 1,564,933 1,698,766 1,860,879

– Six years later 1,466,825 1,474,210 1,536,864 1,683,741

– Seven years later 1,479,799 1,468,834 1,556,307

– Eight years later 1,484,337 1,461,418

– Nine years later 1,485,395

Current estimate of cumulative claims cost

1,485,395 1,461,418 1,556,307 1,683,741 1,860,879 1,930,712 1,838,918 1,931,906 2,096,658 2,182,305 18,028,239

Cumulative payments (1,099,831) (1,152,960) (1,130,466) (1,144,335) (1,137,150) (1,004,443) (740,284) (570,382) (391,008) (108,129) (8,478,988)

Outstanding claims – undiscounted

385,564 308,458 425,841 539,406 723,729 926,269 1,098,634 1,361,524 1,705,650 2,074,176 9,549,251

2006 and prior years 2,627,313

Total outstanding claims – undiscounted 12,176,564

Discount (2,269,447)

Claims handling expenses 1,230,680

Risk margin 920,191

Total outstanding claims net of recoveries per balance sheet (Note 24 (c)) 12,057,988


Financial Report

25. Provisions

2016 2015

$000s $000s

Current

Employee benefits (Note 25 (a))

Annual leave

– Unconditional and expected to be settled wholly within 12 months 4,759 4,137

– Unconditional and expected to be settled wholly after 12 months 4,827 4,535

Long service leave



Termination benefits

– Unconditional and expected to be settled wholly within 12 months 2,978 –

31,699 25,830

On-costs (Notes 25 (a) and (b))



4,396 3,961

Leasehold restoration (i) 689 –

Total current provisions 36,784 29,791

Non-current

Employee benefits (Note 25 (a)) 3,201 3,009

On-costs (Notes 25 (a) and (b)) 496 467

3,697 3,476

Leasehold restoration (i) 3,990 4,247

Total non-current provisions 7,687 7,723

Total provisions 44,471 37,514

Note:

(i) The provision for leasehold restoration represents the fair value of the dismantling, removal or restoration costs estimated to be required to be paid upon vacating the leased premises, where the obligation under these lease contracts for the premises to be returned to its original state existed at the time of entering into the leases.


2016 2015

$000s $000s

(a) Employee benefits and on-costs

Current

Annual leave 9,586 8,672

Long service leave 19,135 17,158

Termination benefits 2,978 –

31,699 25,830

Non-current

Long service leave 3,201 3,009

Total employee benefits 34,900 28,839

Current on-costs 4,396 3,961

Non-current on-costs 496 467

Total on-costs 4,892 4,428

Total employee benefits and on-costs 39,792 33,267

Employee Benefits On-costs

Leasehold Restoration Total

$000s $000s $000s $000s

(b) Movement in provisions

30 June 2016

Balance at beginning of the year 28,839 4,428 4,247 37,514

Additional provisions recognised 16,091 2,007 336 18,434

Reductions arising from payments (10,545) (1,585) (25) (12,155)

Reductions resulting from re-measurement or settlement without cost

(20) (3) (61) (84)

Unwinding of discount and effect of changes in discount rates

502 78 182 762

Balance at end of the year 34,867 4,925 4,679 44,471


Financial Report

26. Reserves and Accumulated Surplus

Research Initiative

Reserve (i)Accumulated

SurplusTotal

Equity

$000s $000s $000s

Balance at 1 July 2014 129,537 2,214,110 2,343,647

Transfer from reserve during the year (129,537) 129,537 –

Net result for the year – 453,859 453,859

Dividend paid – (241,699) (241,699)

Balance at 30 June 2015 – 2,555,807 2,555,807

Transfer from reserve during the year – – –

Net result for the year – (475,271) (475,271)

Dividend paid – –

Balance at 30 June 2016 – 2,080,536 2,080,536

Note:

(i) The Institute for Safety, Compensation, and Recovery Research is a collaborative initiative with the Transport Accident Commission and the Monash University to facilitate research and best practice in injury prevention, rehabilitation and compensation practice and to improve outcomes in those areas. The Research Institute initiative reserve was transferred to accumulated surplus on 1 July 2014.

27. Notes to the Cash Flow Statement

(a) Reconciliation of cash and cash equivalents

For the purposes of the cash flow statement, cash and cash equivalents include cash on hand and highly liquid investments that have short periods to maturity and are readily convertible to cash at the option of WorkSafe. Cash and cash equivalents at the end of the financial year as shown in the cash flow statement are reconciled to the related items in the balance sheet as follows:

2016 2015

Note $000s $000s

Cash and cash equivalents (i) 26,987 (10,824)

Cash and deposits at call 18 1,484,358 1,341,023

1,511,345 1,330,199

Note:

(i) The cash and cash equivalents credit balance at 30 June 2015 represents unpresented or uncleared cheques net of the bank balance at reporting date.


2016 2015

$000s $000s

(b) Reconciliation of Net Result to Net Cash Flows from Operating Activities

Net result for the year (475,271) 453,859

Changes in fair values of investments at fair value through the comprehensive operating statement

218,779 (981,511)

Depreciation on plant and equipment 6,091 5,744

Amortisation on intangibles 15,789 15,613

Loss on disposal of plant and equipment 238 –

Write-down of intangibles 337 –

Movements in provisions due to changes in discount rates 762 647

Changes in assets and liabilities:

(Increase) decrease in premiums receivable (7,888) 10,434

Decrease in investment income receivable 1,369 1,148

(Increase) in recoveries receivable (10,187) (25,120)

Decrease in sundry receivable 118 630

(Increase) in prepayments (532) (1,406)

(Increase) decrease in net deferred tax assets (241,947) 11,544

(Decrease) increase in premium creditors (428) 18,768

(Decrease) in other creditors and accruals (14,498) (1,638)

Increase in outstanding claims 978,245 610,310

(Decrease) increase in tax liabilities (113,681) 113,820

Increase (decrease) in provisions 6,195 (1,082)

Total adjustments 838,762 (222,099)


28. Commitments

2016 2015

$000s $000s

(a) Operating leases (i)

Future minimum lease payments under non-cancellable operating lease arrangements:

Due within one year 23,118 23,866

Due later than one year and less than five years 68,522 50,773

Due later than five years 140,700 1,621

Total operating lease commitments (inclusive of GST) 232,340 76,260

GST recoverable from the ATO (21,122) (6,933)

Total operating lease commitments (exclusive of GST) 211,218 69,327


Financial Report

2016 2015

$000s $000s

(b) Other operating commitments

Amounts payable under non-cancellable other operational contractual arrangements:

Due within one year 10,875 8,373

Due later than one year and less than five years 14,545 10,247

Total other operating commitments (inclusive of GST) 25,420 18,620

GST recoverable from the ATO (2,311) (1,693)

Total other operating commitments (exclusive of GST) 23,109 16,927

Note:

(i) Operating leases relate to leasehold premises, vehicles and office equipment with lease terms between 1 and 5 years. Some operating lease contracts contain market review clauses in the event that WorkSafe exercises its option to renew. WorkSafe does not have an option to purchase the leased assets at the expiry of the lease periods.

29. Responsible Person-Related Disclosures

(a) Responsible personsIn accordance with the Ministerial Directions issued by the Minister for Finance under the Financial Management Act 1994, the responsible persons who held office during the financial year were:

(i) Responsible Minister– Honourable Robin Scott MP, Minister for Finance

(ii) Directors– Mr Paul Barker (appointed as Chairman effective 17 September 2015)– Mr John Walter (ceased as Acting Chair on 16 September 2015)– Ms Clare Amies (Chief Executive)– Mr Paul Kirk– Mr Ross McCann– Mr Neil Lucas– Ms Marlo Baragwanath (appointed on 25 August 2015)


(b) Transactions with responsible person-related entitiesMr John Walter is a partner of Corrs Chambers Westgarth. The aggregate amount of legal services provided by the firm to WorkSafe were as follows:

2016 2015

$000s $000s

Legal services (442) (1,091)

The spouse of Mr John Walter is a Board member of the Victorian Funds Management Corporation (VFMC). It is the Victorian Government’s policy that all the investment assets of WorkSafe be managed by the VFMC to which WorkSafe agrees to pay a base and performance fee which is endorsed by the DTF for all VFMC mandated clients. The aggregate amount of investment fees incurred were as follows:

2016 2015

$000s $000s

Investment fees (44,873) (43,001)

Mr John Walter and Mr Paul Kirk are directors of the TAC. Under the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is entitled to recover from the TAC, all compensation payable under WorkSafe scheme for injury in a transport accident during the course of work. WorkSafe also receives annual Workplace Injury Insurance premium from the TAC.

WorkSafe and the TAC reimbursed each other for the cost of external services acquired jointly, and internal services provided to each other, in relation to collaborative initiatives between WorkSafe and the TAC. In addition, WorkSafe made payments to the TAC for the management of WorkSafe claims of injured workers with catastrophic injuries.

The aggregate amounts in respect of the above transactions with responsible person-related entities were:

2016 2015

$000s $000s

Recovery of compensation paid 77,600 79,340

Workplace Injury Insurance premium 653 578

Cost reimbursement received and receivable 9,302 7,386

Cost reimbursement paid and payable (6,404) (5,558)

Management of catastrophic claims (1,730) (1,767)

Mr Ross McCann is a member of the advisory Board of Monash Sustainability Institute. During the year, WorkSafe participated in research conducted by Monash Sustainability Institute and WorkSafe employees participated in educational sessions provided by it.

The aggregate amounts in respect of these transactions with responsible person-related entities were:

2016 2015

$000s $000s

Fundings (168) (84)

Training and seminars (2) –


Financial Report

Transactions with responsible person-related entities are made on normal commercial terms and conditions. Conflicts of interest are overcome where warranted, by directors declaring their interests and abstaining from voting at WorkSafe’s Board meetings.

30. Remuneration of Responsible Persons

2016 2015

$000s $000s

Total remuneration of all responsible persons received or receivable in connection with their employment (i)

803 1,071

The number of responsible persons of WorkSafe whose remuneration falls within the following bands was:

Income Band

2016 2015

$

0 – 9,999 1 –

40,000 – 49,999 – 2

50,000 – 59,999 3 3

70,000 – 79,999 1 1

90,000 – 99,999 1 1

110,000 – 119,999 – 1

460,000 – 469,999 1 –

520,000 – 529,999 – 1

Note:

(i) Amounts relating to ministers are reported in the financial statements of the Department of Premier and Cabinet. For information regarding related party transactions of ministers, the register of members’ interests is publicly available from: www.parliament.vic.gov.au/publications/register-of-interests.


31. Remuneration of Executive Officers and Payments to Other Personnel

(a) Remuneration of Executive OfficersThe number of executive officers of WorkSafe, excluding the Chief Executive, whose total remuneration exceeded $100,000 is shown in the table below. Base remuneration is exclusive of bonus, long-service leave and termination benefits.

The number of executives varies from year to year due to the timing of appointments, resignations, and the composition of the executives.

Income Band Base Remuneration Total Remuneration

2016 2015 2016 2015

$

Less than 99,999 3 4 2 4

100,000 – 109,999 1 – 1 –

110,000 – 119,999 1 – – –

130,000 – 139,999 1 1 2 1

140,000 – 149,999 2 – – –

190,000 – 199,999 – 1 – –

210,000 – 219,999 – 2 – 1

220,000 – 229,999 1 – 1 1

230,000 – 239,999 – 1 – –

240,000 – 249,999 – – 1 –

250,000 – 259,999 1 1 – 1

260,000 – 269,999 – – 1 –

270,000 – 279,999 – – – 2

280,000 – 289,999 2 – 1 –

290,000 – 299,999 – – 1 –

300,000 – 309,999 1 1 1 –

310,000 – 319,999 – 1 – –

340,000 – 349,999 – – 1 –

360,000 – 369,999 – – – 1

470,000 – 479,999 – – 1 1

Total number of executives 13 12 13 12

Total annualised employee equivalent (i) 8.4 8.0 8.4 8.0

Total amount ($000s) 2,241 2,075 2,992 2,434

Note:

(i) Annualised employee equivalent is based on working 38 ordinary hours per week over the reporting period.


Financial Report

(b) Payments to Other Personnel with Significant Management ResponsibilitiesThe number of other personnel charged with significant management responsibilities is disclosed in the table below, within the $10,000 expense band. These contractors are responsible for planning, directing or controlling, directly or indirectly, the WorkSafe’s activities.

Expense Band

2016 2015

$

Less than 99,999 2 1

140,000 – 149,999 1 –

Total expenses ($000s) 290 56

(c) Ex-gratia Expenses

2016 2015

$000s $000s

Payments relating to the cessation of employment contracts 79 –

32. Employee Superannuation Expense

2016 2015

$000s $000s

Superannuation is provided for employees via the following schemes:

Defined contribution schemes

VicSuper Pty Ltd – VicSuper Scheme 8,264 8,237

Other 5,361 4,724

13,625 12,961

Defined benefit schemes

Emergency Services Superannuation Scheme

– Revised Scheme 412 431

– New Scheme 1,223 1,200

– State Employees Retirement Benefit Scheme 18 18

– Transport Scheme 25 24

1,678 1,673

15,303 14,634

WorkSafe does not recognise any defined benefit liability under the Emergency Services Superannuation Scheme, as WorkSafe has no legal or constructive obligation to pay future benefits relating to its employees. WorkSafe’s only obligation is to pay superannuation contributions as they fall due. The Department of Treasury and Finance administers and discloses the State’s defined benefit liabilities in its financial report.

The superannuation contributions are based on the relevant rules of each plan. At 30 June 2016, contributions outstanding were $nil (2015: $nil). Employees have the option of contributing exclusively to private sector complying funds or contributing to a state fund or both. Employee superannuation includes contributions paid under salary sacrifice arrangements.


33. Financial Instruments

WorkSafe’s financial assets and liabilities are exposed to a variety of financial risks: credit risk, liquidity risk and market risk. The VFMC uses different methods to measure different types of risk to which WorkSafe’s investment portfolio is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, and credit ratings for credit risk.

(a) Credit risk

Credit risk refers to the risk that an issuer or a counterparty will default on its contractual obligations resulting in financial loss to WorkSafe.

The VFMC manages counterparty credit risk by conducting due diligence on counterparties and will only deal with counterparties of high quality with substantial balance sheets. Agreements also contain provisions for the agreement to be reviewed or rescinded upon the occurrence of specified events relating to counterparty credit and liquidity.

