Workers compensation legislation to face second inquiry after government loses first battle

The NSW Labor government’s contentious workers compensation bill has been dealt a major blow and will be delayed indefinitely after Treasurer Daniel Mookhey failed to convince the Coalition and crossbenchers to back his reforms.

To avoid an embarrassing loss in the upper house, the government did not oppose the Coalition’s push to have a second inquiry into the bill, which will occur over at least two weeks and have broad powers to interrogate the data and modelling underpinning the proposed legislation.

Treasurer Daniel Mookhey claimed the Coalition’s amendments to the government’s workers compensation legislation would cost $1.9 billion.Credit: Sam Mooy

The proposed changes included increasing the Whole of Person Impairment (WPI) threshold to 31 per cent, limiting the capacity for people with serious psychological injury to receive long-term support or claim damages.

Mookhey had warned the Coalition’s amendments to the legislation would cost the state $1.9 billion.

This will be the second time the legislation is considered by an inquiry, after a snap one-day hearing was held in mid-May. Some Labor backbenchers had circulated a draft letter imploring the premier to delay the introduction of the bill.

Opposition treasury spokesman Damien Tudehope acknowledged he and Mookhey seemed to “have swapped friends” as he argued an inquiry was fundamental to understand the inherent risks with the reforms, a process he believed should have begun in October last year.

Mookhey, who hoped the legislation would be debated and passed on Thursday, argued an inquiry would miss an opportunity to begin repairing the state’s workers compensation system, providing certainty to injured workers and small businesses ahead of three successive years of 12 per cent cost rises in premiums.

“I understand as well the point that the shadow treasurer is making about the desire to familiarise himself further with data, but that comes at an expense, that is the opportunity cost we have to fix this system,” he said. “I urge the house to do its job today.”

Greens MP Abigail Boyd accused the government of employing “secrecy, deception, the blatant mistruths” as it made the public case for reform, despite the serious impacts the reforms would have on vulnerable workers.

“A bill that is literally about life and death,” she said.

Boyd said the budget’s bottom line, rather than premiums, as claimed by Mookhey, was the primary driver of the need for reform, saying there had been a “complete breach of trust” because of the government’s conduct. She questioned whether any Labor MP would have thought that they would be championing these reforms two years ago.

As part of the negotiated solution, one of the Coalition’s motions, referring the legislation to the Public Accountability and Works Committee, was amended by independent MP Mark Latham, providing the committee with scope to interrogate details and modelling underpinning the proposed reforms.

With several states already pursuing similar reforms, Latham said he hoped an inquiry would consider the evidence from other jurisdictions including Victoria, where he said costs had been contained by excluding through definitions – rather than as proposed by Mookhey, by curtailing the duration of payments.

The unusual addition, that “the committee should … consider making use of the services of any staff or facilities of a government department, administrative office or public body” underscores the bargaining position the crossbench wielded in their negotiations with the treasurer.

While there was an intention to bring the legislation back to be voted on in late June, the amendment was open-ended, ensuring the government did not seek to undermine the committee’s work.

One crossbencher, speaking on the condition of anonymity, characterised the senior government members as “panicked” and “rattled” during negotiations throughout Wednesday night and Thursday – a view corroborated by a Labor upper house MP.

The committee would first meet on Friday, upper house sources said, with independent MP Taylor Martin to be added as a participating member.

While the brokered amendment was intended to see the bill return to parliament in late June, an open-ended provision was inserted to stop the government from interfering in the committee’s business, upper house sources involved in negotiations said.

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