Workers' Compensation and the Unfunded Liability Fetish

Abstract

Although commonly referred to in debates over the direction of workers ‘compensation policy in Australia the concept of an unfunded liability’ is poorly understood. This has not stopped it from being invoked as a justification for reducing compensation entitlements to injured workers.

The paper attempts to explain and demystify the notion of an unfunded liability and the associated concept of full funding. In doing so it seeks to locate these concepts within the broader debate over the direction of workers compensation policy that has taken place over the last decade. It is also argued that the obsession with these ‘performance indicators’ has detracted attention and resources from the pressing necessity for major reductions in the number and severity of workplace injuries.