Assessment processes also ensure that well-defined documentation underpins each transaction; that clear rules exist for completing single transactions with a particular counterparty; and that appropriate credit limits exist to accommodate the transaction. Exposure is measured according to the individual transaction, counterparty total, credit rating total and other bases, and is monitored by personnel separated from the dealing function. When conducting over-the-counter derivative transactions, bilateral legal contracts must be signed with the counterparty prior to execution of the transaction.

The establishment of appropriate policies and multi-tiered limits ensures that WorkSafe maintains a diversified portfolio without any significant concentration of credit risk on an industry, regional or country basis.

(i) WorkSafe’s maximum exposure to credit risk at reporting date in relation to each class of financial asset is the carrying amount of those assets as indicated in the balance sheet.

(ii) Concentrations of credit risk The VFMC manages credit risk by diversifying the exposure amounts with particular issuers and counterparties

and operating in liquid markets. WorkSafe does not have any significant concentration of credit risk on an industry, regional or country basis. The investment strategy for WorkSafe is to ensure a diversified portfolio.


Financial Report

The table below provides information regarding the credit risk exposure of WorkSafe by classifying assets according to the VFMC’s credit ratings of counterparties.

Investment grade (i)

Non-investment grade (ii) Total

30 June 2016

$000s $000s $000s

Financial assets at fair value through the comprehensive operating statement

Cash and cash equivalents 26,987 – 26,987

Investments – cash and deposits at call 1,484,358 – 1,484,358

Debt securities 910,997 54,368 965,365

Derivative assets – 292,721 292,721

Investment settlements outstanding – 583,316 583,316

2,422,342 930,405 3,352,747

Investment grade (i)

Non-investment grade (ii) Total

30 June 2015

$000s $000s $000s

Financial assets at fair value through the comprehensive operating statement

Cash and cash equivalents – – –

Investments – cash and deposits at call 1,341,023 – 1,341,023

Debt securities 1,083,065 106,109 1,189,174

Derivative assets – 149,102 149,102

Investment settlements outstanding – 440,832 440,832

2,424,088 696,043 3,120,131

Notes

(i) Assets classified with Standard and Poor’s credit ratings of AAA to BBB- are classified as investment grade.(ii) The non-investment grade assets include assets that fall outside the range of AAA to BBB- Standard and Poor’s

credit ratings as well as non-rated assets that are within the risk parameters outlined in the Investment Risk Management Plan.


(b) Liquidity risk

Liquidity risk arises from WorkSafe being unable to meet financial obligations as they fall due.

The VFMC uses a combination of cash and futures portfolios plus a large proportion of listed securities to ensure sufficient liquidity is available at all times to meet WorkSafe’s operating requirements.

The following table summarises the maturity profile of WorkSafe’s financial liabilities. The table includes the liquidity analysis in relation to contractual (as opposed to statutory) financial liabilities. While the liability for outstanding claims is the most significant liability for which payments will need to be made in the future, they are excluded from the definition of a financial liability under AASB 4 ‘Insurance Contracts’. Details on the average term to settlement for the claims liabilities portfolio are included in Note 4 (a).

Less than 3 months 4–12 months 1–5 years 5+ years Total

30 June 2016

$000s $000s $000s $000s $000s

Financial liabilities


– – – – –

Non-statutory payables

89,590 57,156 – – 146,746

Derivative liabilities 69,288 16,260 2,233 – 87,781

158,878 73,416 2,233 – 234,527

Less than 3 months 4–12 months 1–5 years 5+ years Total

30 June 2015

$000s $000s $000s $000s $000s



10,824 – – – 10,824


85,408 76,241 – – 161,649

Derivative liabilities 81,555 18,929 4,926 85 105,495

177,787 95,170 4,926 85 277,968


Financial Report

(c) Market riskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: market interest rates (interest rate risk), foreign exchange (currency risk) and market prices (equity price risk).

When establishing the investment asset allocation, the VFMC considers input from actuaries to ensure that the investment mix is appropriate to service future WorkSafe liabilities and that projected outcomes are in line with the overall investment objectives and remain within the risk parameters approved by the Treasurer.

For the sensitivity analysis of each type of market risk, the percentage change used for each of the variables has been determined by WorkSafe at 30 June 2016 and 30 June 2015.

(i) Interest rate riskInterest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The significant accounting policies (Note 3) describe the policies used to measure and report the assets and liabilities of WorkSafe. Where the applicable fair value is determined by discounting future cash flows, movements in interest rates will result in a reported unrealised gain or loss in the comprehensive operating statement.

The VFMC seeks to manage the interest rate risk through an asset allocation strategy for the investment portfolio, which acts as an economic hedge against the insurance liabilities of WorkSafe. To the extent that these assets and liabilities can be matched, unrealised gains and losses on the remeasurement of liabilities resulting from interest rate movements will be off-set by unrealised losses or gains on the remeasurement of investment assets.

The VFMC uses derivatives to manage the interest rate risk on the interest rate sensitive assets. Interest rate swap contracts and forward rate agreements are used to either change the interest rate risk between fixed and floating rates of interest or between different floating rates of interest.

A summary of WorkSafe’s exposure to interest rate risk on financial instruments is as follows:


Variable Interest

Rate

Fixed Interest Rate Period to maturity or re-pricing Non

Interest Bearing

Total Carrying

Valueless than 3 months

4–12 months 1–5 years

over 5 years

30 June 2016

$000s $000s $000s $000s $000s $000s $000s

Financial assets


26,987 – – – – – 26,987

Premium receivables – – – – – 50,961 50,961

Investments

– Derivative assets 214,040 – – – – 78,681 292,721

– Other investments 320,248 1,260,153 39,242 411,131 329,597 11,076,594 13,436,965

Sundry receivables – – – – – 5,836 5,836

561,275 1,260,153 39,242 411,131 329,597 11,212,072 13,813,470



– – – – – 146,746 146,746

Derivative liabilities 30,512 – – – – 57,269 87,781

30,512 – – – – 204,015 234,527

Net financial assets 530,763 1,260,153 39,242 411,131 329,597 11,008,057 13,578,943

Variable Interest

Rate

Fixed Interest Rate Period to maturity or re-pricing Non

Interest Bearing

Total Carrying

Valueless than 3 months

4–12 months 1–5 years

over 5 years

30 June 2015

$000s $000s $000s $000s $000s $000s $000s

Financial assets

Premium receivables – – – – – 48,468 48,468

Investments

– Derivative assets 118,436 – – – – 30,666 149,102

– Other investments 472,623 1,188,842 55,349 389,810 398,441 10,999,853 13,504,918

Sundry receivables – – – – – 5,959 5,959

591,059 1,188,842 55,349 389,810 398,441 11,084,946 13,708,447



– – – – – 10,824 10,824


– – – – – 161,649 161,649

Derivative liabilities 38,571 – – – – 66,924 105,495

38,571 – – – – 239,397 277,968

Net financial assets 552,488 1,188,842 55,349 389,810 398,441 10,845,549 13,430,479


Financial Report

2016 2015

$000s $000s

Reconciliation of net financial assets to net assets:

Net financial assets as above 13,578,943 13,430,479

Non-financial assets and liabilities:

– Recoveries receivable 281,804 271,617

– Prepayments 6,410 5,878

– Confirmed premium estimate 1,800 (3,600)

– Plant and equipment 12,426 12,910

– Intangibles 58,387 68,206

– Net deferred tax assets 527,005 285,058

– Tax liabilities – (113,681)

– Statutory payables (1,976) (1,999)

– Outstanding claims (12,339,792) (11,361,547)

– Provisions (44,471) (37,514)

Net assets per balance sheet 2,080,536 2,555,807

Interest rate sensitivityA sensitivity analysis has been determined based on the exposure to interest rates at the reporting date and the stipulated change taking place at the beginning of the financial period and held constant throughout the reporting period. A 0.5% increase or decrease in interest rates (or discount rates) is used by actuaries to present the sensitivities of the actuarial clams liabilities (Note 4 (c)). This percentage has been used to present the impact on interest bearing investments. These movements are attributable to WorkSafe’s exposure to interest rates on its variable rate investments and its fair value movement on its fixed rate investments.

At reporting date, if interest rates had moved 0.5% up or down and all other variables were held constant, WorkSafe’s net result and equity would change as follows:

2016 2015

$000s $000s

Impact on net result and equity of a 0.5% increase in interest rates:

– before impact of interest rate derivatives (14,483) (14,903)

– impact of interest rate derivatives (3,746) (3,134)

– after impact of interest rate derivatives (18,229) (18,037)

Impact on net result and equity of a 0.5% decrease in interest rates

– before impact of interest rate derivatives 14,493 14,913

– impact of interest rate derivatives 3,747 3,136

– after impact of interest rate derivatives 18,240 18,049


(ii) Foreign currency riskForeign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. WorkSafe is exposed to foreign exchange risk through its investments which are denominated in foreign currency, and anticipated future transactions.

Forward foreign exchange contracts

The VFMC limits foreign exchange risk through the use of forward contracts where it agrees to sell specified amounts of foreign currencies in the future at a predetermined exchange rate. The proportion of foreign exchange risk which is hedged is reviewed regularly to ensure that the net exposure is maintained at a level which is consistent with the overall investment objectives.

The foreign exchange risk disclosures have been prepared on the basis of WorkSafe’s direct investments and not on a look-through basis for investments held indirectly through unit trusts. Consequently the disclosure of currency risk may not represent the true currency risk profile of WorkSafe where the unit trust has significant investments which have exposure to the currency markets. On this basis, the table below summarises WorkSafe’s exposure to foreign currency risk and the management of that exposure using forward exchange contracts outstanding at the reporting date in Australian dollar equivalents.

Investment in Foreign Currency Forward Contract Cover Net exposure

2016 2015 2016 2015 2016 2015

$000s $000s $000s $000s $000s $000s

Australian Dollar 11,756,328 11,805,138 3,530,007 3,072,590 15,286,335 14,877,728

British Pound 229 (125) (190,958) (183,350) (190,729) (183,475)

Euro Dollar 24,239 29,512 (483,488) (391,309) (459,249) (361,797)

Japanese Yen (563) 144 (215,846) (204,285) (216,409) (204,141)

United States Dollar 1,828,874 1,733,252 (2,361,571) (2,031,823) (532,697) (298,571)

Other 12,648 14,241 (257,994) (295,460) (245,346) (281,219)

Total investments (Note 18) 13,621,755 13,582,162 20,150 (33,637) 13,641,905 13,548,525

Foreign currency sensitivityThe sensitivity analysis below has been determined based on the exposure to foreign exchange rates at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period.

The following table details WorkSafe’s sensitivity to a 10% increase and decrease in the Australian Dollar against the relevant foreign currencies.

The sensitivity analysis includes foreign currency denominated investment items and adjusts their translation at the year end for a 10% change in the value of the Australian dollar relative to foreign currency. A positive number indicates an increase in the net result where the Australian Dollar strengthens against the respective currency.

2016 2015

$000s $000s

Impact on net result and equity of a 10% increase in foreign exchange rates

– before impact of foreign exchange derivatives (118,709) (113,094)

– impact of foreign exchange derivatives 223,354 197,669

– after impact of foreign exchange derivatives 104,645 84,575

Impact on net result and equity of a 10% decrease in foreign exchange rates

– before impact of foreign exchange derivatives 145,089 138,226

– impact of foreign exchange derivatives (272,989) (241,595)

– after impact of foreign exchange derivatives (127,900) (103,369)


Financial Report

(iii) Other price riskWorkSafe is exposed to equity price risk arising from investments in Australia and overseas (Note 18). The equity investments are held to back general insurance activities and the portfolio is actively managed. The VFMC limits price risk through diversification of the equity investment portfolio.

Equity price sensitivityThe sensitivity analysis below has been determined based on the exposure to equity prices both within Australia and overseas markets at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period.

The following table details WorkSafe’s sensitivity to a 10% increase and decrease in the Australian equities market and a 10% increase and decrease in overseas equities markets.

If Australian and overseas equity prices had been 10% higher or lower and all other variables held constant at the period/year end, WorkSafe’s net result and equity would change as follows:

2016 2015

$000s $000s

Impact on net result and equity of a 10% increase in:

– listed equity prices 38,329 23,403

– unlisted Australian equity prices 647,454 665,017

– unlisted Overseas equity prices 62,126 74,116

747,909 762,536

Impact on net result and equity of a 10% decrease in:

– listed equity prices (38,329) (10,350)

– unlisted Australian equity prices (647,454) (665,017)

– unlisted Overseas equity prices (62,126) (74,116)

(747,909) (749,483)


(d) Off-setting of financial assets and financial liabilitiesThe following table identifies financial assets and liabilities which have been off-set in the balance sheet in accordance with AASB 132 Financial Instruments: Presentation and those which have not been off-set in the balance sheet but are subject to enforceable master netting agreements (or similar arrangements) with trading counterparties.

Gross and net amounts

included in balance sheet

Related amount not set-off in

balance sheet Net amount

30 June 2016

$000s $000s $000s

Derivative assets 292,721 (68,561) 224,160

Derivative liabilities (87,781) 68,561 (19,220)

Total 204,940 – 204,940

Gross and net amounts

included in balance sheet

Related amount not set-off in

balance sheet Net amount

30 June 2015

$000s $000s $000s

Derivative assets 149,102 (42,806) 106,296

Derivative liabilities (105,495) 42,806 (62,689)

Total 43,607 – 43,607

(e) Fair valueWorkSafe uses various methods in estimating the fair value of a financial instrument. The fair value of the financial assets and liabilities reflects the amount at which the instrument could be exchanged in an orderly transaction between market participants at the measurement date.

The fair value measurement for WorkSafe’s financial instruments is categorised into the fair value hierarchy as follows:

(i) Level 1 – Fair value is calculated based on quoted prices in active markets for identical assets or liabilities. These inputs are readily available in the market and are normally obtainable from multiple sources.

(ii) Level 2 – Fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or the liability, either directly (as prices) or indirectly (derived from prices).

(iii) Level 3 – Fair value is estimated using inputs for the asset or liability that are not based on observable market data.


