NSW Treasurer stands by icare after millions in underpayment revealed

NSW Treasurer Dominic Perrottet is standing by the state-government owned insurer icare, after it emerged thousands of injured workers had been underpaid millions in compensation.

Mr Perrottet said concerns about icare's financial viability and performance, including the systemic underpayment of NSW workers, were "not new", as he distanced the government from the need to conduct a fresh inquiry into the organisation.

NSW Treasurer Dominic Perrottet said concerns about icare's underpayment of injured workers were "not new" and the issues were "being resolved".Credit: Edwina Pickles

"They are matters that are not new. There are matters that have been, I believe, resolved, or on track to being resolved," Mr Perrottet said.

"In relation to the underpayments issue, that was raised some time ago. It was self reported by icare and it pre-dates icare's existence. But obviously, as a responsible minister, where there are issues of misconduct, I take that very seriously and we'll look into it if that is deemed appropriate."

The board of icare is accountable to Mr Perrottet.

A joint investigation by The Age, The Sydney Morning Herald and ABC TV's Four Corners revealed as many as 52,000 injured workers had been underpaid by up to $80 million in compensation.

In a subsequent statement, a spokesman for Mr Perrottet said icare's initial estimate of a $40 million to $80 million underpayment had since been revised down to $5 million to $10 million, while the number of workers affected had also been revised.

"Based on current information, icare estimates 5000 to 10,000 workers have been impacted, which is a significant reduction to initial estimates of around 50,000 workers," the spokesman said.

"The average weekly amount [owed to each claimant] is approximately $56, bringing the estimate down to $5 million to $10 million. Icare expects to begin making payments to affected workers in the coming months."

The spokesman said the issue, which also included some overpayments, dated back to 2012.

The investigation also revealed that NSW Treasury was aware as far back as June 2018 that the independent regulator was "increasingly concerned" about the financial viability of the workers’ insurance scheme.

The investigation uncovered that the overhaul of icare's claims model to a computer-driven system in 2018 led to a significant decline in return-to-work rates, a crucial indicator of how workers' compensation schemes are performing.

Executive remuneration has also soared, with retired senior EY partner and actuary Peter McCarthy identifying a 22-fold increase since icare's establishment in 2015 in the number of executives who earned an average salary of $300,000.

State Insurance Regulatory Authority (SIRA), the regulator that oversees icare, has referred conduct within the organisation to the Independent Commission Against Corruption.

NSW Labor leader Jodi McKay said the "litany of issues" surrounding icare amounted to a "monumental scandal".

"What we have is the greatest wage theft by an agency, a government agency, in the history of this country," Ms McKay said.

"It's fair to say that some 3 million workers plus, and the 360,000 businesses that depend on icare in this state for workers compensation, can have no confidence that this scheme is operating that the way it should."

Mr Perrottet defended the current level of scrutiny of icare's practices, saying the concerns raised by SIRA pointed to effective oversight.

"I think the regulator, through SIRA, plays a very important role in raising issues and concerns that they have with the service provider. It's exactly why we set it up in the first place," he said.

"If there are concerns about return-to-work rates, if there are concerns about care and support that they should be receiving, then I'm happy to get that feedback and act accordingly."

Watch the joint investigation on ABC's Four Corners on Monday at 8:30 pm AEST.

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