ACHIEVING OUTCOMESWORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

98–9997–98 99–00 00–01 01–02

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MOVING FORWARD

WORKCOVER INSURER

OUR VISION is to excel in workers’ compensation insurance.OUR VALUES are excellence, integrity, responsiveness and respect.OUR GOALS are:• to be a customer focused insurer• to be an organisation of professional, committed people who

are rewarded for delivering our vision and living our values• to maintain a financially viable fund, balancing the needs of

injured workers and employers.

Since WorkCover’s establishment five years ago, we have focused oncustomer service and worked hard to achieve a balance between injuredworkers and employers. It is this focus that is helping us achieve ourvision. Maintaining effective working relationships with all our customers is paramount to our ongoing success.

THIS YEAR WORKCOVER CONTINUED TO PROVIDE THE BESTPOSSIBLE BENEFITS TO WORKERS FOR THE LOWEST PREMIUM TO EMPLOYERS. WE PROVIDED INSURANCE COVERAGE FOR ABOUT132 000 EMPLOYERS, COMPENSATING AND HELPING THEIRWORKERS WITH WORK-RELATED INJURIES.

MEASURING OUR PERFORMANCE2002 2001 2000

WorkCover insurerInjured worker satisfaction % 75.9 71.4 67.8Employer satisfaction % 77.4 68.8 70.2PeopleSatisfaction % 67.1 66.7 66.4FinancialSolvency % 20 20 20

Q-COMP, Queensland’s workers’ compensation regulator, has its own vision, valuesand goals in line with its independent status. These are located on page 25 of this report.

VISION, VALUES, GOALS AND OVERALL PERFORMANCE

October 2002

The Honourable Gordon Nuttall MPMinister for Industrial RelationsNeville Bonner Building75 William StreetBrisbane Queensland 4000

Dear Minister

I am pleased to present to you the WorkCover Queensland Annual Report2001–2002. Our fully funded position has enabled us to become a cuttingedge service provider. Again, we have retained solvency levels whileproviding the lowest average premium rate in any Australian State.Significantly, our customer focus has ensured that we are now providingand delivering increased benefits to injured workers.

Reflecting on this past year, our most notable operationalachievement was the successful implementation of an Australian firstclaims and policy information system. This system, replacing our coreclaims and policy system, will enable us to continue to meet the needs of our customers well into the future.

Again, we have worked hard to maintain the impartiality of Q-COMP,the regulator of workers’ compensation in Queensland. We also highlightWorkCover’s fifth birthday and our significant achievements andadvancements over the past five years.

Our simple but strong charter remains unchanged: we are committedto achieving a balance between benefits for injured workers andpremiums for employers. It is with great pleasure that I announce that in2002 we maintained this balance. We will continue this commitment andnot be complacent in light of these results.

I am very proud to be the Chairman of this successful workers’compensation scheme but equally I am proud of our people and theircommitment to change and continuous improvement.

I commend this report to you and look forward to working with youto ensure the ongoing success of WorkCover.

Yours sincerely

IAN BRUSASCO AM

CHAIRMAN

CONTENTSVISION, VALUES, GOALS

AND OVERALL PERFORMANCE . . . . . . . . . . . . . . . . . . . .1CHAIRMAN’S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2BOARD OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . .4WORKCOVER INSURER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6WORKCOVER’S SIGNIFICANT ACHIEVEMENTS . . . . . . . . .7CEO’S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8WORKCOVER INSURER MANAGEMENT TEAM . . . . . . . . .9OUR CUSTOMERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10OUR PEOPLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14OUR FINANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18WORKCOVER INSURER STATISTICS . . . . . . . . . . . . . . . . .21Q-COMP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Q-COMP MANAGEMENT TEAM . . . . . . . . . . . . . . . . . . . . .28

Q-COMP STATISTICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29SCHEME-WIDE STATISTICS . . . . . . . . . . . . . . . . . . . . . . . .30FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .31DIRECTORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33FIVE-YEAR REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35STATEMENT OF FINANCIAL PERFORMANCE . . . . . . . . . .36STATEMENT OF FINANCIAL POSITION . . . . . . . . . . . . . . .37STATEMENT OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . .38NOTES TO AND FORMING PART OF THE

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . .39ACTUARIAL CERTIFICATE ON OUTSTANDING CLAIMS

LIABILITIES AS AT 30 JUNE 2002 . . . . . . . . . . . . . . . . . .53CERTIFICATE OF WORKCOVER QUEENSLAND . . . . . . . . .54DECLARATION BY DIRECTORS . . . . . . . . . . . . . . . . . . . . . .55INDEPENDENT AUDIT REPORT . . . . . . . . . . . . . . . . . . . . .56

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ACHIEVING OUTCOMES WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

THIS YEAR MARKS THE FIFTH ANNIVERSARY OF WORKCOVERQUEENSLAND. I TAKE THIS OPPORTUNITY TO RECOGNISEWORKCOVER’S ACHIEVEMENTS OVER THE PAST FIVE YEARS AND THE VALUABLE CONTRIBUTION OF OUR PEOPLE.

WorkCover is now financially stable, provides much improved customerservice and is made up of professional, committed people.

At its establishment in February 1997, WorkCover Queensland wasin the red with its solvency at negative 22%. This is the third consecutiveyear we have maintained our required solvency for full funding of 20%.We also have an investment fluctuation reserve to ensure we maintainthis solvency in times of negative investment return, such as this year.

WorkCover’s aim is to maintain full funding while deliveringexcellent customer service. Our customer service results are now at anunprecedentedly high level for both employers and injured workers. We are achieving our ideal, of balancing the needs of both our customers.

More workers are being covered and we are providing improvedbenefits and services to them. Employers’ average net premium ratecontinues to be the lowest of any Australian State, having reduced from2.145% at WorkCover’s inception to the current 1.55%.

We are committed to our people, who are being rewarded for theiroutstanding performance. Our people’s satisfaction with their job andWorkCover, as measured by surveys conducted by an independent marketresearch company, has continued to rise steadily in recent years.

Since its creation, WorkCover has experienced many changes,influenced by both internal and external factors. These have includedlegislative and policy changes, as well as improvements in the way wedeliver our services in response to customer and business needs.

This year we also harnessed new technology by implementing a newclaims and policy information system. This system provides a platform forfuture enhancements to better service our customers. Injured workers arecontinuing to embrace our move to electronic business with over 70%now opting to be paid via Electronic Funds Transfer.

Amendments to our legislation, together with customer expectations,have contributed to changes in the way we manage common law claims.The majority of these claims are now being settled before litigation iscommenced. We actively encourage earlier settlement of common law

claims; thus expediting payments to injured workers and providingemployers with greater certainty in premium forecasts. Settlements,while early, are still appropriate and our focus on compliance activityremains strong.

During the year the board approved an additional self-insurancelicence bringing the total number of self-insurers to 24. We also ensuredexisting self-insurers met their legislative requirement to have satisfac-tory occupational health and safety systems in place by March 2003.

We continue to successfully transform Q-COMP into an independentregulator, in readiness for its separation from WorkCover. Stakeholdersnow perceive Q-COMP as providing impartial regulatory services.

In addition to embracing past changes, we have identified importantchallenges for the future. Statutory and common law claims managementare our top priorities. Rehabilitation is one of the most importantelements in managing claims. While having a financially stable schemeis essential, returning those injured to work is equally vital.

We need to encourage employers to facilitate their injured workers’rehabilitation and return to work, including earlier notification of claimsto WorkCover. The reasons for our claim decisions also need to be moreclearly communicated to our customers. Throughout 2002–2003 we willbe working with our customers and people to help meet these challenges.

Educating our customers and consulting with stakeholders was a keyfocus for 2001–2002. Together with key stakeholders, we established a‘Worker Well-Being, Better Business’ project and a general practitionerworking party which enabled greater understanding, between employers,unions and the medical profession, about claims management andrehabilitation. An education program for general practitioners and avideo to assist injured workers attending medical assessment tribunalswere also launched this year. New brochures and fact sheets wereintroduced to better explain our services. We plan to further expand ourcommunication activities in 2002–2003.

As WorkCover’s Chairman, I am proud of our organisation’s achieve-ments in our first five years. We have delivered on our promise to keeppremiums competitive for the employers of this State, while continuing to provide excellent benefits and services to workers.

I congratulate WorkCover’s people for their efforts and the board fortheir focus and commitment. With our people and directors, I feel ourfuture success can be assured.

IAN BRUSASCO AM

CHAIRMAN

CHAIRMAN

IAN BRUSASCO AM, PHC

Chairman of Foodbank. Director ofQueensland Investment Corporation and Queensland Academy of Sport.Formerly, Chairman of Port of BrisbaneCorporation, Brisbane Strikers, 4TABand 4KQ. Served as an Alderman on theBrisbane City Council for 14 years andreceived the Advance AustraliaFoundation Award for Services toBusiness, Sport and Community.

DEPUTY CHAIRMANTERRY WHITE BA, PHC, MPS, FAIM

Chairman of Faulding Retail Board,White Retail and Terry White Chemists.Formerly, Member of Parliament,Minister of the Crown, universitylecturer, President of the PharmacyGuild and Director of retail/manufacturing companies.

JOHN BATTAMS BEC, DIP ED

General Secretary QueenslandTeachers’ Union. Senior Vice Presidentof Queensland Council of Unions.Chairman of Healthtrac Australia.Formerly, Director of Teachers’ Union Health.

PETER HENNEKEN BBUS, BA

Director-General, Department ofIndustrial Relations. Chairman of Q-Leave and Industrial RelationsAdvisory Council.

BILL LUDWIG OAM

Queensland Branch Secretary andNational President of the AustralianWorkers’ Union. Executive Member of Australian Council of Trade Unions.Chairman of Sunsuper. Director of Q-Leave and Training and Employment Board.

CHRISTINE MAHER BA, LLB (HONS)

Partner of Corrs Chambers Westgarth,Lawyers. Formerly, Director of SuncorpInsurance and Finance and Q-Super.

GERRY MURPHY AM

Chairman of the Queensland LawSociety’s Accident CompensationCommittee and Senior Partner ofMurphySchmidt, Lawyers. ChairmanHaulmark Group and Member ofArchdiocese Finance Board. Formerly,President of Queensland Law Society,Law Council of Australia, AustralianCouncil of Professions and QueenslandRugby Club.

DON NISSEN FAIM, FAICD

Chairman of Energex, Allgas Energy andBrisbane Broncos. Director of CollectionHouse, Ariadne, Macarthur Coal andEnergex Retail. Formerly, 40 yearsexperience in banking and finance.

RHONDA PASHEN BPHTY, MBA

Risk and Safety Manager, Woolworths.Member of Brisbane Institute of TAFECouncil and Royal Children’s HospitalDistrict Community Council. Formerly,General Manager of BusinessDevelopment Division of WorkCoverQueensland.

HAROLD SHAND ASM, BA, LLB

Chief Executive, Jellinbah Resources.Chairman of Sunstate Orchards Group,Australian and Queensland RugbyJudiciary Committees. Formerly,Director of Sullivan & NicolaidesPathology Group.

JIM STEWART BBUS, FAICD

Executive Chairman of Stewarts HotelGroup. President of the QueenslandHotels Association. Formerly, Chairmanof Host Plus Superannuation andNational President of the AustralianHotels Association.

BOARD OF DIRECTORSCHAIRMAN’S REPORT

Minister for Industrial RelationsThe Hon. Gordon Nuttall MP

Chief Executive OfficerTony Hawkins

Board of DirectorsChairman

Ian Brusasco AM

Audit Committee

WorkCover insurer Q-COMP

CLOCKWISE FROM TOP RIGHTHAROLD SHAND, JIM STEWART, DON NISSEN,PETER HENNEKEN, BILL LUDWIG, GERRYMURPHY, RHONDA PASHEN, TERRY WHITE, IAN BRUSASCO, JOHN BATTAMS, CHRISTINE MAHER.

OVERALL ORGANISATIONAL STRUCTURE

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An active communication campaign was undertaken this year tofacilitate our people’s understanding and adoption of the corporate andbusiness plans. An important element of the campaign is ongoing re-enforcement.

INVESTMENTThe board monitors investment on a monthly basis and receives bi-monthly presentations from WorkCover’s fund manager, the QueenslandInvestment Corporation. The board reviews our investment strategy atleast annually. As a long term insurance operation, WorkCover maintainsa balanced investment profile and a long term outlook. The risk of anegative investment return is minimised by an investment fluctuationreserve, thereby providing ongoing stability and certainty of premium rates.

RISK MANAGEMENT WorkCover’s financial, business and operational risks are identified andmonitored through our risk management program. The program operatesboth on strategic and operational levels. Key principles of the programadhere to the Australian and New Zealand Risk Management Standard (AS/NZS 4360).

Key strategic risks are identified through the planning process. Eachkey issue identified in WorkCover’s corporate plan, has an associated risklevel and is ranked according to this risk. Strategies to address all issueshave been developed. Progress of these strategies is reported to theboard on a quarterly basis.

WorkCover’s high risk issues for 2001–2002 were:• claims management• implementation of the claims and policy information system • national competition policy review outcome• customer service.

The majority of these high risks were addressed in 2001–2002.Statutory and common law claims management are the high risk areasidentified for 2002–2003. We have developed strategies to address these risks.

As part of the development of the annual audit plan, a riskassessment of all operational activities of WorkCover is undertaken. The assessment considers the likelihood and consequence of theoccurrence of risk, as well as controls designed to prevent or detect it.This assessment identifies high risk areas for review. A bi-yearly controlself assessment questionnaire also encourages managers to identifyrisks and be accountable for their control.

INTERNAL AUDITThe Internal Audit unit provides independent, objective advice to seniormanagement and the board. This is achieved through systematic anddisciplined evaluation of the effectiveness of risk management, controlsand corporate governance processes.

The unit has independent status within WorkCover, reportingoperationally to the Audit Committee and administratively to the ChiefExecutive Officer. The Internal Audit Charter, approved by the AuditCommittee, outlines the objectives, duties and authority of the unit. The annual audit program, developed through a risk analysis process, is approved by the Audit Committee.Key achievements for 2001–2002 include:• 100% of approved audit plan completed• all requests for ad-hoc reviews completed• education of core business line management in risk management

processes• implementation of a control self assessment package focussing on

financial and administrative controls• development of an internal training program for audit staff• positive feedback received from clients through post-audit

feedback surveys

• risk based audit programs based on key business risks and changesas a result of the new claims and policy information systemimplementation.Future challenges for the unit include the continuing education of

management and staff about risk management. This will be achieved bymarketing the unit’s services and by the further development of controlself assessment tools. The identification of potential cost savings willalso continue to be an area of focus for Internal Audit.

ETHICAL STANDARDS AND CONDUCTAs required under the Act, our directors must act honestly, discloseinterests, exercise due diligence and not use information or their positionimproperly. The board has also formally adopted the Australian Instituteof Company Directors’ Code of Conduct, which provides guidance forcarrying out duties and defines standards of professional conduct. Toassist in avoiding conflicts of interest, a register of directors’ materialinterests is maintained. Where a conflict arises, the director involveddoes not receive the relevant board paper and is not present at the boardmeeting while the item is considered.

Additionally, WorkCover’s Code of Conduct, developed inconsultation with our people, provides a framework for ethical conduct.Through this consultative process, the code reflects the operationalneeds of WorkCover and provides a basis for high ethical standards forour people.

At WorkCover, privacy and the confidentiality of personal informationare important to us. We are committed to protecting privacy byresponsibly collecting, using, storing and disclosing the personalinformation we may hold, in a manner consistent with the QueenslandGovernment’s Information Standard 42. WorkCover has published itsprivacy policy, reviewed its personal information practices and isdeveloping an organisation wide privacy plan in compliance with thisinformation standard.

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ACHIEVING OUTCOMES WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

BOARD OF DIRECTORSBoard of Directors’ roleWorkCover Queensland’s Board of Directors is responsible for settingWorkCover’s strategic direction and for overseeing and monitoring ourbusiness and performance.

Directors are accountable to the Minister for Industrial Relations forWorkCover’s commercial policy and management, and regulation of theWorkCover Queensland Act 1996 (the Act). Our board also views itself asresponsible to WorkCover’s customers, both employers and workers.