Financial Report

Level 1 Level 2 Level 3 Total

30 June 2016

$000s $000s $000s $000s

Financial assets

Cash and cash equivalents 26,987 – – 26,987

Premium receivables – 50,961 – 50,961

Investments

– Cash 412,091 86,546 – 498,637

– Australian equities 90,477 1,500,118 – 1,590,595

– International equities 847,100 4,050,972 – 4,898,072

– Private equity 51,228 138,084 83,536 272,848

– Inflation linked bonds 87 1,590,393 – 1,590,480

– Infrastructure – 4,826 756,314 761,140

– Property 7,562 355 936,517 944,434

– Diversified fixed income (93,727) 1,535,868 87,006 1,529,147

– Insurance – 300 318,373 318,673

– Non traditional strategies 675,758 170,435 387,029 1,233,222

– Overlays 4,985 (328) – 4,657

Sundry receivables – 5,836 – 5,836

2,022,548 9,134,366 2,568,775 13,725,689


Non-statutory payables – 146,746 – 146,746

– 146,746 – 146,746

Net financial assets 2,022,548 8,987,620 2,568,775 13,578,943


Level 1 Level 2 Level 3 Total

30 June 2015

$000s $000s $000s $000s

Financial assets

Cash and cash equivalents – – – –

Premium receivables – 48,468 – 48,468

Investments

– Cash 401,251 103,474 – 504,725

– Australian equities 42,943 1,484,273 20 1,527,236

– International equities 713,910 4,187,342 – 4,901,252

– Private equity 54,088 124,446 93,992 272,526

– Inflation linked bonds 39,373 1,539,527 – 1,578,900

– Infrastructure – 46,351 645,580 691,931

– Property 9,421 (865) 969,578 978,134

– Diversified fixed income (9,768) 1,579,731 77,506 1,647,469

– Insurance 2 (2,819) 274,065 271,248

– Non traditional strategies 504,870 170,684 490,444 1,165,998

– Overlays 5,090 4,016 – 9,106

Sundry receivables – 5,959 – 5,959

1,761,180 9,290,587 2,551,185 13,602,952


Cash and cash equivalents 10,824 – – 10,824

Non-statutory payables – 161,649 – 161,649

10,824 161,649 – 172,473

Net financial assets 1,750,356 9,128,938 2,551,185 13,430,479

Transfer between categories No amounts were transferred between Level 1 and Level 2 during the year ended 30 June 2016 (2015: $nil).

Reconciliation of Level 3 fair value movementsThe following table presents the changes in Level 3 instruments (financial assets) for the year ended 30 June 2016 and 30 June 2015:


Financial Report

2016 2015

$000s $000s

Investments

Balance at beginning of the year 2,551,185 2,179,224

Transfers from Level 1 to Level 3 – 20

Transfers from Level 3 to Level 2 – (929)

(Losses) gains recognised in the comprehensive operating statement (21,590) 97,436

Purchases 375,680 573,966

Sales (336,500) (298,532)

Balance at end of the year 2,568,775 2,551,185

Total (losses) gains for the year included in gains for assets held at end of the year

(41,110) 126,082

(f) Estimation UncertaintyThe investments managed by the VFMC on behalf of WorkSafe include the following unlisted investments which are inherently subject to estimation uncertainty.

2016 2015

$000s $000s

Investments Classes

Infrastructure 756,314 645,580

Private equity 83,536 93,992

Property 936,517 969,578

Insurance 318,373 274,065

Diversified fixed income 87,006 77,506

Non-traditional strategies 387,029 490,444

Australian equities – 20

Balance at end of the year 2,568,775 2,551,185

These unlisted investments are not traded in an active market, and hence their fair value at reporting date is based on the price advised by external fund managers or valuations determined by appropriately skilled independent third parties. Where valuation techniques including discounted cash flows, multiples based analysis, comparison with similar transactions and other techniques considered appropriate in the circumstances have been employed in pricing or valuing investments, the valuations are inherently subject to estimation uncertainty. Given this inherent subjectivity, the underlying inputs and assumptions are reviewed on an on-going basis to ensure the valuations reflect the best estimates of the economic conditions at reporting date.

It is reasonably possible that outcomes within the next financial period would be different from the assumptions used in the current valuation models and a material adjustment to the carrying amounts of the related investments could be required.

The disclosures below provide details of the inputs and assumptions used in the current valuation models. A majority of these investments are held via third party pooled investment vehicles, and as such WorkSafe is not privy to the detailed assumptions or valuation techniques used to value the underlying investment assets. WorkSafe is reliant on third parties for these valuations and the quantitative information regarding significant unobservable inputs used in the fair value measurement cannot be assessed.


(i) Infrastructure investmentsInfrastructure investments comprise both domestic and international exposure to transport, social, energy and other infrastructure assets through unlisted pooled vehicles and unlisted trusts.

The valuations of unlisted infrastructure investments are primarily based on a discounted cash flow methodology. Assumptions which may be subject to estimation uncertainty include the risk-free discount rates, risk premium, asset utilisation rates, capital expenditure forecasts, operating costs and other estimated future cash flows.

(ii) Private equity investments

Private equity investments comprise both domestic and international exposure to venture capital, buyout, special situations and expansion capital sectors. These investments include externally managed unlisted pooled vehicles and trusts.

The valuation of unlisted private equity investments are primarily based on multiples of earnings, discounted cash flow, market equivalents and other market accepted methodologies. Assumptions which may be subject to estimation uncertainty include the identification of appropriate comparables, estimated future profits, risk-free rate, risk premium, estimated future cash flows and future economic and regulatory conditions.

(iii) Property investmentsProperty investments include externally managed unlisted property trusts with exposure to domestic and international commercial, industrial, retail and development property market.

The valuations of unlisted property investments are primarily based on discounted cash flow, capitalisation and direct comparison methodologies. Assumptions which may be subject to estimation uncertainty include the identification of appropriate comparables, estimated future profits, risk-free rate, risk premium, estimated future cash flows and future economic and regulatory conditions.

(iv) Insurance investments

The valuation of insurance investments is primarily based on a discounted cash flow methodology. The portfolio includes a holding of United States life insurance policies is valued by an independent valuer using the actuarial asset share method. The actuarial asset share method is based on the assumptions of probabilities of insured’s mortality and premium payments on the valuation date. Other assumptions and interdependencies in the valuation model include weighted average discount rate applied to the portfolio, life expectancy estimates obtained from qualified providers and expected premium payments based on “back solving” premiums’ optimisation method.

An increase in the weighted average discount rate would decrease the value of the insurance investments. A reduction would result in an increase to the fair value.

An increase in the life expectancy estimates would decrease the value of the insurance investments. A reduction would result in an increase to the fair value.

(v) Fixed interest investments

Fixed interest investments comprise investments in government, government-related, corporate and securitised bonds, loans and other debt instruments, primarily from Australian issuers but with some limited exposure to international issuers, and fixed interest and currency instruments through externally managed unlisted pooled vehicles and segregated portfolios.

The valuations of fixed interest investments are primarily based on third party pricing services, which source prices from brokers and market makers. For less liquid securities, valuation methodologies determined to be appropriate by the managers or their independent valuation agent. Such methodologies applied may include discounted cash flow, amortised cost, direct comparison and others. Assumptions which may be subject to estimation uncertainty include appropriate credit spread and other risk premium, risk-free rate, estimated future cash flows, identification of appropriate comparables, future economic and regulatory conditions.


Financial Report

(vi) Non-traditional strategies investments

Non-traditional strategies investments comprise investments in hedge funds and other non-traditional investments that do not fit within the definition of other asset classes but which provide diversification benefits to the total portfolio. These investments are made through externally managed unlisted pooled vehicles.

The valuations of non-traditional strategies investments are primarily based on prices quoted on an exchange or traded in a dealer market. For less liquid securities, valuation methodologies are set out by each manager. Depending on the investment, the methodologies applied include discounted cash flow, amortised cost, direct comparison and other market accepted methodologies. The investment manager may choose to appoint independent valuation agents to seek independent price verification. Assumptions which may be subject to estimation uncertainty include appropriate credit spread and other risk premium, future risk free rate, future cash flows, identification of appropriate comparables, future economic and regulatory conditions.

34. Contingent Assets and Contingent Liabilities

WorkSafe had no contingent assets at the reporting date (2015: nil).

WorkSafe will be relocating its head office to Geelong by June 2018. As a part of this transition some employees have confirmed their intention to relocate to Geelong in 2017, and will be entitled to relocation benefits in accordance with a relocation deed. While the ultimate relocation benefits to which the employees are entitled will be contingent on the specific relocation decisions made by the individual employees, WorkSafe could incur a liability of up to $11 million (2015: $nil) in respect of these benefits over the next 3 years.

35. Events after Reporting date

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of WorkSafe, the results of those operations, or the state of affairs of WorkSafe in future financial years.

Statement by Chairman, Chief Executive and Chief Financial Officer

The attached financial statements of the Victorian WorkCover Authority have been prepared in accordance with Standing Direction 4.2 of the Financial Management Act 1994, applicable Financial Reporting Directions, Australian Accounting Standards including Interpretations, and other mandatory professional reporting requirements.

We further state that, in our opinion, the information set out in the comprehensive operating statement, balance sheet, statement of changes in equity, cash flow statement and accompanying notes, presents fairly the financial transactions during the year ended 30 June 2016 and the financial position of the Victorian WorkCover Authority at 30 June 2016.

At the time of signing, we are not aware of any circumstances which would render any particulars included in the financial statements to be misleading or inaccurate.

We authorise the attached financial statements for issue on 26 August 2016.

Paul Barker Clare Amies Roger ArnoldChairman Chief Executive Chief Financial Officer

Dated at Melbourne this 26th day of August 2016



Financial Report

Appendices


OHS Prosecution Outcomes 2015/16

Defendant A.C.N. Result Fine

Diversion 1 of 2015-16 n/a No Plea Taken – Diversion $0.00

Van Krieken, Paul Andrew n/a Pleaded Guilty – Fined without conviction $10,000.00

Modeland Pty Ltd 006 848 362 Pleaded Guilty – Without conviction, placed on an undertaking to be of good behaviour with a special condition

$0.00

Ballarat Plumbing Pty Ltd 154 877 568 Pleaded Guilty – Fined without conviction $3,000.00

Southern Grampians Shire Council n/a Pleaded Guilty – Convicted and fined $7,500.00

Elonchrome Pty Ltd 006 420 471 Pleaded Guilty – Without conviction, placed on an undertaking to be of good behaviour with a special condition

$0.00

R Collie Earthmoving Pty Ltd 095 663 317 Pleaded Guilty – Convicted and fined $37,000.00

Owners Corporation 1 Plan No. PS348186R

n/a Pleaded Guilty – Fined without conviction $2,500.00

A & A Seremetis Pty Ltd 145 267 063 Pleaded Guilty – Fined without conviction $15,000.00

Mach, Charlie n/a Pleaded Guilty – Convicted and fined $1,000.00

Pettit, James n/a Pleaded Guilty – Without conviction, placed on an undertaking to be of good behaviour with a special condition

$0.00

Foscor Pty Ltd 070 123 107 Pleaded Guilty – Fined without conviction $40,000.00

Vintek Australasia Pty Ltd 072 601 800 Pleaded Guilty – Fined without conviction $1,500.00

Culwick, Russell Anthony n/a Pleaded Guilty – Without conviction, placed on an undertaking to be of good behaviour with a special condition

$0.00

Seahaven Services Pty Ltd 135 309 474 Pleaded Guilty – Convicted and fined $20,000.00

Golden City Support Services * VIC A009388D

Pleaded not Guilty – Fined without conviction $15,000.00

G & S Fortunato Pty Ltd 102 562 685 Pleaded Guilty – Fined without conviction $35,000.00

W & M Mahony Pty Ltd 100 096 875 Pleaded Guilty – Fined without conviction $25,000.00

Cotton On Group Pty Ltd 127 904 198 Enforceable Undertaking with conditions $0.00

Cotton On Group Pty Ltd 127 904 198 Enforceable Undertaking with conditions $0.00

Garijon Pty Ltd 093 093 166 Pleaded Guilty – Fined without conviction $5,000.00

Silk Contract Logistics Pty Ltd 006 444 355 Pleaded Guilty – Fined without conviction $60,000.00

Dollar Sweets Company Pty Limited 006 044 159 Pleaded Guilty – Fined without conviction $25,000.00

Turi Foods Pty Ltd 057 142 971 Pleaded Guilty – Convicted and fined $60,000.00

Australian Pet Essentials Pty Ltd 128 477 529 Pleaded Guilty – Convicted and fined $15,000.00

Becon Constructions (Australia) Pty Ltd

092 361 165 Pleaded Guilty – Fined without conviction $3,500.00

Acquittal 1 of 2015-16 n/a Pleaded not Guilty – Discharged (Magistrates' Court) $0.00

Thiess Services Pty Ltd 040 725 247 Pleaded not Guilty – Convicted and fined $600,000.00

Acquittal 2 of 2015-16 n/a Pleaded not Guilty – Acquitted (County Court) $0.00

HOA Australia Pty Ltd 006 234 877 Pleaded Guilty – Fined without conviction $4,000.00

Acquittal 3 of 2015-16 n/a Charges Withdrawn $0.00

Pyrenees Hay Processors Co-Operative Limited

n/a Pleaded Guilty – Fined without conviction $15,000.00

Victoria Wool Processors (Aust) Pty Ltd

050 032 356 Pleaded not Guilty – Convicted and fined $75,000.00

Appendix 1 – Prosecutions





Wyncity Enterprises Pty Ltd 154 141 894 Pleaded Guilty – Fined without conviction $35,000.00

Wodonga Rendering Pty Ltd 074 885 457 Pleaded Guilty – Fined without conviction $40,000.00

Cool Dynamics Refrigeration Pty Ltd 081 731 811 Pleaded Guilty – Convicted and fined $285,000.00

Walters, Daniel Hamilton n/a Pleaded Guilty – Fined without conviction $4,000.00

Specialty Packaging Group Pty Ltd 005 319 666 Enforceable Undertaking with conditions $0.00

Total Beauty Network Pty Limited 107 354 718 Pleaded Guilty – Convicted and fined $75,000.00

Alcibiade Lanza n/a Pleaded Guilty – Convicted and fined $2,500.00

Organic Spring Pty Ltd 163 907 453 Pleaded Guilty – Without conviction, placed on an undertaking to be of good behaviour with a special condition

$0.00

Blu Apartments & Constructions Pty Ltd

166 884 804 No Plea Taken – Convicted and fined $35,000.00

Aeromarl Pty Ltd 074 231 691 Pleaded Guilty – Convicted and fined $12,000.00

Bluestar Global Logistics (Aust) Pty Ltd


Melbourne Chef (Aust) Pty Ltd 050 131 827 Pleaded Guilty – Convicted and fined $45,000.00


Monty Group Pty Ltd 108 944 350 Pleaded Guilty – Fined without conviction $20,000.00

Orrcon Distribution Pty Ltd 006 702 067 Pleaded Guilty – Fined without conviction $40,000.00


