WorkSafe premium hike on the cards to support ‘fundamentally broken’ agency

The Andrews government is considering hiking WorkSafe levies to prop up a “fundamentally broken” workplace safety regulator.

The Andrews government is considering slugging business more to fund WorkSafe.

The Andrews government has been accused of breaking an election promise as it considers collecting more money from businesses to prop up its ailing workers’ compensation scheme.

Just months after Labor pledged to deliver its election commitments without new or increased taxes, senior government figures have been discussing a move to alter the prem­iums charged to fund Work­Safe’s insurance program.

On Monday, the government confirmed it would consult workers, unions and the private sector to fix a scheme that was “fundamentally broken”.

WorkSafe is under serious financial stress with claims tripling since 2010.

WorkSafe inspectors on the job in Geelong. Picture: Alan Barber

It has received at least $1bn in bailouts from the government over the past two years to cover the shortfall between its payouts to employees and the money it has raised.

This is forecast to grow with the government expected to be forced to move $1bn a year out of the budget and into the scheme if changes are not made.

In an effort to fix this perilous financial position, the government is holding talks about how to save the compensation scheme. Ideas include increasing premiums across a range of industries, or the introduction of tiered approach that could result in more money from higher-earning companies.

Another topic of discussion is the amount of people who are on the scheme and have never returned to work.

Changes to tests for those who have been away from work for 130 weeks have led to a doubling of the amount of weekly active claims in this category since 2016, to 8500 people.

Expanding premiums will open the government up to a backlash from the business community, with Treasurer Tim Pallas reaffirming last November that the government would deliver on its election pledges “with no new or increased taxes, no increase in net debt, all while bringing the budget back to $1bn surplus”.

The Andrews government is considering slugging businesses more for WorkSafe. Picture: Valeriu Campan

Opposition treasury spokesman Brad Rowswell said any hike in premiums would be Labor’s 44th new or increased charge since it came into government in 2014.

“Why should Victorian businesses pay the price for Labor’s massive debt and culture of waste?” he said.

“Any additional hit to business bottom lines puts Victorian jobs at risk. Despite promising not to hike taxes just weeks ago, Labor is hitting Victorian businesses yet again to pay for their record debt and more than $30bn in project blowouts.”

Under the current WorkCover rules, a complex formula is used to determine how much money is paid by employers, with the average rate about 1.27 per cent of the money the business pays in wages and entitlements.

Since 2020, the Work­Safe board has called for an increase to this premium amid cost pressures including an increase in mental health claims.

But the government’s expenditure review committee rejected this proposal amid concerns about burdening businesses with charges ahead of the election and as the sector recovered from Covid-19 lockdowns.

“The WorkCover scheme is fundamentally broken,” a government spokeswoman said.

“The scheme does not meet the needs of those it was originally designed to assist more than 30 years ago. The government is working with business and worker stakeholder groups to look at all options to continue the ongoing sustainability of the WorkSafe program.”