The board’s aim is to ensure that WorkCover meets its statement of corporate intent. This statement specifies our financial and non-financial performance targets, objectives and main undertakings for thefinancial year.

The role and requirements of the board are specified in chapter sixof the Act. To further clarify its responsibilities, the board developed acharter outlining its objectives, duties and other arrangements includingmeetings, reporting and committees.

The WorkCover Board:• provides strategic leadership, including developing WorkCover’s

corporate plan• monitors performance against WorkCover’s goals and objectives • recommends legislative policy to the Minister • monitors compliance with statutory, financial and corporate

governance responsibilities• reports to the Minister, on a quarterly basis, of its progress against

the statement of corporate intent.

DIRECTORS’ TERMS OF OFFICE Our board currently comprises 11 directors whose professional skills are detailed on page 3. All directors are non-executive directors. The Governor-in-Council appoints directors and determines remunerationas part of terms of appointment. When appointing a director, theGovernor-in-Council considers the person’s ability to contribute to ourperformance as a commercial enterprise and regulator. Our boardmembers have the blend of skills, knowledge, experience and diversitynecessary to meet the present and future needs of WorkCover.

The board formally met on 11 occasions during the year, including a corporate planning session. Board agendas are prepared in conjunctionwith the Chairman and Chief Executive Officer with papers circulated in advance.

During 2001–2002, board resolutions impacting on the futuredirection of WorkCover included:• endorsing rehabilitation arrangements with relevant

recommendations being made to the Minister • maintaining the average premium rate at 1.55% and self-insurers’

levy at 5% of deemed premium• endorsing awareness campaigns for coverage of household and

interstate workers • fully repaying government equity in the fund • providing funding for research on rehabilitation and advisory

services for injured workers and employers• approving a licence for a new self-insurer• recommending restrictions on lawyer advertising to government.

Standing meeting items include the Chief Executive Officer’s report,financial statements, reports on Q-COMP and self-insurers, updates on

common law and statutory claims management, as well as summaries ofclaim cases. On a quarterly basis, items considered include informationtechnology, human resources and strategic matters. General managersregularly attend board meetings to present and discuss relevant issues.

Meetings during 2001–2002 attended by each board member areoutlined in the Directors’ Report on page 33.

AUDIT COMMITTEE The board continues to maintain an Audit Committee to help monitorinternal controls and provide additional assurance when the boardreviews the financial information in the annual accounts. The AuditCommittee’s role is documented in a charter approved by the board.

The Audit Committee’s responsibilities include reviewing:• internal and external audit functions and reports• compliance with accounting and corporate governance

responsibilities• internal control frameworks• reports on any misappropriation, fraud or theft • risk management systems• ethical standards.

As required by its charter, the committee met three times in 2001–2002. The Audit Committee currently comprises three directors: Mr Terry White (Chairman), Ms Christine Maher and Mr Don Nissen. Mr Jim Stewart was a member of the committee until 28 August 2001.Other attendees at meetings include the Chief Executive Officer, ChiefFinancial Officer, Internal Audit Manager and external auditors. Boardmembers are welcome to, and do often, attend meetings.

During 2001–2002, the committee’s considerations included:• WorkCover’s financial statements and the budget process• internal and external audit plans and reports• risk management, including insurance arrangements and

employer strategies• the actuary’s outstanding claims analysis.

Meetings attended during 2001–2002 by each committee memberare outlined in the Directors’ Report.

REVIEW COUNCILThe Review Council monitors the performance and outcomes of thereview process and Medical Assessment Tribunals and makesrecommendations to the board about these.

Under the Act, the Review Council is required to have tworepresentatives of workers and two representatives of employers.Currently, these representatives are: Ms Grace Grace, General SecretaryQueensland Council of Unions; Mr Brian Kilmartin, Solicitor, Sciacca’sLawyers and Consultants; Mr Bill Nevin, Manager MIMCare, MIMHoldings Limited; Mr Ray Sear, Senior Advisor, Workplace Safety andWorkers’ Compensation, Australian Industry Group. As nominated by theAct, the Chairman of the Board, Mr Ian Brusasco, is also a member andChairman of the Review Council.

The Review Council met four times in 2001–2002. Our boardreceives quarterly reports from the council and these are included in the quarterly report to the Minister.

STRATEGIC PLANNINGWorkCover is required, under the Act, to prepare and submit to theMinister a three-year corporate plan. The corporate plan documents our:• vision, values and goals• relationship with stakeholders • business projections• key performance indicators.

The corporate plan forms the basis for annual operational businessplans. Strategies are developed to address key issues and achieve keyperformance indicators. Management and the board regularly monitorprogress against key issues and strategies.

CORPORATE GOVERNANCE

Internal Audit

Audit Committee Chief Executive Officer

WorkCover Board

INTERNAL AUDIT REPORTING RELATIONSHIP

WORKCOVER’S SIGNIFICANTACHIEVEMENTS

7FOR OUR CUSTOMERS WE:• conducted forums with employers to better understand their

information requirements and to provide them with more timely and relevant data

• developed a framework of continuous improvement for betterstatutory claims management

• incorporated injury management into common law claimsmanagement

• improved working relationships with common law service providers,namely, factual investigators, solicitors, injury management providers and barristers.

FOR OUR PEOPLE WE:• implemented extended salary bands and accelerated progression

within our pay scales, thereby significantly enhancing the way weremunerate our people

• trained all who would become users of our claims and policyinformation system

• introduced a training initiative to enhance skills in handling criticalcustomer situations

• developed an improved induction strategy to better inform our newpeople about how their role contributes to our direction.

FOR OUR FINANCES WE:• continued to maintain all solvency requirements• maintained the lowest average net premium rate in any Australian

State, stable and secure at 1.55%.

FINANCIAL SUMMARY$M $M $M

FOR THE PERIOD 1 JULY TO 30 JUNE 2002 2001 CHANGE

Premium revenue 546 515 31Investment revenue (65) 133 (198)Net claims paid 498 461 37Increase/(decrease) in outstanding claims provision 3 (181) 184Operating expenses 112 104 8Operating result before income tax (131) 265 (396)Operating result after income tax (73) 192 (265)

BALANCE AT YEAR ENDING 30 JUNE

Total assets 2,163 2,444 (281)Total liabilities 1,697 1,844 (147)Net assets 466 600 (134)

TO EXCEL IN WORKERS’ COMPENSATIONINSURANCE THROUGH EXCELLENCE, INTEGRITY,RESPONSIVENESS AND RESPECT.

INSURER

JULY AUGUST SEPTEMBER

JANUARY FEBRUARY

APRIL MAY JUNE

MARCH

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02

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ACHIEVING OUTCOMES WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

WORKCOVER QUEENSLAND HAS WORKED HARD OVER THE PASTFIVE YEARS TO DEVELOP A CUSTOMER-FOCUSED ORGANISATIONCHANNELING OUR RESOURCES AND ENERGY INTO THE IMPLEMEN-TATION OF THIS CUSTOMER DRIVEN CHANGE STRATEGY.

The last major step in this strategy was finalised this year when wesuccessfully implemented our new claims and policy information system.This Australian first technology brings increased productivity andimproved customer service. It will play an important role in equipping usfor the future. In 2002–2003 we will leverage these technologies toensure that they continue to support our business and customers.

Our customer satisfaction survey revealed our highest eversatisfaction levels. Overall injured worker satisfaction increased to75.9% from 71.4%. Satisfaction of employers increased to 77.4% from68.8%. While these results are excellent, areas for improvement havebeen identified and taken into account for future planning.

Not only is our net average premium rate the lowest it has been infive years, but we are also assessing and collecting premium withinrecord timeframes.

The final stage of our communication strategy for the legislativechange to the definition of ‘worker’ was successfully implemented. As aresult, many employers sought coverage clarification. During 2002–2003we will continue to focus on compliance and ensure that the correctamount of wages paid by employers to their workers is declared toWorkCover. We will continue to strengthen our relationship withpolicyholders, through communication, the provision of timely andrelevant data and liaison with industry associations.

We continued to implement our customer-focused strategy on earlyand appropriate resolution of common law claims. To complement this,we have entered into service level agreements with our major commonlaw service providers. The ongoing improvement of our relationships withthese providers is one of our primary objectives.

Many enhancements in the way we manage statutory claims wereidentified in 2001–2002 through the establishment of a continuousimprovement program. Changes implemented included an earlyintervention pilot aimed at reducing decision-making times and improving outcomes.

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CEO’S REPORT We will continue our focus on statutory claims managementthroughout 2002–2003, notably through rehabilitation-return to workstrategies for our injured workers and increasing employers’ awarenessof these issues. To complement our current extensive regional officenetwork, and in response to the changing demographics of ourcustomers, we will establish another statutory claims office on theSunshine Coast in 2002–2003.

Our ability to continue to provide low and stable premiums foremployers, and excellent benefits and services for injured workers, isdependent on investment returns. We were able to absorb the negative2.61% return this year due to our investment fluctuation reserve.Maintaining low premium rates in the future is directly related to claimsexperience. If claims costs increase, so too will premiums.

Our people’s satisfaction again improved this year. The majorindicator analysed from the survey results is the People SatisfactionIndex. This index rose over the last three years from 66.4% in 2000 to67.1% in 2002. The 2002 employee survey results indicate that 70% ofour people are satisfied with their current job. This is a significantincrease from the 67% satisfaction result in 2001. Our people’s ongoingsatisfaction is essential if our future objectives are to be realised.

We continue to fulfil our commitment to our people to engage staffon a permanent basis wherever possible. This ensures stability of ourworkforce and capitalises on our investment in our people. Our peoplealso received their first performance based pay as part of the secondphase of WorkCover’s current enterprise bargaining agreement. Thisagreement provides broader salary bands and accelerated progressionbased on performance. We will begin negotiating our next round ofenterprise bargaining in 2002–2003.

In 2002–2003 we will focus on developing our people for the futurethrough training, leadership development and enhanced communicationacross our organisation.

While WorkCover is still responsible for Q-COMP, we are preparingfor its separation and ensuring Q-COMP remains totally independentfrom WorkCover insurer.

I look forward to a continuing high level of service to our customersin 2002–2003. Our success will be driven by the use of new technology,ongoing development of our people and constant search for ‘bestpractice’. I assure our customers that, rather than becoming complacentin the light of our success, we will focus on their ever-changing needs.

TONY HAWKINS

CHIEF EXECUTIVE OFFICER

TONY HAWKINS B COMM, DIP FIN MGT, FCPA

In his role as Chief Executive Officer,Tony consolidates thirteen yearsinsurance experience with the AXAGroup and fourteen years miningexperience at CSR. He has successfullyled significant corporate transforma-tional change at WorkCover, with afocus on continuous improvement.

DAVID HELEY B ADMIN, CPA, DFP, FPA (AFF)

David is responsible for all finance, and business support activities forGroup Services. He holds a degree inbusiness and has over 15 yearsexperience in finance and insurancemanagement. While in the role of Chief Financial Officer, David has seenWorkCover achieve a strong financialposition through prudent financialmanagement.

LYNN KINCADE BA

Lynn’s past experience in informationtechnology general management spansthe running of two commercialorganisations, leading over one hundredprofessional people in each organisation.Her many years experience across eight countries ensures a cutting edgedelivery of information technology andadvancements. Over the past year, Lynnwas responsible for implementing thenew leading edge claims and policyinformation system developed by theFuturis project.

GORDON LAWSON FCA

Gordon brings a unique blend ofbusiness experience to WorkCover andone that contributed to achieving thelowest average net premium rate in anyAustralian State. Previously, he was apartner in a large firm of charteredaccountants and worked as an ownerand director in a medium sizedQueensland business. This combinationof business experience and accountingknowledge has ensured strongleadership in Insurance Services.

EVRON McMAHON DIP BUS MGT, CMAHRI

Evron’s extensive managementexperience, in providing service deliveryexcellence, ensures customers receivethe best possible customer service.Evron’s knowledge of claimsmanagement is highlighted by theachievement of the service balancebetween injured workers andemployers. Her knowledge of humanresources and her years in theinsurance industry make her a greatasset to WorkCover Queensland.

ROBERT MILLER B BUS

Robert has over 11 years experience in human resources in the fields oftraining and development, recruitmentand selection, and internal consulting.Robert’s background in the banking and finance sector blends well withWorkCover’s commercial focus.

PAUL O’CONNOR LLB, LLM, ADLS, FTIA

Paul’s focus on common law claimsbuilds on his extensive experience in both the Australian and overseasinsurance markets. With experience in underwriting, brokerage and riskmanagement, as well as leadership of organisational projects, Paul isideally placed to manage and lead the Common Law Division.

WORKCOVER INSURERMANAGEMENT TEAM

Common LawGeneral ManagerPaul O’Connor

Information TechnologyGeneral ManagerLynn Kincade

Insurance ServicesGeneral ManagerGordon Lawson

Human ResourcesGeneral ManagerRobert Miller

Statutory ClaimsGeneral ManagerEvron McMahon

Group ServicesGeneral ManagerDavid Heley

Chief Executive OfficerTony Hawkins

WORKCOVER INSURER ORGANISATIONAL STRUCTURE

CLOCKWISE FROM TOP RIGHTROBERT MILLER, DAVID HELEY, PAUL O’CONNOR, LYNN KINCADE, TONY HAWKINS, GORDON LAWSON, EVRON McMAHON.

JULY AUGUST SEPTEMBER

JANUARY FEBRUARY

APRIL MAY JUNE

MARCH

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02

OCTOBER NOVEMBER DECEMBER

CONTINUALIMPROVEMENTMEANS INCREASED LEVELS OF

CUSTOMER SATISFACTION.

11WHO ARE OUR CUSTOMERS?WorkCover strives to provide the best possible benefits to workers forthe lowest premium to employers. We provide insurance coverage forabout 132 000 Queensland employers, compensating and helping theirworkers with work-related injuries.

LARGE INCREASES IN CUSTOMER SATISFACTIONWorkCover’s customer service survey for 2002 revealed our highest everlevels of customer satisfaction.

In consultation with an independent research company, WorkCover is able to fully use customer feedback to enhance customer servicepractices. Research ensures that the plans and strategies developed arebased on a greater understanding of our customer needs.

Overall injured worker satisfaction continued to increase in 2002 to75.9%, from 71.4%. Overall satisfaction of employers is at its highestlevel in four years, with a rating of 77.4% in 2002, which has increasedfrom 68.8%.

While these results are excellent, areas of improvement have beenidentified and taken into account in future plans.

‘WORKER WELL-BEING, BETTER BUSINESS’ PROJECTWorkCover recognises the importance of balanced return to workoutcomes for all our customers.

This year we embarked upon the ‘Worker Well-Being, BetterBusiness’ project. This project is a significant step forward, not only inachieving better outcomes, but also in developing valuable workingrelationships with key stakeholders. The project involves a large numberof external stakeholders including representatives from unions, employerassociations, Q-COMP, Workplace Health and Safety and the medicalprofession. The project aims to achieve a number of objectives including:• development of industry based rehabilitation models• consensus between all stakeholders as to what contributes to the

well-being of workers

• raising the profile of, and participation in, rehabilitation• a measurable reduction in claim numbers and costs to business.

In March 2002 the project team became operational. It will continueto meet on a monthly basis until early 2003, when the rehabilitationmodels are scheduled to commence.

OUR CUSTOMERS—OUR FOCUSThis year WorkCover continued its efforts to balance and meet the needsof employers and injured workers. In particular, WorkCover successfullyimplemented several key projects integral to better service delivery.

OUR CUSTOMERS’ PREMIUMSImproving the Experience Based Rating (EBR) SystemIn 2001–2002, as a result of customer feedback and the identification ofissues facing our policyholders, we introduced further refinements to theEBR system. In particular, the highest rate that may be applied to anyemployer is two times the industry rate. Previously, the rate was cappedat two times the industry rate for two years only, after which it revertedto three times the industry rate.

These changes took effect from 1 July 2002 and will apply in thepremium calculation for 2001–2002 and will continue to apply to futureassessment of premium rates.Setting premium ratesWorkCover continued to have the lowest average premium rate of allstate based workers’ compensation schemes this year. Since theintroduction of the EBR system in 1997, the average premium rate hasfallen from $2.145 per $100 wages to $1.55 per $100 wages.