Graham, Daniel n/a Pleaded Guilty – Convicted and fined $2,000.00

Linde Material Handling Pty Limited 000 768 776 Pleaded Guilty – Fined without conviction $18,000.00

Cabrini Health Limited 108 515 073 Pleaded Guilty – Fined without conviction $50,000.00

Australian Facade Manufacturers Pty Ltd


Essendon Football Club 004 286 373 Pleaded Guilty – Convicted and fined $200,000.00

Essendon Football Club 004 286 373 Pleaded Guilty – Convicted and fined $0.00

DiMac Constructions Proprietary Limited

004 716 821 Enforceable Undertaking with conditions $0.00

Perrowood Pty Ltd 006 724 750 Pleaded Guilty – Convicted and fined $40,000.00

Veyance Belting Pty Ltd 000 468 780 Pleaded Guilty – Fined without conviction $90,000.00

Aussie Signs Pty Ltd 006 631 894 Pleaded Guilty – Convicted and fined $250,000.00

Cat Site Clearing Pty Ltd 125 360 465 No Plea Taken (ex parte) – Fined with conviction $25,000.00

Mainline Developments Pty Ltd 120 540 258 Pleaded Guilty – Convicted and fined $1,000.00

La Precast Group Pty Ltd 151 431 319 No Plea Taken (ex parte) – Fined with conviction $4,000.00

McIntyre Structural Steel Pty Ltd 081 841 965 Pleaded Guilty – Fined without conviction $9,000.00

McIntyre Structural Steel Pty Ltd 081 841 965 Pleaded Guilty – Fined without conviction $0.00



Acquittal 4 of 2015-16 n/a Charges Withdrawn

Ault, Andrew William n/a Pleaded Guilty – Convicted and fined $2,000.00


Orbit Cleaning Services Australia Pty Ltd

144 792 889 Pleaded Guilty – Convicted and fined $20,000.00




Rinoldi Pasta Pty Ltd 004 248 524 Pleaded Guilty – Fined without conviction $18,000.00

Gerard Duynhoven Pty Ltd 081 412 106 Pleaded Guilty – Fined without conviction $3,250.00

Leo Duynhoven Pty Ltd 069 212 219 Pleaded Guilty – Fined without conviction $3,250.00

Jurgens Australia Pty Ltd 127 210 904 Pleaded Guilty – Convicted and fined $80,000.00

Wilbridge Securities Pty Ltd 069 519 562 Pleaded Guilty – Fined without conviction $45,000.00

Alice Homes Pty Ltd 104 869 865 Pleaded Guilty – Fined without conviction $3,000.00

Benjamin Joseph Grech n/a Pleaded Guilty – Convicted and fined $2,000.00

BPL Melbourne Pty Ltd 115 955 541 Pleaded Guilty – Convicted and fined $40,000.00

Rowland & Associates Pty Ltd 077 566 324 Enforceable Undertaking with conditions $0.00

Fountain Downs Pty Ltd 006 578 650 Pleaded Guilty – Without conviction, placed on an undertaking to be of good behaviour with a special condition

$0.00

Arendtsz, Shaun Victor n/a Pleaded Guilty – Fined without conviction $2,000.00

AMPD Group Pty Ltd 155 544 335 Pleaded Guilty – Convicted and fined $4,000.00

Triestina Nominees Pty Ltd 005 318 409 Pleaded Guilty – Convicted and fined $30,000.00

Caelli Constructions Pty Ltd 080 995 204 Pleaded Guilty – Convicted and fined $30,000.00

Active Event Management Pty Ltd 119 494 192 No Plea Taken (ex parte) – Fined without conviction $2,500.00

Melbourne Accident Repair Centre Pty Ltd


Tabloid Holdings Pty Ltd 107 261 352 Pleaded Guilty – Convicted and fined $30,000.00

Lilford Farms Pty Ltd 168 868 148 Pleaded Guilty – Convicted and fined $450,000.00

Integra Civil Pty Ltd 600 360 254 Pleaded Guilty – Fined without conviction $18,000.00

Bernie Leen & Sons Pty Ltd 126 062 431 Pleaded Guilty – Fined without conviction $2,500.00

Ducon Pty Ltd 094 425 868 Pleaded not Guilty – Convicted and fined $50,000.00

Acquittal 5 of 2015 –16 n/a Pleaded not Guilty – Discharged (Magistrates' Court) $0.00

Cresp, Mark n/a Pleaded Guilty – Convicted and fined $2,000.00

Acquittal 6 of 2015 – 16 n/a Charges Withdrawn $0.00

Shane Cook Homes Pty Ltd 088 961 031 Pleaded Guilty – Without conviction, placed on an undertaking to be of good behaviour with a special condition

$0.00

Acquittal 7 of 2015 – 16 n/a Charges Withdrawn $0.00

Chassis Pty Ltd 100 293 516 Pleaded Guilty – Convicted and fined $2,000.00

Controls Australia Pty Ltd 005 641 083 Pleaded Guilty – Fined without conviction $4,500.00

Controls Australia Pty Ltd 005 641 083 Pleaded Guilty – Fined without conviction $2,000.00

Winnipeg Textiles Pty Ltd 080 687 725 Pleaded Guilty – Fined without conviction $7,000.00

Singh, Harinder n/a Pleaded Guilty – Convicted and fined $10,000.00

Dennert, Wayne Allen n/a Pleaded Guilty – Convicted and fined $12,500.00

The Geo Group Australia Pty Limited 051 130 600 Pleaded Guilty – Convicted and fined $60,000.00

Gippsland Premium Quarries Pty Ltd 126 268 782 Pleaded Guilty – Fined without conviction $8,000.00

Gippsland Premium Quarries Pty Ltd 126 268 782 Pleaded Guilty – Convicted and fined $30,000.00

Bilic Homes Pty Ltd 005 916 585 Pleaded Guilty – Convicted and fined $300,000.00

Australian Tartaric Products Pty Ltd 008 275 554 Pleaded Guilty – Fined without conviction $22,000.00

Vand Builders Pty Ltd 160 162 630 Pleaded Guilty – Convicted and fined $25,000.00





Metropolitan Express Transport Services Pty Ltd


Severino Homes Pty Ltd 100 162 589 Pleaded Guilty – Fined without conviction $3,500.00

* matter under appeal

Compensation Prosecution Outcomes 2015/16

Defendant A.C.N. Result Fine Restitution

SABHARWAL, Vikrant n/a Convicted and fined $3,000 and ordered to pay restitution of $16,137.40 plus costs.

$3,000.00 $16,137.40

TURNER, Lyndon James n/a Convicted and fined $10,000 and ordered to pay costs ($2,700).

$10,000.00 $0.00

ZAMMIT, Shane n/a Sentenced without conviction to an adjourned undertaking to be of good behaviour for a period of two years. Condition to pay $1000 to Court Fund and costs.

$0.00 $0.00

Diversion 2 of 2015-16 n/a Diversion Order with condition to make restitution of $12,629.26, pay $500 to Court Fund and pay costs.

$0.00 $12,629.26

MAZUMDAR, Dr Pralay n/a Convicted and placed on Community Corrections Order for period of 2 years, ordered to perform 350 hours of community work. Fined $5000, paid restitution of $44,539.78 and ordered to pay costs.

$5,000.00 $44,539.78

RYLAND, David n/a Convicted and sentenced to an effective aggregate term of imprisonment of 8 months, wholly suspended for 24 months and ordered to pay restitution ($80,000) and costs.

$0.00 $80,000.00

FALZON, Lawrence n/a Convicted and sentenced to 12 months imprisonment, wholly suspended with an operational period of 24 months. Ordered to pay restitution of $101,944.60.

$0.00 $101,944.60

LANGDON, Mark n/a Convicted and sentenced to 6 months imprisonment and ordered to pay restitution of $93,920.00 and costs.

$0.00 $93,920.00

LITTLE, Garry n/a On charge 1, convicted and fined $1,500. On charge 2, convicted and placed on a 15 month Community Corrections Order, with condition that he perform 150 hours unpaid community work. Ordered to make restitution of $14,400 to WorkSafe.

$1,500.00 $14,400.00

SPARK, Kerrie n/a Convicted and fined $2,000 and ordered to pay restitution of $4,973.40 and costs.

$2,000.00 $4,973.40

LITTLE, Anthony De n/a Convicted and fined $850 and ordered to pay restitution of $6152.40 and costs.

$850.00 $6,152.40

TUMBAS, Branko n/a Convicted and sentenced to a term of imprisonment of 4 months, wholly suspended for 12 months (fraud charges). Convicted and fined $1,000 (false information charges). Ordered to pay costs and restitution of $87,391.40.

$1,000.00 $87,391.40

BEDFORD, Dale n/a Convicted and fined ($5000) and ordered to pay restitution of $8,942.60 and costs.

$5,000.00 $8,942.60


Compensation Prosecution Outcomes 2015/16

Defendant A.C.N. Result Fine Restitution

RECHICHI, Robert n/a Convicted and sentenced to a term of imprisonment of 4 months, wholly suspended for 12 months. Ordered to pay restitution of $37,676.90 and costs.

$0.00 $37,676.90

LESTER, Patrick Emerich n/a Convicted and fined $3,000 and ordered to pay restitution of $15,069.47 and costs.

$3,000.00 $15,069.47

Diversion 8 of 2015-16 n/a Diversion Order with condition to make restitution of $5000.

$0.00 $5,000.00

ZAMMIT, Zachary Michael n/a Sentenced without conviction to an adjourned undertaking to be of good behaviour for a period of 12 months. Condition to pay $1000 to Court Fund, restitution of $3408.40 and costs.

$0.00 $3,408.40

DWYER, Lawrence n/a Convicted and sentenced to pay a fine of $3500 and ordered to pay restitution of $10,537.36.

$3,500.00 $10,537.36

ARDRAN, Shannon n/a Convicted and fined $4,000 and ordered to pay costs.

$4,000.00 $0.00

Trio Nominees Pty Ltd 134 575 018 Fined $750 without conviction and ordered to pay costs.

$750.00 $0.00

Ansa Cleaning Pty Ltd 118 309 569 Convicted and fined $800. $800.00 $0.00

WOODROFFE, Anthony n/a Community Corrections Order for 12 months, without conviction, with condition of 150 hours community work. Ordered to pay $13,198 in restitution and costs.

$0.00 $13,198.00

Crescent Industries Pty Ltd (in liquidation)

140 915 859 Convicted of one charge of failing to forward a claim for weekly payments within 10 days of receipt and one charge of failing to apply for registration as an employer to the Authority within 60 days after it became aware, or reasonably out to have been aware of, its obligation to do so. Fined $20,000 as part of an aggregate order.

$20,000.00 $0.00

Enforceable Undertakings 2015/16

Rowland & Associates Pty Ltd On 29 March 2016, Rowland & Associates Pty Ltd entered into an Enforceable Undertaking with WorkSafe Victoria in relation to the supply of plant that, so far as was reasonably practicable, was not safe and without risk to health when it was used for the purpose for which it was designed, manufactured or supplied.

DiMac Constructions Proprietary Limited

On 3 February 2016, DiMac Constructions entered into an Enforceable Undertaking with WorkSafe Victoria in relation to an incident that occurred on 1 June 2015 involving an employee of Di Mac who was injured when he fell approximately 3.3 metres into the internal of a building.

Specialty Packaging Group Pty Ltd On 1 December 2015, Specialty Packaging entered into an Enforceable Undertaking (EU) with WorkSafe in relation to an incident that occurred on 23 July 2014 where an employee stopped a forklift on sensor pads that muted a light curtain guarding a machine exclusion zone. The employee then entered the exclusion zone and injured his foot when it became stuck between a sweeper bar and pallet. In the EU, the company made seven undertakings to improve health and safety in its own workplace, and raise awareness of health and safety issues in the cardboard manufacturing industry and the community.

Cotton On Group Services Pty Ltd On 16 September 2015, Cotton On Group Services entered into an Enforceable Undertaking with WorkSafe in relation to three instances of failing to comply with improvement notices relating to manual handling and traffic management issues.



2015/16 Statistics

OHS Prosecution success rate 94%

Completed investigations proceeding to legal review outcome 71%

OHS Investigations proceeding to prosecution within 12 months 91%

Number of OHS prosecutions commenced (counted by defendant) 119

Number of compensation prosecutions commenced (counted by defendant)

30

Number of completed OHS prosecutions (counted by defendant) 110 Excludes Committal outcomes Includes successful and unsuccessful prosecutions

Number of completed ACA and WIRCA prosecutions (counted by defendant)

23 Excludes Committal outcomes

Number of OHS Cautions 42

Number of Compensation Cautions 33

Number of PI Code of Conduct Cautions 5

Total Cautions 80

Requests to WorkSafe for a prosecution to be brought pursuant to section 131 of the Occupational Health and Safety Act 2004 (OHS Act)Where WorkSafe has not brought prosecution proceedings within six months of an alleged offence against the OHS Act, a person may request that WorkSafe bring a prosecution pursuant to section 131(1) of the OHS.

In 2015/16, WorkSafe received 17 requests for a prosecution to be brought for an alleged offence against the OHS Act.

Pursuant to section 131(2), within three months of the request being made, WorkSafe must advise the person in writing whether prosecution proceedings will be brought.

• WorkSafe determined to commence a prosecution in relation to none of these matters• WorkSafe determined not to commence a prosecution in relation to five of these matters• Decision is pending in 12 matters

Pursuant to section 131(3), where WorkSafe advises a person that prosecution will not be brought, the person may request that WorkSafe refer the matter to the Director of Public Prosecutions (DPP) for advice on whether a prosecution should be brought (section 131(4)):

Seven matters were referred to the DPP in 2015/16. Of the seven matters:

• The DPP recommended not to prosecute in four matters• Advice is pending in three matters

Requests to WorkSafe for prosecutions to be brought pursuant to sections 242AC and 252AA of the Accident Compensation Act 1985 (AC Act) and sections 577 and 607 of the Workplace Injury Rehabilitation and Compensation Act 2013 (WIRC Act)Where WorkSafe has not brought prosecution proceedings within six months of an alleged offence against the AC Act or the WIRC Act, a person may request that WorkSafe bring a prosecution pursuant to sections 242AC or 252AA of the AC Act or pursuant to sections 577 or 607 of the WIRC Act.

In 2015/16, WorkSafe received no request for prosecution under section 242AC of the AC Act. WorkSafe received no requests to bring a prosecution pursuant to section 252AA of the AC Act or pursuant to sections 577 or 607 of the WIRC Act.

