Home » Latest Articles » The Panacea NSW Needed? What do you think?
We have put together information to keep injured or ill persons informed of what to expect.
Read More »
All employers play a crucial role in the prevention and management of workplace injuries.
Read More »
Information for Psychologists, Occupational Therapists, Nurses, Exercise Physiologists and Doctors.
Read More »
Other key stakeholders are also encouraged to provide Information and comments about issues of relevance .
Read More »
Home » Latest Articles » The Panacea NSW Needed? What do you think?

The Panacea NSW Needed? What do you think?

It has been nearly two years since major changes to NSW Workers Compensation were announced by the newly elected NSW Liberal Government.  The changes impacted on workers weekly payments, and entitlements for lump sums for permanent impairment (and pain and suffering where applicable).  They also included changes to how an injury and employability was to be assessed, how medical bills paid (or not paid), the right to get legal assistance to pursue a claim, and the right to rehabilitation assistance to help them recover and get back to work. The changes have affected other stakeholder significantly such as treatment providers, lawyers and rehabilitation providers.


In this month’s Workcovre feature story we look at two different perspectives on the changes. We want your opinions, and your views. We encourage you to contribute to our blog, and or to our short 8-question survey.  Below are extracts from the two articles:


30 OCTOBER 2013 PRESS RELEASE:  Further Premium Cuts On the Way for Business As Workcover Returns To Surplus


“NSW Premier Barry O’Farrell and Minister for Finance and Services Andrew Constance today announced a further reduction to WorkCover premiums while confirming the scheme is now back in the black for the first time since 2008.  It means 200,000 employers across 376 industries will benefit from an average premium rate reduction of five per cent – saving them more than $130 million a year.  


Mr O’Farrell made the announcement at Aldridge Traffic Systems at Rhodes along with Mr Constance, Member for Drummoyne, John Sidoti and Vice President of the NSW Business Chamber Tony Dormer.  “These reductions in WorkCover premiums show the NSW Liberals & Nationals Government is delivering on its commitment to support jobs and grow the state economy,” Mr O’Farrell said.  “The NSW Government’s reforms are delivering a fairer system, with more generous payments being provided to severely injured workers and businesses receiving incentives to improve workplace safety,”.  


“The premium cuts announced today are on top of an average 7.5 per cent rate cut that came in earlier this year for 167,000 employers.  “With these reductions combined, NSW businesses will receive an average 12.5 per cent rate reduction in the 2013 premium cycle, returning $330 million to help grow the economy The NSW Government's action to fix the scheme means no employer will receive a rate increase in 2013.”


“These reforms are great news for a business such as Aldridge Traffic Systems which will receive a further WorkCover premium rate reduction of 7.5 per cent.”  Mr Constance said the former Labor government ran WorkCover into the ground, leaving behind an unsustainable scheme with a $4.1 billion deficit.  “The NSW Liberals & Nationals were determined to clean up the mess left behind by our predecessors, and pleasingly, we’ve been able to put WorkCover back on a sustainable footing,” Mr Constance said.


The NSW Government’s reforms are freeing up businesses to grow and are providing better support for injured workers to help them return safely to work sooner. “Returning to work early and safely is good for recovery and helps workers regain financial independence sooner. The NSW Government’s reforms are freeing up businesses to grow and are providing better support for injured workers to help them return safely to work sooner. Returning to work early and safely is good for recovery and helps workers regain financial independence sooner. 


Safe Work Australia has reported that in 2012/13, NSW’s return to work rate improved by three per cent to 88 per cent - making it higher than the national average of 86 per cent.  “This result is a key driver in WorkCover’s improved performance, with the scheme accumulating a $309 million surplus as of 30 June 2013.


“This is a great result for the workers and employers of NSW. There is now adequate funding to protect injured worker payments while rewarding employers for good safety performance.”

Small employers are continuing to benefit from incentives introduced in June including: 

  • An Employer Safety Incentive (ESI) premium discount at each policy renewal
  • A Return to Work Incentive for employers who have an injury in the workplace. An employer can retain their ESI discount provided injured workers return to work within 13 weeks
  • An increased discount to five per cent for paying the premium in full by the due date.


The NSW Business Chamber estimated that without the NSW Government’s reforms to the WorkCover Scheme 12,600 jobs and job opportunities would be have been at risk.

“WorkCover’s improved financial performance proves that looking after people who are injured at work and lower premiums are not mutually exclusive,” Mr Dormer said.  “Apart from the reduced premiums, it is particularly pleasing there has been a reduction in the number of claims and the improvement in the return to work rate. “NSW now has the best return to work rate in the country,” he said.


In contrast, very different perspectives from Report No.1 Compiled for Unions NSW By Professor Ray Markey, Dr Sasha Holley, Dr Sharron O’Neill and Dr Louise Thornthwaite, Macquarie University Centre for Workforce Futures on 12 February 2014 are noted 

Unions NSW brief summary of key comments and conclusions


1. The rapid turnaround of the crisis that justified the cuts to the workers compensation system in NSW in 2012 has been achieved through a dramatic reduction in the compensation for injured workers. It also raises questions about the actuarial assumptions underpinning the original deficit calculations and the validity of the Government’s response.


2. The 12.5% cut in insurance premiums for employers since the changes were introduced, occurred with no Government review of the impact of the changes on injured workers.


