THE state government will look to merge WorkCover with other bodies like the Motor Accidents Authority in a bid to fix a $1 billion blowout in the deficit of its workers compensation liabilities.
Finance Minister Greg Pearce is now flagging the biggest reforms to the state's workers compensation system since unionists blockaded parliament against former Premier Bob Carr's WorkCover reforms in 2001.
The workers compensation deficit grew by $994 million in the six months to June 30 to $2.36 billion and the scheme has become a drain to taxpayers in a way it has not since before 2001, Mr Pearce said.
He will examine a merger of the five schemes which cover all workers around the state, including WorkCover, the Motor Accidents Authority, Dust and Diseases Tribunal, Sporting Injuries Committee and Lifetime Care and Support Authority to achieve savings.
The minister also plans to put tougher guidelines on where insurance companies invest the money in the scheme to ensure they get proper returns.
The reforms are set to be the next battle for the government with the union movement after it capped public service wages and announced plans to axe public servants.
The $2.36 billion workers compensation scheme deficit is the biggest since June 2003, when a deficit of $2.98 billion was recorded. From 2006 to 2009, small surpluses were recorded.
But the previous Labor government had left the Coalition with a large deficit, Mr Pearce said.
"The prevention of workplace injuries and illnesses and getting injured employees back to work are the highest priorities for the NSW government," Mr Pearce said.
"The $2.3 billion deficit in the scheme is a major concern.
The fact the liability has almost doubled in the past six months of Labor government control of the scheme is alarming. The WorkCover scheme has a history of deficit, having spent only 2 1/2 of the last 16 years in surplus.
"The liability is now comparable to when the scheme was reformed in 2001.
"At a time of economic uncertainty, it is unfair that this liability will be borne by employers into the future.
"We need to address the core issue of the structure of the scheme and we are currently looking at options for reform."
A greater number of recent compensation claims is also said to be responsible for the deficit.
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