Premium hike in Daniel Andrews’ WorkCover overhaul

Victorian taxpayers have been forced to tip in $1.3bn to keep the workers’ compensation scheme afloat, with eligibility tightened and premiums increased by 42pc.

Victorian Premier Daniel Andrews says WorkCover premiums would rise from 1.27 per cent to 1.8 per cent on July 1. Picture : NCA NewsWire / Nicki Connolly

The Andrews government will hike WorkCover premiums by 42 per cent and toughen the eligibility requirements for injured Victorian workers receiving payments in a bid to fix the state’s “fundamentally broken” workers’ compensation scheme.

In a move announced ahead of Tuesday’s state budget, that has angered both business and union groups, Daniel Andrews on Friday revealed premiums would rise from 1.27 per cent to 1.8 per cent on July 1, with a “whole person impairment test” of greater than 20 per cent introduced for injured workers receiving payments for more than 130 weeks.

Stress and burnout claims will no longer qualify for weekly benefits, and a new “Return to Work” agency will be established to assist physically injured and mentally ill Victorians to get back to work sooner.

The government conceded in March that WorkCover was “fundamentally broken”, revealing the annual premium deficit had blown out to $1.1bn — a figure WorkSafe Minister Danny Pearson on Friday revealed has now reached $1.3bn.

The reform comes after the government chose New Year’s Eve to release an alarming consultants’ report it had kept secret for two years, which found WorkSafe was “at a tipping point in its history and is facing both internal and external threats to its financial stability”, with increases in mental health claims, government raids on dividends and unstable financial markets to blame.

Assistant Treasurer Danny Pearson. Picture: NCA NewsWire / David Geraghty

“The number of claims and the cost of claims has tripled since 2010, and what we know is that if people are consigned to hundreds and hundreds of weeks of benefits, being away from friends, co-workers, connection, productive work, then that’s simply no good for them,” the Premier said.

Mr Andrews said mental injuries now accounted for 16 per cent of new claims, “which was never envisaged when the scheme was designed”.

“That’s why we’re creating Return to Work Victoria … to pilot supports for injured Victorians and those experiencing work related mental stress to return to work or training pathways,” he said.

“Health outcomes for workers are worse the longer they remain on WorkCover, and can lead to prolonged injury and unemployment. The longer a person is away from work, the less likely they are to ever return.”

Workers experiencing stress and burnout will have access to weekly payments removed and instead become eligible for provisional payments for 13 weeks to cover medical treatment, as well as receiving “enhanced psychosocial support” to assist them to return to work.

Those who have already been receiving payments for more than 130 weeks will not be affected, with the eligibility changes set to come in from 2024 to only apply prospectively.

The government also plans to legislate for the scheme to be reviewed no earlier than three years after the changes come into effect.

Mr Andrews said any funds left over from the premium hike would be returned to the scheme, “to ensure better outcomes for workers, or lower premiums”.

Paul Guerra, chief executive, Victorian Chamber of Commerce and Industry

Business, unions ‘disappointed’

In a rare joint press conference, Victorian Chamber of Commerce and Industry CEO Paul Guerra and Trades Hall Council Secretary Luke Hilakari both expressed disappointment at the announcement.

“The WorkCover system in Victoria is no longer fit for modern Victoria, but slugging businesses a 42 per cent premium increase to keep it viable is not the answer. It’s not fair,” Mr Guerra said.

“What we need to see is real reform that ensures that assistance is given to the worker as soon as it can be.”

Mr Guerra called for claims to be assessed more rapidly and for greater focus on injury prevention measures.

Victorian Trades Hall council secretary Luke Hilakari. Picture: NCA NewsWire / Nicki Connolly

“But we think denying workers access to the scheme is the wrong way to go,” he said.

“We have real concerns about what is being said about excluding workers who experience stress, anxiety and overwork.

“We have real concerns about a whole person impairment test being put forward at 20 per cent.”

Mr Hilakari said waiting lists for psychiatric care presented a significant challenge in enabling mentally Victorians to return to work.

“You can’t see a psychiatrist for anywhere between six and 12 months. You can’t see a psychologist for anywhere between three to four months,” he said.

“These are the people that we need to be stood up to help injured workers as soon as possible because what we know about injured workers is the faster you get treatment, the more likely you’re going to get back to work faster … (and the) less likely that your mental health issues will compound and become worse.

“We are very concerned about today’s announcements. We don’t want to see any injured worker miss out on the support that they rightly deserve.”

‘Workers and businesses pay for Labor mismanagement’: Opposition

Opposition treasury spokesman Brad Rowswell said workers and businesses were being forced to pay for the government’s mismanagement of WorkCover.

“Instead of operating a strong and sustainable scheme has supports injured workers returning to work, the Andrews government has been forced to hike premiums on businesses and cut support to workers,” Mr Rowswell said.

“By the Premier’s own admission, Victoria’s WorkCover scheme is broken and it’s workers and businesses who will pay the price when they can least afford it.

“This is not even reform. It’s the same scheme given another name that will slug businesses and punish workers.

“It’s the latest example of the Andrews government’s financial incompetence which will be on full show next week when it hands down a horror state budget.”

In September The Australian revealed Victorian taxpayers had bailed WorkSafe out to the tune of $450m — with that figure now at $1.3bn.

Days later, Labor appointed Bracks and Brumby government minister Bob Cameron as chairman of WorkSafe, working alongside former senior Bracks and Brumby government staffer Colin Radford, who is chief executive.