Workers compensation reform in NSW has overcome a key hurdle, with legislation passing the parliament’s lower house despite the Coalition teaming up with the Greens to try and block its progress.
The Workers Compensation Legislation Amendment Bill 2025 is now expected to go before the upper house on Thursday.
The NSW Government is calling on the Parliament to pass this legislation so workers compensation can be protected for future generations.
The current system isn’t working, and it is not sustainable. It is failing injured workers, failing businesses and failing the state.
Since 2018, the number of psychological claims has doubled. Since 2020, the average cost of psychological injury claims has almost doubled.
Under the status quo, just 50 per cent of workers with psychological claims are back at work within a year. For physical injuries, the rate is 95 per cent.
The Government’s reforms will ensure businesses are not hit with an unnecessary $1 billion per year insurance premium increase. Without the reform, the premiums paid by businesses are set to increase by 36 per cent over three years to 2028.
Governments of both persuasions have put $6.1 billion since 2018 into bailing out the Treasury Managed Fund, which insures public sector workers.
The Bill currently before the Parliament has been informed by consultation with unions and experts, including through the release of an exposure draft and a parliamentary inquiry.
It includes a range of refinements to proposals that were contained in the exposure draft and is complemented by $344 million in new funding for a Workplace Mental Health package.
The legislation before Parliament will reform the way workers compensation system deals with psychological injury by addressing:
- the lack of focus on preventing psychological injury at work
- the low rate of recovery and return to work for psychologically injured workers
- the sharp rise in premiums for business and cost explosions for the NSW public.
Treasurer Daniel Mookhey said:
“The Government has been able to get the workers compensation bill through the Legislative Assembly. This is despite the Liberals teaming up with the Greens to block this important reform.
“They should now unite to pass this legislation in the upper house.
“This Bill is about creating a modern system that will better protect workers from psychological injury and provide better help when they need it. I want to ensure that future generations of workers have a workers compensation system they can rely on.”
Industrial Relations Minister Sophie Cotsis said:
“The workers compensation system has failed injured workers. In particular it has failed workers with psychological injuries. It is designed to keep workers in the system.
“We are building a better system, one that supports workers to not only get help as soon as possible, but to return them back to a safe workplace as soon as they are able and not left languishing for many years.”
Minister for Customer Service Jihad Dib said:
“We are putting in place widespread reforms for workers that ensure those with the greatest need continue to receive support, and those who can return to work are supported.
“We need a workers compensation scheme that can serve injured workers into the future – that means it needs reform now, supported by greater effort on preventing injury, treating the injury and supporting the worker to make sure it can be sustainable.”