Allan faces caucus backlash over proposed WorkCover changes

Premier Jacinta Allan is facing a caucus uprising over proposed changes to Victoria’s workers’ compensation scheme, with unions branding the proposal “offensive” and pressuring state MPs to ditch its draft legislation.

On Monday Labor MPs will hold a caucus meeting that is being described as a “litmus test” of cabinet’s control as Labor MPs, backed by Trades Hall, push back on Allan and Minister for WorkSafe Danny Pearson over the proposed bill.

Victorian Premier Jacinta Allan and Worksafe Minister Danny Pearson are facing internal pressure to dump draft changes to Victoria’s workers’ compensation scheme.Credit: Wayne Taylor

Members of Allan’s own Socialist Left faction are among those angry with cabinet’s decision to – as they describe it – “ram through” the changes, with one MP telling The Age the issue was going to “blow up”.

The backlash comes after Victorian Trades Hall Council secretary Luke Hilakari wrote to all 70 Labor MPs urging them to lobby Pearson to ditch the draft laws over fears Labor had reached a deal with the opposition, securing a passage through parliament.

The Allan government has struggled to garner support from MPs and unions for its proposed overhaul of the WorkCover scheme, aimed at reining in hefty payouts or insurance premium hikes for businesses.

In the past two years, Labor has poured $1.3 billion of taxpayers’ money into WorkSafe to keep up with the soaring number of claims. In the 2022-23 financial year there were 32,780 new claims, a 14 per cent increase on the year before.

In an effort to bring down costs, the Allan government wants to axe weekly benefits for stress and burnout in favour of 13 weeks of provisional payments for support and treatment.

The amendments would also require injured workers with “long tail” claims stretching beyond 130 weeks to prove they suffer from a high level of permanent impairment. Average business premiums have been hiked by 42 per cent to improve the scheme’s bottom line.

Sources familiar with internal discussions said angry MPs were motivated to challenge the proposal after hearing that Pearson was on the cusp of announcing a deal with the Coalition to pass the long-anticipated changes through parliament.

Liberal sources confirmed the opposition had been meeting with the government to reach a deal, but the proposal has not gone to shadow cabinet or the party room.

Several MPs told The Age that one concession being considered to attract opposition support was a regulated cap on future premium increases.

Striking a deal with the Liberals would give the government the numbers it needs in the upper house, where most crossbench MPs do not support altering mental health benefits, where claims have risen from 2 per cent of all injuries to more than 16 per cent in recent years.

With parliament to resume on Tuesday, union figures spent the weekend ramping up pressure on Labor MPs to challenge Pearson on the deal at Monday’s caucus meeting.

One Labor MP, from Allan’s own Socialist Left faction, speaking to The Age on the condition of anonymity to discussion negotiations, said ministers were “panicking” ahead of the meeting, with some MPs and union officials preparing to make threats to cabinet members over their future support.

“This will be a litmus test for the cabinet to step up,” the MP told The Age.

“Jacinta [Allan] doesn’t have the same power as Daniel [Andrews]. You’ve got a caucus that has never seen this.”

One Right faction MP said there were “serious concerns” from the caucus about the legislation, how it was handled and the fact that no unions appeared to support the bill.

“Unions have been actively contacting MPs about this issue. That has rattled caucus members,” they said.

Another MP, also from the Right, singled out Pearson’s handling of the legislation and said it was creating problems.

“There are more questions than answers from this minister,” the MP said.

“He has told us he’s consulted with unions. They’re telling us they were ‘consul-told’.”

Another MP, from the party’s Left, said there was a risk the bill would be put to a vote of the caucus – which the MP described as “unheard of” – if the concerns of MPs weren’t addressed.

In response to questions about the status of the legislation and its support, an Allan government spokesperson said that the government was continuing to “negotiate to ensure the passage of the bill”.

“As we’ve always said, if the bill isn’t passed, premiums will have to go up,” the spokesperson said.

In the letter sent to Labor caucus members late last month, Hilakari described the bill as fundamentally flawed and urged Labor to push for it to be withdrawn for further consultation.

The Community and Public Sector Union has been running advertisements on radio urging the public not to support the legislation.

State secretary Karen Batt said this week was a “defining moment for state Labor”.

One MP said the opposition was under significant pressure not to contribute to further insurance costs to businesses. The government has warned they will hike premiums further if their changes are not legislated.

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