To allow Queensland businesses the opportunity to budget the costof their premium, WorkCover sets industry rates and F factors one year inadvance. In a volatile insurance industry we have worked hard to achievethis stability, to the benefit of all Queensland business.

OVERALL SATISFACTION OF OUR CUSTOMERS AT AN ALL TIME HIGH, CONTINUING TOINCREASE IN 2002 TO 75.9% FROM 71.4%.

EMBARKED ON A ‘WORKER WELL-BEING,BETTER BUSINESS’ PROJECT INVOLVING A LARGE NUMBER OF EXTERNALSTAKEHOLDERS.

INCORPORATED INJURY MANAGEMENT INTOCOMMON LAW CLAIM MANAGEMENT, TO ASSISTUS IMPROVE CLAIMS OUTCOMES FOR BOTHINJURED WORKERS AND EMPLOYERS.

13

Improved medical managementAn integral part of the claims process is timely and appropriate medicalmanagement of claims. WorkCover continues to forge valuedrelationships with key medical and allied health service providers. This includes: • developing specialist directories• preparing medical education packages to help our people assess

and manage claims• building relationships with local providers to increase awareness

and understanding of the workers’ compensation process.

OUR CUSTOMERS’ COMMON LAW CLAIMSWorkCover continued to focus on its customer service delivery toemployers and injured workers throughout the common law process. In particular, we implemented recommendations of the March 2001customer service review of common law, including claims managementand service provider reforms. We continued to refine our focus on high-risk claims through targeted compliance activity.Working Smarter programThe business process review program was introduced in December 2001to refine our claims management processes and to review our resourcemodel. Role definitions were developed for our people and our structurewas modified to take into account process efficiencies identified in thereview. As a result, we have aligned the number of common law casemanagers to meet customer expectations and changing claim numbers.In-house case management of common law claimsWe successfully introduced in-house case management of targetedcommon law claims during the pre-litigation process. This model hasachieved a number of early and appropriate settlement outcomes for ouremployer and injured worker customers. Injury managementAs a result of recommendations from the customer service review, andamendments to the Act last year, injury management is now an important

part of the common law process. We introduced a team of injurymanagement specialists to focus on injury management interventions forcommon law claims. This focus will assist us to improve claim outcomesfor both injured workers and employers. Our injured workers will benefitfrom greater access to rehabilitation services. Employers will benefitthrough reduced overall claim costs.Building better working relationshipsWe undertook formal tender processes for our solicitors, barristers, injurymanagement providers and factual investigators. Our service providershave agreed to meet service standards set by WorkCover to assist us todeliver quality claim outcomes. We are building on our workingrelationship with our service providers by meeting with them regularly. A review of our panel solicitors has commenced to identify anyopportunities for improvement.

Our customers value communication and education throughout thecommon law process. We will work to develop relationships withInsurance Services to provide employers with more information about thefinancial impact of a common law claim, and to keep them informedduring the claim process.

FUTURE CUSTOMER FOCUSIn the year ahead WorkCover will focus on improving service delivery andworking relationships with our customers. Our customer satisfactionresearch will continue to provide valuable insights into areas ofimportance to our customers. This information will be used throughoutthe next year to continually improve service delivery. We look forward tocontinuing to build on our relationships with our customers, and keystakeholders, through projects initiated this year as well as projectsplanned for 2002–2003.

12

OUR CUSTOMERS WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

CollectingOur people assessed policies with an assessed premium value ofapproximately $530m allocated as follows:• policies of $10,000 or greater, premium value $402m• policies of $5,000 to $10,000, premium value $40m• policies of less than $5,000, premium value $88m.ComplianceWorkCover’s compliance focus is to ensure that employers are paying a fair premium by declaring the correct amount of wages paid to theirworkers, and to identify Queensland employers who do not have aWorkCover policy. A five year strategic plan was developed andimplemented in 2001–2002 to address these objectives. Activities carried out to date include:• educating and auditing those industries most affected by the change

in the definition of ‘worker’, in particular the building andconstruction industry

• creating a dedicated team of Compliance Field Officers, withrelevant industry experience, to undertake on-site inspections

• trialling the use of external audit consultants to work with ourinsurance people on audits of larger employers

• cooperating with other government agencies to assist in theidentification of employers with the highest probability of underdeclaring wages paid to workers or being uninsured

• continuously improving WorkCover’s audit program and training ofour staff to maximise the effectiveness and efficiency of auditsundertaken.In 2001–2002, 2 817 employers were audited. This resulted in the

collection of $1.471m additional premium and penalties (representingunder declared wages of $44m), and refunds of $0.872m (representingover declared wages of $28m).

During 2001–2002, we conducted forums with employers so that wecould better understand their information requirements and provide moretimely and relevant data.

OUR CUSTOMERS’ STATUTORY CLAIMSContinuous improvement programA key initiative this year has been to develop a framework for continuousimprovement. The program focuses on increasing customer satisfaction,implementing process efficiencies and rewarding customer service.

By developing an issues collection process we are able to examineour procedures and make improvements to respond to our customerneeds. The process involves working closely with unions and employerassociations, our injured workers and WorkCover people.

The continuous improvement program focuses on implementingprocess efficiencies and delivering internal training to achieve results.One of the first process efficiencies to result from the framework is the Differential Case Management model. The model has helped tostreamline ‘simple’ claims requiring case management by identifying the different levels of involvement needed for different claim types. The model works to ensure that resources are allocated appropriately to each claim.

An important part of the program is the recognition of our people as our future. In addition to placing great emphasis on staff educationand training, we have also implemented a compliments register. This register records the customer service achievements of people within Statutory Claims. To date, we have recorded at least onecompliment a day from either an injured worker or employer about claim management.Better management of psychological-psychiatric injury claimsWe continued our commitment to improving the management ofpsychological-psychiatric injury claims. This year saw the implementationof a pilot project aimed at improving the assessment process, reducingdecision-making time frames and increasing return to work outcomes.The pilot project involved better communication with treatingpractitioners, workers and employers, early in the claim, to increaseunderstanding of the process and early intervention options. Preliminaryreviews show positive results.

‘OUR CUSTOMERS’ ACHIEVEMENTS AT A GLANCE.

MOVING FORWARD. 1997–2002

98–99• MORE TIMELY RENEWAL AND COLLECTION

OF CURRENT AND NEW POLICIES• ENHANCED TELEPHONE LODGEMENT OF

NEW POLICY APPLICATIONS REDUCING THE TURNAROUND OF PROCESSING NEWPOLICY APPLICATIONS

• STREAMLINED THE PROCESSING OF ‘SIMPLE’ CLAIMS

• EXTERNAL MEDICAL OFFICER NETWORKINTRODUCED.

97–98• ESTABLISHED WORKCOVER QUEENSLAND • IMPLEMENTED THE EXPERIENCE BASED

RATING SYSTEM TO PROVIDE EMPLOYERSWITH A FINANCIAL INCENTIVE TO ADOPT A ‘WHOLE OF BUSINESS’ COMMITMENT TO INJURY PREVENTION, RISK AND CLAIMSMANAGEMENT AND REHABILITATION.

99–00• ACHIEVED THE LOWEST AVERAGE NET

WORKERS’ COMPENSATION PREMIUM RATEIN ANY AUSTRALIAN STATE

• BEGAN FORECASTING PREMIUM TO HELPEMPLOYERS UNDERSTAND THE ISSUESAFFECTING THEIR PREMIUMS

• INTRODUCED ELECTRONIC FUNDS TRANSFEROFFERING INJURED WORKERS AN EASIERPAYMENT OPTION.

01–02• EMBARKED ON A ‘WORKER WELL-BEING,

BETTER BUSINESS’ PROJECT• OVERALL SATISFACTION OF CUSTOMERS

AT AN ALL TIME HIGH• CREATED A DEDICATED TEAM OF

COMPLIANCE FIELD OFFICERS, WITHRELEVANT INDUSTRY EXPERIENCE, TOUNDERTAKE ON-SITE INSPECTIONS.

00–01• AMENDED THE EXPERIENCE BASED RATING

FORMULA TO REDUCE THE LONG-TERMIMPACT OF ONE-OFF HIGH COST STATUTORYAND COMMON LAW CLAIMS ON THEPREMIUM RATE OF SMALL BUSINESS

• COMMUNICATED TO CUSTOMERS ANDEMPLOYER ASSOCIATIONS ABOUT THE NEWDEFINITION OF ‘WORKER’.

JULY JUNEJULY JUNEJULY JUNEJULY JUNEJULY JUNE

JULY AUGUST SEPTEMBER

JANUARY FEBRUARY

APRIL MAY JUNE

MARCH

01

02

OCTOBER

ENCOURAGINGEXCELLENCE

CONTRIBUTES TO OUR PEOPLE’S COMMITMENT TO SERVICE.

15STRATEGIC HUMAN RESOURCE MANAGEMENT LEADS TO AN ORGANISATION’S SUCCESSThe people of WorkCover experienced change on a number of levelsduring our last five years. Changes in technology, legislation, job rolesand organisational structure, as well as the changing nature of theworking world in which we operate, have resulted in changes in the dailylives of the people who ensure our service delivery to our customers.

During 2001–2002, our people continued to grow and develop tomeet the changing needs of our customers and the continuousimprovement of our methods of operation. To assist our people, a numberof significant initiatives were undertaken in 2001–2002. Many of theseinitiatives will continue in the future as a commitment to the people ofWorkCover. Initiatives in the areas of reward for performance, trainingand development, and induction of new people all played a key role inbuilding on the foundations of our people management practices.

OUR PEOPLE OUR FUTUREOur philosophy is to, wherever possible, promote people from within, inorder to develop the careers of those who have existing knowledge andexpertise in the provision of our services. Balanced with this philosophyis the need to recruit high quality candidates, from outside WorkCover,who bring a fresh view to our ways of working. We are committed toplacing people on a permanent basis. At 30 June 2002, 90% of ourpeople were permanent appointments.

We continued our participation in the government’s ‘Breaking theUnemployment Cycle’ scheme. Over the past year trainees wereappointed to permanent roles in Statutory Claims, Common Law,Insurance Services and Information Technology. We recruited four newtrainees under this scheme just prior to the close of the financial year.

COMMITMENT TO TRAININGWith the implementation of the new claims and policy informationsystem, all of our people who use the system undertook extensive

training to prepare for the change. In total, 633 people attended initialtraining for the system with refresher training being provided to 324people immediately prior to the system’s implementation. A new role ofPrincipal Trainer for the system has been created to design a completetraining framework for the ongoing training of users. This training willcover new people to the organisation as well as existing people whochange job roles.

Statutory Claims is designing a new strategy for providing technicaltraining to our people who are responsible for the assessment and casemanagement of claims. This new approach will commence in 2002–2003with around 300 people participating in a range of training programs. Our very successful partnership with Griffith University continues withthe Graduate Certificate in Case Management. We currently have 51people enrolled in the study program, which is fully sponsored byWorkCover. With 22 people graduating in April 2002, we now have 53people in total who have received this qualification. A further intake ofnew students for the program is planned for February 2003.

In 2001–2002, we were very pleased to renew our partnership withMt Eliza Business School. The school collaborates with us on ourLeadership and Management Program. In October 2001, 17 peoplegraduated from the program with a Diploma in Frontline Management.Along with building the leadership skills of our people, the workplace-based projects that participants are required to complete, generate manyworthwhile new initiatives for WorkCover. Recent projects included newprocedures for reducing determination periods for disputed back andneck claims and the implementation of a new manager’s instructionguide for Statutory Claims. Our sixth group to undertake the programcommenced in April 2002, with 20 participants.

Two new major training initiatives were introduced during the year. Investigation skills training was conducted for our Area ServiceOfficers, who provide on site services to both employers and injured workers.

THE INTRODUCTION OF EXTENDED SALARYBANDS AND ACCELERATED SALARYPROGRESSION WITHIN OUR PAY SCALES, SIGNIFICANTLY ENHANCED OUR REMUNERATIONPRACTICES. THESE REMUNERATION CHANGESBROUGHT A MORE COMMERCIAL ANDCONTEMPORARY EDGE TO THE WAY WEREWARD OUR PEOPLE.

ALL PEOPLE WHO WOULD BECOME USERS OF WORKCOVER’S NEW CLAIMS AND POLICYINFORMATION SYSTEM WERE EXTENSIVELYTRAINED IN ITS OPERATION PRIOR TOIMPLEMENTATION. DURING NOVEMBER ANDDECEMBER 2001, OVER 600 PEOPLE ACROSS THE STATE ATTENDED COMPREHENSIVETRAINING PROGRAMS FOR THE NEW SYSTEM’S PROCEDURES.

A NEW TRAINING INITIATIVE WAS INTRODUCEDTO DEVELOP THE SKILLS OF OUR PEOPLE TOHANDLE CRITICAL CUSTOMER SITUATIONS.TRAINING WAS PILOTED FOR MANAGERS INOFFICES TO BE ABLE TO HANDLE CRITICALCUSTOMER SITUATIONS AND ASSIST THEIRPEOPLE TO DEAL WITH SIMILAR EVENTS.

17

The site will also be a useful reference source for newcomersfollowing their attendance at the Corporate Induction Program.

A new enterprise agreement will be negotiated this year to ensurethat our employment conditions remain competitive with the job marketin which we operate. Results from our employee opinion survey indicatethat the vast majority of people are satisfied with the level ofremuneration in WorkCover. A new enterprise agreement will build onthe foundations already existing in our employment arrangements.

Computer based training resources currently used by our people willbe reviewed during the year. E-learning facilities for training in desktopapplications will be reviewed, to ensure that our people have access tothe most effective training resources available. Other computer basedtraining applications will also be reviewed to ensure that they meet thetraining needs and interests of our people.

16

OUR PEOPLE WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

A provider was selected to implement training to assist our people inhandling critical customer situations. Focus groups and pilot programswere conducted to ensure that training content meets the needs of ourpeople, with full-scale delivery of the training planned to occurthroughout 2002–2003.

REWARDSUnder the terms of our current enterprise agreement, all people coveredby WorkCover’s Award received a 3% salary increase during the 2001–2002 year. Of significant importance to the way we remunerate ourpeople was the introduction of extended salary bands and acceleratedsalary progression within our pay scales this year. The extended salarybands improved the ability of our people to increase the salary theyreceive as their experience in their role grows over time. The introductionof accelerated salary progression allows people who consistently performat a superior level, against their performance objectives, to receive anannual salary increase that is higher than was possible under our previoussalary arrangements. These changes to our salary structure are instru-mental in ensuring we remunerate and reward our people in a mannerconsistent with the commercial environment in which we operate.

Our Award was reviewed in line with the national drive to have allAwards expressed in plain English and to be free of any discriminatorylanguage. Our current enterprise agreement concludes at 31 December2002, and negotiations will commence early in the new financial year fora new enterprise agreement.

Prior to the close of 2001–2002, we introduced the option of salarysacrificing for superannuation contributions for people covered by ourAward. This option provides greater flexibility for our people todetermine their salary structure.

In addition to our remuneration provisions, WorkCover’s achievementawards were once again issued throughout the year to people or teamswho contributed to our success in a particularly significant way.

Achievement awards were given to people for accomplishments inclaims assessment, organisation of medical assessment tribunals and forcontributing in various ways to the implementation of the new system.

MEASURING THE SATISFACTION OF OUR PEOPLEFor the third year running we conducted our annual Employee OpinionSurvey with this year’s results continuing the overall trend of increasinglevels of satisfaction in most aspects of work in our organisation. The major indicator analysed from the survey results is the PeopleSatisfaction Index. This index rose over the last three years from 66.4%in 2000 to 67.1% in 2002. Of favourable note in the survey was theenthusiasm with which our people were looking forward to theimplementation of the new system. The survey results also highlightedsome issues surrounding the way change is managed in our organisation.These issues will be taken into consideration when designing the changemanagement process that will accompany the formal separation of Q-COMP from the commercial side of WorkCover’s operation.

