Workers compensation crisis - government introduces reform package


Workers compensation crisis - government introduces reform package

The Minister for Industrial Relations, Jeff Shaw, announced today (Wednesday, 20 November) a legislative reform package intended to remedy the ailing NSW WorkCover scheme.


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The Minister for Industrial Relations, Jeff Shaw, announced today (Wednesday, 20 November) a legislative reform package intended to remedy the ailing NSW WorkCover scheme.

The Minister stated when announcing the reforms:

"I take no joy in announcing these cost-cutting measures. They were made necessary by the neglect of the previous Coalition Government, who ignored actuarial advice to keep premiums artificially low and benefits artificially high.

"These efficiency measures will be introduced in concert with a wide-ranging Upper house inquiry into workplace safety and an independent review of rehabilitation by an eminent person.

"I am confident that this three-pronged attack will not only reduce workers compensation premiums in the long-term, but make NSW workplaces safer.

"In announcing this package, I would like to pay tribute to the contribution of employer groups and the trade union movement in dealing with this difficult issue through the Tripartite Working Party."

The group of 23 NSW employer organisations responded to the Minister’s announcement by saying that the reform package contained ‘pluses and minuses’.

The employer group expressed disappointment that the package did not go further, but saw the package as a useful first step. The second and ‘more critical step’, the employer group stated, is to get rid of the destructive ‘compensation culture’ and ‘incentive to litigate’ which ‘pervade our workplaces and community’.

The employer group called for the immediate passage and implementation of the ‘positive aspects’ of the Government’s package.

Summary of Major Initiatives

The Minister’s press release provided the following summary of the proposed reforms:

  1. Redefined test for workplace injury - the test will be whether the employment was a substantial contributing factor to the injury or disease;
  2. Restore lump sum payments to pre-1991 levels - the maximum lump-sum payments for permanent disability (s66)( NSW WorkCover scheme) and pain and suffering (s67) will be decreased by approximately 25 % (although both provisions will now be subject to indexation);
  3. Review of weekly payments after two years - insurers will be authorised to terminate weekly payments after two years unless the worker meets the criteria for serious ongoing incapacity and he or she has made a serious attempt at rehabilitation;
  4. Deduct pre-existing injury from lump sum entitlements - employers will only be liable for the extent of the impairment which arose out of the employment;
  5. Improvements to conciliation arrangements - an independent conference-based conciliation process will be introduced, which will feature mandatory screening or conciliation of disputes before the worker is allowed to proceed to the Court;
  6. Restoration of no-fault journey claims - workers compensation will again apply to journeys to and from work;
  7. Wider and improved use of medical panels - the report of a medical panel will be prima facie evidence, and leave of the Court will be required to admit further evidence on a question determined by the medical panel;
  8. Regulation of advertising by lawyers and claims agents - regulations will ensure that advertising is factual and to ensure that marketing strategies are not overly aggressive (the Minister stated that this reform is designed to discourage ‘ambulance chasers’ and has the support of the legal profession); and,
  9. Increase in claims excess - employers’ claims excess will increase from $500 to the first two weeks of weekly compensation.
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