One s607 matter was referred to the DPP in 2015/16. The decision is still pending.


This appendix includes data on agent performance which WorkSafe Victoria uses to assess the performance of its Authorised Agents for remuneration purposes and for general performance management. The information is provided to inform employers and the public on aspects of the performance of WorkSafe authorised agents.

The information does not purport to be all-inclusive or contain all information which employers may require to make an informed assessment as to the selection of an agent. Employers should make their own independent assessment of the capabilities of each agent and, where appropriate, seek professional advice.

Note that the market allocation of agents may differ between years due to employers transferring Agents and/or from entries or exits to Self-Insurance or other Schemes. These movements can impact the trend performance indicated in this Appendix.

Given the introduction of the Electronic Document Management System by WorkSafe in relation to certificates and invoice processing over 2015/16 processing data is not provided at an agent level over 2015/16. This is due to the implementation of the system impacting the performance of agents differently across the year. Scheme performance is included.

Claims Management and Return to Work

Timeliness of employer notification to Agent Return to Work Index

% received within 12 days % not returning to work within 6 months

Agent Result Trend Result Trend

Allianz 91.7% Steady 19.1% Deteriorated

CGU 92.5% Steady 20.7% Deteriorated

GBS 94.9% Steady 19.5% Steady

QBE 95.1% Steady 20.6% Deteriorated

Xchanging 96.5% Improved 18.5% Improved

Scheme 93.9% Steady 19.8% Steady

Return to Work Index Trend information

Improved Performance in current year has improved by more than 2% of that in the previous year

Steady Performance in current year is within +/- 2% of the previous year

Deteriorated Performance in current year has deteriorated by more than 2% of that in the previous year

Duration – % of workers on weekly payments at:

13 weeks 26 weeks 52 weeks 134 weeks

Agent Result Trend Result Trend Result Trend Result Trend

Allianz 40.0% Steady 22.7% Steady 8.6% Steady 2.0% Improved

CGU 39.4% Deteriorated 23.6% Deteriorated 9.1% Deteriorated 1.7% Improved

GBS 35.3% Steady 21.0% Steady 8.6% Steady 2.4% Deteriorated

QBE 39.2% Steady 23.5% Deteriorated 8.7% Improved 2.9% Deteriorated

Xchanging 40.8% Deteriorated 22.8% Deteriorated 8.6% Deteriorated 1.9% Deteriorated

Scheme 38.9% Steady 22.8% Deteriorated 8.7% Steady 2.1% Steady

Note: a lower percentage represents higher performance

Duration Trend information




Appendix 2 – Agent Performance Results



Service and Processing

Worker Levels of ServiceEmployer Levels of

ServiceValid Conciliation

Non Compliance Complaints

AgentService event

score TrendService event

score Trend

Number of valid

complaints

Number of valid complaints per $10m

billed premium

Trend in Number of complaints per

$10m billed premium

Allianz 78.68% Steady 87.99% Steady 5 0.1 Steady

CGU 80.80% Steady 86.54% Steady 1 0.0 Improving

GBS 72.88% Deteriorated 83.89% Steady 5 0.1 Steady

QBE 76.17% Steady 83.82% Steady 1 0.0 Improving

Xchanging 82.54% Steady 89.21% Steady 2 0.1 Steady

Scheme 78.35% Steady 86.23% Steady 14 0.1 Steady

Worker and employer service Trend information




Processing (Scheme Level) Result Trend

Timeliness of Weekly Payments to Injured Workers – % paid within 7 days 99.3% Steady

Timeliness of medical reimbursements – % paid within 11 days 94.5% Steady

Timeliness of Employer reimbursements – calendar days to pay 75% 7 days Steady

Timeliness of payments to providers – % paid within 30 calendar days of invoice receipt 97.0% Steady

Timeliness of Processing (excluding employer reimbursements) Trend information




Timeliness of Employer reimbursements Trend information

Improved Performance in current year has improved by more than 2 calendar days of that in the previous year

Steady Performance in current year is within +/- 2 calendar days of the previous year

Deteriorated Performance in current year has deteriorated by more than 2 calendar days of that in the previous year


Agent fees

Authorised agents operating under an instrument of appointment which WorkSafe issues pursuant to the Workplace Injury Rehabilitation and Compensation Act 2013 are paid fees for acting on behalf of WorkSafe in the issuing of WorkCover insurance, collection of insurance and the administration of claims. The agent remuneration includes performance based components. It also allows for the reduction of an agent’s fees upon the occurrence of an event such as a failure to meet performance criteria.

Reductions Applicable to 2015/16

CGU incurred a remuneration reduction of $444,527 for data manipulation relating to the payment of weekly compensation.

Definitions

Measure Definition

Timeliness of employer notification to agent

The proportion of claims, with 20 days lost time duration or more, received by the agent from the employer with remuneration greater than $1 million and within 12 days of the employer receiving the claim from an injured worker. Measure includes claims received between 1 July 2015 and 30 April 2016.

Return to Work Index The proportion of injured workers recorded as working on the date six months after lodgement of their claim (Insurer Received date). Measure only includes claims received between 1 December 2014 to 30 November 2015 (inclusive), with greater than 10 days of weekly compensation paid. See note (1).

Duration on weekly payments at 13 and 26 weeks

Duration is measured as the number of workers receiving 13/ 26 weeks of compensation expressed as a proportion of workers who have received at least 10 days of compensation. See note (1).

Duration on weekly payments at 52 weeks

Duration is measured as the number of workers who have exceeded 52 weeks of compensation for claims received on or after 1 April 2012 expressed as a proportion of workers who have received at least 10 days of compensation for claims reported between 1 April 2013 and 31 March 2015 inclusive. See note (1).

Duration on weekly payments at 134 weeks

Duration is measured as the number of workers who have exceeded 134 weeks of compensation for claims received on or after 1 September 2010 expressed as a proportion of workers who have received at least 10 days of compensation for claims reported between 1st September 2011 and 31 August 2013 inclusive. See note (1).

Injured Worker Levels of Service from the agent

The Injured Worker Survey is measured against service events, that is, the average performance across six key events. These figures are based on an independent survey of approximately 417 workers a month (i.e. 5000 a year) who received weekly benefits within the three month period leading up to the survey month. See note (2)

Employer Levels of Service from the agent

The Employer Survey is measured against service attributes, that is, the average performance across 12 service dimensions. These figures are based on an independent survey of 1200 employers who had at least one claim that received any type of payment or that was entitled to weekly compensation in the three months prior to the survey (which is conducted on a monthly basis throughout the year). See note (3).

Valid Conciliation Non Compliance Complaints

This measure shows the number of valid complaints which were made against the agent and have been registered on the WorkSafe Conciliation Compliance Database between 1 July 2015 and 30 June 2016.

The measure is also expressed as the number of complaints per $10 million of billed premium to allow for agent market share.

The total number of disputes referred for conciliation between 1 July 2015 and 30 June 2016 as recorded on the WorkSafe computer system is 14,304.

Timeliness of weekly payments direct to injured workers

The timeliness of payment of weekly payments direct to injured workers is assessed as the percentage of payments made within 7 calendar days from a notification of payment requirement being received by the Scheme. See note (4).

Timeliness of medical reimbursements direct to injured workers

The timeliness of payment of medical reimbursements direct to injured workers is assessed as the percentage of payments made within 11 calendar days of a request for payment being received by the Scheme from the injured worker. See note (4).

Timeliness of Employer reimbursements

The timeliness of reimbursements of weekly payments to employers is assessed as the number of days it takes to make 75% of payments. See note (4).



Definitions

Measure Definition

Timeliness of processing provider accounts – % paid within 30 days of invoice

The timeliness of payment to providers for treatment provided to injured workers is assessed as the percentage of accounts paid within 30 calendar days of receipt by the Scheme. See notes (4) and (5).

Notes

(1) This assessment takes into account the differing mix of claims that Agents manage.

(2) The survey is accurate to within +/–3% at 95% confidence level for each Agent.

(3) The survey is accurate to within +/–5% at 95% confidence level for each Agent.

(4) There may be instances where the Agent is reliant on further information from third parties to make a payment.

(5) Accounts for this measure are counted slightly differently from other measures. If there are multiple service dates on the same account, it is counted multiple times.

Other than the Injured Worker and Employer surveys, audits and timeliness of employer notification to Agent, all assessments were made at 30 June 2016.

Market Share as at 30 June 2016

Agent % of Policies % of Remuneration % of Premium

Allianz 30.54% 24.02% 23.01%

CGU 26.13% 28.79% 26.09%

GBS 14.15% 15.78% 18.63%

QBE 17.54% 18.24% 19.14%

Xchanging 11.64% 13.17% 13.14%

Scheme 100% 100% 100%

Notes

Number of policies refers to the employers with WorkCover Insurance managed by each agent. Remuneration refers to the salaries and wages (including superannuation) paid by employers managed by each agent. Premium refers to the premium payable for the 2015/16 year for employers managed by each agent. Due to rounding, market share may not equate to 100%.

Agent name Full description

Allianz Allianz Australia Workers' Compensation (Victoria) Limited

CGU CGU Workers Compensation (Vic) Limited

GBS Gallagher Bassett Services Workers Compensation Vic Pty Ltd

QBE QBE Workers Compensation (VIC) Limited

Xchanging Xchanging Integrated Services Victoria Pty Ltd trading as Xchanging


Overview

Self-insurers are part of the WorkSafe scheme. Their status is derived from the Workplace Injury Rehabilitation and Compensation Act 2013.

Employers are eligible to apply for self-insurance in Victoria if they satisfy prescribed minimum requirements of financial strength and viability. The applicant must be a body corporate and not a subsidiary of another body corporate, other than a foreign company.

As at 30 June 2016, there were 38 self-insurers operating in Victoria, representing approximately 8 per cent of total scheme remuneration.

Applications and approvals during 2015/16

Applications for self-insurance are made to WorkSafe. WorkSafe has the power to approve or refuse any application.

In determining whether an applicant is suitable, WorkSafe must be satisfied that the applicant is ‘fit and proper’ to be a self-insurer. In this regard, WorkSafe examines the applicant’s:

• financial viability;• capacity to administer claims for compensation;• incidence of injuries to workers and the cost of claims in respect of such injuries;• safety of working conditions;• compliance with the Act and Regulations;• compliance with any terms and conditions (where the application is for re-approval); and • any other matters that WorkSafe thinks fit.

Approval as a self-insurer is subject to certain prescribed terms and conditions specified in Ministerial Orders, as well as any terms and conditions determined by WorkSafe.

Initial approval has effect for a period of three years. Renewal of approval is for a period of four years, unless WorkSafe, in its discretion, determines that approval has effect for six years. This longer period of approval is designed to reward good performance in the area of health and safety, injury management and return to work.

No new self-insurers commenced during 2015/16.

The following corporations were successful in their application for renewal of approval to self-insure in Victoria during 2015/16:

(i) ExxonMobil Australia Pty Ltd effective from 31 August 2015 for a period of 4 years. (ii) Westpac Banking Corporation effective from 31 August 2015 for a period of 4 years.(iii) Ford Motor Company of Australia Ltd effective 1 January 2016 for a period of 4 years.(iv) Ingham Holdings I Pty. Ltd effective 12 January 2016 for a period of 4 years.(v) Unilever Australia (Holdings) Pty Ltd effective 31 March 2016 for a period of 4 years.

Return to work rate

In 2015/16, self-insurers achieved a sustained return to work rate of 83.9 per cent, which represents a slight improvement on the 2014/15 result of 82.7 per cent.

Service

WorkSafe’s Injured Workers Survey includes injured workers covered by self-insurers. In 2015/16, the service score was 70 per cent for all self-insurers. While this is an improvement on the prior year, the score is lower than the equivalent service score for WorkSafe agents (73 per cent1).

1 Due to the differences between the self-insurers survey methodology and that of WorkSafe agents, it is not possible to make a direct comparison between the respective 2015/16 service results. This average has been calculated to provide an approximate comparison only.

Appendix 3 – Self-Insurance Report



List of self-insurers as at 30 June 2016

1. Alcoa Australian Holdings Pty Ltd ALCOA AUSTRALIA ROLLED PRODUCTS PTY LIMITED

2. Alcoa of Australia Limited ALCOA OF AUSTRALIA LIMITED

3. Amcor Limited AMCOR FLEXIBLES (AUSTRALIA) PTY LTD

AMCOR FLEXIBLES (PORT MELBOURNE) PTY LTD

AMCOR LTD

4. Arrium Limited AUSTUBE MILLS PTY LTD

ONESTEEL RECYCLING PTY LIMITED

ONESTEEL REINFORCING PTY LIMITED

ONESTEEL TRADING PTY LIMITED

ONESTEEL WIRE PTY LIMITED

SSX SERVICES PTY LIMITED

5. Australia and New Zealand Banking Group Ltd

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

6. BHP Billiton Limited BHP BILLITON LIMITED

7. BlueScope Steel Limited BLUESCOPE DISTRIBUTION PTY LTD

BLUESCOPE STEEL (AIS) PTY. LTD.

BLUESCOPE STEEL LIMITED

FIELDERS MANUFACTURING PTY LTD

LYSAGHT BUILDING SOLUTIONS PTY LTD

ORRCON DISTRIBUTION PTY LTD

8. BP Australia Group Pty Ltd B P AUSTRALIA PTY LTD

CENTREL PTY LTD

ELITE CUSTOMER SOLUTIONS PTY LTD

NO. 1 RIVERSIDE QUAY PROPRIETARY LIMITED

9. Brambles Limited BRAMBLES INDUSTRIES LIMITED

CHEP AEROSPACE PTY LTD

CHEP AUSTRALIA LIMITED

CHEP PALLECON SOLUTIONS PTY LTD

KEGSTAR PTY LIMITED

10. Brickworks Limited AUSTRAL PRECAST (VIC) PTY LTD

AUSWEST TIMBERS PTY. LTD.

BRICKWORKS LTD

BRISTILE ROOFING (EAST COAST) PTY LTD

DANIEL ROBERTSON PTY. LTD.

NUBRIK CONCRETE MASONRY PTY. LTD.

NUBRIK PTY LTD

11. Broadspectrum Limited APP CORPORATION PTY LIMITED

BROADSPECTRUM (AUSTRALIA) PTY LTD

BROADSPECTRUM SERVICES PTY LTD

ICD (ASIA PACIFIC) PTY LIMITED

O.G.C. SERVICES PTY LTD



12. Carter Holt Harvey Building Products Pty Limited

CARTER HOLT HARVEY LVL PTY LIMITED

CARTER HOLT HARVEY PINEPANELS PTY LIMITED

CARTER HOLT HARVEY WOODPRODUCTS (CENTRAL AND NORTHERN REGIONS) PTY LIMITED

CARTER HOLT HARVEY WOODPRODUCTS AUSTRALIA PTY LIMITED

13. Crown Resorts Limited BETFAIR PTY LIMITED

CAPITAL CLUB PTY. LTD.

