‘Fork in the road’: Crossbenchers deliver circuit-breaker for workers’ comp laws

NSW Treasurer Daniel Mookhey will take a compromise on his long-stalled workers’ compensation reforms to cabinet after crossbench MPs orchestrated a circuit-breaker deal in a last-ditch bid to ensure the controversial bill passes the parliament this year.

In a significant move to end the deadlock, Sydney MP Alex Greenwich and former Liberal turned independent Taylor Martin, along with several other crossbenchers, have taken to the government a revised deal the MPs say will be palatable to business, unions and not-for-profit groups.

Crossbench MPs Taylor Martin and Alex Greenwich have offered a compromise. Credit: Photo: Sitthixay Ditthavong; artwork: Aresna Villanueva

Under the compromise, the crossbenchers have proposed changing the measurement of “whole of person impairment” for pyschological injuries, a key sticking point in Mookhey’s push to reform the expensive workers’ compensation scheme.

Instead, the state’s Chief Psychiatrist would be asked to devise a new tool to “determine psychological impairment.” This would be done within 18 months of the bill passing.

Mookhey has argued reforms are critical to address an increasingly unsustainable compensation scheme where a doubling of psychological injury claims has placed significant pressure on the system’s financial viability, resulting in rising premiums for businesses and charities.

Under Labor’s bill before parliament, workers would be cut off from regular compensation payments after 2½ years unless they can prove a whole-person impairment of at least 31 per cent.

NSW Treasurer Daniel Mookhey’s bill has been tied up for months.Credit: Sam Mooy

However, in a letter to Mookhey on Thursday, the crossbenchers said to reduce looming premium increases for businesses, they would support an increase in whole person impairment thresholds while the Chief Psychiatrist works on a new measurement tool.

“Our proposed thresholds are fairer, and the Chief Psychiatrist review provides the opportunity to adopt a new tool for psychological impairment before any worker is affected by them,” the MPs said.

The first increase would start on July 1, 2026, at 25 per cent, with a second and third increase set at 27 per cent on July 1, 2027, and 28 per cent on July 1, 2029 – lower than the bill’s proposed 31 per cent. It is expected, however, a new assessment tool would supersede those increases.

Access to substantial tax-free lump sum payments for many injured workers would be restored, however, a condition of the deal is that joint amendments from Liberal upper house leader Damien Tudehope and independent MLC Mark Latham must be defeated.

Tudehope and Latham proposed changes to the definition of sexual harassment as well as axing claims made for excessive work demands and vicarious trauma.

Greenwich said the compromise deal had sufficient support in the upper house to pass.

“This circuit-breaker gives the parliament a mandate to deliver a fairer process for psychological injuries than currently exists, and locks in large lump sum payments for injured workers as a safeguard,” Greenwich said.

“Before any worker is impacted by an increase to whole person impairment thresholds in 2029, we will have time to implement a new scheme following any recommendations from the chief psychiatrist, the expert panel of businesses and unions, and a parliamentary inquiry.

“Importantly, the proposal also creates immediate new restrictions on insurers to stop them engaging in protracted legal battles as a way to fight reasonable claims.”

Greenwich warned that if parliament did not pass the reforms in the final sitting fortnight of the year “people will start losing their jobs as NGOs and small business grapple with how to pay for premium cost blowouts”.

Taylor, who will move the amendments in the upper house next week, acknowledged “they won’t please either side of the debate”.

“However what’s being proposed will buy enough time for a more fulsome review into how the workers’ compensation scheme can be reworked to properly cover psychological injuries – which the scheme was never designed for,” Martin said.

In a statement on Thursday, Mookhey said: “Upper house and lower house crossbenchers have today put forward further suggestions for how we can repair the state’s failing workers’ compensation system.

“Their proposals are constructive. We will engage with them seriously. Because we are more interested in a fix than a fight.”

The treasurer said he wanted a system that “gets people back to work as quickly as possible, with premiums small businesses can afford”.

“So I look forward to further engaging with the Labor caucus and cabinet, the crossbench, the opposition, union movement, business community and not-for-profit sectors about the detail of these specific proposals,” Mookhey said.

NSW Opposition Leader Mark Speakman said: “We’ve received the proposed amendments this afternoon and we will consider them carefully before parliament resumes.”

Greenwich said the Coalition’s “hard stance” in the negotiations had “given me room to bring the government to the table and consider a compromise, but now they need to move”.

“This is a fork in the road for the opposition, either work with sensible crossbenchers and the government to deliver a sustainable scheme for workers and employers, or side with Latham and the Greens in a hopefully failed bid to cripple our workers’ compensation system.

“Ahead on the next election, voters will remember whether they backed Latham to protect workplace bullies, racists, and sexual harassers, or did they support our amendments to deliver a fairer system for workers with psychological injuries and their employers.”

In a statement, the National Disability Services said it was “pleased that the NSW parliament has been able to find a way forward because the current situation is unsustainable”, with the involvement of a chief psychiatrist a “sensible” move.

Business NSW chief executive Daniel Hunter said: “This proposal is an important, commonsense compromise that would bring much-needed certainty and sustainability of premiums for the 320,000 NSW businesses that pay workers’ compensation premiums.

“A do-nothing scenario would see premiums rise 36 per cent over three years, forcing one in five of our members to shut their doors. The deal ensures many businesses can survive and hopefully thrive.”

NSW Council of Social Service chief executive Cara Varian said the sustainability of the sector had been under enormous pressure due to increases in insurance premiums, forcing many to absorb the cost or cut back on frontline services.

“We understand that independent MP Alex Greenwich has proposed changes to the bill to help progress this issue, we welcome this effort to resolve the legislative impasse,” Varian said.

Yolanda Saiz, the chief executive of St Vincent de Paul Society NSW, said “exorbitant premium increases” were draining vital funds from essential community services.

“The current legislation to fix this problem has sat idle in the NSW Parliament for too long,” Saiz said. She welcomed Greenwich’s leadership on “seeking to move this critical reform forward”.

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