August 16, 2000

Coming on top of earlier offers, each of which was put to us at the time as their bottom line, the Government presented us with a “discussion paper” on July 7. Subsequent meetings combined with correspondence received this week have confirmed that this discussion paper now forms the Government’s latest offer.
The Government has been “calling on firefighters to consider and accept new benefits, which are fair and generous”. The problem is that their offer is currently only developed for permanent firefighters on First State Super (FSS) and there is still no firm offer for either permanent SASS members, or any retained members. It follows that the Government’s call is bogus – an offer to only 750 of the 4500 affected members is really no offer at all. This notice is therefore geared directly to permanent FSS members and, while it is still relevant to all firefighters, a separate paper explaining the position for retained members will follow shortly.

CATEGORIES OF BENEFIT

What the Government is offering:

The Government is proposing 5 different levels of benefit:
1. Death
2. Total and Permanent Incapacity (TPI)
3. Partial and Permanent Incapacity, Category 1 (PPI – 1)
4. Partial and Permanent Incapacity, Category 2 (PPI – 2)
5. Temporary Incapacity

What the Union is claiming:

The Union has continually sought the same levels of benefit which are presently available to members under the old SSF scheme, and indeed to all present and future politicians under their own Parliamentary Contributory Superannuation Scheme (PCSF):

1. Death
2. Unable to perform own job (ie, firefighting)

The problems with the Government’s offer:

Five different categories of cover means five different levels of benefit, whereas two means two. It follows that the more categories there are, the greater the disparity in the benefits, and the greater the inequity between SSF members and others.

SCOPE OF COVER

What the Government is offering:

The Government insists that all 5 of their D&D categories will be strictly tied to narrow legal definitions under Workers Compensation legislation. It is therefore all “at work” and in order to qualify, your employment will have to be a “substantial contributing factor to the injury” which will only be included if it is “arising out of or in the course of [your] employment”.

What the Union is claiming:

Again, the Union is seeking the same level of cover as that which was provided under SSF, and which is still available to this day to all politicians under PCSF.

The test is a simple one – if you are medically retired from the Brigades because you are incapable of performing the work of a firefighter then you qualify.

The problems with the Government’s offer:

The Government continues to take a Workers Compensation “top-up” approach which would bring with it all of the litigation and disputation associated with Workers Compensation generally. It would be a long, drawn-out and potentially expensive process which could very likely lead to industrial disputation on a case by case basis. The Union’s approach is so straightforward that it avoids all of these problems, and is supported by an 80 year proven record of actually working.

The Government’s offer also fails to recognise degenerative and/or cumulative injuries or diseases which often occur over many years of firefighting. For example, if your knee gives way after 20 years of firefighting, but it happens on your days off then you’re looking at no benefit, and no job. However, if your knee collapsed on shift then you could still lose your job but you would (or we would at least be able to argue you should) be covered. The same argument can apply to any one of the dozens of occupationally-related diseases which afflict firefighters. Their approach is irrational, and would necessarily leave a lot of members without cover in highly subjective circumstances.

Another serious flaw in their approach comes with the question of fitness. The Government and the Department are determined to introduce compulsory post-recruitment (ie ongoing) health and fitness standards throughout the Brigades. Putting the wider arguments about ongoing fitness testing to one side, the fact remains that fitness testing will severely impact upon your responsibilities to your employer. You simply can’t be fit for your days on and unfit on your days off – it’s a 24 hour a day, 7 days a week responsibility.

That being so, we argue that the 24/7 level of cover available under SSF should also be available to other firefighters. If you are training on your days off in order to keep your job (be it a jog around the block, lifting weights in a gym or cycling 20 kms) and you are injured then the Government’s offer will not cover you, even though your requirement to be fit is directly related to your work. So if you’re not fit you could lose your job, but you could also lose your job by trying to keep fit (including “playing sport”, which the Government now seems to have a big problem with!).

And finally, say that you’re fit, you’re healthy, you have the constitution of an ox and you’ll live to be 103. But what if an off-duty car accident leaves you without an arm? It does happen. If you were a clerk (or even a politician) you would still keep your job, but because there’s no room for one-armed firefighters in the Brigades it would be out the door with you – and still with no benefit.

LEVELS OF COVER

What the Government is offering:

1.    Death
A member would have to die on-duty to qualify.
A spouse pension of 40% of your final salary, indexed to the Sydney CPI, would be payable until your spouse reached age 60. Additional children’s pensions (if applicable) would also be payable as per the SSF scheme.

2.    Total and Permanent Invalidity (TPI)
This is the “head on a plate” scenario. A member would have to be deemed to be injured so badly that they would be unfit to perform any sort of work in any occupation ever again in order to qualify.
A pension of 60% of your final salary, indexed to the Sydney CPI, which would be payable until you reach age 60.

