Recently, future amendments to the NSW Workers’ Compensation legislation were confirmed. In March 2024, amendments to the Victorian Workers’ Compensation came into effect. In both states these changes are focussed on reversing the financial ruin that the respective schemes have found themselves in.

On the face of it, this would appear to be good for employers in both states. However, the reality is that these changes only focus on stopping a small subset of claims entering the system and stopping a large subset of claims progressing past the 130-week period (where the premium impact on employers has almost ended).

The main focus in both states appears to be:

• Limiting the number of claims that progress past the point where claims are no longer premium sensitive
• Reducing the number of Mental Injury claims that are entitled to compensation under the respective Acts.

130 Week Criteria

Victoria implemented a 21% Whole Person Impairment (WPI) threshold as part of the eligibility test for payments continuing beyond 130 weeks. In NSW, for workers with mental injuries, payments beyond 130 weeks will be limited to those with at least a 31% WPI. 

Mental Injury Claims

In Victoria they removed mental injury claims relating to “Stress or Burnout” caused by:

• Events that are considered usual or typical; and
• Are reasonably expected to occur in the course of their duties

When doing this they cleverly defined that a degree of interpersonal conflict is to be expected in any role. This for the first time in Australia lifted the requirement for the threshold of Bullying or Harassment to be met for a claim to be considered.

The NSW definition of reasonable management action is currently quite narrow and specific. Any management action outside of what is actually stated in the Act, is currently unable to be used by an employer to defend a claim.

The amendments will add another 7 management actions to those that can be utilised by an employer to defend a claim.

The wording is once again specific to only these 15 management actions. As such, NSW missed an opportunity to include the wording used in Section 40 of the Victorian WIRC Act — “…includes but is not limited to…” which would have provided significantly more power to the amendment.

However, this wording has been utilised in the Victorian Acts (ACC Act 1985 & WIRC Act 2013) for around 15 years and did little if anything to curb the growing number of mental injury claims in Victoria over the last 10 years. So, though it will undoubtedly lead to additional mental injury claims being rejected, if Victoria is any guide, it will provide little overall benefit in attempts to stem the growth of mental injury claims in NSW.

Little If Any Employer Benefit

Based on how the premium models work in both states, employers are unlikely to see any benefit from these amendments, and injured workers will see none. These amendments are a classic magician’s misdirection, equivalent to David Copperfield making the Statue of Liberty disappear.

Just like David Copperfield, both WorkSafe and icare have attempted to alter the perspective of employers. Though instead of making them believe that something has disappeared when it has not, they are hoping to make them see benefit where there is none.

These changes are smoke and mirrors attempting to make workers and employers think that the real issues of declining return to work outcomes and rising employer premiums are being addressed.

They are not.

I have no doubt that more stringent criteria for weekly benefits exceeding 130 weeks will improve the schemes performance, given the significant financial decline of both schemes.

WorkSafe Victoria*:

• Recorded an accumulated net deficit of $7.1 billion between 2018-19 and 2022-23

• Received $1.3 billion from the government across 2020-2023 to support financial sustainability

Insurance and Care NSW:

• Recorded a net loss of $1.9 billion dollar in 2023-24^

• Received $3.9 billion from the government across 2019-2022 to support financial sustainability~

* Auditor-General’s Report on the Annual Financial Report of the State of Victoria 2024-2025 (November 2025)

^ Insurance and Care Annual Report – 2023-2024

~ Insurance News Article: More Work To Do As icare Reports Loss

Failing to Improve RTW Outcomes

But I don’t see this providing any relief for employers facing rising workers compensation premiums off the back ongoing poor return to work outcomes.

Victoria

WorkSafe Victoria’s Annual report boasts 6 month return to work rates for physical and mental injuries of 74.7%. However, an article by Alex Collie* identified that Australia has failed to improve in this area since 1998, with the return to work rates at 7 to 9 months after injury remaining between 72% to 77%. With this in mind, Victoria’s results fail to impress.

* https://theconversation.com/whats-behind-our-failure-to-return-more-injured-people-to-work-16396

New South Wales

NSW is in a much more precarious position. Seven years after the disastorous decision to remove all but one agent from the scheme, return to work outcomes have still not recovered. Currently it is taking 52 weeks for the scheme to achieve the same results they were achieving at 26 weeks in 2017.

Data from SIRA’s Open Data Analytics Tool as at December 2025

With NSW’s premium model focussed on weekly benefits paid, the deterioration in return to work outcomes have had a devastating effect on employer premiums.

Of real concern is, that after finally returning to a multiple agent scheme, recent suggestions that claims should be taken in house by icare.

The Solution

The solution to the issues in both states is not groundbreaking.

There is a consistent failing across both schemes. What appears to be a need to be liked. Possibly a failing of the woke times that we find ourselves in.

As a result, in recent years, it appears as if the obligations of injured workers have shrunk to merely meeting administrative requirements.

Both NSW and Victoria appear more focussed on how they can make injured workers happy and have forgotten that the purpose of their schemes is to get people back to work.

In 2017 I was involved in a series of roadshows at which icare ran a campaign focused on “Improving the customer experience”.  Spoiler, the customer was the injured worker and not the employer.

Peter Rozen’s Independent Review into Management of Complex Workers’ Compensation Claims in Victoria culminated in a report titled “Improving the experience of injured workers”.

WorkSafe Victoria and Insurance and Care NSW need to focus less on being liked and more at getting injured workers back to work.

The schemes work when there are equal parts benefit and obligation. Crudely put we need both the carrot and the stick.

Not, as Deborah Glass would have us believe, because the Agents are “immoral and unethical”, but because workers get stuck in the compensation cycle. When a worker gets stuck in the compensation cycle everything available to the agent should be utilised to help them break free. If that means that adverse actions need be threatened and then implemented, then that is still best for the injured worker.

CGU’s response to the 2019 Ombudsman’s report summed it up well.

“The draft report highlights and criticises the actions by Claims Consultants in trying to break the cycle of compensation and attachment to compensation entitlements and is some cases those actions are highlighted in the report as provocative, unreasonable or inappropriate.

However, the purpose of these actions is genuinely aimed to disrupt the compensation cycle and activate return to work opportunities.”

There appears to be a misconception that allowing an injured worker to be happy and remain on compensation until such point that the scheme severs it at 130 weeks is a good result for the injured worker.

To the contrary, anytime an injured worker makes it to 130 weeks (whether their claim is terminated at this point or not) is a failure of the scheme and should be seen and recorded as such.

Taking this approach, Agents should be encouraged to use every lever available in the legislation to prevent an injured worker from becoming stuck in a “cycle of compensation’.

Conclusion

Let’s dispense with the smoke and mirrors. Let’s leave misdirection to the magicians.

The fix is easy – tell the agents to apply the legislation and then get out of their way.

Based on the financial positions and return to work outcomes:

• in NSW before icare made changes on 1 January 2018 and
• in Victoria before WorkSafe capitulated to the misplaced media pressure bought about by the Ombudsman’s reports

Allowing the Agents to focus on getting injured workers back to work and allowing them to utilise every tool at their disposal, should result in better outcomes for injured workers, employers, and the schemes.

Note: If you want to see how David Copperfield made the Statue of Liberty disappear click here. It was very clever.