3. By focussing on culling injured workers benefits the changes:  did not reflect the reasons for the increase in the deficit identified by the NSW Auditor General and the Joint Select Committee’s 2012 report to Parliament; or failed to address the long--‐standing problems of the system identified by the Industry Commission Australia in 1994, Grellman in 1997 and the Productivity in 2004; and   ignored the fact scheme expenditure and expenditure on payments and services to injured workers has not increased in NSW over the last decade.


4. As a result of the 2012 changes, vulnerable individuals who were already suffering the effects of work injury or illness are now experiencing increased trauma, distress, depression, financial hardship and unnecessarily prolonged pain when their treatments are delayed. The resulting impact on a victim’s partner, children and other loved ones is also unconscionable.


5. The costs of injuries are increasingly shifting from the workers compensation scheme and employers to workers and their families.


6. WorkCover has withheld comprehensive work injury and illness data from the NSW public since 2010. This inhibits debate about workers compensation arrangements in NSW. The detail of the scheme agent’s contracts is also withheld (no contract has ever been terminated).


7. The changes are without doubt retrospective:  Work capacity decisions (WCDs) can be applied to overrule decisions about weekly payments that were made by the Workers Compensation Commission before the 2012 changes.  Workers injured before the legislation changed don’t have liability denied according to the new rules about journey claims or heart attacks for example, but the new system of payments applies to them, with many having their payments cut off.


 8. The most significant impact on injured workers from the changes is the introduction of work capacity decisions (WCDs), whereby an insurer can reduce weekly payments by the value of a hypothetical wage for a hypothetical job that the insurance caseworker assesses the worker as having the capacity to perform, regardless of whether such a position is available or likely to be offered to the worker, where such a position might be located, or whether the medical practitioner deems the worker fit that duty.


9. The WIRO Kim Garling states:

“…unless you’re in a coma, you have work capacity.”


10. The WCD process is morally hazardous given that the insurers have a conflict of interest between meeting insured workers’ needs and maximising profits.


11. Lawyers are not entitled to be paid for any advice or assistance given to workers in relation to the WCD process yet payment for legal advice to insurers is not prohibited however and they are known to employ lawyers.


12. While seriously injured workers (those with 30% WPI) are exempt from having a work capacity assessment, there have only been 994 workers in this category since 1987.


13. The significant increase to weekly payment statutory limits offers a theoretical improvement in the financial support available to injured workers however, insurers are using other elements of the system to reduce payments.


14. For workers injured prior to October 2012, the change to cut off medical treatments 12 months after the termination of weekly benefits will take effect from 31 December 2013. This means for every worker whose weekly payments were cut off during 2013, their medical payments will cease on the first anniversary of those payments being cut. The earliest this could happen is 1 January 2014.


15. Early indications are that:  workers requiring medication or medical equipment, such as opiods, hearing aids or prosthetic limbs, will struggle financially to purchase this; workers who require ongoing treatments, like physiotherapy, to keep themselves fit for work will need to fund these treatments themselves or risk becoming unfit for work; workers who require operations, such as knee reconstructions, are experiencing difficulties in having these operations approved by the insurer before their entitlement period ends.


16. Capping medical benefits conflicts with Industry Commission recommendations from 1994.


17. The evidence shows medical treatment requirements of injured workers generally continue well beyond 12 months. These costs will now be borne by the Medicare system and the workers themselves.


18. Eliminating journey claims from the scheme will have a minimal impact on the scheme or employers. They amount to only 2.6% of claims, which is only $70 million, with $35 million of that recovered against third party insurers.


19. The changes place significant obligations on workers without imposing reciprocal obligations on employers to provide suitable employment opportunities.


20. Workers are forced to look for work with any employer, yet the evidence shows workers are roughly twice as likely to return to work if they remain with the same employer than a new one.


21. The changes cut off benefits in order to encourage return to work; yet there was no evidence provided to the Joint Select Committee of a connection between reducing financial benefits and return to work rates.


22. The changes don’t address the serious problems with the rehabilitation system for workers compensation in NSW. Compared to Victoria, rehabilitation costs significantly more per worker and there are significantly less injured workers participating in rehabilitation.


23. Evidence reveals terminated workers suffer stigma and discrimination from potential employers.


24. Examples of conflicts of interest in the workers compensation system include:

a. WorkCover is both the nominal insurer, with commercial incentives to minimise insurance claim payments, and a regulator, with the responsibility to monitor insurers and enforce contracts.

b. Contracted insurers and licensed self--‐insurers have an inherent conflict of interest as their responsibilities to compensate injured workers and assist them to recover and return to work are overshadowed by their mandate to maximise profits. This conflict has risen to the fore with the new system of WCDs.

c. Independent medical examiners and rehabilitation providers are paid by the insurers. They have incentives to assist insurers to minimise expenditures for services and payments to injured workers.

They do not, however, have incentives to minimise expenditures for their own services, nor do they have incentives to assist the worker to recover.

These conflicts of interest have been exacerbated by the changes.


25. Enforcement of WHS in NSW is often criticised for being under--‐resourced and comparatively weak. The Victorian regulator directs a greater proportion of its budget to enforcement activities (43% to 12%) and has half as many worksites per inspectors (1086 vs. 2296) 


26. There was also a decline in the number of penalty notices issued in 2011/2012.


27. Future reports from Macquarie University Centre for Workforce Futures will report against nine benchmarks.


What are your thoughts  - Please either comment on our blog or complete this short questionnaire.

More Information

Useful Information

Member Login

Forget Password?