Allan government pushing to reform ‘fundamentally broken’ WorkCover scheme

The Allan government has struck a last-minute deal with the Liberals to push through contentious WorkSafe reforms, with premiums now set to undergo a year-long freeze.

The Allan government is eager to reform the state’s WorkCover scheme. Picture: NCA NewsWire / Andrew Henshaw

The Victorian government has struck a last minute deal with the opposition to push through contentious WorkSafe legislation.

As part of the deal, premiums will be frozen for a 12-month period.

There will also be a 12-month independent review into the overall scheme.

WorkSafe Minister Danny Pearson said it is an important moment for Victorian workers.

“We are making sure they have the dignity of viable scheme,” he said.

“It’s something that I’m incredibly proud of.”

It comes after the Herald Sun revealed legislation to overhaul the scheme was due to come back to parliament this week, less than a month after a parliamentary inquiry warned the legislation was “inadequate”.

The government’s Bill was proposing to limit mental health claims to stop people accessing funds for stress and burnout and also threatened to mandate stricter tests for people seeking to keep receiving compensation after two and a half years.

Premier Jacinta Allan is understood to be confident of pushing a major reform of the WorkCover scheme through parliament. Picture: Nicki Connolly

The proposed legislation prompted fierce backlash from the Victorian Trades Hall Council and the Victorian Chamber of Commerce and Industry.

Both the Greens and the opposition were also vehemently opposed to the planned changes.

It was initially reported the Liberal Party were planning to back the changes when they came to parliament this week, according to both government and opposition sources.

Senior Liberal sources said the party would be loath to stand in the way of sensible reform, but stressed legislation could not simply cut thousands of Victorians out of care.

The government has long claimed the WorkCover system is “fundamentally broken” and requires urgent change, with Premier Jacinta Allan and WorkSafe Minister Danny Pearson repeatedly threatening that without action, premiums will “absolutely” go up by between 2.4 per cent and 2.57 per cent.

WorkSafe and TAC Minister Danny Pearson. Picture: NCA NewsWire / David Crosling

Benefits paid to injured workers now routinely exceed the premiums paid by business to fund the scheme by $1.1bn every year, and the government has been forced to spend at least $1bn in bailouts to prop up WorkSafe over the past two years to cover the shortfall.

A parliamentary inquiry, which was sparked after the government failed to legislate its changes before the end of last year, recommended that an independent expert panel conduct another inquiry into the scheme and warned the proposed laws were “inadequate”.

A government spokesman said if the Bill had not passed, premiums would rise.

“There’s been consultation, there’s been an inquiry – it’s time to vote for the Bill to modernise Workcover and ensure it can continue to be there for Victorian workers,” he said.

“We’ve been clear that WorkCover is fundamentally broken. Our changes will ensure premiums stay low and the scheme can continue to support workers into the future.”

Animal Justice Party MP Georgie Purcell, who chaired the parliamentary inquiry, accused the government of ignoring the committee’s recommendations if it proceeded with the legislation.

“The arrogance of this government to ram this Bill back through before responding to the inquiry’s report is absolutely shameful,” she said.

“We made it clear that a number of important changes must be made before it is reintroduced.

“It seems this government does not care about the real life impact this will have on Victorian workers.”