Union says insurers ‘bleeding the system dry' in backlash to NSW bid to limit workers compensation claims
The government wants to limit the ability of New South Wales's 4.5 million workers to claim compensation by raising the psychological injury threshold required for compensation and making it harder to receive lifetime payments.
The NSW treasurer, Daniel Mookhey, has warned that the workers compensation scheme will become unsustainable without changes, noting premiums will need to rise by as much as 38% over the next four years. The government faces a $2.6bn shortfall in the Treasury Managed Fund which covers the cost of claims by state public servants.
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But the vast majority of submissions to state parliamentary hearings on the changes oppose them, with many arguing the government needs to address other aspects of the scheme and prevent bullying, unreasonable work demands and other causes of psychological injury, rather than curtailing the ability of workers to claim.
Unions NSW will tell the committee on Tuesday that the focus of the reforms should be on stopping insurance companies using workers compensation scheme funds to run cases with no reasonable chance of success.
In its submission, Unions NSW said legal fees and investigations cost the scheme $332m annually, with minimal benefit to workers or employers.
It gave the example of one case where an insurer spent $85,000 of public money to fight a $5,000 knee surgery that a worker's doctor said she needed. The tribunal ultimately approved the surgery.
'This inquiry has exposed the shocking waste happening right under our noses – $332m a year being spent on legal fees and investigations that achieve virtually nothing for workers or the scheme's sustainability,' the secretary of Unions NSW, Mark Morey, said.
'While politicians argue about fictional fraud epidemics, insurers are bleeding the system dry with impunity.'
The inquiry has received hundreds of submissions from people who have experienced psychological injury at work and from professional groups representing legal professions, doctors, psychologists, employers and insurers.
NSW Secondary Principals' Council – which represents more than 500 principals in public schools – expressed its strong opposition to the bill. Teachers have made an increased number of claims for psychological injury.
'While we acknowledge the government's intent to address systemic issues, we are deeply concerned that the proposed amendments fail to address the underlying causes of workplace injury – particularly those experienced by principals,' the council said.
'According to the Australian Catholic University's Riley Review (2023), over 50% of school leaders report serious threats of violence, with one in three experiencing physical assault,' the submission said.
'These risks are reinforced by the NSWSPC's own longitudinal data. The 2024 principal wellbeing survey found that nearly 1 in 4 principals (23%) reported experiencing a work-related psychological or physical health issue – including depression, PTSD, and anxiety,' it said.
The Law Society said its position remains that the government should not proceed with the bill, which was 'introduced without adequate transparency and meaningful consultation'.
Law firm Slater and Gordon said while it recognised the government's objective of restoring financial sustainability to the scheme, it should not be achieved through 'blunt eligibility restrictions, untested procedural models, and thresholds that will have the effect of excluding all but the most extreme cases'.
Clubs NSW supported the change, saying in itssubmission that psychological injury were too readily accepted and paid.
'Clubs are regularly liable for injuries caused by reasonable management action like delivering performance feedback,' it said in its submission.
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