CROWN MELBOURNE LIMITED

CROWN RESORTS LIMITED

14. CSR Limited BRICKS AUSTRALIA SERVICES PTY LIMITED

CSR LIMITED

15. ExxonMobil Australia Pty Ltd ESSO AUSTRALIA PTY LTD

MOBIL EXPLORATION & PRODUCING AUSTRALIA PTY LTD

MOBIL OIL AUSTRALIA PTY LTD

MOBIL REFINING AUSTRALIA PTY. LTD.

16. Ford Motor Company of Australia Limited FORD MOTOR COMPANY OF AUSTRALIA LIMITED

17. Goodman Fielder Pty Limited GOODMAN FIELDER CONSUMER FOODS PTY LIMITED

QUALITY BAKERS AUSTRALIA PTY LIMITED

18. Hanson Australia (Holdings) Proprietary Limited

HANSON CONSTRUCTION MATERIALS PTY LTD

HANSON LANDFILL SERVICES PTY LTD

HYMIX AUSTRALIA PTY LIMITED

19. Ingham Holdings I Pty. Ltd INGHAMS ENTERPRISES PTY. LIMITED

20. Mars Australia Pty Ltd MARS AUSTRALIA PTY LTD

21. Melbourne Water Corporation MELBOURNE WATER CORPORATION

22. Mondelez Australia Holdings Pty Limited MONDELEZ AUSTRALIA PTY LTD

23. Myer Holdings Limited MYER PTY LTD

SASS & BIDE PTY LTD

SASS & BIDE RETAIL PTY LTD

WAREHOUSE SOLUTIONS PTY LTD

24. Paper Australia Pty Ltd PAPER AUSTRALIA PTY LTD

25. Philip Morris (Australia) Limited PHILIP MORRIS LIMITED

26. Primary Health Care Limited HEALTHCARE IMAGING SERVICES (VICTORIA) PTY LIMITED

IDAMENEO (NO 125) PTY LTD

IDAMENEO (NO.789) LTD

SIDAMENEO (NO. 456) PTY LTD

SPECIALIST DIAGNOSTIC SERVICES PTY LTD

SPECIALIST VETERINARY SERVICES PTY LTD

THE TRUSTEE FOR ARTLU UNIT TRUST




27. Qantas Airways Limited ACCUMULATE LOYALTY SERVICES LIMITED

EASTERN AUSTRALIA AIRLINES PTY. LIMITED

EXPRESS FREIGHTERS AUSTRALIA (OPERATIONS) PTY LIMITED

JETSTAR AIRWAYS PTY LIMITED

JETSTAR GROUP PTY LTD

JETSTAR SERVICES PTY LIMITED

Q CATERING LIMITED

QANTAS AIRWAYS LIMITED

QANTAS DOMESTIC PTY LIMITED

QANTAS GROUND SERVICES PTY LIMITED

QANTAS INFORMATION TECHNOLOGY LTD

QANTAS ROAD EXPRESS PTY LIMITED

QF CABIN CREW AUSTRALIA PTY LIMITED

28. Robert Bosch (Australia) Proprietary Ltd ROBERT BOSCH (AUSTRALIA) PROPRIETARY LIMITED

29. Royal Automobile Club of Victoria (RACV) Limited

INTELEMATICS AUSTRALIA PTY LIMITED

R.A.C.V. FINANCE LIMITED

RACV INSURANCE SERVICES PTY LTD

ROYAL AUTOMOBILE CLUB OF VICTORIA (RACV) LIMITED

30. Spicers Limited PAPERLINX SERVICES PTY LTD

SPICERS AUSTRALIA PTY LTD

31. The University Of Melbourne AUSTRALIAN MUSIC EXAMINATIONS BOARD (VIC) LIMITED

MELBOURNE DENTAL CLINIC LTD

MELBOURNE UNIVERSITY PUBLISHING LIMITED

MU STUDENT UNION LIMITED

NOSSAL INSTITUTE LIMITED

UNIVERSITY OF MELBOURNE

UOM COMMERCIAL LTD

32. Toll Holdings Limited TOLL HOLDINGS LIMITED

TOLL IPEC PTY LTD

TOLL NORTH PTY LTD

TOLL TRANSPORT PTY. LIMITED

33. Toyota Motor Corporation Australia Limited TOYOTA MOTOR CORPORATION AUSTRALIA LIMITED

34. Unilever Australia (Holdings) Pty Ltd TEA TOO PTY. LTD.

UNILEVER AUSTRALIA (HOLDINGS) PROPRIETARY LIMITED

UNILEVER AUSTRALIA LIMITED

UNILEVER AUSTRALIA TRADING LIMITED

35. Viva Energy Australia Group Ltd VIVA ENERGY AUSTRALIA LTD

VIVA ENERGY REFINING PTY LTD



36. Wesfarmers Limited AUSTRALIAN VINYLS CORPORATION PTY LTD

BULLIVANTS PTY LIMITED

BUNNINGS GROUP LIMITED

CHEF FRESH PTY LTD

COLES FINANCIAL SERVICES PTY LTD

COLES GROUP LIMITED

COLES SUPERMARKETS AUSTRALIA PTY LTD

COREGAS PTY LTD

CSBP LIMITED

EUREKA OPERATIONS PTY LTD

GREENCAP – NAA PTY LTD

INTEGRATED SAFETY TRAINING PTY LTD

J. BLACKWOOD & SON PTY LTD

KMART AUSTRALIA LIMITED

LAWVALE PTY LTD

LIQUORLAND (AUSTRALIA) PTY. LTD.

MODWOOD TECHNOLOGIES PTY LTD

OFFICEWORKS BUSINESSDIRECT PTY LTD

OFFICEWORKS LTD

PROTECTOR ALSAFE PTY LTD

TARGET AUSTRALIA PTY. LTD.

THE WORKWEAR GROUP PTY LTD

TYRE AND AUTO PTY LTD

WESFARMERS CHEMICALS ENERGY & FERTILISERS LIMITED

WESFARMERS FINANCE PTY LTD

WESFARMERS LIMITED

37. Westpac Banking Corporation ASGARD WEALTH SOLUTIONS LTD

BT FINANCIAL GROUP PTY LIMITED

WESTPAC BANKING CORPORATION

WESTPAC FINANCIAL CONSULTANTS LIMITED

38. Woolworths Ltd LANGTONS PTY. LTD.

PHILIP LEONG STORES PTY LIMITED

QUEENSLAND PROPERTY INVESTMENTS PTY LTD

RETAIL FM PTY LTD

SARA APPAREL LIMITED

WOOLSTAR PTY. LIMITED

WOOLWORTHS LTD



Board of Management

The WorkSafe Board of Management is established under section 24 of the Accident Compensation Act 1985 and continued under section 502 of the Workplace Injury Rehabilitation and Compensation Act 2013. The Board presently consists of seven Directors, each of whom is appointed by the Governor in Council. One of the Directors is also the appointed Chief Executive.

The Board sets the framework for the achievement of WorkSafe’s objectives and the execution of its functions. The Board does this by overseeing strategic planning, policy development, auditing and compliance, prudent financial management, fostering stakeholder relationships and reviewing management performance.

Management of the operations and administration of WorkSafe is delegated by the Board to the Chief Executive who manages and controls the affairs of WorkSafe in accordance with the policies and practices set by the Board.

Directors

The Directors currently serving on the Board are:

Paul BarkerChairman B.Bus, FCA, AGIA and ACIS, MAICDAppointed September 2015

Paul Barker is Chairman of Mirvac Funds Management Limited, Mirvac REIT Management Limited, and a Director of Cricket Victoria.

He has previously held roles including Deputy Chairman of WorkSafe Victoria, Chairman of the Transport Accident Commission (TAC), the Emergency Services Telecommunications Authority, VicForests, Stadium Operations Limited (Etihad Stadium), the Victorian Division of the Institute of Chartered Accountants, and a Director of Employment National Limited.

Clare AmiesChief Executive BA, BSW, MSW, Grad. Cert. Public Policy, AMP (Harvard), MAICD Appointed June 2015

Clare was recently the Executive Director of the Insurance Business Unit for WorkSafe. Prior to that she was Executive Director of the Health & Disability Strategy Group, a collaboration between WorkSafe and the Transport Accident Commission (TAC) that provides health policy and strategic support to the TAC and WorkSafe.Clare spent six years as the Chief Executive Officer of the Western Region Health Centre and five years prior to that as its General Manager, Primary Care Services.

Clare is a Director of Reach Foundation, a member of the Australian Institute of Company Directors (AICD) and Board member of Leadership Victoria.

Ross McCann BEng (Chem) (Hons), FIChemE Appointed October 2013

Ross was Chairman of Qenos, the sole manufacturer of polyethylene in Australia. He was previously the Chief Executive Officer of Qenos. Prior to Qenos, Ross was a member of the Executive Committee of WMC Resources with responsibility for major project management both within Australian and off shore. He began his career with ICI Australia and spent 25 years in management roles in operations, business development, project management and leading business units.

Ross is Deputy Chairman of Sustainability Victoria and a Director on the EPA Victoria Advisory Board. He previously held positions as President of the Plastics and Chemicals Industry Association; Director of the Australian Stem Cell Centre and International Vice President of IChemE.

Appendix 4 – Governance and Compliance


Paul Kirk BEc, CA, RITA, MAICD

Appointed October 2013

Paul had a long and distinguished career at PricewaterhouseCoopers, retiring in July 2011 to form Collin Pitt Associates, a boutique Corporate Advisory, Strategy and Restructuring practice. Paul was also a Special Advisor to Lazard Australia’s Corporate Restructuring business for two years.

Paul has extensive experience in the area of corporate advice, turnaround and restructuring, distressed mergers and acquisitions, strategic advice, distressed debt and implementation of asset management vehicles, forensic accounting and insolvency management.

Paul is also currently a Director of the TAC, Australian Unity Limited, Victorian Registration & Qualifications Agency and is also a member of the Audit and Risk Committee of Monash University.

John Walter LLB (Hons), MBA

Appointed March 2014

John is Chairman of the TAC and a partner at Corrs Chambers Westgarth.

John has diverse experience as a senior lawyer and has served as chair of the Wheat Export Authority, a director of the Australian Barley Board, and at Corrs Chambers Westgarth as chair of the Audit and Risk Committee. He is also a member of the APEC Business Advisory Council Committee which provides expert advice to governments across the Asia Pacific Region.

Neil Lucas PSM, JP

Appointed August 2014

Neil qualified as a Municipal Clerk (RMIT) and pursued a 30 year career in local government culminating in his appointment as Chief Executive – City of Berwick during which time he served as Victorian President of Institute of Municipal Administration. Neil was a Member of Parliament including Parliamentary Secretary to the Leader of the Opposition in the Legislative Council and has served on a number of State Government Boards including the Holmesglen Institute, Emergency Services Telecommunications Authority and the Victorian Government Purchasing Board. Previously, he held positions as the Administrator of Australia’s Indian Ocean Territories (Christmas Island and the Cocos (Keeling) Islands), and as a Councillor & Mayor of the City of Casey. Neil is presently Chairman of the Berwick & Harkaway Cemeteries Trust.

Neil was awarded the Public Service Medal in the Australia Day 1995 Honours List for services to local government and the community.

Marlo Baragwanath LLB (Hons), BA, MSc (Public Administration & Public Policy) LSE

Appointed August 2015

Marlo Baragwanath is currently Director of the Office of the CEO at the Victorian Building Authority. Prior to that she held the position of General Counsel at WorkSafe for 10 years, and has also held roles at Ombudsman Victoria, the Department of Justice and in private legal practice.



Directors’ access to Independent Legal Advice

WorkSafe provides a budget for Directors to obtain independent legal advice in respect of their individual obligations as Directors.

Conflict of Interest

The Directors are required by section 31 of the Accident Compensation Act 1985 (section 511 of the Workplace Injury Rehabilitation and Compensation Act 2013) to declare any pecuniary interest in any matter being considered by the Board or in any other matter in which WorkSafe is concerned.

Directors are required to complete a declaration of private interests upon appointment and in July of each year that they are a director.

Directors are also governed in respect of conflicts of interest by the relevant provisions of the Public Administration Act 2004 and binding codes issued by the Victorian Public Sector Commission.

Board Committees

The Board is supported by three committees chaired by independent non-executive Directors.

Audit CommitteeWorkSafe Board Members of the Audit Committee as at 26 August 2016: Paul Kirk (Chair), Paul Barker, Neil Lucas, Marlo Baragwanath and Ross McCann. Chief Executive attends.

The Audit Committee assists the Board to fulfil its oversight responsibilities relating to:

• the integrity, effectiveness and quality of WorkSafe’s financial reporting and disclosures;• the effectiveness of WorkSafe’s risk management framework;• the independence, work plan, and effectiveness of WorkSafe’s External Auditor;• the External Auditor’s annual audit of WorkSafe’s financial statements;• the qualifications, engagement, fees, scope of work and effectiveness of WorkSafe’s Internal Audit function; and• WorkSafe’s compliance with relevant laws, regulations, standards and codes including the Financial Management Act

1994 (Vic), Standing Directions of the Minister for Finance under the Financial Management Act 1994 and audit requirements under the Prudential Standard for Victorian Government Insurance Agencies 2015.

Risk CommitteeWorkSafe Board Members of the Risk Committee as at 26 August 2016: Paul Kirk (Chair), John Walter, Paul Barker, Marlo Baragwanath and Ross McCann. Chief Executive attends.

The Risk Committee assists the Board to fulfil its oversight responsibilities relating to:

• the implementation, operation and adequacy of the risk management and internal control framework that WorkSafe uses to identify and manage key business, financial, fraud and regulatory risks; and

• WorkSafe compliance with relevant laws, regulations, standards and codes including the Prudential Insurance Standard for Victorian Government Insurance Agencies (with the exclusion of audit requirements which are overseen by the Audit Committee), the VFMC and Centralised Investment Model, the Victorian Government Risk Management Framework (with the exclusion of the attesation requirements which are overseen by the Audit Committee).

Remuneration CommitteeWorkSafe Board Members of the Remuneration Committee as at 26 August 2016: Paul Barker (Chair), Neil Lucas, Marlo Baragwanath and John Walter.

