The Court's ruling comes in the wake of its Work Choices decision which last year validated the government's controversial IR laws. It provides further confirmation of the Federal government's constitutional ability to encroach on what have traditionally been regarded as state powers.
Historically, responsibility for workers' compensation in Australia has resided mainly with the states and territories but the High Court's decision has now paved the way for a federal takeover - if not sooner, then later.
Whether, as in the case of the IR laws, there is a Big Bang attempt to take over workers' compensation or not remains to be seen. What is clear though is that the political and constitutional agenda in this crucial policy area is changing, and changing fast.
There are some 10.4 million workers in Australia covered by 10 major workers' compensation schemes. Not surprisingly, disparities between the different schemes can create difficulties for the growing number of Australian corporations that operate across state borders.
Since its 2004 election victory, the Howard government has been assisting large corporations to exit state and territory workers' compensation schemes and join the federal Comcare scheme as national self-insurers - employers entitled to administer the Comcare legislation for their own workers.
Optus, the Toll group, Linfox and the National Australia Bank are just some of the big Australian companies that have now moved from state schemes to Comcare. These developments have attracted widespread criticisms from state and territory governments and the trade union movement.
Unions complain that workers have had no say at all in decisions by their employers to abandon state and territories schemes in favour of federal coverage under Comcare. Concern with the level of compensation payments under Comcare is also a crucial issue, especially in light of the government's proposed cutbacks to workers' entitlements.
The states and unions have also expressed concerns that workplace health and safety standards will be eroded because enforcement under Comcare is much more limited than in other jurisdictions.
In addition, the states and territories are worried that a large exodus of corporate employers would have a serious adverse financial impact on their schemes. Smaller schemes, including South Australia's WorkCover system, could be especially vulnerable in the event of a mass exodus by large employers.
The High Court decision will inevitably encourage more corporate employers to seek coverage under Comcare. It may also persuade the Howard government to accelerate proposals for a national takeover of workers' compensation, along the lines proposed by the Productivity Commission back in 2004, although in view of its standing in the polls this is rather unlikely.
While a national workers' compensation scheme certainly warrants greater consideration, the current industrial relations climate makes it virtually impossible for any negotiated agreement to be reached between the parties. The most likely outcome is an ongoing tug-of-war between the states, the territories and unions on one side, and the Howard government and major employer groups on the other.
The bad news for workers is that increasingly they will be entitled to substantially different amounts of compensation in the event of injury, based solely on whether their employer is covered by Comcare or one of the state workers' compensation schemes. And for employers who remain where they are there is always the possibility of higher compensation premiums to look forward to.
This is not good policy. What's really needed is a constructive approach based on sound public policy principles rather than the lowest common denominator. Unfortunately, this is unlikely to happen anytime soon.
