Andrews government considers major shake up to WorkCover charges to bolster ‘broken’ scheme

Looming shortfalls of $1bn a year have prompted the Andrews government to make sweeping changes, including slugging businesses a higher premium.

The Andrews government is set to hike the average WorkCover premium to 1.8 per cent and exclude stress and overwork from insurance claims in a major shake-up of the scheme.

Details obtained by the Herald Sun have shown the final changes being debated to the system, which the state has described as “broken” with looming shortfalls of $1bn a year.

WorkCover Minister Danny Pearson was meeting with union bosses as late as Thursday night to finalise the arrangement after weeks of negotiations behind closed doors.

Under the plan taken to Victorian Trades Hall, the average premium paid by businesses across the state will rise from 1.27 of their payroll to 1.8 per cent.

WorkCover premiums are set to rise for businesses. Picture: Andrew Henshaw

This would rake in hundreds of millions more dollars to help fund the insurance scheme.

As early as this week, the state had been floating an idea to take this as high as 1.9 per cent.

The government is also set to remove or limit eligibility for claims relating to anxiety, being overworked and even stress.

But in a major backdown they are not expected to significantly change claims for serious issues such as sexual harassment or bullying.

Changes to mental health claims also put the government on a collision course with the union movement that has raged for weeks.

They have privately campaigned hard against any changes that would limit the ability of their members to be compensated for workplace injuries.

The state government had made concessions for the most severe of these mental health claims, but has refused to budge on others as it fears rising costs in this area have made the scheme unsustainable.

Mental injuries now make up 16 per cent of claims and are the fastest rising source of payouts.

It is unclear if the changes will be welcomed by the union movement, who are hoping to negotiate further despite a Friday deadline.

The Andrews government has also made concessions on the calculation of “whole person impairment”, which are used to determine permanent damage for those receiving compensation after 130 weeks.

The state backed down on a push to put this at 35 per cent impairment and is now looking at a 20 per cent figure.

A government spokeswoman said they had been upfront with the fact the WorkCover scheme was broken.

“That’s why we are talking to unions and business stakeholder groups to arrive at the best way to fix it,” she said. “The consultation is genuine and continuing.”

Businesses face WorkCover premium hike

White collar businesses are set to be slugged with major hikes to their premiums to offset the cost of mental health payouts in WorkCover.

As the Andrews government looks to prop up the “broken” scheme, the Herald Sun can reveal a major shake up to WorkCover charges are being considered.

A decision could be made as soon as Friday on the revamped system as the government juggles a list of ideas to ensure its financial viability.

Current proposals excluding bullying and harassment, and possibly covering only post-traumatic stress disorder, under mental health claims.

But the state is also weighing up a major rethink of how businesses are charged.

Under the existing system, blue collar jobs attract some of the biggest premiums because of their higher risk of physical injury.

But mental health and harassment claims have now become so common that office jobs, where these are recorded just as commonly, are set to be slugged with similar rates.

This major shake-up of premiums is seen as one of the main ways to stop the government bailing out WorkCover, with forecasts the state may need to tip in $1bn a year.

“We’ve been upfront that the WorkCover scheme is broken, and that’s why we are talking to worker and business stakeholder groups to arrive at the best way to fix it,” a state government spokeswoman said.

Insiders have warned the government is headed for public dispute with both the union movement, who do not want claims to be restricted, and businesses, who do not want to be hit with hefty price hikes.

Changes in both these areas are tipped to make up the final reforms.

White collar employers are set to be hit with higher WorkCover premiums. Picture: David Crosling

Victoria is well below the national average when it comes to longer claims, with 89.6 per cent of workers returning to work at any time following a work-related injury or illness.

Critics say this could be contributing to the billion-dollar blowouts.

United Workers Union executive director Godfrey Moase said the state should be focusing more on “holistic” changes that would help people enter the workforce.

He said sometimes people on long-term claims, particularly older or regional workers, couldn’t start earning again because their old employers weren’t flexible with hours or roles.

“There is not enough is happening in terms of making reasonable adjustments so that those workers can stay in that job, keep paying their taxes and contributing to their local community,” Mr Moase said.

“It is more difficult for those categories of workers to find alternative employment.

“That’s considerably adding to the cost of the injury management system

“If we just look at WorkCover, as one element in that discussion, then we risk cost shifting, and not solving the underlying issues.”

Ann-Marie Hermans, the Opposition spokeswoman for WorkCover, said:

“Victoria’s workers compensation scheme has been driven into the ground under Daniel Andrews and workers and businesses will be left to pay the price.

“Labor’s mismanagement of WorkCover means less cover for injured workers and higher premiums for Victorian businesses.”