CHANGING LONG ACCEPTED WORK PRACTICES TO REDUCE THE NUMBER & COST OF CLAIMS

1. CHANGING LONG ACCEPTED WORK PRACTICES TO REDUCE THE NUMBER & COST OF CLAIMS 2007 Comcare National Conference 24th October 2007 Delivered by: Dominic Andreacchio General Manager – Human Resources Australian air Express

2. CHANGING LONG ACCEPTED WORK PRACTICES TO REDUCE THE NUMBER & COST OF CLAIMS Changing long accepted work practices Overcoming high injury rates and escalating costs Dealing with productivity and morale Issues Achieving significant improvements

3. Australian air ExpressCOMPANY BACKGROUND • Joint Venture Qantas Airways Ltd & Australia Post • Formed 1st August 1992 (integration of Australia Post Express Courier & Australian Airlines Cargo) • Ansett Collapsed September 2001 (Huge growth within short time frame and limited framework)

4. KEY STAKEHOLDERS • QantasAaE’s largest supplier “Belly Space” access to over 300 Qantas flights per day. • Australia Post - Largest customer

5. COMPANY OVERVIEW • Approximately 1360 FTE employees nationally • Union Coverage - TWU & ASU • Operate own dedicated freighter aircraft network • Extensive fleet of over 500 courier vehicles • Expansive regional service network • Operational sites “ON” & “OFF” airport locations

6. SELF INSURED SINCE 1999 UNDER THE COMMONWEALTH SCHEME AaE took the decision to self-insure under theSafety, Rehabilitation and Compensation Act 1988 (SRC Act) because it offered our company, our employees and our shareholders substantial long-term advantages, such as: • Quicker response times on decision making • Greater flexibility with injury management and return to work strategies • Greater control of managing corporate risk • Reduced workers’ compensation costs

7. WHERE WE WERE IN 2001/2002 • Claims received 111 • Claims per 100 FTE’s 8.2 • Frequency of Lost Time Injuries per 1,000,000 hours worked 34

8. AaE WORKERS COMPENSATION CLAIMS RECEIVED2001/2002 TO 2006/2007

9. WORKERS COMPENSATION CLAIMS PER 100 FTE’S2001-2002 to 2006-07

10. LOST TIME INJURY FREQUENCY RATE 1998/1999 to 2006/2007

11. AaE PERFORMANCE SUMMARY Over a 6 year Period : • New Claims trended Down by 48% • Claims per 100 FTE’s trended down by 49% • Frequency of Lost Time Injuries trended down by 70%

12. CHANGING LONG ACCEPTED WORK PRACTICES AaE OHS Management System was developed and implemented in early 2000/01 without anticipating the impact of the Ansett collapse in September 2001. Key elements of the OHS management system included: • Commitment and leadership by the AaE Board, Chief Executive Officer and senior executives; • Integration of prevention, rehabilitation and claims management -linking them to the company’s business plan; and • The development of policy and risk management based procedures. • Integration of HR & OHS strategic workshops.

13. DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES The most significant ‘building block’ that allowed us to move forward with changing long accepted work practices and cultural change was the commitment of the AaE Board, Chief Executive Officer and Senior Executive to ensure that change occurred across all aspects of the business.

14. DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES (cont)… AaE took the following initiatives: • Engaged external consultants to drive cultural change through the “Extraordinary Leadership” program which included OHS. This program targeted: • Senior Management • Middle Management • Line Management

15. DRIVING CHANGE TO LONG ACCEPTED WORK PRACTICES (cont).. • Increased resources were made available nationally to assist in the prevention and injury management activities, including the appointment of State OHS Advisors and dedicated state Case Managers. • An increased commitment to Case Management training. • Strong push that early intervention was the key to success in managing injured employees. • Increased reporting to the Board and Senior Executive, ie. LTIFR, Costs and Time Off Work etc.

16. WHAT DID AaE DO TO MAKE A DIFFERENCE: Some actions taken by AaE which we believe have made a difference are: • Demonstrated ‘seriousness’ about addressing major manual handling concerns, such as transportation of tuna fish, including the influencing and education of our customers.

