James O’Doherty: Daniel Mookhey says workers comp scheme is putting pressure on budget

This year NSW Treasurer Daniel Mookhey’s budget bogeyman is the broken workers compensation scheme – and he wants everyone to know about it, writes James O’Doherty.

Premier Chris Minns (left) and Treasurer Daniel Mookhey say new Budget measures will make it easier to deliver more homes alongside the infrastructure and services communities need. Photo: NewsWire/Gaye Gerard

Daniel Mookhey has adopted two budget traditions since taking over as NSW Treasurer.

The first, started by this column in 2023, is to define each economic blueprint by the musicians who provided the soundtrack.

The second is to define a new budget bogeyman on which to blame all of his financial woes.

The villain in Mookhey’s first budget, written to the tunes of Chance the Rapper and Olivia Rodrigo, was the former government.

In 2024, when writing the budget to Taylor Swift, Mookhey blamed NSW’s problems on Canberra amid a historic cut to our share of GST.

Daniel Mookhey in his office at Parliament House ahead of the budget. Picture: Jonathan Ng

This year Mookhey’s bogeyman is the broken workers compensation scheme – and he wants everyone to know about it.

“That is certainly one of the biggest pressures on the budget,” Mookhey says in an interview in his Parliament House office.

Figuring out how to build more houses will be a key feature of the coming budget. Picture: Jonathan Ng

The government-funded insurance scheme covering public sector workers is in a parlous state, having required billions of dollars in top-up funding in recent years.

“People will see that the budget will record a $2.6bn hit over four years,” he says, due to the scheme paying out more money than it raises.

“People should ask: Is that a good use of public money? And our point is, it’s not.”

The state’s nominal insurer is also in deficit to the tune of almost $5bn, holding only 78 cents in assets for every dollar it expects to pay out in compensation.

The private sector scheme is losing more than $6m every day, as compensation claims pile up.

Labor claims delays in passing reform will put increasing pressure on small businesses who will be forced to pay even more for skyrocketing insurance premiums.

Mookhey has been able to make this year’s budget bad guy even more scary after the Coalition moved to block attempts to crack down on psychological injury payouts, in a move that stunned Labor MPs.

Daniel Mookhey (left) with Planning and Public Spaces Minister Paul Scully are focused on providing more affordable housing in Sydney. Picture: NewsWire/Sam Ruttyn

The Coalition’s political opponents are already talking about mounting a campaign highlighting increasing insurance premiums for small business, which they have dubbed the “Tudehope tax” in honour of former finance minister Damien Tudehope.

With the government racing towards the 2027 election, Mookhey is trying to craft a narrative of being a responsible economic manager, in contrast to a Coalition that has turned its back on small business.

Reforms to workers compensation is one of the “not sexy, not spectacular” reforms on which he has embarked to clean up the state’s books.

“If you can fix a broken workers compensation system, you can put more investment into prevention and workplace health and safety,” he says.

Premier Chris Minns has pledged to fix the housing crisis. Picture: NewsWire/Gaye Gerard

Mookhey is great at finding things to blame for the state of the budget books.

But there is a risk that people will eventually just see “a list of excuses”.

That’s the view of one Labor MP, who believes the government is increasingly running out of time to deliver on what they promised.

“Excuses wear thin,” they say.

“You have got to be able to say that you have a vision and a plan.”

While Premier Chris Minns has provided a “vision” – namely, fixing the housing crisis – delivering a plan on how to get there is proving a problem.

Mookhey’s first budget made big investments in housing for frontline workers. The second included $6.6 billion for social housing.

On Tuesday, the Treasurer says, he will unveil “more interventions” on housing, particularly focused on the private market.

Reforms like allowing developers to deliver public infrastructure rather than waiting for the government to catch up are a step in the right direction, as is the three-person “Housing Development Authority” designed to let major projects bypass the convoluted planning scheme.

However, Minns and Mookhey still need to find a “Plan B” for the tens of thousands of homes that will no longer be built at Rosehill.

Do not expect Mookhey to pull a rabbit out of his hat on Tuesday to solve that problem.

Mookhey rejects the idea that this year’s budget is the last chance he will have to properly fix the housing crisis before the election.

“The housing challenge is … a problem that’s been built up over 30 years,” he says.

“We expect to make progress on the housing challenge in every budget.”

The soundtrack to Mookhey’s third budget was a return to the Treasurer’s “roots” of hip-hop and R&B, including that from 1990s New York.

With one more budget to deliver before voters go to the polls, Mookhey’s playlist next year will need to be packed with bangers.