PLANNING FOR FUTURE SUCCESSA new induction strategy was introduced which will assist people joiningour organisation to better understand how their role contributes to ourdirection. All new WorkCover people will attend the redesignedCorporate Induction Program during their first month on the job. Theprogram includes an overview of all divisions and how they contribute to our operation, relevant employment policies and practices, anintroduction to the claims and policy information system and a customerservice workshop.

To complement our redesigned Corporate Induction Program, aninduction section will be included on our intranet site. The inductionintranet site will provide useful information for people who work with usonly for a short period of time or who haven’t yet attended the CorporateInduction Program. The site will contain information on timesheets, report-ing absences, pay dates and other areas of interest to a new person.

‘OUR PEOPLE’ ACHIEVEMENTS AT A GLANCE.

MOVING FORWARD. 1997–2002

98–99• UPGRADED AND DEVELOPED NEW TRAINING

PROGRAMS TO RESPOND TO ORGANISATIONALAND CULTURAL CHANGES

• INSTILLED A GREATER PERFORMANCECULTURE AND INTRODUCED AN ACHIEVEMENTAWARD SCHEME FOR OUTSTANDINGPERFORMANCE

• REDESIGNED RECRUITMENT PRACTICES TOREFLECT A FOCUS ON CUSTOMER SERVICE.

97–98• ESTABLISHED WORKCOVER QUEENSLAND • INCREASED TOTAL TRAINING DAYS FOR OUR

PEOPLE BY 70%• IMPROVED INTERNAL COMMUNICATION BY

LINKING ALL EMPLOYEES WITH AN INTRANETAND INTERNAL E-MAIL SYSTEM

• IMPLEMENTED MAJOR CHANGES TOPERFORMANCE MANAGEMENT, REWARD AND RECOGNITION, RECRUITMENT ANDSELECTION, AND COMMUNICATION.

99–00• ENSURED ALL OUR PEOPLE PARTICIPATED

IN CUSTOMER SERVICE TRAINING• PROVIDED LEADERSHIP TRAINING FOR

NEW MANAGERS IN PARTNERSHIP WITH MONASH MT ELIZA BUSINESS SCHOOL

• DEVELOPED THE FIRST CASE MANAGEMENTCOURSE WITH GRIFFITH UNIVERSITY TO HELPOUR PEOPLE CONTINUOUSLY IMPROVE CLAIM MANAGEMENT.

01–02• ACHIEVED THE HIGHEST EVER LEVELS OF

PEOPLE SATISFACTION• IMPLEMENTED EXTENDED SALARY BANDS

AND ACCELERATED PROGRESSION WITHINOUR PAY SCALES, THEREBY SIGNIFICANTLYENHANCING THE WAY WE REMUNERATE OUR PEOPLE

• INTRODUCED A NEW TRAINING INITIATIVE TO ENHANCE SKILLS IN HANDLING CRITICALCUSTOMER SITUATIONS.

00–01• SELECTED AS A FINALIST IN THE AUSTRALIAN

HUMAN RESOURCE INSTITUTE AWARDS FOREXCELLENCE IN PEOPLE MANAGEMENT

• INTRODUCED TWO NEW TECHNICAL TRAININGCOURSES TO HELP BUILD THE SKILL LEVELSOF OUR PEOPLE

• APPOINTED ALL TRAINEES RECRUITED IN THEPREVIOUS YEAR UNDER THE GOVERNMENT’S‘BREAKING THE UNEMPLOYMENT CYCLE’.

%

68

68

67

67

662002

mean

7.0

6.9

6.8

6.7

6.6

6.52000 2001

MEASURES OF OUR PEOPLE’S SATISFACTION

People satisfaction indexMean satisfaction with job Mean satisfaction with organisation

JULY JUNEJULY JUNEJULY JUNEJULY JUNEJULY JUNE

JULY AUGUST SEPTEMBER

JANUARY FEBRUARY

APRIL MAY JUNE

MARCH

01

02

OCTOBER NOVEMBER DECEMBER

SOUND FUNDMANAGEMENT

ENSURES THE BEST RESULTS FOR WORKERS AND EMPLOYERS.

19WorkCover is a government owned, not-for-profit insurer. Our incomecomes from premiums paid by employers and investment returns on ourfunds. We return excess funds (after expenses, claims costs,provisioning, and required surplus) back to policyholders and injuredworkers through premium rate reductions, improved benefits and better services.

Our financial goals are to manage our funds and investments, tomaintain full funding, and to ensure WorkCover is able to provide thebest benefits for workers at the lowest premium cost to employers.

WorkCover, under the WorkCover Queensland Act 1996, is taken to be fully funded if it exceeds its liabilities by at least 20% of WorkCover’soutstanding claims provisions at the end of the financial year.

For the year ended 30 June 2002, WorkCover continues to maintainsolvency requirements. The operating result from ordinary activities afterincome tax equivalents however recorded a deficit of $73.4m. This resultwas due to negative investment returns. Total equity at 30 June 2002remains strong at $466.5m. All State Government equity has now been repaid.

WorkCover through use of its Investment Fluctuation Reserve createdin 1999–2000 has been able to provide on-going certainty and stability of premiums for all employers. The WorkCover Board has maintained theaverage net premium rate at 1.55%. This continues to be the lowestreported average workers’ compensation scheme rate of all other Statesin Australia.

REVENUEPremium revenuePremium revenue for the year was $546.3m, an increase of 6% over2001–2002.Investment incomeWorkCover maintains a balanced portfolio managed by the QueenslandInvestment Corporation. A net investment return of -2.61% was realised

for the year. The investment performance this year has been affected byweakened equity markets both overseas and domestically.

EXPENSESClaims paymentsClaims payments have increased from $461.0m in 2000–2001 to $498.0min 2001–2002. This is primarily due to an increase in statutory claimspayments.

The outstanding claim provision has remained stable at $1 645.0m.WorkCover’s actuary PriceWaterhouseCoopers provides an actuarialvaluation twice a year as at 31 December 2001 and 30 June 2002. The estimates of liability are known as central estimates and areintended to have a chance of adequacy in the order of 50%.

WorkCover require a higher degree of confidence than this for itsprovision for outstanding claims. The provision therefore includes aprudential margin over the central estimates. The magnitude of theprudential margin is such as to increase the chance of adequacy of theprovision to the desired level.

In recognition of this overall uncertainty, the WorkCover Boardadopted a prudential margin at 30/06/1999 of 15% of the centralestimates. This has been retained giving the provision a probability ofsufficiency of between 80% and 85%.

Statutory claims payments made in 2001–2002 rose by 14% to$264.8m. Reasons for this include an increase in the quantum of lumpsum benefits legislated from 1 July 2001, an increase in medical/rehabilitation payments due to WorkCover’s enhanced focus onrehabilitation/return to work and, to a lesser degree, an increase inweekly compensation. The number of new statutory claims receivedremained constant at 72 989 compared to 73 090 in 2000–2001.

Common law claims payments in 2001–2002 increased slightly by 2%to $233.2m. The average common law claim value (settlement and legals)was $126 774, higher than the average in 2000–2001 of $114 315.

CONTINUED TO HAVE THE LOWEST AVERAGENET PREMIUM RATE REPORTED BY ANY OTHERWORKERS’ COMPENSATION SCHEME IN ANYAUSTRALIAN STATE.

MAINTAINED FULL FUNDING OF 20% SOLVENCYDESPITE A NEGATIVE INVESTMENT RETURN,WITH TOTAL EQUITY REMAINING STRONG.

USED INVESTMENT FLUCTUATION RESERVE TOPROVIDE ON-GOING CERTAINTY AND STABILITYOF PREMIUMS FOR EMPLOYERS.

2120

OUR FINANCES WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

The number of new common law claims received during the year was 2 396 compared to 1 634 in 2000–2001. This increase is mainly due to an earlier lodgement of claims this year compared to recent years.Operating expensesWorkCover’s operating expenses increased by 8% in 2001–2002 to$112.0m. This is largely associated with a $6.3m increase in grants andthe costs of implementing the new claims and policy information system.

FUTURE DIRECTIONWorkCover will continue to use prudent financial management to ensurea balanced, financially viable scheme for its stakeholders. Our premiumswill be set, claims benefits reviewed and operational expenses carefullymanaged in order to deliver this balance. Further, we will continue ourlong-term investment strategy built around a balanced portfolio.

‘OUR FINANCES’ ACHIEVEMENTS AT A GLANCE.

MOVING FORWARD. 1997–2002

98–99• REDUCED AVERAGE NET PREMIUM RATE FROM

2.145% TO 1.85%• RECOMMENDED REMOVAL OF THE 10%

PREMIUM SURCHARGE• INCREASED PRUDENTIAL MARGIN TO 15%

OF CENTRAL ESTIMATES.

97–98• ESTABLISHED WORKCOVER QUEENSLAND • ACHIEVED POSITIVE NET ASSETS

(2% SOLVENCY) • MOVED FROM 75% TO 100% BALANCED

INVESTMENT PORTFOLIO.

99–00• REACHED FULL FUNDING (20% SOLVENCY)• REDUCED AVERAGE NET PREMIUM RATE

TO 1.75%, THE LOWEST OF ANY AUSTRALIAN STATE

• CREATED INVESTMENT FLUCTUATION RESERVE.

01–02• MAINTAINED FULL FUNDING DESPITE

NEGATIVE INVESTMENT RETURN• CONTINUED TO HAVE THE LOWEST

AVERAGE NET PREMIUM RATE IN ANYAUSTRALIAN STATE

• FULLY REPAID GOVERNMENT EQUITY.

00–01• MAINTAINED FULL FUNDING• REDUCED AVERAGE NET PREMIUM RATE

TO 1.55%• IMPROVED EXPERIENCE BASED

RATING SYSTEM.

Total claims paid (after recoveries)

$M $MPAYMENT TYPE 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Statutory claimsWeekly compensation 132.2 26.6% 120.2 26.1%Medical/rehabilitation 64.3 12.9% 54.8 11.9%Lump sum 53.7 10.8% 42.3 9.2%Hospital 9.8 2.0% 10.2 2.2%Travel 3.1 0.6% 3.9 0.8%Legal 1.5 0.3% 0.6 0.1%Funeral 0.3 0.1% 0.3 0.1%Common Law claimsSettlement:

Settlement out of court 192.8 38.7% 181.2 39.3%Settlement in court 2.1 0.4% 4.2 0.9%

Legal:Legal costs for defendants 25.8 5.2% 20.7 4.5%Outlays for defendants 6.3 1.3% 8.4 1.8%Legal costs for plaintiffs 3.7 0.6% 8.1 1.8%Outlays for plaintiffs 2.4 0.5% 6.1 1.3%

Total 498.0 100.0% 461.0 100.0%

New statutory claims by office

OFFICE 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Brisbane 23,089 31.6% 24,038 32.9%Cairns 3,152 4.3% 3,002 4.1%Ipswich 4,818 6.6% 5,133 7.0%Logan 8,206 11.3% 7,772 10.6%Mackay 2,276 3.1% 2,183 3.0%Maryborough 3,669 5.0% 3,682 5.0%Rockhampton 3,602 4.9% 3,683 5.0%Southport 6,634 9.1% 6,584 9.0%Strathpine 8,322 11.4% 7,703 10.5%Toowoomba 5,964 8.2% 5,965 8.2%Townsville 3,257 4.5% 3,345 4.6%

Total 72,989 100.0% 73,090 100.0%

WORKCOVER INSURERSTATISTICS

$M

01–02 99–00 98–99

700

600

500

400

300

200

100

097–9800–01

PREMIUM REVENUE

$M

99–00 98–99

300

250

200

150

100

50

0

(50)

(100)97–98

%

12.0

10.0

8.0

6.0

4.0

2.0

0.0

-2.0

-4.001–02 00–01

INVESTMENT INCOME Investment income Investment return

$M

01–02 00–01 99–00 97–98

500

400

300

200

100

098–99

CLAIMS PAID (AFTER RECOVERIES)

JULY JUNE JULY JUNEJULY JUNEJULY JUNEJULY JUNE

2322

WORKCOVER INSURER STATISTICS WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

WORKCOVER INSURER STATISTICS CONTINUED

New statutory claims by industry

INDUSTRY 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Accommodation, cafés & restaurants 4,296 5.9% 4,645 6.4%Agriculture, forestry & fishing 2,505 3.4% 2,425 3.3%Communication services 175 0.2% 158 0.2%Construction 5,960 8.2% 6,405 8.8%Cultural & recreational services 1,494 2.0% 1,630 2.2%Education 2,094 2.9% 2,172 3.0%Electricity, gas & water supply 536 0.7% 533 0.7%Finance & insurance 500 0.7% 435 0.6%Government administration & defence 4,512 6.2% 4,462 6.1%Health & community services 7,874 10.8% 7,568 10.4%Manufacturing 20,728 28.4% 21,305 29.1%Mining 1,586 2.2% 1,720 2.4%Personal & other services 3,737 5.1% 3,763 5.1%Property & business services 4,381 6.0% 3,120 4.3%Retail trade 5,227 7.2% 5,462 7.5%Transport & storage 3,651 5.0% 3,740 5.1%Wholesale trade 3,493 4.8% 3,292 4.5%Unknown 240 0.3% 255 0.3%

Total 72,989 100.0% 73,090 100.0%

000’s

01–02 99–00 98–99

90

80

70

60

50

40

30

20

10

097–9800–01

STATUTORY CLAIM REGISTRATIONS

%

<=7 days 8–14 days 15–28 days >28 days

80

70

60

50

40

30

20

10

0

STATUTORY CLAIM DECISIONS

New statutory claims by injury nature

INJURY NATURE 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Burns 1,771 2.4% 2,081 2.8%Contusion 6,507 8.9% 6,734 9.2%Deafness 662 0.9% 901 1.2%Diseases of the skin

and subcutaneous tissue 385 0.5% 531 0.7%Dislocation 382 0.5% 399 0.5%Disorders of muscles, tendons

and soft tissue 1,158 1.6% 1,376 1.9%Foreign body 3,591 4.9% 3,692 5.1%Fracture 3,976 5.4% 4,026 5.5%Hernia 636 0.9% 931 1.3%Multiple injuries 578 0.8% 715 1.0%Nerve root and plexuses disorders 424 0.6% 616 0.8%Open wound 10,812 14.8% 11,766 16.1%Other diseases 927 1.3% 709 1.0%Other injuries 2,306 3.2% 1,865 2.6%Psychological injuries 2,537 3.5% 2,343 3.2%Strain/sprain 34,899 47.8% 33,745 46.2%Superficial injuries 724 1.0% 660 0.9%Unspecified nature 714 1.0% 0 0.0%

Total 72,989 100.0% 73,090 100.0%

New statutory claims by injury location

INJURY LOCATION 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Ankle 2,948 4.0% 2,782 3.8%Back 14,655 20.1% 14,803 20.3%Ear 882 1.2% 1,068 1.5%Elbow 1,581 2.2% 1,635 2.2%Eye 4,032 5.5% 4,179 5.7%Foot and toes 2,110 2.9% 2,397 3.3%Hand and fingers 12,464 17.1% 13,200 18.1%Head and face 3,004 4.1% 2,945 4.0%Hip 399 0.6% 399 0.5%Knee 4,414 6.1% 4,513 6.2%Lower limbs 3,052 4.2% 3,047 4.2%Multiple locations 1,560 2.1% 1,273 1.7%Neck 3,502 4.8% 3,361 4.6%Shoulder 5,104 7.0% 5,190 7.1%Systemic 3,155 4.3% 2,993 4.1%Trunk other 3,026 4.2% 2,899 4.0%Upper limbs 2,654 3.6% 2,766 3.8%Wrist 2,954 4.0% 3,105 4.2%Unspecified location 1,493 2.0% 535 0.7%

Total 72,989 100.0% 73,090 100.0%

01–02 00–01 99–00

IMPARTIALINDEPENDENCE

SUPPORTS A BALANCED REGULATORY SERVICE.

25Q-COMP—THE WORKERS’ COMPENSATION REGULATORY SERVICEOF QUEENSLANDQ-COMP was established in May 2000 as Queensland’s impartial andindependent regulatory service.

