Government facing defeat on core of workers compensation reforms

The NSW government is facing a significant defeat of its contentious workers compensation reforms, with the Coalition and parts of the crossbench resolving to oppose doubling the threshold for psychologically injured workers to receive long-term payments.

After months of unfruitful negotiations, the legislation will return for a vote during the first week of the year’s final sitting period, after an upper house committee established to examine the workers compensation reforms resolved to hand down its report on November 3.

One of the most contentious aspects of the bill was the plan to double the Whole Person Impairment (WPI) level – a measure of how much an injury has permanently reduced a person’s function. It was savaged as tantamount to ending the scheme by severely curtailing the ability of some of the state’s sickest workers to access payments.

A parliamentary inquiry in May heard that only 27 employees, of the hundreds who access the scheme every year, would be able to access long-term benefits under the proposed system.

Treasurer Daniel Mookhey has maintained the measures are needed to address the scheme’s sustainability. After the Coalition proposed reducing the WPI threshold during debate in May, the treasurer warned it would add $1.9 billion of “additional financial pressure to the scheme”.

Last Monday, the Coalition’s shadow cabinet resolved to oppose the proposed new WPI threshold, maintaining their position from June. With this commitment, Liberal and Greens sources said there appeared sufficient numbers to remove the government’s proposed amendment.

The amendment would keep the WPI at 15 per cent.

The Liberals have argued against removing the sickest workers from the scheme, instead calling for the reforms to prevent vexatious claims accessing compensation in the first instance.

“The best approach to making savings for this scheme is negotiating with the opposition about appropriate savings at the front end,” said opposition treasury spokesman Damien Tudehope.

Mookhey and Tudehope have been meeting since the legislation was first sent for inquiry but have made little progress. Premier Chris Minns and Opposition leader Mark Speakman met this week to find a compromise, but failed, sources said.

Last week, Mookhey said the 31 per cent threshold was the issue “most separating us from the opposition”, and accused the Coalition of teaming up with independent MP Mark Latham to exclude workers from accessing the scheme.

“At its core, we will talk to the opposition to see whether or not we can find a reasonable compromise there. But it does involve the opposition also recognising the urgency of the problem,” he said.

Coalition and crossbench sources – speaking on the condition of anonymity to detail confidential deliberations – said the Liberals, Nationals, Greens and independent MPs Mark Latham, Rod Roberts and Taylor Martin would probably vote to remove the proposed 31 per cent WPI.

Despite a major public relations campaign by the government and sections of the business community, upper house opposition to aspects of the reform have hardened. But with a series of amendments tabled by the Liberals, Greens and Latham, there remained little clarity about the final shape of the legislation once the upper house voted.

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