Premier may have to answer for workers’ compensation failure at polls

Abysmal management of the scandal-ridden state workers’ compensation insurer icare has turned the agency into a complete basket case.

Not for the first time, NSW Treasury has expressed its concerns about the financial sustainability of the scheme, which it says will need to increase premiums by 33 per cent by 2025, equivalent to $1 billion, to cover the shortfall. Businesses are already paying $3 billion a year in premiums to cover workers if they get sick or injured on the job. But this proposition is way too big an ask in the current economy. The only alternative used by icare in 2012 is to cut more vulnerable workers off from the scheme.

A confidential briefing note from Treasury for the state government published in this masthead described icare’s financial position as being the same as it was in the early 2010s when the scheme was in crisis.

Workers’ compensation has a long record of poor management, resulting in benefits being slashed for injured workers, many of whom could not afford the cost of medical treatment or putting food on the table. As our report reveals today, thousands of injured workers have also been underpaid.

To add insult to injury, icare just approved pay increases for 116 of its executives, including a $1 million-plus package for chief executive Richard Harding.

Realistically, premiums should have increased above the levels the state government has allowed. Finance Minister Damien Tudehope rejected a proposal to increase premiums by 15 per cent this year, capping the rise at 2.9 per cent. All this has done is kick the problem down the road to avoid getting businesses offside.

Treasury says premiums have been priced below break-even since 2016. This, along with a deteriorating return-to-work performance and medical inflation, has contributed to icare’s dire financial position.

Premier Dominic Perrottet set up icare in 2015 when he was finance minister to replace the WorkCover scheme, which in 2011 was facing a predicted $4 billion deficit. Thousands of injured workers were cut from payments to deal with the problem.

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As the Herald’s investigative journalist Adele Ferguson has revealed, a major source of icare’s troubles date back to 2018 when it moved to a computer-driven model that was supposed to make the management of claims more efficient. But this high-risk move, which cost hundreds of millions of dollars, failed to achieve its purpose of getting more workers back to work sooner. Instead, many have remained trapped in the automated system, struggling to get the treatment they need to return to work because of a lack of human contact in the early days of their injury.