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Legislative Assembly for the ACT: 2002 Week 13 Hansard (21 November) . . Page.. 3988 ..

TERMS OF REFERENCE

1.1 BACKGROUND

1.1.1 The ACT Government is covered by the Commonwealth's Safety, Rehabilitation and Compensation Act 1988 for the purposes of workers' compensation. The ACT Government has a single premium pool which includes public sector agencies, statutory authorities and Territory-owned Corporations (generically "agencies and instrumentalities"). The ACT pool was separated from the Commonwealth pool on 1 July 1994. From that time, the ACT was effectively self-funded.

1.1.2 In 1996, the ACT Government implemented an experience-based premium devolution model as part of a corporate strategy to manage workers' compensation performance at the agency/instrumentality level. Premium devolution involves allocating the ACT Government's premium to agencies and instrumentalities (defined as 'customers') on the basis of the previous two years claims experience. Devolution is both a management tool and a means of allocating premium costs to disparate entities based on a set of agreed principles. Within the larger ACT customers, it is common for a second-tier devolution to cost centres and groups of cost centres to be undertaken. The rationale for second-tier devolution is to ensure a level of accountability in relation to senior managers' responsibility for injury prevention and management.

1.2 PROJECT SCOPE

Objectives

1.2.1 The selected consultant will conduct a review of the current methodology for devolving the ACT Government's workers' compensation premium to agencies and instrumentalities and make recommendations for changes which could be implemented in the devolution of the 2001-2002 premium (bearing in mind that performance accountability in setting devolved premiums is to remain an important objective of any future model).

1.2.2 In so doing, the consultant will examine, analyse and advise on the following matters:

� the extent to which premiums should reflect customer claim performance without excessive volatility (including the appropriate balance of experience rating and risk sharing);

� the degree to which the setting of customer premiums should take into account the performance outcomes for recently incurred claims (e.g. duration and cost) and for those incurred in older experience years;

� the limiting of long-term cross-subsidisation In customers and groups of customers;

� the treatment (e.g. claims capping) of the impact of individual large or unusual claims;

� appropriate parameters (e.g. minimum size of cost centres and cost-centre groupings) to guide second-tier devolution:

� the setting of premiums for new and/or small customers:

� the adjustment of premiums to reflect changes to the structure of customers (e.g., following changes to the administrative arrangement orders) which result in mergers and transfers of functions;

� any staging or other transitional arrangements necessary, to the efficient and equitable implementation of a new methodology; and

� other factors which the consultant identifies as relevant to the review and as agreed with the steering committee.

Stage 1: Preparation of Discussion Paper

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