‘Taxing itself’: Victoria’s emergency services face WorkCover hikes

Emergency services in Victoria could be slugged a combined $100 million a year as part of the state’s attempt to prop up its failing workers’ compensation scheme.

The Andrews government in May confirmed WorkCover premiums would increase on average by 42 per cent to fund changes to the “fundamentally broken” scheme, enraging both businesses and unions for hiking bills while reducing coverage.

Premier Daniel Andrews said the state’s emergency services were receiving more government funding than ever.Credit: Drew Ryan

The increase will see employers pay an average 1.8 per cent of payroll, up from 1.27 per cent, with each industry’s rate dependent on its risk factors, meaning emergency services tend to pay more to insure against workplace injuries for police, paramedics and firefighters.

Police Association of Victoria chief executive Wayne Gatt expected the force’s insurance bill to increase to more than $200 million as a result of the premium change, up from last year’s $143.4 million.

“You simply can’t increase something by so much and expect that the service or support that you offer won’t need to be reduced in turn to cover the cost increase,” Gatt said in a statement.

“When the government increases the cost of doing business to the public sector, it is effectively taxing itself.”

Police Association chief executive Wayne Gatt estimates the force’s insurance bill will increase to more than $200 million.Credit: Paul Rovere

The industry rate for “police services” increased from 5.563 per cent to 8.596 per cent, a jump of 55 per cent. Analysis by The Age and state opposition roughly calculated the change could amount to an extra $78 million a year for Victoria Police.

The analysis does not include the ‘claims experience factor’, which WorkCover applies to each employer, which could significantly alter the outcome.

The agencies declined to provide their claims experience factor, which accounts for the claims and staff recovery history from that workplace. The estimates also do not include any possible changes to staffing levels.

Premier Daniel Andrews on Friday refuted emergency services could be strained by increased WorkCover levies, stating the agencies had more government funding than ever.

‘You simply can’t increase something by so much and expect that the service or support that you offer won’t need to be reduced.’

Police Association chief executive Wayne Gatt

“Members of Victoria Police, Ambulance Victoria, firefighters, and so many others that are in our emergency services are subjected to unique risks. They need a safe workplace,” Andrews said on Friday.

“If they are injured, they need a workers’ compensation scheme that they can have confidence in.”

Victoria’s average annual WorkCover premium is higher than in Queensland and NSW, but lower than Tasmania and the ACT.

Fire Rescue Victoria (FRV) was in deficit in the 2021-22 financial year and paid 340 WorkCover claims each worth an average $49,780, up from 314 valued at $46,576 the previous year.

The industry rate for “fire protection and other emergency services” increased from 3.971 per cent in 2022-23 to 5.380 per cent in 2023-24, meaning the agency could be charged $11.09 million extra a year in WorkCover fees.

The levy for “ambulance services” increased from 4.839 per cent to 7.631 per cent. Based on Ambulance Victoria’s annual report, that could translate to an estimated extra $17.3 million a year.

The average cost of a WorkCover claim at the emergency service grew from almost 13 per cent to $113,268 in the year to 2021-22, “primarily driven by the increase in total psychological claims compared to physical claims”.

“Psychological claims tend to result in longer time lost than physical claims and be more expensive to treat,” the Ambulance Victoria annual report said.

Andrews reinforced that WorkCover was “on its knees because premiums have not risen for 20 years and costs have”. WorkCover recorded an insurance operations deficit of $1.6 billion in 2021-22, after a deficit of $3.9 billion the previous year.

The number of people stuck on the scheme and out of work for more than 2½ years almost doubled since June 2016, according to government figures, and mental injuries had grown to represent 16 per cent of all new claims.

Workers experiencing stress and burnout were excluded from ongoing support under this year’s overhaul.

The Country Fire Authority (CFA) reported payroll tax, fringe benefits tax and WorkCover premiums cost a combined $6.88 million in 2021-22 but did not break down the levies.

Adam Barnett, chief executive of the Volunteer Fire Brigades Victoria, said the CFA had already suffered significant budget cuts.

“Given CFA’s employee costs total more than $122 million a year, CFA volunteers are extremely concerned about any future cuts, including though increased taxes like increased WorkCover premiums,” Barnett said.

“CFA volunteers already have to tin rattle and fundraise for essential equipment ... they cannot take any further cuts without significantly impacting morale and public safety.”

Shadow WorkCover spokeswoman Ann-Marie Hermans said the changes could diminish frontline services.

“These premium hikes aren’t about delivering better outcomes for injured Victorian workers, but about bailing out a WorkCover scheme that has been run into the ground by the Andrews government,” she said.

Victoria Police, Ambulance Victoria and the CFA declined to comment. FRV pointed The Age to its annual report, and the state government did not respond by deadline.

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