The WorkSafe Board Remuneration Committee assists the Board to fulfil its oversight responsibilities by ensuring that WorkSafe has executive remuneration policies guidelines and practices that are consistent with Government policy.


Board and Subcommittee Meetings

Number attended/eligible to attend

Directors Board Audit Risk Remuneration

Paul Barker 8/8 4/4 3/3

John Walter 9/9 1/1 4/4 1/1

Neil Lucas 9/9 5/5 1/1 1/1

Marlo Baragwanath 7/9 3/4 2/3

Paul Kirk 9/9 5/5 4/4 1/1

Ross McCann 8/9 4/5 3/4 1/1

Clare Amies 9/9

Risk Management

Compliance with the Victorian Government Risk Management Framework and ProcessesStanding Direction 4.5.5 of the Financial Management Act 1994 requires public sector agencies to provide an annual attestation of compliance with the mandatory risk management process requirements set out in the Victorian Government Risk Management Framework.

The Audit Committee of WorkSafe has considered the Statement by the Chief Executive on compliance with the Victorian Government Risk Management Framework and the Executive Team’s internal risk attestation.

On this basis, I certify on behalf of the Board of WorkSafe that WorkSafe has complied with the Ministerial Standing Direction 4.5.5 – Risk Management Framework and Processes.

Paul BarkerChairmanWorkSafe Victoria

Date signed: 26 August 2016



Compliance

This section includes disclosures required by the Financial Management Act 1994, the Accident Compensation Act 1985, the Workplace Injury Rehabilitation and Compensation Act 2013, the Protected Disclosure Act 2012, the Carers Act 2012 and the Freedom of Information Act 1982. It also includes voluntary disclosure of additional regulatory compliance information.

Manner of Establishment and Relevant Minister WorkSafe was established by section 18 of the Accident Compensation Act 1985 as in force immediately before 1 July 2014 as a body corporate with perpetual succession.

The Hon. Robin Scott MP was appointed the Minister for Finance in December 2014, with responsibility to manage Victoria’s occupational health and safety laws, and the accident compensation scheme.

Accountability of WorkSafe Pursuant to section 492 of the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is required to exercise its powers and perform its functions under the Workplace Injury Rehabilitation and Compensation Act 2013, the Accident Compensation Act 1985, the Workers Compensation Act 1958, the Occupational Health and Safety Act 2004, the Equipment (Public Safety) Act 1994 and the Dangerous Goods Act 1985. Pursuant to section 495 of the Workplace Injury Rehabilitation and Compensation Act 2013, WorkSafe is subject to the general direction and control of the Minister and any specific written directions given by the Minister. The Minister cannot give a direction in relation to a specific person.

Ministerial Directions No Ministerial Directions were given under section 495 during the financial year 2015/16.

WorkSafe’s Objectives, Functions and Powers WorkSafe’s primary objectives, functions and powers are found in sections 492, 493 and 494 of the Workplace Injury Rehabilitation and Compensation Act 2013 and sections 2, 7 and 8 the Occupational Health and Safety Act 2004.

These Acts are available from WorkSafe’s website located at worksafe.vic.gov.au.

WorkSafe’s Role in the Community WorkSafe is the regulator of occupational health and safety and the accident compensation scheme in Victoria and its objectives and functions include (amongst others):

• providing insurance to employers • receiving, assessing and determining claims for payment of compensation to injured workers • conducting and defending legal proceedings before courts and tribunals • assisting employers and workers in achieving healthy and safe working environments • promoting the effective occupational rehabilitation of injured workers and their early return to work • developing and implementing programs to provide incentives for employers to implement measures to eliminate or

reduce risks to health and safety and to otherwise improve occupational health, safety and welfare, and • promoting public awareness and discussion of occupational health and safety and providing information services to

workers, employers and the Victorian community.

Access to Information WorkSafe discloses a large volume of information online, by print publishing, and through its metropolitan and regional offices. It also provides information services in person and/or by phone, through its Advisory Services, annual report, website, library at 222 Exhibition Street, and any of its or its authorised agents’ offices across Victoria.


The Freedom of Information Act 1982 In addition to organisational structure, governance and compliance, this Appendix shows how WorkSafe makes information readily available to workers and the public in accordance with Part II of the Freedom of Information Act 1982.

The Freedom of Information Act 1982 gives members of the public the right, subject to certain exemptions, to apply for access to information held by WorkSafe and/or to correct their personal information if it is incomplete, incorrect or out of date.

The Freedom of Information Act 1982 applies to documents created by WorkSafe, as well as those created by other organisations, which are in the possession of WorkSafe and its authorised agents.

For requests under the Freedom of Information Act 1982, applicants may use the online form provided at www.foi.vic.gov.au.

In 2015/16 WorkSafe and its agents received 1,128 freedom of information requests. The Freedom of Information Commissioner received 31 applications for review and complaints and the Victorian Civil and Administrative Tribunal received nine applications for review, all of which are current and carried over into the next financial year.

Details on the outcome of reviews by the FOI Commissioner and the Victorian Civil and Administrative Tribunal are available on the FOI Commissioner’s website and annual report.

The Freedom of Information Act 1982 is just one of the processes available to the public to access WorkSafe documents or information. WorkSafe has processes in place to provide information to workers and the public outside the formal FOI process. Most communications or exchange of information with third parties occurs in the normal course of our business and with injured workers directly, or through our authorised agents, or under the Workplace Injury Rehabilitation and Compensation Act 2013.

As part of normal claim management and administration, injured workers may access information in relation to their claim under section 9 of the Workplace Injury Rehabilitation and Compensation Act 2013 directly from the agents or their employer (including a self-insurer) or in accordance with other provisions of the Workplace Injury Rehabilitation and Compensation Act 2013.

In 2015/16 19,049 requests for information in relation to workers’ injury claims were received by agents under the Workplace Injury Rehabilitation and Compensation Act 2013.

Organisation and Functions Information about WorkSafe and its structure, business units, authorised agents, objectives, functions, powers, the legislation it administers and requests for access to information made under the Freedom of Information Act 1982 or the Workplace Injury Rehabilitation and Compensation Act 2013 can be found in the annual report and/or on the WorkSafe website.

Publications including policies, manuals, guidelines, codes of practice, brochures and other materials are available on the WorkSafe website.

Legislation administered by WorkSafe is also available on its website.



Categories of DocumentsRecords are managed using a cataloguing system called TRIM, are organised by subject and type (form, policy, guidance, etc.) and filed by business area and subject matter.

Injury claims are filed by name and managed by authorised agents in accordance with WorkSafe’s record management policy and authorities and standards issued by the Public Record Office Victoria under the Public Records Act 1973.

Categories of records/files include:

• Actuarial • Annual reports • Complaints • Compliance • Compliance Codes • Contracts • Correspondence, including ministerial • Dangerous Goods • Dispute Management • Enforcement Group • Financial • Freedom of Information requests • Health and Disability Services, including Clinical and Independent Medical Examiner services • Health and Safety • Human Resources (employee records) • Information Technology Shared Services • Injury claims (managed by authorised agents) • Insurance, including Self Insurance, and Premium • Investigations • Legislation, and policy • Legal and litigation • Licensing application, renewals • Policies, procedures, manuals, including the Online Claims Manual • Programs or events (e.g. WorkSafe Week Awards) • Prosecution • Return to work • Risk • Service Requests • Scheme Performance, including data and statistics • Strategic and operational planning • Workplace visit entry reports, improvement and prohibition notices.

Health and Safety WorkSafe is responsible for improving health, safety and welfare in Victorian workplaces under the Occupational Health and Safety Act 2004 and associated legislation.

Information held by WorkSafe is separated into the categories of personal or case files, operational and policy files (on legislation or particular aspects of legislation) and correspondence files. Current files are stored at WorkSafe’s head office in Exhibition Street or at one of its regional offices.


Insurance WorkSafe is responsible for the compensation and rehabilitation of injured workers and managing employer workplace injury insurance and premiums under the Workplace Injury Rehabilitation and Compensation Act 2013.

The rehabilitation and compensation scheme is administered by a number of authorised agents on behalf of WorkSafe. These agents are currently responsible for a range of functions including premium collection, claim lodgement and the delivery of benefits to, and rehabilitation of workers. Therefore, personal or case files of workers are held by the agents who manage their claims. Other operational and policy files are stored at WorkSafe’s offices in Exhibition Street, Melbourne.

Examples of the types of documents to which members of the public usually apply for access are:

• documents relating to their personal information, for example a particular worker’s injury claim, or a workplace complaint made against an individual or company; or

• documents of a non-personal nature, for example details on WorkSafe’s processes or decisions, or information on an incident at a workplace.

Not all documents are automatically made available in response to a request. A concerned person may check WorkSafe’s website or contact the Advisory Service to enquire as to whether the information they require is available for inspection or whether the person should apply for it under the provisions of the Freedom of Information Act 1982.

Making a Request Workers’ injury claim files If you are a worker who has claimed compensation and wish to access documents in relation to your injury claim file you can contact the agent managing your claim to apply for documents under section 9 of the Workplace Injury Rehabilitation and Compensation Act 2013. Under this Act agents are required to process and respond to a request within 28 days from the date they receive the request. Information in relation to the injury claim access to information process is available on the WorkSafe website – Online Claims Manual.

Workplace Injury Insurance Premium Information Documents relating to employer premiums are held by the agents. Certain documents can be released by the agents without the need to use the Freedom of Information Act 1982 process. Employers should contact the agent managing their claims to request access to particular documents.

Other Information For information not related to a worker’s injury claim file or an employer’s premium, requests must be made in writing and should be addressed to:

Freedom of Information WorkSafe Victoria GPO Box 4306 MELBOURNE VIC 3001

Requests under the Freedom of Information Act 1982 must be made in writing, or using the online form provided at www.foi.vic.gov.au. A statutory fee of $27.20 from 1 July 2015 (which is increasing to $27.90 from 1 July 2016) is payable for each request and must be paid by credit card online, or enclosed with the letter of request (cheques should be made payable to WorkSafe Victoria).

The fee may be waived if the applicant requests and provides evidence as to why payment of the fee would cause them financial hardship. Additional costs for access to documents may be also incurred, such as for photocopying (e.g. 20 cents per each A4 size black and white paper) and search time.

Decisions are made under the Freedom of Information Act 1982 by the Principal Officer or authorised Freedom of Information Officers in accordance with the requirements of sections 26 and 51 of the Freedom of Information Act 1982. The Freedom of Information team may be contacted for general queries on (03) 9641 1555.

Further Information Further information and forms are available online at www.worksafe.vic.gov.au.

Online publications and Library WorkSafe produces a wide range of publications, many of which can be accessed on its website or by attending its library. The library has an extensive collection of publications. Members of the public are welcome to use the collection, but must first make an appointment by telephone on (03) 9641 1548 or 1800 671 004.

The library operates from: Ground Floor 222 Exhibition Street Melbourne



Protected disclosures WorkSafe has established procedures under Part 9 of the Protected Disclosure Act 2012.

The purpose of these procedures is to facilitate the making of disclosures and the protection of people who make disclosures from reprisals.

The procedures are available on WorkSafe’s website at www.worksafe.vic.gov.au

Application for Internal Review

Internal Review Outcomes 2014/15 2015/16

Health and safety

Inspector’s decision affirmed (no change) 70* 43

Inspector’s decision set aside 65 102

Inspector’s decision varied (other than compliance date) 45 59

Compliance date only changed 881 1,077

Extension refused 48 17

Application refused 0 0

Application withdrawn 68* 77

Application ineligible / not reviewable 9 10

Total health and safety 1,186 1,385

Licensing


Decision set aside 0 1

Application invalid 0 1

Application withdrawn 0 0

Total licensing 5 3

Return to work

Decisions set aside 3 3

Compliance date only changed 2 1


Varied 0 1

Invalid 3* 1

Withdrawn 1* 0

Total return to work 12 8

* There are some differences in the internal review outcomes reported in the 2015 Annual Report compared to the 2014/15 figures reported above. Some errors were discovered in a reconciliation which have now been corrected.

Victorian Civil and Administrative Tribunal Applications

During the year there were three applications to VCAT for review of Internal Review Unit decisions. One application was set aside, one was withdrawn and one is scheduled for a compulsory conference in 2016/17.


Environmental performance

WorkSafe is committed to reducing its environmental footprint and consistently manages sustainability through resource conservation, pollution prevention and promoting awareness among employees and stakeholders.

WorkSafe proactively manages our environmental footprint through employee participation. Initially this began with an official Green Office Program but has more recently become simply part of the way WorkSafe operates.

The provision of bicycle and end of trip facilities (e.g. showers and lockers) promotes riding to work as an everyday event, sensor lighting throughout the tenancy reduces electricity consumption, the gradual introduction of electronic document management is reducing paper and storage, and our recycle and compost programs are highly successful. Our electricity and paper usage continues to be monitored and minimised.

All redundant mobile phones, IT and camera equipment are donated to a range of charitable entities for recycling if they cannot be re-used within our offices. WorkSafe also recycles batteries, CDs, DVDs and other media.

2015/16 2014/15

Electricity (kWh) 327,580 326,274

Paper consumption (reams) 17,557 15,430

Paper consumption (reams) per FTE 17.16 16.01

Recycled paper (reams) 16,327 13,571

Recycled paper (%) 92.99% 87.95%

Implementation of the Victorian Industry Participation Policy

During 2015/16, WorkSafe commenced five Victorian Industry Participation Plan (VIPP) applicable contracts totalling approximately $1.20 billion. They were all state-wide contracts to which a Statement of Intent was required rather than a VIPP.

The outcomes expected from the implementation of the Statement of Intent to these contracts are as follows:

• a commitment to local content ranging between 93% – 100%.

During 2015/16, WorkSafe completed seven VIPP applicable contracts, collectively valued at approximately $1.24 billion. The outcomes reported from the implementation of VIPP were as follows:

• an average of 92 – 100% of local content outcome was recorded• a total of 226 new local jobs were created• 15 new apprenticeships were created and 5 existing apprenticeships retained• A total of 1,047 existing jobs retained.

During 2015/16, five large businesses prepared a Statement of Intent.

National Competition Policy

Review of Legislative Restrictions In accordance with its National Competition Policy commitments, the Victorian Government commissioned a review of Victoria’s accident compensation legislation in 1998. The review identified three main restrictions on competition; the mandatory nature of the insurance, monopoly provision and centralised premium setting.