17. WHAT DID AaE DO TO MAKE A DIFFERENCE (cont) • National Manual Handling Program • Risk analysis of all manual handling activities • Production of a DVD for competency based training • Introduction of on site physiotherapy services

18. WHAT DID AaE DO TO MAKE A DIFFERENCE (cont) • Injury Management: • Suitable Duties manual to assist injured employees returning to work • The introduction of Case Managers at all key ports in the organisation • The introduction of Company nominated doctors • The introduction of preferred rehabilitation providers • Shared accountability between the employee and AaE Management

19. WHAT DID AaE DO TO MAKE A DIFFERENCE (cont) Injury Management (cont): • The introduction of an Early Intervention Program to assist injured employees by the provision of suitable duties, payment of some medical expenses and early referral to nominated facility doctors • Communication to all AaE employees of what the injury management processes are. • Improved reporting to the Board and Senior Executive ie. LTIFR, costs and time off work.

20. WHAT DID AaE DO TO MAKE A DIFFERENCE (cont) • The inclusion of OHS key performance indicators in the senior executive appraisal process, example: • LTIFR (set by the Board on recommendation of CEO) • Personal Performance Indicators • OHS as an agenda item on all executive meeting agendas • Workplace inspections • Attendance at OHS committee meetings

21. WHAT DID AaE DO TO MAKE A DIFFERENCE (cont) • Conducted a Staff Survey which included HR and OHS issues: Results: High satisfaction levels associated with all OHS and prevention activities within AaE.

22. WHAT DID AaE DO TO MAKE A DIFFERENCE (cont) 6. The importance of actioning HAZARD/INCIDENT REPORTS in a timely manner and feeding outcomes to all parties leads to: • Increased confidence • Increased Trust • Belief that the organisation cares • Positive safety culture NOTE:you get 600 free lessons before a serious incident occurs

23. To succeed in changing Work Practices and CREATE an improved Safety Culture: You MUST have: • Commitment from the CEO and the Senior Executives; • Push from the top down and from the bottom up; • Buy in from those employees doing the job; • Integrated performance indicators; • Line Management Training to support the change processes; • Established review processes ie. Staff surveys, and • Patience – it takes time.

24. ACHIEVING SIGNIFICANT IMPROVEMENTS Between 2001/2002 and 2006/2007 AaE achieved: • 48% reduction in claims • 49% reduction in claims per 100 FTE’s • 70% reduction in Frequency of Lost Time Injuries What happens now?

25. ACHIEVING SIGNIFICANT IMPROVEMENTS (cont)… AaE is in the process of going through a number of significant challenges, including: • Optimisation of National Business Processes; • Introduction of Boeing 737 freighter aircraft; • Introduction of new, state-of-the-art freight handling facilities with advanced logistics technology; • Increased competition; • Increased scrutiny from the AaE Board, and • Increased scrutiny from Comcare

26. ACHIEVING SIGNIFICANT IMPROVEMENTS (cont)… We now need to take the next step to drive down our injury rates even further. We have identified the following key factors as barriers to be overcome: • Resistance to continued change by Supervisors & Line Managers; • Acceptance that injuries are an expected outcome of our working environment; • Moving freight without acknowledging the risks; and • Ageing workforce

27. WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE In 2006/07: • We introduced “Safety Week” and launched “Safety is no Accident” Program • Safety is no Accident logo appears on all safety documentation • CEO contacts Line Managers in respect of all Lost Time Injuries;

28. WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2006/07 (cont): • We introduced “Line Manager” competency based training aimed at up-skilling line managers in supervision and injury reporting; • OHS, HR and Training & Development Officers have been involved in change management associated with new facility committees during 2007 & will continue into 2008, and • We introduced fortnightly telephone conferences with OHS Coordinators & Return to Work Coordinators.

29. WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2007/08: • We issued AaE’s new Safety Card

30. WHAT ARE WE DOING TO MOVE TO THE NEXT STAGE (cont)… In 2007/08 (cont): • We conducted an OHS Strategic Workshop • We launched a Safety Observation Program involving management and peers; • Introduced focused pre-employment assessments, and • We launched AaE’s ‘Environment Policy’

31. WHY CHANGE THE LONG ACCEPTED WORK PRACTICES • To do nothing condones current performance - we can always do better. • Risks can be managed and incidents should not be seen as inevitable given the nature of our business.