Source : the age
If there is ever a Hollywood blockbuster made about NSW state insurer icare – and it’s surely only a matter of time – Daniel Mookhey would play a starring role.
In opposition, the now-treasurer was pivotal in exposing, among other things, a systemic, multimillion-dollar underpayments scandal affecting tens of thousands of injured workers, and billions in “bail-outs” paid by the former Coalition government to cover growing liabilities.
Dodgy contracts, unnecessary spending, executive bonuses; these were all ills Labor diagnosed.
NSW Treasurer Daniel Mookhey, who led the opposition charge against icare, now has the troubled scheme under his watch.Credit: Kate Geraghty
None of this was untrue, it just had nothing to do with what Labor is now proposing as it embarks on a major reform of NSW workers’ compensation laws, which has left unions, medical experts, lawyers and injured workers genuinely perturbed.
Indeed, some of the contentious workers’ compensation reforms floated by the government directly contradict promises that senior ministers including Mookhey made before the election.
The final bill, due to be introduced this week, will almost certainly differ from the draft that has circulated for in recent weeks. Mookhey is grappling with pushback from the union movement and some MPs, and on Monday a coalition of unions will rally outside ministerial headquarters in Martin Place. Three key crossbench MPs, including the influential independent Alex Greenwich, have written a joint letter to the treasurer, demanding significant changes to the bill.
The key components include a proposal requiring people who suffer a psychological injury at work as a result of, for example, sexual harassment or bullying, to first prove it in the NSW Industrial Relations Commission. There are also changes to dramatically lift the threshold at which people with a serious psychological injury can receive ongoing support, or claim damages.
At a snap one-day parliamentary inquiry into the reforms last week, an icare official said only 27 of the hundreds of people impaired by psychological injuries each year would be eligible to claim long-term benefits under new thresholds proposed in the bill.
So why do it?
The government argues the workers’ compensation scheme was not designed to address psychological injury, and is failing workers by not preventing them from getting hurt and employers by placing the scheme in financial distress.
A bullying and harassment court in the IRC is necessary, the argument goes, to stop injuries before they happen. Most people agree, but there are issues. One is whether such a court would be good at prevention. The NSW Women’s Legal Service says that of 883 Stop Bullying applications made in the equivalent federal jurisdiction in 2023-24, only one order was made.
More contentious is whether compensation should be contingent on such a claim.
Consider a woman being sexually harassed by her boss. Without provisional acceptance, what the government is proposing suggests she would need to pay for her own legal representation in a claim against the company, while potentially remaining in the workplace where the harassment took place.
When Mookhey was presented with this hypothetical in mid-May, he conceded it was a “valid point”, but added: “under the existing status quo [those cases] are not being resolved either”.
The government’s second argument is that because the scheme is so bad at managing psychological injuries, the consistent growth in claims has left it in dire financial straits.
The funding ratio for the nominal insurer – responsible for covering private sector employers – has been falling precipitously for years. Icare has warned that steep premium increases are on the way.
At the same time, Treasury Managed Fund (TMF), which covers the public sector, is bleeding money. In the past seven years, governments on both sides have had to inject $6.1 billion to maintain TMF’s (admittedly self-imposed) funding ratio of 105 per cent.
It’s important to separate those two things because, while icare manages both, they are different problems for the government. Higher business premiums are a political issue, and there’s a strong argument that part of the pressure faced by the nominal insurer is successive governments keeping them artificially low.
TMF is a budget problem, and it is responsible for a disproportionate number of claims.
An audit report by the State Insurance Regulatory Authority last year found while TMF covers 8 per cent of workers, it contributes 46 per cent of new psychological injury claims.
The report found nine out of 10 government agencies reviewed had non-compliant return-to-work programs in place.
Which brings us to the crux of the criticisms: rather than embarking on surgical reforms to fix what everyone agrees is a bad scheme – by looking at whether the enormous sums paid to insurers, rehabilitation providers and medico-legal industries are delivering real value for money, or letting new prevention strategies such as SafeWork NSW’s empowerment as a standalone regulator play out – the government is overseeing an amputation.
Mookhey argues the scheme is in such a parlous state that, in effect, it is too little, too late.
“I simply say that the rate of improvement, as a result of the preventative [measures] ideally should have started in 2018, that’s when the claim numbers went from 5000 to 6000, to 12,000,” he said on Friday.
“Had that investment taken place in 2018, we would be in a very different scenario today.”