Pursuant to section 490 of the Workplace Injury Rehabilitation and Compensation Act 2013, the Minister must before 1 July 2015 and once every five years after that, cause a review on any matter relating to the setting of premiums. The review is to be undertaken by an independent expert review body.

An independent review of premium setting was begun prior to 1 July 2015 by the Department of Treasury and Finance and has now been finalised. Any key findings and recommendations will be considered for potential implementation for the 2017/18 financial year.

The Minister may also cause a review on any matter relating to self-insurer contributions to be undertaken by an independent expert body.



Competitive Neutrality Under the Victorian Government’s Competitive Neutrality Policy WorkSafe is listed as a Public Financial Enterprise. Therefore, in accordance with the obligations set out in the Competition Principles Agreement, WorkSafe pays the full suite of Commonwealth and State taxes or tax equivalents where applicable. WorkSafe is not a borrower in its own right and therefore is not subject to the Financial Accommodation Levy.

The Building Act 1993

WorkSafe’s policy with respect to new building works, and alterations to existing buildings, is to comply with the Building Act 1993 as if WorkSafe is not exempt from compliance as a public authority (as provided in section 217(3) of the Building Act 1993).

Some buildings occupied by WorkSafe may have been constructed or altered under exemptions for public bodies which applied at the time. WorkSafe is unaware of any material non-compliance with the current building standards for buildings of their nature and age.

The Carers Recognition Act 2012

WorkSafe has taken all practical measures to comply with its obligations under the Carers Recognition Act 2012. These include considering the carer relationships principles set out in the Act when setting policies which affect employees in care relationships. WorkSafe has employment policies including the provision of carers leave, flexible working hours, purchased leave and the ability to work from home which comply with the statement of principles in the Act.

Additional Information Available on Request

To the extent applicable, the information listed in Financial Reporting Direction 22, issued by the Minister for Finance, is available on request subject to provisions of the Freedom of Information Act 1982.

Merit and equity, and employment and conduct principles

WorkSafe is committed to the application of principles of merit and equity in the employment process. These principles ensure applicants are assessed and evaluated fairly and equitably on the basis of key selection criteria and required competencies. All decision making recognises WorkSafe’s Code of Conduct, Organisation Values and relevant policies and processes. All WorkSafe employees have access and support available to them via the Equal Employment Opportunity Contact Officers.

WorkSafe Workforce data

30 June 2016 30 June 2015

Total number of employees 1,061 1,000

Full time equivalent 1,023 964

Males 531 507

Females 530 493

Full time 946 891

Part time 115 109

Average age 45 45

Workforce by WorkSafe classification band

Band 1 Band 2 Band 3 Band 4 Band 5 Band 6 Other

30 June 2016 7 55 120 344 369 89 77

30 June 2015 5 52 109 318 354 84 78


Consultants

The following table listed the consultants engaged in 2015/16 where the total costs of each individual engagement was in excess of $10,000

Consultancy DescriptionTotal

Approved Fee2015/16

ExpenditureFuture

Expenditure

$000s $000s $000s

Beaton Capital Pty Ltd Analysis and review of the personal injury litigation management

82 21 –

Deloitte Touche Tohmatsu Regulation Impact Statement for proposed OHS Regulations 2017 and Equipment (Public Safety) Regulations 2017

693 624 –

Deloitte Touche Tohmatsu Review of health and disability shared services arrangements

96 96 –

Deloitte Touche Tohmatsu Development of Agent contract optionality

75 37 –

Direct Focus Consulting Pty Ltd

Review of procurement processes and procedures

69 35 34

Entity Solutions Services Pty Ltd

Disability strategy review and environmental scan

42 10 –

PricewaterhouseCoopers Modelling work relating to benefit delivery and liability management into the future to assist with informing WorkSafe’s next strategy

218 218 –

PricewaterhouseCoopers Regulation Impact Statements for legislative instruments

106 28 –

ShineWing Australia Pty Ltd Development of vision of success, performance measures and realisation plans for Geelong Relocation Program

55 55 –

Silverstone Edge Pty Ltd Development of a performance management framework

48 48 –

Studio Thick Pty Ltd Development of external public website user experience roadmap

173 173 –

Workforce Planning Global Pty Ltd

Development of a strategic workforce planning framework

23 23 –

Total 1,679 1,367 34

In addition a further 2 consultancies where the total payable to consultants was less than $10,000 were engaged during the financial year at a total cost of $13,000.

The total approved fees and expenditure for 2015/16 excludes GST.



Information and Communication Technology (ICT) Expenditure

For the 2015/16 reporting period, WorkSafe had a total ICT expenditure of $48.67 million, with the details shown below:

Business As Usual ICT Expenditure

Total

Non-Business As Usual ICT Expenditure

Total Operational Expenditure Capital Expenditure

$000s $000s $000s $000s

33,729 14,944 7,192 7,752

Advertising

Details of advertising and communications expenditure (for campaigns with a media spend of $150,000 or greater)

Campaign Name

Campaign Summary

Start/End Dates Advertising Media

Expenditure

Advertising Production

Expenditure

Research and Evaluation

expenditure

Other Campaign

Expenditure

Total Campaign

Expenditure

Regional sponsorships (football and netball – One Goal)

TV, Press, Radio, Digital

3 Apr – 30 Jun 391,339 81,053 – – 472,392

Enforcement (Bad Days)

TV, Press, Radio, Outdoor, Digital

21 Feb – 30 Jun (three separate bursts)

1,795,347 591,765 41,380 82,613 2,511,105

Mother's Day Press, Radio, Digital

1 – 8 May 176,417 73,155 – – 249,572

Farm Safety Press, Radio, Outdoor, Digital (Regional only)

3 Apr – 30 Jun (two separate bursts)

220,498 510,793 49,756 – 781,047

Return to Work (Getting Back)

TV, Cinema, Press, Radio, Outdoor, Digital

1 Jul – 30 Jun (three separate bursts)

1,704,389 171,461 26,206 32,575 1,934,631

Safety Values (Leaving Work Safely)

TV, Press, Radio, Digital

23 Aug – 19 Dec (two separate bursts)

2,417,060 37,252 4,996 123,877 2,583,185

Total 6,705,051 1,465,479 122,338 239,065 8,531,932

Sponsorship of country football was excluded from the 2015 Annual Report in error. The excluded expenditure details are: Advertising Media Expenditure $222,185, Advertising Production Expenditure $374,007, Total Campaign Expenditure $596,192.


The Victorian Ombudsman handed down her report, Investigation into the management of complex workers compensation claims and WorkSafe oversight, on 12 September 2016. In her report, the Ombudsman made 17 recommendations, the first two of which were made to Government. The remaining 15 recommendations were made to WorkSafe, and our response to those recommendations, and the timeframe by which they will be addressed, is listed in the table below. WorkSafe accepts all the recommendations made to us.

Recommendation number Response Timing

Recommendations to WorkSafe

3. Consider how the overall operation of the scheme can better target its resources and oversight to ensure quality decision-making in the cohort of complex cases where disputes frequently arise.

WorkSafe accepts this recommendation.

WorkSafe has engaged RMIT to conduct an end to end review of the system.

By 30 June 2017

4. Implement a system to record, collate and track complaints, feedback, discussions with agents and outcomes, and use this data to:

a. identify and remedy complaint patterns and systemic issues

b. assist identifying trends in agent decision-making practices and potential systemic issues in the scheme

c. conduct ongoing audits of samples of claims disputed at conciliation, Medical Panels and court where the decision was changed.

WorkSafe accepts this recommendation. By 31 December 2017

5. Provide conciliation officers access on request to the relevant agent claim files to enable better informed conciliation outcomes.

WorkSafe accepts this recommendation. We are currently working on a program to digitise claims files and expect this to be completed by December 2017. This will enable faster access to the documentation that the agent relied upon to make their decision.

By 31 December 2017

6. Review all claims subject to a direction at conciliation to identify opportunities to improve agent practices.

WorkSafe accepts this recommendation. This will be incorporated into the plan to address recommendation 4.

See recommendation 4

7. Use its power to issue a written direction to an agent where it identifies that an agent’s decision is unreasonable and/or unsustainable, and the agent refuses to withdraw it.

WorkSafe accepts this recommendation. This will be incorporated into the plan to address recommendation 4.

See recommendation 4

8. Update the Claims Manual to outline WorkSafe’s expectations in relation to the 130 week test and use of the ‘indefinite ground’, including:

a. that a medical opinion that is not definitive (i.e. states ‘possibly’, ‘may’ or ‘should have a capacity’ and/or provides no clear reason or justification) is not sufficient to meet the test.

b. WorkSafe’s expectations around timeframes.

WorkSafe accepts this recommendation. By 31 October 2016

9. Review the weightings given to the financial rewards and penalty measures for 2017–18 to ensure that there is sufficient focus on good quality and sustainable decision-making.

WorkSafe accepts this recommendation. By 1 July 2017

10. Amend its quality decision-making audit procedure so that agents cannot be rewarded for a decision upon which a review or appeal panel cannot reach a unanimous view.


11. Amend the scope of the Return to Work Index audits to ensure that it rewards agents for genuine and sustainable return to work outcomes.


Appendix 5 – WorkSafe’s response to the Ombudsman Victoria’s Investigation into the management of complex workers compensation claims and WorkSafe oversight


Appendix 5 – WorkSafe’s response to Ombudsman Victoria’s recommendations

Recommendation number Response Timing

12. In consultation with the agents, provide training to agent staff on the financial reward and penalty measures, including their purpose and their relationship to good administrative decision-making (referred to in the Claims Manual) on claims and offers at conciliation.


13. Publish information on each of the financial reward and penalty measures at the start of each financial year.

WorkSafe accepts this recommendation. WorkSafe publishes information about agent performance for remuneration purposes each year in the WorkSafe Annual Report. WorkSafe will also separately publish the Annual Performance Adjustment measures for the coming year in October 2016 and annually thereafter.

By 31 October 2016

14. Implement changes to the current IME system to:

a. prevent agents from selectively using ‘preferred IMEs’ or

b. provide injured workers a choice of the IME with the appropriate speciality, by whom they are examined.


15. Amend its IME complaint handling policy to provide scope for examination of complaints where a worker does not provide consent for the complaint to be provided to the IME, which may include the referral of the matters raised to the IME quality assurance division for intelligence gathering purposes.


16. Amend the IME quality assurance process to:

a. ensure IMEs subject to a high number of complaints are peer reviewed

b. document the process by which WorkSafe will review an individual claim file where significant deficiencies are identified in relation to an IME’s report, to ensure a worker’s entitlements have not been unreasonably rejected or terminated based on the report.


17. Review the injured worker’s case detailed in case study 3 to ensure the worker has not been incorrectly disentitled to compensation.

WorkSafe accepts this recommendation. Completed


Disclosure Index

The Annual Report of WorkSafe Victoria is prepared in accordance with all relevant Victorian legislations and pronouncements. This index has been prepared to facilitate identification of WorkSafe’s compliance with statutory disclosure requirements.

Ministerial Directions

Legislation Requirement Page reference

Report of Operations

Charter and purposeFRD 22G Manner of establishment and the relevant

Ministers125

FRD 22G Purpose, functions, powers and duties 125

FRD 22G Key initiatives and projects throughout

FRD 22G Nature and range of services provided 126–128

Management and structureFRD 22G Organisational structure 9

Financial and other informationFRD 22G Summary of the financial results for

the year31–33

FRD 22G Significant changes in financial position during the year

46

FRD 22G Major changes or factors affecting performance

throughout

FRD 22G Subsequent events 101

FRD 22G Details of consultancies over $10 000 132

FRD 22G Details of consultancies under $10 000 132

FRD 22G Disclosure of government advertising expenditure

133

FRD 22G Disclosure of ICT expenditure 133

FRD 22G Application and operation of Freedom of Information Act 1982

126

FRD 22G Compliance with building and maintenance provisions of Building Act 1993

131

FRD 22G Application and operation of the Protected Disclosure Act 2012

129

FRD 22G Application and operation of the Carers Recognition Act 2012

131

FRD 22G Statement on National Competition Policy 130

FRD 22G Statement of availability of other information 131

FRD 22G Occupational health and safety policy 42–43

FRD 22G Employment and conduct principles 131

FRD 10A Disclosure index 136

FRD 25B Victorian Industry Participation Policy disclosures

130

SD 4.5.5 Attestation for compliance with Ministerial Standing Direction 4.5.5

124

SD 4.2(g) Specific information requirements throughout

SD 4.2(j) Sign-off requirements inside cover

Appendix 6 – Disclosure Index

Ministerial Directions

Legislation Requirement Page reference

Financial Report

Financial statements required under Part 7 of the FMASD 4.2(b) Operating statement 45

SD 4.2(b) Balance sheet 46

SD 4.2(a) Statement of changes in equity 47

SD 4.2(b) Cash flow statement 48

Other requirements under Standing Directions 4.2SD 4.2(c) Compliance with Australian Accounting

Standards and other authoritative pronouncements

49

SD 4.2(c) Compliance with Ministerial Directions 101

SD 4.2(c) Accountable officer’s declaration 101

SD 4.2(d) Rounding of amounts 58

Other disclosures as required by FRDs in notes to the financial statementsFRD 11A Disclosure of ex-gratia payments 87

FRD 21B Disclosures of Responsible Persons, Executive Officers and other Personnel (Contractors with Significant Management Responsibilities) in the Financial Report

85–87

FRD 103F Non-financial physical assets 56

FRD 110 Cash flow statement 48

FRD 112D Defined benefit superannuation obligations 57

LegislationFreedom of Information Act 1982 126

Building Act 1993 131

Protected Disclosure Act 2012 129

Carers Recognition Act 2012 131

Victorian Industry Participation Policy Act 2003 130

Financial Management Act 1994 49


Appendix 6 – Disclosure Index

Head Office222 Exhibition Street Melbourne VIC 3000

Phone 03 9641 1555

Toll-free 1800 136 089

Website worksafe.vic.gov.au

Twitter @WorkSafe_Vic

Facebook facebook.com/worksafevictoria

Local OfficesNorth

Essendon Fields 03 9223 6888

Shepparton 03 5831 8260

Wangaratta 03 5721 8588

West

Ballarat 03 5338 4444

Bendigo 03 5443 8866

Geelong 03 5226 1200

Mildura 03 5021 4001

Warrnambool 03 5564 3200

East

Dandenong 03 8792 9000

Mulgrave 03 9565 9444

Traralgon 03 5174 8900

Advisory ServicePhone 03 9641 1444

Toll-free 1800 136 089

Email [email protected]

WorkS

afe Victoria A

nnual Report 2016