In our first year we achieved establishment and recognition of Q-COMP as the impartial regulator of the Queensland workers’compensation scheme. During our second year we continued to focus onconsolidating relationships with our key stakeholders, employers andinjured workers, through their respective industry associations, unions,insurers, medical and allied health providers and the legal profession.We believe our focus on ensuring that workers, employers and insurershave access to impartial regulatory services will help us achieve our vision.Our vision is to excel in workers’ compensation regulatory services.Our values are impartiality, excellence, integrity, responsiveness and respect.Our goals are to:• be a customer focused, impartial regulator• be an organisation of professional, committed people who are

rewarded for delivering our vision and living our values• maintain control and monitoring mechanisms to ensure a balanced

and viable scheme.

MEASURING OUR PERFORMANCEMarket research in 1999–2000 revealed that our customers andstakeholders were concerned about the impartiality and independence ofQ-COMP from WorkCover. Our latest survey results show that customersand stakeholders are more confident about this, indicating that theirconcerns are being addressed.

Q-COMP 2002 2001 2000

Impartiality 82.0 81.0 70.0

ENSURING INDEPENDENCE AND IMPARTIALITYIn July 2001, following the national competition policy review of theWorkCover Queensland Act 1996 (the Act), it was announced that Q-COMP would be totally separated from WorkCover’s commercialoperations. The government has now endorsed a model for separationwhich will formalise independence in the regulation and administrationof the scheme.

LISTENING TO OUR STAKEHOLDERSTo provide opportunities for increased levels of participation andconsultation, and education about regulatory issues, Q-COMP establishedconsultative forums with select stakeholder groups. These groupsincluded a General Practitioner (GP) Education Consultative Committee,an Employer-Medical Profession Consultative Committee, insurer workingparties and insurer forums.

The efforts of the GP Education Consultative Committee haveculminated in the development of an education program for Queensland’sgeneral practitioners. With around 85 000 workers’ compensation claimsbeing made each year, we are committed to putting in place strategies to make rehabilitation work. The GP Education Program core module—“Injury at Work—How GPs can help”—with its focus on effectivecommunication between all parties and the influential role of the GP, is one such strategy.

REVIEW AND APPEALSThe number of applications for review, lodged by workers and employersagainst insurers’ decisions, again increased during 2001–2002, with 2 218 applications being received. This is an increase of 24.3% over2000–2001.

Insurers’ decisions to reject or accept a claim, or to terminatebenefits under a claim, were once again the most common decisionsreferred for review.

TO EXCEL IN WORKERS’ COMPENSATIONREGULATORY SERVICES THROUGH IMPARTIALITY,EXCELLENCE, INTEGRITY, RESPONSIVENESS AND RESPECT.

Q-COMP

JULY AUGUST SEPTEMBER

JANUARY FEBRUARY

APRIL MAY JUNE

MARCH

01

02

27

Previously, self-insurer, WorkCover claims and injured worker datawere separate. All available scheme-wide workers’ compensation data is now consolidated into a single database, updated regularly by allinsurers in Queensland. We provide comprehensive reports to insurers,as a benchmark of their performance against scheme-wide data, and ourannual statistical reports continue to be well received.

Queensland is one of the few schemes, nationally or internationally,to have such current and consistent data. Insurers will have ready accessto extensive historical Queensland workers’ compensation claims data,assisting them to manage workers’ compensation claims appropriately.

REHABILITATION AND COMPLIANCE ADVISORY SERVICESCurrently, there are a total of 8 451 Queensland workplaces who haveaccredited workplace rehabilitation policies and procedures.

We have continued to audit approved rehabilitation coordinatortrainers to ensure delivery of consistently high-quality courses forrehabilitation coordinators. At 30 June 2002, there were a total of 13 691 registered rehabilitation coordinators, 3 850 of these havingcompleted the one-day recertification course.

Through our employer audit program we are identifying strategies to assist employers to provide their injured workers with effectiverehabilitation.

Q-COMP is investigating and developing strategies for some of thekey issues. These include review of current workplace rehabilitationlegislative provisions, rehabilitation provider services, and education foremployers and the medical profession about the basics of rehabilitation.

We are also working with government departments to implement apilot program for early intervention and treatment for injured workers.

The unit continues to provide advice about rehabilitation toemployers, insurers and medical and rehabilitation providers.

LICENSING AND INSURER COMPLIANCEDuring the year, Q-COMP processed one new self-insurance licence andthe WorkCover board approved this licence. This brings the total numberof self-insurers in the scheme to 24.

The rapidly changing corporate business arena impacts on theregulation of self-insurance in terms of changes of membership and

transfers. Ten self-insurance renewal applications were processed andeight licenses were amended for changes in membership, as a result ofcorporate sales and acquisitions.

Q-COMP continues to monitor self-insurers’ compliance with the legis-lation through on-site audits, monthly analysis of claims data and periodicreview of licensing conditions. We completed 23 audits of self-insurersfor statutory claims management, rehabilitation and damages claims.

We also broadened the scope of our insurer compliance activities,with the commencement of monitoring and auditing of WorkCoverinsurer for compliance with the legislation.

Self-insurers were required to have workplace health and safetysystems developed and implemented by 3 March 2002. Under the Act, all self-insurers must have satisfactory occupational health and safety(OHS) performance.

The board has now considered reports from the Department ofIndustrial Relations about the OHS performance of each of those self-insurers.

SCHEME-WIDE ISSUESQ-COMP has worked collaboratively with insurers, other stakeholdersand other jurisdictions on a number of scheme-wide issues.

We are progressing well in resolving any issues about electronicdistribution of the Workers’ Compensation Medical Certificate.Discussions with information technology providers about integration ofthe certificate into current practice management software are underway.

Q-COMP continues to regularly update the medical and allied healthtables of costs and fee schedules. We also provide advice andinterpretation on the application of these tables for medical and alliedhealth providers and insurers.

In conjunction with the Australian Dental Association of Queensland,we developed a new Table of Costs for Dental Fees, released on 1 July 2002.

INTO THE FUTUREWe will continue to provide fair, impartial and professional workers’ com-pensation regulatory services, ensuring the legislation is applied fairlyand appropriately—protecting the rights of both workers and employers.

26

Q-COMP WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

As a result of the increased number of review applications, the numberof appeals received against review decisions during 2001–2002 rose to376, an increase of 41.4% over 2000–2001.

Meeting the challenge of this higher demand on the services of Q-COMP’s Review Unit was a major focus during the 2001–2002 year. We implemented a new proactive approach by ensuring the applicantand the insurer provide all the necessary information for a review at theearliest possible stage.

Q-COMP continued its focus on improving communication with allaffected parties (workers, employers and insurers) during the review and appeal processes. Our review officers make early contact with allapplicants by telephone (where possible) to explain the process andanswer any questions.

We recognise that insurers need up-to-date information in order tofacilitate decision-making. Q-COMP provides insurers with regularupdates of relevant industrial magistrate and industrial court decisions.

A trial of a mediation process to resolve disputes during the reviewstage was completed during the year. Of the 100 cases referred formediation, 50% agreed to participate in mediation and of these, 50%were resolved successfully through this process. As a result of the trial,mediation will continue to be used selectively where cases are identifiedas suitable and both the applicant and the insurer give their consent.

To ensure we continue to have access to good quality legalrepresentation during appeals to the Industrial Magistrate and IndustrialCourt, a panel of barristers was appointed to provide legal services forthe Review Unit. Fourteen barristers in total were chosen, following theadvertising of an Invitation to Offer and a subsequent merit selectionprocess. These new appointments will also assist us to keep pace withincreasing workloads.

MEDICAL ASSESSMENT TRIBUNALS (MATs)Referrals to the Medical Assessment Tribunals (MATs) by workers’compensation insurers again increased this year. The total number ofreferrals this year was 4 613.

As part of the continuous improvement of tribunal processes, theChairs of the General Medical and the Specialty Assessment Tribunalsreviewed the format for documentation of tribunal decisions. Members of

each tribunal group took into consideration feedback from stakeholders,obtained through market research and Q-COMP meetings. A new formatwas developed and implemented by each tribunal group, according totheir specialty, between July and December 2001. Early feedback fromstakeholders indicates that decisions are clearer under the new format.

Our research confirmed our anecdotal evidence: workers withtribunal appointments were generally unaware of what to expect whenthey arrived for their appointment. We also knew that otherstakeholders, including insurers and representatives, had littleunderstanding of the overall MAT process.

As part of Q-COMP’s overall communication and education strategy,we produced a video about the MAT process. This video demystifies the process and eases some of the concerns of workers coming to thetribunals. It will also provide useful information to groups who have con-tact with the tribunals including insurers, unions, employers and doctors.

We provided additional training in permanent impairmentassessment as part of our commitment to continue to ensure high qualityand consistent MAT decisions.

In November 2001, we offered a core module with emphasis on theuse of the AMA Guides in the evaluation of permanent impairment, andthe interaction of the AMA Guides with the Table of Injuries as legislatedunder the Act. A subsequent course was presented in June 2002 on themusculo-skeletal system for which Q-COMP and WorkCover insurercommissioned Dr Mohammed Ranavaya, a Professor of Occupational andEnvironmental Medicine at the Marshall University School of Medicine inWest Virginia. He is an internationally recognised expert on the AMAGuides and has lectured globally on the effective use of these guides inthe performance of independent medical evaluations.

We are planning a range of specialty modules in the coming year.

Q-COMP INTEGRATED INFORMATION TECHNOLOGY SYSTEMSThe amalgamation of four separate databases into the comprehensive,integrated Q-COMP Core System was no small task. Our review andappeals, MATs, rehabilitation and self-insurance information will betogether on the one database. This integration of our data and operating systems brings the benefit of better sharing of informationwithin Q-COMP.

Q-COMP ACHIEVEMENTS AT A GLANCE.

MOVING FORWARD. 1999–2002

99–00• ESTABLISHED Q-COMP AS THE INDEPENDENT

REGULATOR OF THE QUEENSLAND WORKERS’COMPENSATION SCHEME

• IMPLEMENTED ADVISORY SERVICES GRANTSTO ENSURE WORKERS AND EMPLOYERS HAVEAN UNDERSTANDING OF THEIR REVIEW AND APPEAL RIGHTS

• INTRODUCED A RESEARCH GRANT TO ASSIST WITH EXTERNAL RESEARCH ON KEYWORKERS’ COMPENSATION ISSUES.

01–02• ESTABLISHED CONSULTATIVE FORUMS WITH

SELECT STAKEHOLDER GROUPS• IMPLEMENTED NEW PROACTIVE APPROACH

TO REVIEW AND APPEAL PROCESSES• INTEGRATED DATA SYSTEMS TO PROVIDE

IMPROVED SCHEME-WIDE INFORMATION.

00–01• IMPLEMENTED A NEW AND INNOVATIVE

SELECTION PROCESS FOR MEDICALASSESSMENT TRIBUNAL MEMBERS

• RECEIVED SIGNIFICANTLY IMPROVED MARKETRESEARCH RESULTS INDICATINGSTAKEHOLDERS HOLD Q-COMP TO BEIMPARTIAL AND INDEPENDENT

• FOCUSED ON INCREASING THE AWARENESSOF STAKEHOLDERS ABOUT MEDICAL MATTERSIN THE WORKERS’ COMPENSATION SCHEME.

JULY JUNEJULY JUNEJULY JUNE

29

Medical Assessment Tribunals cases heard by Tribunal

TRIBUNAL 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Cardiac 7 0.2 21 0.6Dermatology 18 0.5 15 0.5Ear nose throat 88 2.5 91 2.8General medical—other 120 3.4 169 5.2General medical—psychological 1,446 40.7 961 30.1Neurology/neurosurgical 172 4.8 207 6.5Ophthalmology 24 0.7 29 0.9Orthopaedic 1,616 45.3 1,604 50.2Prescribed disfigurement 66 1.9 105 3.2

Total cases heard 3,557 100.0% 3,202 100.0%

Total files referred to MATs 4,613 4,029

Review Unit applications received by application type

APPLICATION TYPE 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Employer re claim decision 345 15.6 351 19.7Employer re premium decision 106 4.8 93 5.2Other 17 0.8 18 1.0Worker re claim decision 1,750 78.8 1,322 74.1

Total 2,218 100.0% 1,784 100.0%

Review Unit application outcomes by review decision

OUTCOME 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Confirmed 1,286 57.1 914 54.7Set aside 547 24.3 375 22.4Varied 98 4.4 61 3.7Invalid and withdrawn applications 319 14.2 321 19.2

Total 2,250 100.0% 1,671 100.0%

Explanatory note:Confirmed Insurers’ decision is confirmed by the Review UnitSet aside Insurers’ decision is set aside by the Review Unit and

a new decision substitutedVaried Insurers’ decision is varied by the Review Unit

28

Q-COMP WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

Q-COMP MANAGEMENT TEAM

Q-COMP STATISTICSCATH WOOD B OCC THY

Cath’s role as General Manager buildson 16 years experience in workers’compensation insurance and regulation,including involvement in all major policyand legislative developments of thescheme since 1994. Her leadership andvision have assisted Q-COMP toachieve recognition as the impartialregulator of workers’ compensation inQueensland. Cath is currentlyQueensland’s representative on theHeads of Workplace Safety andCompensation Authorities (HWSCA) andthe Workers’ Compensation & InjuryManagement Committee of HWSCA.

CASSIE DRANSFIELD BSC (STATS) HONS,

GRAD DIP INFO SYS MGMT

During Cassie’s involvement with Q-COMP, she has led the consolidationof information across all insurers,allowing a better understanding ofQueensland’s workers’ compensationscheme through data and trendanalysis. Cassie brings a wealth ofknowledge and experience from herpast 10 years in both commercial andpublic organisations, in a broad rangeof industries including market research,management consulting, businessdevelopment, and education.

JENNY DUHS B OCC THY, GRAD DIP ADMIN

Jenny consolidates extensive experi-ence in rehabilitation and managementinitially in the public health system, andfor the past 14 years specifically withinthe workers’ compensation environment.Jenny brings consultative and leader-ship skills to this role and was heavilyinvolved in the early development of theconcept of workplace-basedrehabilitation in a clinical context at theSouth Brisbane Rehabilitation Centre.

DR CHRIS CUNNEEN RFD, MBBS, FRACGP, CIME

Chris’ focus on better management ofall injured workers through educationand improved communication, builds on

his medical background in GeneralPractice, Orthopaedic Surgery and PainManagement. Chris brings to his role aspecial interest in the occupationalissues relating to injury and permanentimpairment assessment. He also haspast experience in small business andthe Australian Army.

CHRISTINA CARRAS B COMM, ACA, SIA (AFF)

The combination of Christina’s previousadvisory role in finance and bankingindustry regulation and her experiencein the financial services industries,ideally places her to oversee self-insurance in Queensland’s workers’compensation system. Christina has abackground as a chartered accountant,her key areas of expertise beingaccounting, compliance and audit.

DEBBIE DUNCAN BSC (PSYCH) HONS

Over the past 15 years, Debbie has hadextensive experience in rehabilitationand workers’ compensation policydevelopment. Debbie was activelyinvolved in the development andimplementation of legislative amend-ments in 1997 and 1999 and she hasbeen active in the communication andeducation of the various stakeholders in the interpretation and application of workers’ compensation legislation in Queensland.

MIRANDA SLAUGHTER B OCC THY, ADV CERT MMT

Miranda brings a wealth of experienceboth from her clinical work in the health industry and in the workers’compensation system. As Manager ofthe South Brisbane RehabilitationCentre, she played a pivotal role inmoving the Centre towards a commer-cialised operation as Proactive InjuryManagement. Miranda has beeninstrumental in introducing changes to the administrative areas of theTribunals.

Medical Assessment CentreManagerMiranda Slaughter

Medical AdvisorDr Chris Cunneen

Review UnitManagerDebbie Duncan

Licensing and InsuranceCompliance Unit ManagerChristina Carras

Rehabilitation Complianceand Advisory Unit ManagerJenny Duhs

General ManagerCath Wood

Business Services ManagerJenny Duhs

Scheme Analysis andSupport Services Unit ManagerCassie Dransfield

Q-COMP ORGANISATIONAL STRUCTURE

CLOCKWISE FROM TOP RIGHTCHRISTINA CARRAS, JENNY DUHS, CASSIE DRANSFIELD, MIRANDA SLAUGHTER,DEBBIE DUNCAN, CATH WOOD, DR CHRIS CUNNEEN.

