The NSW Liberals and Nationals have secured important improvements to Labor’s Workers Compensation proposals.
The outcome balances three imperatives: affordability for employers, protection for injured workers, and long-term sustainability of the scheme.
Significantly the agreement will see:
· iCare premiums frozen at the current rate for 18 months
· Improved protections for the most injured workers with an additional 12 months of medical benefits and income support and
· Increased funding for return-to-work programs, including retraining, mentoring and specialist case workers
Leader of the Opposition Kellie Sloane said from the outset the NSW Liberals and Nationals mounted a case against Labor’s original plan to cut entitlements for injured workers, particularly those with permanent psychological injuries.
“Our consistent position has been that reform should focus on the front end of the scheme, targeting rorts, inefficiencies, and poor return-to-work outcomes that drive premium increases and productivity losses. That remains our position today,” Ms Sloane said.
However, prolonged uncertainty was no longer sustainable.
“Small businesses and charities should not be heading into Christmas facing unknown premium shocks, and injured workers must have certainty of support and recovery pathways. NSW must also have a sustainable Workers Compensation system,” Ms Sloane said.
“As new Leader, my priority was to reset negotiations with the Treasurer to stabilise premiums for business while strengthening protections for workers with psychological injuries,” she said.
“Neither side achieved everything it sought. But this agreement represents a clear and material improvement on the Government’s original position.”
Ms Sloane said the resolved framework delivers stronger protections for the most seriously injured workers, including enhanced return-to-work support and increased access to medical benefits.
The arrangements will remain in place while the State’s Chief Psychiatrist develops a new, clinically robust test for permanent psychological injury.
However, Ms Sloane made clear the Opposition does not endorse Labor’s broader handling of the workers compensation system.
“This agreement resolves immediate instability, but it does not fix the underlying structural weaknesses in the scheme,” she said.
“The Opposition does not support the Government’s overall approach, and we remain committed to pursuing meaningful, long-term structural reform to ensure NSW has a Workers Compensation system that is fair, compassionate, and financially sound.”
“We will continue to hold the Government to account until that reform is delivered.”
NSW Nationals Leader Gurmesh Singh said this deal is a win for business, and a win for injured workers.
“Small business is the lifeblood of regional NSW, and right now they’re doing it tough. Premiums have increased significantly under the Minns Labor Government, putting pressure on bottom lines,” Mr Singh said.
“The Liberal and Nationals amendments put a firm limit in the legislation, making sure the government can’t approve any rise in premiums. It’s a safeguard for employers and a reminder that affordability must stay front and centre.
“More work is needed to shield businesses from bogus claims, but our amendments give employers some certainty as we head into the Christmas period.”
Under the NSW Liberals and Nationals proposal, the NSW Government has agreed to the following:
1. The Whole Person Impairment (WPI) thresholds at 25% (in July 2026) rather than the original 31% proposed by the Government.
2. The reasonable management action defence may be triggered where it is the significant cause of injury.
3. A legislated restriction on iCare premiums, under which no average premium increases may be approved. Existing premium settings will apply with no additional increase.
4. A legislated cap on iCare premiums, which will sunset in 18 months, by which time the Chief Psychiatrist’s report is expected to be completed.
5. The Treasurer will be given a regulation-making power to adjust the WPI threshold to present settings below the legislated cap where it is in the public interest.
6. The establishment of a new “Return to Work Intensive” year, under which a worker with
7. WPI above 20% but below the maximum WPI threshold will receive:
1. An additional 52 weeks of medical benefits
2. An additional 52 weeks of income replacement at 60% of PIAWE
3. Appropriate training, mentoring, and other supports to facilitate a return to work
8. Increased funding for return-to-work programs, including retraining, mentoring, and specialist case workers.
9. The development of a successor program to Business Connect with a comparable budget, informed by expert consultation.
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