3.    Permanent and Partial Invalidity – Category One (PPI – 1)
This would be payable to firefighters whose disability was, according to the Government “not severe enough for them to be unable to perform any occupation for which they are suited but severe enough to reduce their earning capacity significantly”. Your injury would be such that you would suffer an earning capacity loss of 35% or more. In other words, you’d be pretty well stuffed, but they would argue that you could (theoretically) work somewhere, anywhere, doing at least something, again.
If you were “lucky” enough to qualify, a lump sum payment (multiple of your salary) would be made upon medical retirement calculated on a sliding scale based upon the age that you were actually injured.

Disabled at age 25 = 7.8 times salary
Disabled at age 35 = 6.3 times salary
Disabled at age 45 = 4.3 times salary
Disabled at age 55 = 1.7 times salary

4.    Permanent and Partial Invalidity – Category Two (PPI – 2)
This would be payable to firefighters whose disability was, according to the Government “not severe enough for them to be unable to perform any occupation but who have a low to moderate level of disability and a moderately reduced earning capacity”. This would be the reality for most injured members, even recently-injured member Jim Cordell (26 Stn.).
A sliding scale would again apply, although its benefits would be significantly reduced from the PPI-1 table:

Disabled at age 25 = 3.3 times salary
Disabled at age 35 = 2.7 times salary
Disabled at age 45 = 1.8 times salary
Disabled at age 55 = 0.7 times salary

5.    Temporary Invalidity
We’ll quote directly from the Government’s own paper:
“Where a firefighter’s incapacity arose from work or directly arose from work, full salary would be payable for a period of up to 2 years if the firefighter had participated in the NSW Fire Brigades Rehabilitation and Periodic Health Fitness Evaluation and Support Program.
If after 2 years or when it is medically established that the firefighter is unable to return to the substantive firefighter position, and has participated in the rehabilitation program, then an exit benefit is paid if the firefighter is medically retired from the NSW Fire Brigades. The exit benefit is paid on a loss of earnings concept.” This is where the PPI payments at points 3 and 4 (above) are meant to come in.

Members would easily pick the loopholes and caveats in this paragraph. Firstly, any rehab program would be for a maximum of 2 years, although it might only last 2 weeks if it was “medically established …etc”, and any of this “benefit” would be tied to the introduction of, and a member’s direct participation in, compulsory health and fitness testing.

The Government has since flagged the possibility of adding a further year of “vocational” training to skill members up for alternative employment in their life after the Brigades. Nice try, but a decreasingly viable answer given the state of the modern labour market – particularly if you’re older.

What the Union is claiming:

1.    Death
The Union is partly satisfied with the Government’s offer of compensation for death on duty. However we remain opposed on several important points, such as:
a) the Government’s offer of a 40% pension terminates once the spouse reaches 60, whereas the SSF scheme provides a pension for the rest of the spouse’s life; and
b) the Union believes the pension should be at the very least 44%, not 40% of the member’s final salary;

2.    Unable to perform the work of a firefighter
If you were medically retired from the Brigades, you would receive a 66% pension based on your final salary, indexed to the Sydney CPI, for the remainder of your life.

The problems with the Government’s offer:

That’s easy: it clearly doesn’t restore equity with SSF, and it simply isn’t enough!

THE COST OF COVER

What the Government is offering:

The Government’s offer is tied to all firefighters taking out 4 additional units of Death or Invalidity cover in FSS, the cost of which is $60 per unit per year, or $240 annually. Further, the Government is also expecting a “co-contribution” payment from all members in order to help fund the cost of their offer set at an additional 2% of a member’s total salary. Taking a Senior Firefighter as an example (the largest single rank), 2% of salary would come to $19.68 per week, or $1027 per year. The total cost to a Senior Firefighter member would therefore be $1267 per annum (based on current wage rates).

In the last week the Government changed tack by kindly offering firefighters the “additional” 24 hour, 7 day a week cover we are seeking – provided we pay for it entirely ourselves. That’s what their ad meant with the “However, firefighters may pay for and receive this additional cover” line. It’s a bit like the Government agreeing to a new Award clause which says that every firefighter will get a new Porsche each year, provided that each firefighter pays for it in full first!

What the Union is claiming:

The Union accepts that the level of D&D cover available under SSF is partly funded by members themselves through their own compulsory super’ contributions. These contributions average out at 6% of a member’s final salary which is calculated (and adjusted) over their entire working life.

It is impossible to even begin to work out the actual cost of the D&D benefit for SSF members (ie the portion of a member’s 6% contributions which directly funds the SSF D&D benefits). Still, equity is equity and as a result the Union’s officials have agreed to the concept of compulsory employee contributions forming part of any new scheme. The real question is how much should that be, and even that can only be answered once the final shape of the scheme is known. Having said that, there is no way known that the D&D component under SSF costs anywhere near 2% when the members’ total contribution is only 6%.