Review Unit appeal outcomes by outcome type

OUTCOMES OF APPEALS FINALISED 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Finalised pre courtWithdrawn 158 50.2 179 58.3Settled 55 17.5 47 15.3Finalised in courtStruck out 14 4.4 5 1.6Dismissed 46 14.6 45 14.7Upheld 42 13.3 31 10.1

Total 315 100.0% 307 100.0%

Explanatory note:Withdrawn Appeals withdrawn by the appellant prior to Court HearingStruck out Appeals struck out by the Magistrate because of failure of the

appellant to comply with legislative or Court requirementsSettled The parties to the appeal have negotiated a settlement out of courtDismissed After hearing evidence, the Magistrate has dismissed the appeal and

confirmed the review decisionUpheld After hearing evidence, the Magistrate has upheld the appeal and set

aside or varied the review decision

ACHIEVING OUTCOMESWORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

98–9997–98 99–00 00–01 01–02

3130

Q-COMP WORKCOVER QUEENSLAND ANNUAL REPORT 2001–2002

SCHEME-WIDE STATISTICS

New statutory claims scheme-wide by industry

INDUSTRY 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Accommodation, cafés & restaurants 4,361 5.1 4,645 5.4Agriculture, forestry & fishing 2,522 3.0 2,426 2.8Communication services 186 0.2 186 0.2Construction 6,001 7.0 6,445 7.6Cultural & recreational services 1,596 1.9 1,638 1.9Education 2,293 2.7 2,212 2.6Electricity, gas & water supply 548 0.6 533 0.6Finance & insurance 729 0.9 675 0.8Government administration & defence 7,455 8.7 7,487 8.8Health & community services 8,175 9.6 7,800 9.1Manufacturing 22,324 26.2 22,913 27.0Mining 1,999 2.3 2,209 2.6Personal & other services 3,966 4.6 3,978 4.7Property & business services 4,563 5.3 3,233 3.8Retail trade 9,177 10.7 9,334 10.9Transport & storage 5,699 6.7 6,007 7.0Wholesale trade 3,573 4.2 3,360 3.9Unknown 240 0.3 259 0.3

Total 85,407 100.0% 85,340 100.0%

New statutory claims scheme-wide by injury nature

INJURY NATURE 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Burns 1,991 2.3 2,335 2.7Contusion 7,792 9.1 8,001 9.4Deafness 976 1.1 1,185 1.4Diseases of the skin

and subcutaneous tissue 476 0.6 616 0.7Dislocation 426 0.5 446 0.5Disorders of muscles, tendons

and soft tissue 1,295 1.5 1,435 1.7Foreign body 3,935 4.6 4,072 4.8Fracture 4,356 5.1 4,453 5.2Hernia 772 0.9 1,054 1.2Multiple injuries 633 0.7 765 0.9Nerve root and plexuses disorders 458 0.5 642 0.8Open wound 12,244 14.3 13,354 15.6Other diseases 1,073 1.3 868 1Other injuries 2,673 3.1 2,206 2.6Psychological injuries 2,896 3.4 2,599 3Strain/sprain 41,763 49.1 40,491 47.5Superficial injuries 934 1.1 818 1Unspecified nature 714 0.8 0 0

Total 85,407 100.0% 85,340 100.0%

New statutory claims scheme-wide by injury location

INJURY LOCATION 2001–2002 % OF TOTAL 2000–2001 % OF TOTAL

Ankle 3,415 4.0 3,285 3.8Back 17,581 20.6 17,613 20.6Ear 1,240 1.5 1,391 1.6Elbow 1,912 2.2 1,980 2.3Eye 4,499 5.3 4,716 5.5Foot and toes 2,489 2.9 2,786 3.3Hand and fingers 14,267 16.7 15,064 17.7Head and face 3,623 4.2 3,489 4.1Hip 467 0.5 455 0.5Knee 5,177 6.1 5,263 6.2Lower limbs 3,489 4.1 3,492 4.1Multiple locations 1,789 2.1 1,496 1.8Neck 4,174 4.9 3,981 4.7Shoulder 6,012 7.0 6,112 7.2Systemic 3,464 4.1 3,188 3.7Trunk other 3,569 4.2 3,433 4.0Upper limbs 3,103 3.6 3,220 3.8Wrist 3,577 4.2 3,709 4.3Unspecified location 1,560 1.8 667 0.8

Total 85,407 100.0% 85,340 100.0%

32

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

CONTENTSDIRECTORS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33FIVE-YEAR REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35STATEMENT OF FINANCIAL PERFORMANCE . . . . . . . . . .36STATEMENT OF FINANCIAL POSITION . . . . . . . . . . . . . . .37STATEMENT OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . .38NOTES TO AND FORMING PART OF THE

FINANCIAL STATEMENTS1 SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . . . . . . .392 CHANGES IN ACCOUNTING POLICIES . . . . . . . . . . .423 PREMIUM REVENUE . . . . . . . . . . . . . . . . . . . . . . . . . .434 NET CLAIMS INCURRED . . . . . . . . . . . . . . . . . . . . . .435 OPERATING EXPENSES . . . . . . . . . . . . . . . . . . . . . . .436 INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . .447 INCOME TAX EQUIVALENTS . . . . . . . . . . . . . . . . . . .448 RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .459 INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4510 OPERATING ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . .4611 INTANGIBLE ASSETS . . . . . . . . . . . . . . . . . . . . . . . . .4712 PAYABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

13 PROVISIONS—OUTSTANDING CLAIMS . . . . . . . . .4714 PROVISIONS—OTHER . . . . . . . . . . . . . . . . . . . . . . . .4715 CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4816 RESERVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4817 ACCUMULATED SURPLUS . . . . . . . . . . . . . . . . . . . . .4818 TOTAL EQUITY RECONCILIATION . . . . . . . . . . . . . . .4819 COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4820 CONSULTANCY FEES . . . . . . . . . . . . . . . . . . . . . . . . .4821 ADDITIONAL FINANCIAL INSTRUMENTS

DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4922 NOTES TO THE STATEMENT OF CASH FLOWS . . . .5023 DIRECTORS’ REMUNERATION . . . . . . . . . . . . . . . . . .5024 EXECUTIVES’ REMUNERATION . . . . . . . . . . . . . . . . .5125 RELATED PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .5226 EVENTS SUBSEQUENT TO BALANCE DATE . . . . . .52

ACTUARIAL CERTIFICATE ON OUTSTANDING CLAIMS LIABILITIES AS AT 30 JUNE 2002 . . . . . . . . . . . . . . . . . .53

CERTIFICATE OF WORKCOVER QUEENSLAND . . . . . . . . .54DECLARATION BY DIRECTORS . . . . . . . . . . . . . . . . . . . . . .55INDEPENDENT AUDIT REPORT . . . . . . . . . . . . . . . . . . . . .56

DIRECTORSThe following persons were directors during the whole of the financialyear and up to the date of this report:

I Brusasco AM (Chairman) director since 1998T A White (Deputy Chairman) director since 1997J C Battams director since 2001P Henneken director since 2001W P Ludwig director since 1998C M Maher director since 1997G A Murphy director since 1998D I Nissen director since 2000R A Pashen director since 1998C J Stewart director since 1997

Mr Harold Shand was appointed a director on 27 September 2001 andcontinues in office at the date of this report.

Particulars of directors’ qualifications and experience are set out under‘Board of Directors’ in the Annual Report.

33DIRECTORS’ MEETINGSThe number of Board and Committee meetings held and the number ofmeetings attended by each director during the financial year are:

BOARD OF DIRECTORS AUDIT COMMITTEEA B A B

I Brusasco AM 10 10T A White 7 10 3 3J C Battams 9 10P Henneken 9 10W P Ludwig 7 10C M Maher 8 10 2 2G A Murphy 9 10D I Nissen 9 10 3 3R A Pashen 8 10H W Shand 6 8C J Stewart 8 10 1 1

A Number of meetings attended.B Number of meetings held during the time the director held office during the year.

PRINCIPAL ACTIVITIESThe principal activities of WorkCover during the course of the year wereto provide workers’ compensation insurance and regulate the schemeequitably, meeting the needs of Queensland employees and employers.There were no significant changes in the nature of the principal activitiesduring 2001–2002.

DIRECTORS’ REPORTTHE DIRECTORS OF WORKCOVER QUEENSLAND PRESENT THEIR REPORT

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002.

2002 2001 2000 1999 1998 $’000 $’000 $’000 $’000 $’000

Statement of Financial PerformanceUnderwriting result (66,544) 131,704 51,597 48,036 (51,742)Investment income (64,641) 133,388 275,410 226,287 192,367Operating result before income tax equivalents (131,185) 265,092 327,007 348,775 155,587Operating result after income tax equivalents (73,366) 191,950 219,446 222,251 99,618

Statement of Financial PositionTotal assets 2,163,077 2,443,502 2,547,403 2,410,616 2,229,698Total liabilities 1,696,627 1,843,686 2,027,959 2,110,618 2,186,951

Net assets 466,450 599,816 519,444 299,998 42,747

EquityCapital 0 60,000 171,578 171,578 136,578Reserves 137,450 270,716 92,850 0 0Accumulated surplus/(deficit) 329,000 269,100 255,016 128,420 (93,831)

Total equity 466,450 599,816 519,444 299,998 42,747

35

FIVE YEAR REVIEWCOMPARATIVE ANALYSIS BASED ON HISTORIC COST

DIRECTORS’ REPORT CONTINUED

REVIEW AND RESULTS OF OPERATIONSWorkCover continues to maintain solvency requirements as required bythe Insurance Act 1973 and additional requirements stipulated underWorkCover’s regulation.

The operating result from ordinary activities after income tax equivalentswas a deficit of $73.366 million. This result was primarily due to anegative investment return of -2.61% on funds invested. Total equity at30 June 2002 is $466.450 million.

Further information on the operations of WorkCover, and the results ofthose operations, can be found in the Chairman’s report, CEO report and‘Our Finances’ section of the Annual Report.

STATE OF AFFAIRSThere were no significant changes in the state of affairs of theorganisation during the financial year.

ENVIRONMENTAL REGULATIONWorkCover is not subject to any significant environmental regulationsunder either Commonwealth or State Legislation. However, the Boardbelieves that adequate systems are in place for the management ofenvironmental requirements as they apply to WorkCover and is notaware of any breaches of these requirements.

EVENTS SUBSEQUENT TO BALANCE DATEThe outstanding claims liability for one self-insurer has been paid outsince 30 June 2002.

Other than this matter, there has not arisen, in the interval between theend of the financial year and the date of this report, any item, transactionor event of a material and unusual nature likely, in the opinion of thedirectors of WorkCover, to affect significantly the operations, the resultsof those operations, or the state of affairs, in future financial years.

LIKELY DEVELOPMENTSWorkCover will continue to pursue excellence in its commercial rolethrough WorkCover insurer and in its regulatory role through Q-COMPuntil Q-COMP is separated from WorkCover as previously announced bythe Government. Other likely developments are covered elsewhere in theAnnual Report.

DIRECTORS’ BENEFITSThe Governor-in-Council approves directors’ remuneration as part of theterms of appointment. Information on directors’ benefits is set out inNote 23 (Directors’ Remuneration) and Note 25 (Related Parties) to thefinancial statements.

INDEMNIFICATION AND INSURANCE OF DIRECTORSIndemnificationThe Minister for Industrial Relations has previously provided directorswith an indemnity. The Minister provided an indemnity for H W Shandduring the course of this financial year.

34

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

Insurance premiumsFor 2001–2002, WorkCover had insurance premiums in respect ofdirectors’ and officers’ liability and legal expenses, for current directorsand officers, including WorkCover’s Chief Executive Officer and generalmanagers. The insurance premiums relate to:

• costs and expenses incurred by the relevant directors/officers indefending legal proceedings, whether civil or criminal and whatevertheir outcome; and

• other liabilities that may arise from their positions.

Directors’ and officers’ liability insurance does not cover conductinvolving a wilful breach of duty or improper use of information to gain a personal advantage.

WorkCover also held accident and travel insurance to cover directorsworking on behalf of WorkCover.

DIRECTION AND NOTIFICATION GIVEN BY THE MINISTERDuring the year, WorkCover made a payment of $11.673 million(including GST) to the Division of Workplace Health and Safety,Department of Industrial Relations, to help in the prevention of injury to workers. The Minister for Industrial Relations made a direction(pursuant to s.416 of the WorkCover Queensland Act 1996) on 31 May2002 requiring WorkCover to contribute $12.058 million (including GST) in 2002–2003 for the same purpose.

ROUNDING OF AMOUNTSAmounts in this report and the accompanying financial report have beenrounded off to the nearest thousand dollars unless otherwise indicated.

RESOLUTION OF BOARD OF DIRECTORSThis report is made in accordance with a resolution of the Board ofdirectors and is signed for and on behalf of the Board of directors this27th day of August 2002.

I BRUSASCO AM T A WHITE

CHAIRMAN DEPUTY CHAIRMAN

Note 2002 2001$’000 $’000

Premium revenue 3 546,267 515,413Net claims incurred 4 (500,807) (280,016)Operating expenses 5 (112,004) (103,693)

Underwriting result (66,544) 131,704Investment income 6 (64,641) 133,388

Operating result from ordinary activities before income tax equivalents (131,185) 265,092Income tax equivalents (expense)/benefit relating to ordinary activities 7a 57,819 (73,142)

Operating result (73,366) 191,950Total revenues, expenses and valuation adjustments recognised directly in equity 0 0

Total changes in equity other than those resulting from transactions with owners as owners 18 (73,366) 191,950

The above Statement of Financial Performance is to be read in conjunction with the accompanying notes.

36

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

STATEMENT OF FINANCIAL PERFORMANCEFOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

Note 2002 2001$’000 $’000

CURRENT ASSETSCash assets 22a 2,702 4,365Receivables 8 24,815 13,944Investments 9 476,600 422,000

Total current assets 504,117 440,309

NON-CURRENT ASSETSInvestments 9 1,575,615 1,971,206Operating assets 10 8,847 7,348Deferred tax assets 7b 57,033 14,863Intangible assets 11 17,465 9,776

Total non-current assets 1,658,960 2,003,193

TOTAL ASSETS 2,163,077 2,443,502

CURRENT LIABILITIESPayables 12 10,694 79,037Current tax liabilities 7c 7,336 54,438Provisions

Outstanding claims 13 476,600 422,000Other 14 26,541 16,682

Total current liabilities 521,171 572,157

NON-CURRENT LIABILITIESDeferred tax liabilities 7d 1,605 28,084Provisions

Outstanding claims 13 1,168,400 1,223,500Other 14 5,451 19,945

Total non-current liabilities 1,175,456 1,271,529

TOTAL LIABILITIES 1,696,627 1,843,686

Net assets 466,450 599,816

EQUITYCapital 15 0 60,000Reserves 16 137,450 270,716Accumulated surplus 17 329,000 269,100

Total equity 18 466,450 599,816

The above Statement of Financial Position is to be read in conjunction with the accompanying notes.

37

STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2002

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe significant policies, which have been adopted in the preparation of this financial report, are:

(a) Basis of preparationThe financial statements are a general purpose financial report and have been prepared in accordance with the WorkCover Queensland Act 1996,the Financial Administration and Audit Act 1977, the Financial Management Standard 1977, applicable Australian Accounting Standards,Statements of Accounting Concepts, Urgent Issues Group Abstracts and other prescribed requirements.

The financial statements have been prepared on an accrual basis whereby income and expenses are included in the period to which they relate.

Unless otherwise stated, the financial statements have been prepared in accordance with the historical cost convention and the accountingpolicies are consistent with those of the previous year. Comparative information is reclassified where appropriate to enhance comparability.

(b) ReinsuranceNo reinsurance is currently undertaken.

(c) PremiumPremium comprises amounts charged to the policyholder, excluding stamp duty and goods and services tax (GST) received on behalf of the Stateand Federal governments. Premium also includes a 5% levy charged to self-insurers based on their deemed premium.

