Businesses spared rising costs as peace deal struck
Businesses have been offered relief from skyrocketing premiums following a peace deal that ends a war over Australia’s largest workers’ compensation scheme.
The months-long stalemate ended on Thursday when newly elected NSW Opposition Leader Kellie Sloane announced a deal with the state’s Labor government.
For changes, the law will need to be passed by parliament in February.
However, the assumption of agreement means there will be no sharp increases in insurance premiums paid to businesses in the coming weeks.
Finance Minister Daniel Mookhey argued backing the beleaguered scheme protecting millions of workers would see NSW premiums 74 per cent higher than Queensland and 40 per cent higher than Victoria by 2028.
“This compromise position allows us to stabilize the workers’ compensation system and return it to a secure foundation,” he said in a statement Thursday.
More than 3.6 million workers in NSW are covered by the state-owned insurer, which serves both the public and private sectors and has long struggled with financial difficulties.
The state government says psychological claims, such as post-traumatic stress disorder, anxiety and depression, make up 12 percent of workers’ compensation claims but account for 38 percent of the program’s total cost.
In the quest for sustainability, Labor first tried to pass reforms in early 2025. But the coalition, the Greens and other opponents have raised concerns that the proposed revision removes support for injured workers by making it harder to claim psychological harm.
Once the new deal is passed by parliament this week, ijarah premiums will be frozen for 18 months and funding for return-to-work programs will be increased.
The impairment threshold for long-term weekly payments will be set at 25 per cent rather than the 31 per cent first proposed by Labor and harshly criticized by mental health experts.
“Small businesses and charities should not be faced with unknown premium shocks heading into Christmas, and injured workers should be assured of support and pathways to recovery,” Ms Sloane said.
“This agreement resolves the immediate instability, but does not address the structural weaknesses underlying the plan.”
The political settlement was welcomed by National Disability Services NSW and business groups.
“These reforms are an early Christmas present for hard-working business owners who are already enduring significant cost pressures,” Business NSW CEO Daniel Hunter said.
But Greens MP Abigail Boyd described it as a “staggering capitulation” and warned it would strip the state’s most seriously psychologically injured workers of their rights.
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