NSW to cut workers compensation in a move backed by industry

The NSW Government is considering cutting benefits under the workers compensation scheme by putting a cap on medical expenses payouts, removing coverage for injury claims relating to journeys to and from work and reducing weekly compensation payments.

WorkCover premiums in NSW are 20% to 60% higher than in Victoria and Queensland and the Government says “urgent action” is required.

The Finance and Services Minister, Greg Pearce, released an issues paper yesterday on the scheme which he described as “failing the people of NSW” with a deficit of $4.1 billion.

The deficit is equal to an amount of $15,146 per employer and $1,326 for every worker that is covered by workers compensation insurance.

Pearce said that without significant reform NSW businesses would face a 28% increase in WorkCover premiums, which would stall the state’s economy and jobs growth.

The report describes the NSW Workers Compensation Scheme as a “broken system” that does not produce good outcomes for injured workers, and says without significant improvements it is not financially sustainable.

It criticises the NSW system as difficult to navigate for all participants with a lot of red tape and warns payments for seriously injured workers are inadequate.

The Australian Industry Group has backed reform of the NSW WorkCover scheme, claiming an overhaul is “strongly supported” by business. 

AIG NSW director, Mark Goodsell, said the scheme was last examined and subject to significant reform in 2001 and a focused inquiry was overdue. 

“The problem is not at the front-end of the system – the number of claims is actually decreasing,” he said.

“The problems are occurring within the system – the support mechanisms and incentives that are meant to work to minimise time away from work and ease the financial and social impact on those injured.”

“Constant vigilance of the workers compensation system is needed to ensure that it can provide support for injured workers and encouragement of recovery and return to work, at premium levels that are competitive with other states.”