The earned portion of premiums charged is recognised as revenue from the date of attachment of risk. The pattern of recognition over the policyperiod is based on time, which is considered to closely approximate the pattern of risks underwritten.

In some instances, premiums may be paid in advance of the period to which those premiums relate. These premiums are recognised as ‘premiumsreceived in advance’ in the Statement of Financial Position.

Unclosed business has not been included as revenue, as the amount is not considered to be material.

Section 332(2) of the WorkCover Queensland Act 1996 provides that policies of accident insurance issued by or on behalf of WorkCover areguaranteed by the Queensland Government.

(d) ClaimsClaims incurred expense and a liability for outstanding claims are recognised in the financial report. The liability for outstanding claims includesclaims reported but not yet paid, claims incurred but not yet reported and the anticipated direct and indirect costs of settling those claims.

The liability for outstanding claims is actuarially calculated each year by an independent actuary.

The liability for outstanding claims is measured as the present value of the expected future payments. These payments are estimated on the basisof the ultimate cost of settling claims, which is affected by factors arising during the period to settlement such as normal and superimposedinflation. The expected future payments are discounted to a present value at balance date. The details of discount rates applied are included innote 13.

The outstanding claims liability includes a 15% prudential margin. This increases the probability of sufficiency of the liabilities to 80–85% inrecognition that there are inherent uncertainties in the actuarial assumptions underlying the present value calculation.

An Actuarial Certificate in respect of outstanding claims liability has been received and reproduced in the Annual Report.

(e) Income taxAs from 1 July 2001, WorkCover is liable for the payment of income tax equivalents under the National Tax Equivalent Regime (the NTER).WorkCover was previously part of the Queensland Tax Equivalents Regime.

Tax effect accounting is applied using the liability method whereby income tax in the Statement of Financial Performance is calculated on theoperating result adjusted for permanent differences between taxable and accounting income. The tax effect of timing differences, which arise fromitems being brought to account in different periods for income tax and accounting purposes, is carried forward in the Statement of FinancialPosition as a future income tax benefit or a provision for deferred income tax at the rates which are expected to apply when those timingdifferences reverse.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income taxbenefits relating to tax losses are only brought to account when their realisation is virtually certain.

39

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

Note 2002 2001$’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIESPremiums received 562,694 516,527Premiums refunded (23,725) (24,003)Interest received 136,561 162,135GST collected on sales 56,047 54,539GST refunded from ATO 10,843 4,810Claims paid (540,179) (509,133)Claims recoveries received 23,530 22,232Operating expenses paid (103,943) (98,704)Rental income received 501 452Property expenses paid (1,289) (1,731)Payment to workers’ dependents 0 (27)GST paid on purchases (12,286) (12,272)GST remitted to the ATO (48,073) (52,924)Sales tax equivalents paid 0 (867)Income tax equivalents paid (68,652) (85,864)

Net cash provided by operating activities 22 (b) (7,971) (24,830)

CASH FLOWS FROM INVESTING ACTIVITIESInvestments made (567,632) (575,969)Investments redeemed 708,544 656,795Proceeds from sale of property investments 0 2,347Proceeds from sale of operating assets 504 108Payment for intangible assets (9,119) (9,083)Payment for operating assets (4,412) (5,618)

Net cash used in investing activities 127,885 68,580

CASH FLOWS FROM FINANCING ACTIVITIESCash outflow from capital repayments (121,577) (50,000)

Net cash provided by financing activities (121,577) (50,000)

Net increase/(decrease) in cash held (1,663) (6,250)Cash at the beginning of the financial year 4,365 10,615

Cash at the end of the financial year 22 (a) 2,702 4,365

The above Statement of Cash Flows is to be read in conjunction with the accompanying notes.

38

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

STATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

(i) Computer softwareComputer software with a cost greater than $50,000 is recognised as an intangible asset. Software with a lesser value is expensed. Computersoftware is amortised on a straight-line basis over the period in which the related benefits are expected to be realised. Current amortisation ratesapplied range from 10–40%.

(j) InvestmentsInvestments are stated at their net market value at each balance date. Investments include a building owned by WorkCover. Changes in the netmarket values of investments at balance date, from their net market values at the previous balance date (or cost of acquisition, if acquired duringthe financial year) are recognised as revenue or expense in the Statement of Financial Performance.

Investments are principally amounts to match future outstanding claims liabilities. As such, investments are apportioned to match currentinvestment assets to current liabilities for outstanding claims with the remaining investments disclosed as non-current.

(k) Accounts payableTrade creditorsLiabilities are recognised for amounts to be paid in the future for administrative goods or services received, whether or not billed to WorkCover.Settlement for these creditors usually occurs within 30 days.

Payments received in advanceLiabilities are recognised for amounts received in advance or overpayment of premiums. Settlements for these creditors are offset against debtswhen raised.

Other creditorsThis represents liabilities for payment of goods and services which have been provided—other than those of an administrative nature. Settlementfor the creditors is in accordance with creditors payment terms.

(l) Employee entitlementsAnnual leaveA liability for annual leave is recognised, and is measured as the amount unpaid at balance date at undiscounted amounts based on current salaryrates in respect of employees’ services up to that date. Related on-costs have been included in the liability.

Long service leaveA liability for long service leave is recognised, and is measured as the present value of expected future payments to be made in respect of servicesprovided by employees up to the balance date. Consideration is given to expected future wage and salary levels, experience of employeedepartures and periods of service. Expected future payments are discounted using interest rates on national government securities with terms tomaturity that match, as closely as possible, the estimated future cash outflows. Related on-costs have been included in the liability.

Sick leaveSick leave entitlements are non-vesting and are only paid upon valid claims for sick leave by employees. Sick leave expense is brought to accountin the reporting period in which it occurs. No liability for sick leave has been recognised as experience indicates that on average, sick leave takeneach financial year is less than the entitlement accruing in that period.

SuperannuationWorkCover contributes to superannuation funds for the purpose of providing benefits for employees and their dependants on retirement, disabilityor death. Contributions are charged as expenses when incurred.

(m) Segment InformationWorkCover provides workers’ compensation insurance in the State of Queensland.

41

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

(f) Goods and services taxRevenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is notrecoverable from the Australian Tax Office (ATO). In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or inthe amount of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financingactivities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

(g) ReceivablesPremiums outstandingPremium debts are given 21 days to settle (excluding those policies subject to a common due date of 30 September). The collectibility of this debtis assessed at balance date and a provision for doubtful debts is raised where some doubt as to collection exists.

Sundry debtors and recoveriesSundry debtors and recoveries are recognised on an accrual basis and are generally settled within two months of invoice date. The collectibility ofthis debt is assessed at balance date and a provision for doubtful debts is raised where some doubt as to collection exists.

(h) Operating assetsAcquisitionAll items of plant and equipment are recorded at their cost of acquisition, being the fair value of the consideration provided plus incidental costsdirectly attributable to the acquisition. An asset recognition threshold of $2,000 exists below which all items are expensed. Items or componentswhich form an integral part of an asset are recognised as a single asset. The recognition threshold is applied to the aggregate cost of eachfunctional asset.

Subsequent additional costsCosts incurred subsequent to initial acquisition are capitalised when it is probable that future economic benefits, in excess of the originallyassessed performance of the asset will flow to the entity in future years. Costs that do not meet the criteria for capitalisation are expensed as incurred.

ValuationUntil 30 June 2001, operating assets were revalued every year for assets with a revaluation threshold of greater than $1,000,000 andcomprehensively every 5 years for all other assets. On applying revised AASB 1041 Revaluation of Non-Current Assets and in accordance withQueensland Treasury’s guidelines—‘Non-Current Asset Guidelines for the Queensland Public Sector’, all of WorkCover’s operating assets are nowrecorded on the cost basis, at the carrying amount of the asset as at 30 June 2001.

The carrying amounts of operating assets valued on the cost basis are reviewed to determine whether they are in excess of their recoverableamount at balance date. If the carrying amount of a non-current asset exceeds its recoverable amount, the asset is written down to the loweramount. The write-down is expensed in the reporting period in which it occurs. In assessing recoverable amounts of operating assets, the relevantcash flows have not been discounted to their present value, except where specifically stated.

Depreciation Depreciation on operating assets is calculated on a straight-line basis so as to write-off the values of each depreciable asset, less its estimatedresidual value, progressively over its estimated useful life to WorkCover. Depreciation rates are reviewed annually to ensure the carrying amountsreflect the remaining useful lives of the respective assets.

The useful lives for each class of operating asset are as follows:

Computer equipment 3 to 7 yearsMotor vehicles 3 to 4 years (to a residual value)Plant and Equipment 3 to 10 yearsFurniture and Fittings 5 to 10 years

40

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

2002 2001$’000 $’000

3 PREMIUM REVENUEInsurance premiums 533,407 498,856Fees and charges 4,259 3,708Self-insurer fees 4,501 4,949Movement in State Government premium provision 4,100 7,900

546,267 515,413

4 NET CLAIMS INCURREDClaims paid 523,198 484,599Claims recoveries (25,162) (23,599)Movement in outstanding claims provision 2,771 (180,984)

Net claims incurred (a) 500,807 280,016

(a) Net Claims Incurred TableCurrent period claims relate to risks borne in the current financial year. Prior period claims relate to a reassessmentof the risks borne in the previous financial years.

Direct Business 2002 2001Current Year Prior Years Total Current Year Prior Years Total

$’000 $’000 $’000 $’000 $’000 $’000

Gross claims incurred and related expenses—undiscounted 674,350 (67,200) 607,150 673,122 (480,617) 192,505Other recoveries—discounted 0 0 0 0 0 0

Net claims incurred—undiscounted 674,350 (67,200) 607,150 673,122 (480,617) 192,505

Discount and discount movement– gross claims incurred (81,195) (25,148) (106,343) (83,854) 171,365 87,511Discount and discount movement– other recoveries 0 0 0 0 0 0

Net discount movement (81,195) 25,148 106,343 (83,854) 171,365 87,511

Net claims incurred 593,155 (92,348) 500,807 589,268 (309,252) 280,016

Note 2002 2001$’000 $’000

5 OPERATING EXPENSESSalaries and related costs 56,254 55,982Contractors 8,874 6,973Consultancy fees 20 389 607Audit fees 92 87Computer costs 4,698 2,570Operating lease rentals 2 (b) 1,796 3,861Other administration expenses 11,865 11,544Depreciation of operating assets 2,233 3,439Amortisation of computer software 770 122Loss on disposal and revaluation of operating assets 196 186Transfer to doubtful debts provision 4,503 4,282Grants 20,334 14,040

112,004 103,693

43

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

2 CHANGES IN ACCOUNTING POLICIESa) Revaluation of non-current assetsWorkCover has applied revised accounting standard AASB 1041 Revaluation of Non-Current Assets from 1 July 2001. In accordance withQueensland Treasury’s guidelines—‘Non-Current Asset Accounting Guidelines for the Queensland Public Sector’, all of WorkCover’s operatingassets have been recorded on the cost basis, at the carrying amount of the asset as at 30 June 2001.

b) Investment income / Operating expensesWorkCover owns an investment property at 280 Adelaide St. It is also a major tenant of this building. In past years, a notional rent revenue(investment income) and rent expense (operating expense) has been recorded in the Statement of Financial Performance. This was recorded toreflect property income against the investment property and rental expense against WorkCover’s operating expenses. Notional rent revenue andassociated expense are not included in this year’s statements. As a result of this change, operating expenses and property income will be reducedaccordingly. There is no effect to the operating result in the Statement of Financial Performance from this change. When applying this change tolast year’s comparatives, operating lease rentals would have reflected $1.489 million and property income $0.472 million.

42

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

2002 2001$’000 $’000

7 INCOME TAX EQUIVALENTS CONTINUED

(c) Current tax liabilitiesProvision for Current Income TaxMovements during the year:

Balance at the beginning of the financial year 54,438 62,739Income tax equivalents paid (68,652) (85,866)Current year’s income tax expense on operating result from ordinary activities 24,606 87,183Under/(over) provision in prior year (13,775) (9,618)Income tax to be refunded 10,719 0

7,336 54,438

(d) Deferred tax liabilitiesProvision for Deferred Income TaxProvision for deferred income tax comprises the estimated expenseat the applicable rate of 30% on the following items:Difference in depreciation for accounting and income tax purposes 0 (1,942)Tax-free/tax-deferred components of investment distribution 1,605 31,157Other 0 (1,131)

1,605 28,084

8 RECEIVABLESPremiums outstanding 10,237 6,245Recoveries 7,117 2,784Income tax refund 10,719 0Prepayments 929 476GST receivable 545 6,125Sundry debtors 123 3,414Less: Provision for doubtful debts (4,855) (5,100)

24,815 13,944

9 INVESTMENTSQueensland Investment Corporation (QIC) 2,026,215 2,367,706Land and buildings 26,000 25,500

2,052,215 2,393,206

Represented by:Current 476,600 422,000Non-current 1,575,615 1,971,206

2,052,215 2,393,206

45

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

Note 2002 2001$’000 $’000

6 INVESTMENT INCOMEInterest from bank accounts 273 108Distribution from Queensland Investment Corporation 136,287 160,826Property

Property income 2 (b) 476 2,857Property expenses (1,298) (915)

Change in net market valuesInvestments held at the end of the financial year (152,233) (29,487)Investments realised during the financial year (48,146) 0

Interest paid to workers’ dependents 0 (1)

(64,641) 133,388

7 INCOME TAX EQUIVALENTS(a) Income tax equivalents expense/(benefit)Prima facie income tax expense/(benefit) calculated at 30% on the operating result from ordinary activities (39,355) 90,131

Increase in income tax expense due to:Non deductible expenses incurred in deriving foreign source income 462 0Other sundry Items 637 4

Decrease in income tax expense due to:Revaluation of land and buildings (150) (255)Foreign tax credits 0 (1,226)Exempt foreign income (12,832) 0Rebatable dividend Income (5,000) (8,696)Adjustment to future income tax benefit and deferred income tax

provision balances due to change in company tax rate 0 (2,461)

Income tax under/(over) provided in prior year (1,581) (4,355)

Income tax expense/(benefit) attributable to operating result from ordinary activities (57,819) 73,142

Income tax expense/(benefit) attributable to operating result from ordinary activities is made up of:Current income tax provision 24,606 87,183Deferred income tax provision (40,946) (9,295)Future income tax benefit (39,898) (391)Under/(over) provision in prior year (1,581) (4,355)

(57,819) 73,142

(b) Deferred tax assetsFuture Income Tax Benefit Future income tax benefit comprises the estimated future benefitat the applicable rate of 30% on the following items:Provisions and employee entitlements not currently deductible 11,054 12,518Unrealised losses on investments 42,870 1,677Difference in depreciation for accounting and tax purposes 2,561 0Other sundry items 548 668

57,033 14,863

44

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

2002 2001$’000 $’000

11 INTANGIBLE ASSETSComputer software at cost 18,177 758Less accumulated amortisation (844) (121)

17,333 637Computer software at cost—work in progress 132 9,139

17,465 9,776

12 PAYABLESCurrent:

Trade creditors 6,679 5,864Premiums received in advance 2,046 2,894Other creditors 1,969 70,279

10,694 79,037

13 PROVISIONS—OUTSTANDING CLAIMSCurrent 476,600 422,000Non-current 1,168,400 1,223,500

1,645,000 1,645,500

Represented by:Expected future claim payments (undiscounted) 2,022,400 1,920,800Discount to present value (377,400) (275,300)

1,645,000 1,645,500

The mean term to settlement and disbursement of outstanding claims is estimated to be 3.1 years. The corresponding mean term at 30 June 2001 was 2.6 years.

The following average weekly earnings inflation rates and discount rates wereused in measuring the liability for outstanding claims.

