An unlikely alliance has delayed workers’ compensation reforms – but change must still occur

An unlikely alliance between the Liberal Party, the union movement and the Greens has teamed up to delay reform to the state’s ailing workers compensation scheme, despite all members of the weird trio conceding that the system is broken.

For those who have missed recent developments, a recap: the Minns government has proposed a substantial rewriting of the state’s workers’ compensation scheme amid legitimate fears the system could collapse under surging psychological injury claims, declining return-to-work rates and skyrocketing insurance premiums for businesses.

Chris Minns’ government has proposed a substantial rewriting of the state’s workers’ compensation schemeCredit: Sam Mooy

The reforms have pitted Labor against its traditional union allies, while the Liberal Party’s opposition to the bill has infuriated the NSW business community.

As the Herald has previously reported, claims for psychological injury have doubled in just six years, with the average cost climbing from $146,000 in 2019 to $288,542 in 2024.

The government also points to figures showing only 50 per cent of workers with a psychological injury return to work within 12 months, compared to 95 per cent for those with a physical injury. And to make matters worse, the scheme currently holds 82¢ in assets for every dollar it expects from future claims. Both Coalition and Labor governments have had to inject $6.1 billion over the past six years to ensure the component of the scheme covering public sector workers remained solvent.

Despite making a strong case for the need for change, Labor was last week unsuccessful in convincing the Liberal Party and the crossbench in the NSW Legislative Council. In the Legislative Assembly Premier Chris Minns and Treasurer Daniel Mookhey were able to secure the support of the eminently sensible independent MP Alex Greenwich and others.

The upper house setback means Parliament will now hold a second inquiry into the bill, which will occur over at least two weeks and have broad powers to interrogate the data and modelling underpinning the proposed legislation.

Last week’s debate was a good reminder that many thoughtful people sit in our state’s parliament. Many contributions from all sides reflected the need to ensure genuinely injured workers can access support. Unfortunately, though, very few contributions from the Liberals and Greens recognised the dire state of the system, and the need to tackle it as soon as possible.

Despite the upper house delays and various reasonable arguments raised in parliament last week on the need to act with caution in such a sensitive space, the Herald remains convinced the government’s bill so far represents the best chance of fixing the system and guaranteeing its financial sustainability.

Labor’s numbers challenge in the upper house means the government’s bill will almost certainly have to change once the inquiry is complete. But those who argue Labor’s bill goes too far, or lacks crucial information about the underlying assumptions behind the reforms, have an obligation to do more than just complain and offer thin alternatives.

If parliament is to have an inquiry, all sides should approach the issue with the urgency it deserves. Politicking and unnecessary delay would let down the very injured workers opponents of Labor’s bill claim to represent.

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