Premier Barry O'Farrell to slash workers compensation payouts
WORKERS compensation rights and payouts will be slashed to rein in a $4 billion WorkCover deficit and take the handbrake off bosses hiring staff.
Premier Barry O'Farrell will today signal his biggest fight with unions yet - a massive overhaul of workers compensation laws.
With the Premier facing accusations he has been too slow in reforming our financially ailing state, the announcement comes on the one-year anniversary of the government's election.
Workers compensation premiums in NSW are double those in Victoria - and the government says employers will end up facing premiums four to five times higher if the scheme is not reformed.
A NSW cleaning company paying $150,000 in annual wages currently forks out $10,681 as a base premium. Similar firms in Melbourne and Brisbane would pay $3709 and $4901 respectively.
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If the system is not reformed, the government says that employer's premium will increase to $13,672.
"Getting WorkCover right - and competitive - represents one of the most significant drivers of economic improvement within our control in NSW," Mr O'Farrell will say in today's speech.
"We are committed to starting this second year of change in NSW with a process to repair this broken system."
It is understood the changes could include restricting weekly compensation payments to injured workers. About 36,000 workers receive weekly compensation payments, which last for eight years on average - although one person has been getting payments for 24 years. In other states, weekly payments end after two to four years.
The reforms are also likely to target generous provisions for the payment of injured workers' medical benefits, with time limits on those with less serious injuries. In Victoria, medical bills are not paid after 12 months except for the most serious injuries.
Mr O'Farrell will say in a speech today that premiums will rise even higher and employers will stop hiring staff unless he steps in.
The Independent Actuary has told the government that by the end of the year the WorkCover deficit will be $4.1 billion - a $1.7 billion slide in six months. The debt is equivalent to $15,146 per employer and $1326 for every worker.
The growth in the scheme deficit from June to December last year cost NSW more than $9 million per day.
A senior government source said WorkCover was "one of the biggest challenges facing small business in NSW and tackling it is one of the Premier's key reforms in his second year".
"This will be tough, but the Premier is determined to take it on," the insider added.
The last time a government tried to reform the WorkCover system in 2001, unions led by current Opposition Leader John Robertson blockaded parliament and ministers had to enter the building via secret tunnels.