Inside the fight over who is ‘gaming’ the NSW workers’ comp scheme

Unions NSW is urging the Minns government to ban major companies from operating their own workers’ compensation schemes, arguing self-insurers have turned icare into the “insurer of last resort” and pushed up premiums for businesses.

As the government gears up for a major overhaul of the state’s workers’ compensation scheme, which experts have warned will make it next to impossible for workers who suffer psychological injuries on the job to claim damages, unions are seeking to convince Labor MPs to push back on the changes.

Unions NSW Secretary Mark Morey and Premier Chris Minns.Credit: Flavio Brancaleone, Kate Geraghty

Unions NSW held a caucus briefing in parliament on Thursday, urging MPs not to support changes they say undercut Labor’s pre-election pledge to support injured workers.

The government says the state’s workers’ compensation scheme is unsustainable, and that a surge in psychological claims – which have doubled in six years – is to blame.

It says its proposed changes put “prevention ahead of compensation”, and will help put downward pressure on insurer premiums. The nominal insurer, icare, has warned premiums will increase by 36 per cent over three years from 2026.

The proposed overhaul has won support from the state’s business lobby. Business NSW chief Daniel Hunter said workers’ compensation is “out of control” and claimed workers were abusing the scheme by lodging claims over “low-level workplace disputes and underperformance”.

The government’s reforms have prompted alarm within the medical and legal industry, as well as unions.

Those groups argue the cumulative effect of the proposed changes will make it almost impossible to claim compensation for psychological injuries.

Unions NSW secretary Mark Morey, who sits on the icare board, agreed the system needs reform, but said the government’s proposals were “a blunt instrument” that unfairly focused on workers.

“If people are gaming the system it’s not workers. It’s insurers, providers, they’re the ones making money out of the system. They’re just picking an easy target by going after injured workers,” he said.

“There are a whole lot of inefficiencies in the system that aren’t the fault of workers.”

Among a series of proposals put forward by the union movement is the abolition of the self-insurer and specialised insurer markets, which comprise about 17 per cent of workers in NSW. Self-insurers licensed in NSW include major employers such as the University of NSW, Ausgrid and Westpac.

Morey said those arrangements – and specialised insurers covering specific industries such as local councils and Catholic institutions – put greater pressure on icare as the nominal insurer.

“They’re able to structure their insurance so they are insuring the best-performing companies. Good employers are taken out of the system so the nominal insurer becomes the insurer of last option,” he said.

“All the terrible employers are in the nominal insurer, and it drives premiums up across the board, so there’s no way of balancing it out.”

Thursday’s caucus briefing marks an escalation in the union’s bid to force the government to make concessions on the changes.

Attended by about 20 Labor backbenchers, it heard from Dr Anthony Dinnen, a psychiatrist who has worked in the scheme for decades and warned against the proposal to double the level of impairment needed to claim lump-sum damages.

Experts have warned that change – which would lift the “Whole Person Impairment” threshold from its current 15 per cent to 30 per cent – would effectively kill the scheme by making it next to impossible for injured workers to claim damages from employers.

Dinnen told MPs that a worker would “have to be institutionalised” to receive that sort of score.

“It essentially means the only treatment will be that available through Centrelink. That is the effect,” he told the Herald.

A spokesman for Treasurer Daniel Mookhey said consultation “remains ongoing” and the government “welcomes all feedback and is keeping all options on the table”.

Legal groups say they have been locked out of the consultation process. NSW Bar Association president Dr Ruth Higgins, SC, said “meaningful engagement” with the government was “yet to occur”.

“Given the potential effect of these reforms on millions of workers, there should be a genuine and considered consultation process,” she said.

Higgins called for the government to be clear about the reforms, saying reports the government was considering raising the threshold for lump-sum payments had caused “understandable distress”.

“Many legal practitioners, who have spent their careers representing injured workers, have never encountered a person being assessed as having a 30 per cent Whole Person Impairment for a psychological injury,” she said.

“If that is what the NSW government intends, it will effectively end workers’ compensation for psychological injury in NSW.”

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