The unlikely bedfellows as Labor faces showdown on workers’ comp laws

The NSW Liberals are in lockstep with unions over Labor’s overhaul of workers’ compensation laws, refusing to back proposed changes unless the government scraps one of the most controversial aspects of its bill which will see a clamp-down on long-term support for psychological injuries.

The opposition’s stance will pave the way for a showdown in NSW parliament this week, with Treasurer Daniel Mookhey insisting a rise in psychological injuries was threatening the financial sustainability of the state’s workers’ compensation scheme and putting significant strain on the state budget.

NSW Opposition Leader Mark Speakman.Credit: Kate Geraghty

Opposition Leader Mark Speakman on Tuesday confirmed that the Coalition would oppose Mookhey’s compensation bill unless the government agreed to axe a new threshold at which people with a serious psychological injury could receive ongoing support or claim damages.

The increase to the threshold, known as Whole Person Impairment (WPI), was widely criticised in a snap one-day parliamentary inquiry into the compensation changes last month. The hearing was told that only 27 of the hundreds of employees with a workplace psychological injury each year would be eligible to claim long-term benefits under the new thresholds.

With the number of psychological injury claims doubling in the past six years and return-to-work rates falling, the government last week introduced its new laws to parliament to reform compensation for injuries such as post-traumatic stress disorder.

The government has already significantly watered down some aspects of its initial reforms, outlined in a draft exposure bill, after they were widely criticised by unions, medical experts and lawyers.

However, Speakman said the changes did not go far enough and the Coalition could not support the bill in its current form because it had been hurriedly prepared with little concern for injured workers.

“The opposition will support the bill, but with sensible amendments,” Speakman said. “We want a scheme that is sustainable, that is fair to workers, fair to business, but does not unduly punish the most severely injured workers, which is what the Minns Labor government is doing.”

The opposition’s treasury spokesman Damien Tudehope said, “there is not one member of the Coalition who does not support lower premiums for workers’ compensation” but the government had rushed its bill without giving enough thought to how best to support both business and workers.

“Workers’ compensation, in many respects, is about return to work rates, and in that regard, we are on a unity ticket with the government to, in fact, improve return to work rates,” Tudehope said.

“However, there are some workers who have an impairment which is so severe that they may not return to work. This bill would, in fact, ensure that most workers, even if they are substantially injured and have no prospect of returning to work, will be cut off from benefits.

“We are not prepared in those circumstances, just to wave through a bill which says to that worker, your injury no longer exists.”

Unions NSW secretary Mark Morey backed the position of the Coalition, saying the union movement had managed to “shift all parties ... except Labor”.

Morey said changes to the WPI threshold from the current 15 per cent to Labor’s proposed 31 per cent would “mean no workers in NSW after two-and-a-half years will get any mental health support”.

“If they get rid of the [31 per cent] WPI, that goes a long way to making us happy,” Morey said.

Daniel Hunter, chief executive of Business NSW, said he was disappointed the opposition had rejected changes to the threshold, but he hoped a middle ground could be reached if they negotiated amendments in “good faith”.

“I think the business community has spoken that they support the reforms as presented ... It is simply not sustainable,” Hunter said.

However, he rejected the opposition’s criticisms that the government was trying to rush through the legislation.

“I think there’s enough information there. And the fact of the matter is that businesses are going broke, and they cannot afford to pay these increases ... to their workers’ compensation bills that are already going through the roof,” Hunter said.

The government has maintained that there is urgency in passing the reforms because of six-monthly revaluations of the liabilities of icare, the state insurer.

Mookhey argues that without changes to the compensation scheme, subsequent business premium rises will be set from a higher liability base. The opposition disputes this, and points to the fact that premiums for the 2025-26 financial year are “already locked in at 8 per cent increase and the next premium filing isn’t due until March 2026”.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.