The problems with the Government’s offer:

Based on current wage rates, the Government’s claim for a 2% employee contribution would in time deliver in excess of $3M per year back to the Department. When this $3M fund was then applied to provide the level of benefits on offer, they wouldn’t only be breaking even – they would very likely stand to make a profit.

Taking a Senior Firefighter (the largest single rank) as an example, a 40% pension for a deceased firefighter’s spouse might initially appear to be a considerable benefit. However the reality is that this would only deliver an annual pension of $18,659 (before tax). There have been two on-duty deaths of our members in the last 10 years, with the result being that the current total death benefit liability for the Government would be in the vicinity of only $40,000 per year – leaving over $2,960,000 to meet the remaining TPI and PPI benefits.

Based on the last decade, and in view of the narrow definitions associated with the Government’s offer, it is almost certainly the case that no member would have qualified for a TPI pension, so there’s no extra drain on the $3M there. As discussed previously, the vast bulk of members who were injured on duty would not qualify for the Category 1 PPI benefit either, so that leaves only the lower Category 2 PPI benefit as the real liability for the remainder of the $3M fund.

For the sake of the argument, we’ll assume that there would be an average age of 40 for all PPI-2 injuries and benefits (note that higher ages receive a lesser benefit, lower ages more). The lump-sum payment on offer for PPI-2 40 year olds is 2.3 times final salary, which for a Senior Firefighter currently equates to $107,285 before tax (hardly a windfall for a 40 year old firefighter who no longer has a job).

On the above figure of $107K it would require almost 30 “on-duty” injuries each and every year which actually resulted in medical retirement before the Government had to even begin to contemplate having to put in any of their own money. The Union does not have the statistics necessary to verify this, but anecdotal evidence strongly suggests that the rate of on-duty injuries which are permanent and which therefore result in medical retirement are not presently reaching the level of 30 firefighters per year. Nowhere near it in fact.

The bottom line is that our Union could probably run their so-called “offer” instead of the Government, and by doing so we could actually make a profit into the bargain! It could be argued that a major disaster could wipe out 100 firefighters at the one time and punch a big hole in that year’s $3M, but the fact is that the Government would already have arrangements in place to lay-off that potential liability by insuring against it (the cost of which would still leave a tidy sum in reserve). The reverse applies equally: for each “good” year for injuries there would be a handy excess which could and would accumulate over successive years.

NOT FAIR, NOT GENEROUS

On the question of costing alone, the offer they are making is obviously so mean, so narrow and so duplicitous that it’s really no offer at all. It’s certainly nowhere near what we’ve been asking for over the last 18 months – equity.

And just so we all know who and what we’re dealing with, their ad this week claimed that “Benefits of this kind would add $450 million to the unfunded superannuation liabilities of the NSW public sector”. It was a statement which was misleading at best, and a deliberate lie at worst. When questioned on this point today, a senior Government representative conceded it should have read “Benefits of this kind would add to the $450 million of existing unfunded superannuation liabilities of the NSW public sector”. An honest mistake? Draw your own conclusions.

Chris Read
State Secretary
Wednesday 16th August, 2000

WORKING EXAMPLES

All of the examples which follow are calculated on a Senior Firefighter’s current rate of pay of $46,646 pa, Senior Firefighter being both the largest single rank and a reasonable average between the wage rates of Officers and junior firefighter ranks.

The Government’s offer

Death
An annual pension of $18,659 ($357.50 per week), indexed to the Sydney CPI, payable to the deceased firefighter’s spouse until the age of 60.

Total and Permanent Invalidity (TPI)
An annual pension of $27,988 ($536.39 per week), indexed to the Sydney CPI, payable to the former firefighter until he/she reaches age 60.

Partial and Permanent Invalidity – Category One (PPI-1)
A one-off lump sum of:
at age 25 – $363,838 (= $10,395 per year or $199.22 per week over 35 years)
at age 35 – $293,870 (= $11,754 per year or $225.27 per week over 25 years)
at age 45 – $200, 578 (= $13,371 per year or $256.25 per week over 15 years)
at age 55 – $79,298 (= $15,859 per year or $303.94 per week over 5 years)

Partial and Permanent Invalidity – Category Two (PPI-2)
A one-off lump sum of:
at age 25 – $153,392 (= $4,382 per year or $83.98 per week over 35 years)
at age 35 – $125,944 (= $5.037 per year or $96.53 per week over 35 years)
at age 45 – $83,963 (= $5,597 per year or $107.26 per week over 35 years)
at age 55 – $32,652 (= $6,530 per year or $125.15 per week over 35 years)

The Union’s claim

Death
An annual pension of at least $20,524 ($393.34 per week), indexed to the Sydney CPI, payable to the deceased firefighter’s spouse for the rest of his/her life.

Medical Retirement
An annual pension of $30,786 (or $590.01 per week), indexed to the Sydney CPI, payable to the former firefighter for the rest of his/her life.