Claims expected to be paid:Not later than one year—

AWE inflation rate 3.5% 3.5%Discount rate 5.3% 4.9%

Later than one year—AWE inflation rate 3.9% 4.0%Discount rate 6.1% 6.0%

14 PROVISIONS—OTHERCurrent:

Employee entitlements 8,276 9,423Lease restoration 265 159State Government premium reimbursement 18,000 7,100

26,541 16,682

Non-Current:Employee entitlements 4,451 3,905Lease restoration 1,000 1,040State Government premium reimbursement 0 15,000

5,451 19,945

47

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

2002 2001$’000 $’000

10 OPERATING ASSETSOperating assets at cost 15,285 15,657Less accumulated depreciation (6,438) (8,309)

Net operating assets 8,847 7,348

Represented by:Mainframe at cost 0 2,650Less accumulated depreciation 0 (2,650)

0 0

Computer equipment at cost 11,404 9,519Less accumulated depreciation (5,247) (4,430)

6,157 5,089

Motor vehicles at cost 2,408 2,040Less accumulated depreciation (384) (315)

2,024 1,725

Plant and equipment at cost 1,267 1,335Less accumulated depreciation (781) (895)

486 440

Furniture and fittings at cost 206 113Less accumulated depreciation (26) (19)

180 94

ReconciliationsReconciliations of the carrying amount for each class of operating assets are set out below:

Computer equipmentCarrying amount at the beginning of the financial year 5,089 3,097Additions 2,867 4,847Disposals (17) (195)Depreciation (1,782) (2,660)

Carrying amount at the end of the financial year 6,157 5,089

Motor vehiclesCarrying amount at the beginning of the financial year 1,725 1,341Additions 1,253 598Disposals (666) (43)Depreciation (288) (171)

Carrying amount at the end of the financial year 2,024 1,725

Plant and equipmentCarrying amount at the beginning of the financial year 440 744Additions 213 189Disposals (17) (51)Depreciation (150) (442)

Carrying amount at the end of the financial year 486 440

Furniture and fittingsCarrying amount at the beginning of the financial year 94 19Additions 99 98Disposals 0 (7)Depreciation (13) (16)

Carrying amount at the end of the financial year 180 94

46

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

21 ADDITIONAL FINANCIAL INSTRUMENTS DISCLOSURE(a) Interest rate riskWorkCover’s exposure to interest rate risk and the effective weighted average interest rate for classes of financialassets and financial liabilities are set out below:

2001–2002Financial Instrument Weighted Floating Fixed Interest Maturing In: Non Total

Average Interest 1 Year Over 1 Year More Than InterestInterest Rate Rate or Less to 5 Years 5 Years Bearing

$’000 $’000 $’000 $’000 $’000 $’000

Financial AssetsCash 3.52% 2,702 0 0 0 0 2,702Receivables 0 0 0 0 0 24,815 24,815Investments* -2.61% 2,026,215 0 0 0 0 2,026,215

Financial LiabilitiesAll other Creditors 0 0 0 0 0 10,694 10,694

2000–2001Financial AssetsCash 4.66% 4,365 0 0 0 0 4,365Receivables 0 0 0 0 0 13,944 13,944Investments* 5.64% 2,367,706 0 0 0 0 2,367,706

Financial LiabilitiesAll other Creditors 0 0 0 0 0 79,037 79,037

* Investments incorporate QIC investments, Foreign Exchange Forward Contracts and Equity Futures. Foreign Exchange Forward Contracts and Equity Futures have notbeen disclosed as the amounts are considered to be immaterial.

(b) Credit risk exposureThe net market value of financial assets included in the Statement of Financial Position represent WorkCover’s exposure to credit risk in relation tothose assets.

WorkCover has determined the appropriate type and mix of investments and has authorised its investment manager to operate within thisapproved investment strategy. The investment manager provides regular reports on the investment performance to WorkCover. As part of themanagement of the portfolio, Queensland Investment Corporation (QIC) enters into derivative financial instruments.

WorkCover does not have any significant exposure to any individual or industry sector.

(c) Net fair values of financial assets and liabilitiesThe carrying amounts of financial assets and liabilities, excluding investments, approximate their net fair values. The net fair value of investmentsis measured at net market value. Bank guarantees held on behalf of self-insurers, are accounted for as unrecognised financial assets. Bankguarantees have increased from $297.774 million in 2000–2001 to $317.879 million in 2001–2002. A net fair value has not been ascribed for these.

49

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

2002 2001$’000 $’000

15 CAPITALState Government equity 0 60,000

0 60,000

16 RESERVESInvestment fluctuation reserveBalance at the beginning of the financial year 270,716 92,850Transfer from/(to) accumulated surplus (133,266) 177,866

Balance at the end of the financial year 137,450 270,716

17 ACCUMULATED SURPLUSBalance at the beginning of the financial year 269,100 255,016Operating result (73,366) 191,950Transfer from/(to) investment fluctuation reserve 133,266 (177,866)

Balance at the end of the financial year 329,000 269,100

18 TOTAL EQUITY RECONCILIATIONBalance at the beginning of the financial year 599,816 519,444Total changes in equity recognised in Statement of Financial Performance (73,366) 191,950Capital payments (60,000) (111,578)

Balance at the end of the financial year 466,450 599,816

19 COMMITMENTSOperating Lease CommitmentsWorkCover has entered into a number of lease agreements for office premises at various regional offices throughout Queensland. Future operating lease rentals are not provided for in the financial statements. They are payable as follows:Within one year 1,921 1,832One year or later and no later than five years 3,017 5,452

4,938 7,284

Workplace Health and Safety GrantPursuant to section 416 of the WorkCover Queensland Act 1996, a direction from the Minister for Industrial Relations was gazetted on 31 May 2002 requiring WorkCover to contribute funding for injury prevention programmes during 2002–2003. (The gazetted amount includes GST).

Within one year 12,058 11,673

Public Hospitals GrantWorkCover Queensland’s undertaking to fund Queensland Health for the provision of hospital health care for workers who are treated as public patients.

Within one year 8,000 5,500

20 CONSULTANCY FEESManagement 11 17Human resource management 36 37Finance/accounting 211 403Information technology 30 0Professional/technical 101 150

389 607

48

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

2002 2001

24 EXECUTIVES’ REMUNERATIONThe number of executive officers of WorkCover whose remuneration fromthe organisation falls within the following bands: Number Number$100,000 – $109,999 0 1$110,000 – $119,999 1 1$120,000 – $129,999 1 0$140,000 – $149,999 1 1$150,000 – $159,999 0 1$160,000 – $169,999 3 3$170,000 – $179,999 2 0$190,000 – $199,999 0 1*$270,000 – $279,999 0 1$280,000 – $289,999 1 0

* Includes a severence payment for a contracted employee.

Executive officers are those officers involved in the strategic direction and general managementof the business at an operating division level.

Executive’s remuneration represents all payments, including superannuation contributions, made in accordance with individual employment contracts. It also includes an allocation of insurance premiums paid by WorkCover in respect of directors’ and officers’ liabilities and legal expenses’ insurance contracts.

$’000 $’000

Total remuneration received, or due and receivable, from WorkCover or related parties by executive officers of WorkCover whose income is $100,000 or more: 1,526 1,485

51

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

2002 2001$’000 $’000

22 NOTES TO THE STATEMENT OF CASH FLOWS(a) Reconciliation of CashCash includes cash at bank, imprest accounts and travel and transfer advances.WorkCover has no unused borrowing or overdraft facilities.

2,702 4,365

(b) Reconciliation of net cash provided by operating activities to operating result from ordinary activitiesOperating result from ordinary activities after income tax equivalents (73,366) 191,949Add/(deduct) items classified as investing activities:–

Change in net market value of investments realised 48,146 0Change in net market value of investments held 152,234 29,486Loss on disposal and revaluation of operating assets 196 186

Add/(deduct) non-cash items:–Depreciation of operating assets 2,233 3,439Amortisation of computer software 770 122Write-off of software 339 0(Decrease)/increase in income taxes payable (47,102) (8,301)(Decrease)/increase in deferred taxes payable (68,649) (4,424)

Net cash provided by operating activities before changein assets or liabilities. 14,801 212,457Add/(deduct) change in assets or liabilities:–

(Increase)/decrease in receivables (10,626) (5,557)(Decrease)/increase in payables (6,765) (18,238)(Decrease)/increase in provisions (5,381) (213,492)

Net cash provided by operating activities (7,971) (24,830)

2002 2001

23 DIRECTORS’ REMUNERATIONThe number of directors of WorkCover whose income from the organisation or any related party falling within the following bands is shown below. Number Number$0 – $9,999 1 4$20,000 – $29,999 8 7$30,000 – $39,999 0 1$40,000 – $49,999 1 0$50,000 – $59,999 1 1

Directors’ income includes an allocation of insurance premiums paid by WorkCover in respect of directors’ and officers’ liabilities and legal expenses’ as well as travel insurance contracts.

$’000 $’000

Total income paid or payable, or otherwise made available, to all directors of WorkCover from the organisation or any related party for the financial year: 320 302

50

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

PricewaterhouseCoopers Actuarial and Superannuation Services was requested by WorkCover Queensland to advise on its provisions for outstandingclaims liabilities at 30 June 2002.

VALUATION REPORTFull details of data, methodology and assumptions are set out in our report dated 1 August 2002. This report was prepared, to the best of ourknowledge, in compliance with the requirements of Professional Standard 300 of the Institute of Actuaries of Australia.

BASIS OF ESTIMATESThe adopted provision as at 30 June 2002 is $1645.0 million, comprising our central estimate of the liability for outstanding claims and a prudentialmargin. In principle all of the valuation assumptions have been selected so as to yield a central estimate which is not knowingly above or below theultimate costs of claims.

The central estimate:

• is discounted—i.e allows for investment income to be earned on actual or notional assets supporting the liabilites;

• allows for future claims inflation;

• allows for the effect of The New Tax System (TNTS) introduced as at 1 July 2000;

• includes a loading for claims handling expenses at the same level as in previous years; and

• complies with the requirements of Australian Accounting Standard AAS26.

A prudential margin has been included to allow for the risk and uncertainties inherent in the estimation of outstanding claims liabilities. The margin is expressed as a percentage of the central estimate. In recognition of the overall uncertainty in the claims experience, the WorkCover Board haveadopted a prudential margin at 30 June 2002 of 15%. This is the same as that adopted at 30 June 2001. In addition a small contingency has beenincluded for risks associated with guarantees given to self-insurers.

QUALIFICATIONSIt is not possible to estimate the outstanding claims liabilities with certainty. Deviations from our estimates are normal and are to be expected. The outcome is dependant on events which are yet to occur and which are impossible to predict, including legislative, social and economic forces. The provisions we have recommended are based on assumptions which we consider to be reasonable in the current circumstances.

CHRIS LATHAM DAVID GIFFORD

FELLOW OF THE INSTITUTE OF ACTUARIES (LONDON) FELLOW OF THE INSTITUTE OF ACTUARIES OF AUSTRALIA 3 AUGUST 2002FELLOW OF THE INSTITUTE OF ACTUARIES OF AUSTRALIA

53

ACTUARIAL CERTIFICATEON OUTSTANDING CLAIM LIABILITIES AS AT 30 JUNE 2002

25 RELATED PARTIESThe following persons held the position of director of WorkCover during the period:

1 July 2001 to 30 June 2002:Mr I Brusasco AM, Mr T A White, Mr W P Ludwig,Ms C M Maher, Mr G A Murphy, Mr D I Nissen,Ms R A Pashen, Mr C J Stewart, Mr P Henneken,Mr J C Battams.

29 September 2001 to 30 June 2002:Mr H W Shand

Details of directors’ renumeration are set out in Note 23.

Apart from the details disclosed in this note, no director has entered into a material contract with WorkCover.

Mr Brusasco is a director of Queensland Investment Corporation (QIC) which managed WorkCover’s funds during the period under normal terms and conditions.

Ms Maher is a partner in the legal firm Corrs Chambers Westgarth which provided legal services to WorkCover during the period under normalterms and conditions.

Messrs Ludwig and Battams hold senior positions in industrial organisations which received grants for the provision of advisory services duringthe period under normal terms and conditions.

Terms and conditions of any transaction with directors and their related entities were no more favourable than those available, or which mightreasonably be expected to be available, on similar transactions to non-director related entities on an arm’s length basis.

From time to time, directors of WorkCover may enter into workers’ compensation policies for their own undertakings. These policies are on thesame terms and conditions as those entered into by other policyholders.

26 EVENTS SUBSEQUENT TO BALANCE DATEAs of 1 July 2002, one self-insurer assumed liability for their outstanding claims.

This will not have any material impact on the current year accounts.

52

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

NOTESTO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2002

In the opinion of the Directors of WorkCover Queensland:

(a) (i) the financial report of WorkCover Queensland, has been drawn up so as to give a true and fair view of the results and cash flows for the periodfrom 1 July 2001 to 30 June 2002 and the state of affairs as at 30 June 2002 of WorkCover Queensland;

(ii) at the date of this declaration, there are reasonable grounds to believe that WorkCover Queensland will be able to pay its debts as and whenthey fall due.

(b) The financial report of WorkCover Queensland has been prepared in accordance with Accounting Standards, other mandatory requirements (Urgent Issues Group Consensus Views) and the WorkCover Queensland Act 1996.

Signed in accordance with a resolution of the Board of Directors dated at Brisbane this 27th day of August 2002.

I BRUSASCO AM T A WHITE

CHAIRMAN DEPUTY CHAIRMAN

55

DECLARATION BY DIRECTORS

We have prepared the foregoing financial report pursuant to the provisions of the WorkCover Queensland Act 1996 and the Financial Administration and Audit Act 1977 and certify that –

(a) the foregoing financial report is in agreement with the financial records of WorkCover Queensland;

(b) in our opinion –

(i) the prescribed requirements in respect of the establishment and keeping of accounts have been complied with in all material respects;

(ii) the foregoing financial report has been drawn up so as to present a true and fair view, in accordance with prescribed accounting standards,of the transactions of WorkCover Queensland for the period 1 July 2001 to 30 June 2002 and of the financial position as at 30 June 2002.

27 August 2002

I BRUSASCO AM A J HAWKINS

CHAIRMAN CHIEF EXECUTIVE OFFICER

54

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

CERTIFICATE OF WORKCOVER QUEENSLAND

DESI

GNED

AN

D PR

ODUC

ED B

Y LL

OYD

GREY

DES

IGN

TO THE BOARD OF WORKCOVER QUEENSLANDScopeI have audited the general purpose financial statements of WorkCover Queensland prepared by the Statutory Body for the year ended 30 June 2002 interms of section 46F of the Financial Administration and Audit Act 1977. The financial statements comprise the Statement of Financial Performance,Statement of Financial Position, Statement of Cash Flows, Notes to and forming part of the financial statements and certificates given by theChairperson and person responsible for financial administration.

WorkCover Queensland is responsible for the preparation and the form of presentation of the financial statements and the information they contain. I have audited the financial statements in order to express an opinion on them.

The audit has been conducted in accordance with QAO Auditing Standards, which incorporate the Australian Auditing Standards, to providereasonable assurance as to whether the financial statements are free of material misstatement. Audit procedures included the examination, on a testbasis, of evidence supporting the amounts and other disclosures in the financial statements and the evaluation of accounting policies and significantaccounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial statements arepresented fairly in accordance with prescribed requirements in Australia which include Australian Accounting Standards so as to present a view whichis consistent with my understanding of WorkCover Queensland’s financial position, and the performance as represented by the results of its operationsand its cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit OpinionIn accordance with section 46G of the Financial Administration and Audit Act 1977, I certify that I have received all the information and explanations I have required and, in my opinion –

• the prescribed requirements in respect of the establishment and keeping of accounts have been complied with in all material respects; and

• the statements have been drawn up so as to present a true and fair view, in accordance with prescribed accounting standards and othermandatory professional reporting requirements in Australia, of the transactions of WorkCover Queensland for the financial year 1 July 2001 to 30 June 2002 and of the financial position as at the end of that year.

J E HARTEN FCPA QUEENSLAND AUDIT OFFICE

ASSISTANT AUDITOR-GENERAL BRISBANE(AS DELEGATE OF THE AUDITOR-GENERAL)

56

ACHIEVING OUTCOMES WORKCOVER QUEENSLAND FINANCIAL STATEMENTS 2001–2002

INDEPENDENT AUDIT REPORT

280 Adelaide Street Brisbane Queensland 4000GPO Box 2459 Brisbane Queensland 4001Telephone 1300 362 128 Facsimile 07 3006 6400info@workcoverqld.com.au www.workcoverqld.com.auISSN 1329–6531