Spending, salaries to be slashed at troubled state insurer

The Minns government has launched a sweeping review into icare to identify where the embattled workers’ compensation insurer can make cuts to excessive spending, waste and salary costs.

The Treasury review will find the cuts in time for icare to make permanent savings to its net cost of operations by March 1. This follows the insurer needing an urgent top-of $669 million in June to ensure it could continue to pay injured frontline public servants.

NSW Minister for Work Health and Safety Sophie Cotsis says spending must be reined in at icare.Credit: AAP

The review will scrutinise the number of senior executives and their remuneration, in line with Labor’s policy to freeze the pay and reduce the executive ranks.

Medical, income and other support provided to injured workers will not be affected by the review.

The review will be led by Treasury after the government passed new laws to provide it with powers to obtain information and records on icare spending. Legislation also was passed to put worker and business representatives on the icare board.

The government says one of the worst examples of mismanagement under the Coalition included an ASX-listed marketing group with extensive links to the NSW Liberal Party being awarded millions of dollars in contracts by icare’s previous board and management.

Some of the $18 million in contracts awarded to the IVE Group, run by former NSW Liberal Party president Geoff Selig, were not put to an open tender.

On a smaller scale but also seen as an example of unnecessary spending, icare management insisted on engaging a professional photographer to shoot headshots for staff security passes. It cost the taxpayers $30,000.

As the largest public sector insurer in Australia, icare covers more than 3 million employees for wages and medical costs for workplace injuries. It collects more than $3 billion annually in premiums.

NSW Labor was highly critical of icare in opposition. Treasurer Daniel Mookhey has blamed former premier Dominic Perrottet, who oversaw the scheme’s setting-up when treasurer in 2015, for the ongoing problems besetting icare.

Icare oversaw one of the biggest underpayment scandals involving a government agency. A joint investigation by the Herald and ABC TV’s Four Corners uncovered deteriorating return-to-work rates and the underpayment of thousands of injured workers.

Minister for Work Health and Safety Sophie Cotsis said she could not guarantee how quickly the Labor government could resolve the problems with icare.

“Sadly, it will take years to correct the workers’ compensation mess that we inherited and I don’t want to give anyone false hope,” Cotsis said.

“We will remain unrelenting in our pursuit of best practice and best governance at icare [and] this review continues the long but necessary road of reform that began within weeks of Labor coming to government.”

Cotsis said businesses needed access to a scheme with affordable premiums and “workers need to be supported when things go wrong at work”.

Icare manages the Treasury Managed Fund and Insurance for NSW, which cover the state’s insurance risks, including payments for NSW public sector workers’ compensation and property damage.

An increase in workers’ compensation claims, a rise in medical malpractice and historical child sex abuse liabilities, as well as property damage from last year’s Northern Rivers floods, led to the government stepping in to provide the urgent top-up in June.

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