The NSW Labor Government has been secretly plotting with Business groups to take a chainsaw to your workers compensation entitlements. These changes will make workers less safe and less supported.
On 3 November 2025, we handed down the report of our inquiry into the NSW Labor Government’s plans to take a sledgehammer to workers compensation entitlements for workers who suffer a work-related psychological injury.
As Chair of the inquiry, I made the following comments in the final report:
Chair’s foreword
The Bills considered by the committee are designed to raise barriers for entry into, and to dramatically curtail access to longer-term essential medical supports and wage replacement payments, for people who experience a work-related psychological injury. Their implications are dramatic, harsh and dangerous. This legislation is discriminatory, and perpetuates stigma related to psychological illness by treating psychological injuries as illegitimate and those who suffer them as being not as debilitated as someone with a physical injury. It is further discriminatory through its gendered impacts which would have a radical and disproportionate impact on working women in NSW.
The government’s case for urgency has not been made out. Since taking power they have not acted with any urgency to address the scheme’s apparent financial peril. Until now, the government’s reform efforts have consisted of cosmetic changes to the scheme’s primary objectives and icare board composition.
There are a host of other levers the government could pull to reform practices within the scheme and place it on a stronger financial footing – instead, the Government has chosen to address the issue of financial sustainability by taking the inconceivably lazy and unfathomably cruel measures outlined in this piece of legislation, including cutting off compensation payments for psychologically injured workers with a degree of permanent impairment between 21 to 30 per cent. Despite the Treasurer's claims to the contrary, evidence presented to the committee showed that most injured workers with a degree of permanent impairment between 21 to 30 per cent are not fit to work in any capacity.
The government has repeatedly been found guilty of selective use of statistics to suit their argument. It felt at times that the inquiry was having to wade through the layers upon layers of obfuscation, spin and hyperbole by a government seeking to justify its own morally vacuous position. Claims data from FY2021-22 was repeatedly used as a comparator to today to demonstrate trends and pace of claims growth, a wilful distortion of the facts as the government well knows that FY2021-22 was Covid-impacted, resulting in claims number more than 15% lower than the prior year. The reality is that over the past 10 years the overall number of injuries has increased in the Nominal Insurer by 7,700, but over 5,000 of those are physical, not psychological - a rate of almost 2 to 1.
Similarly, the Treasurer has repeatedly referred to a metric for measuring the Nominal Insurer’s financial position, being the funding ratio as compared to the insurance ratio, which overstates the scheme deficit. The Treasurer’s predictions for the financial position of the scheme at June 2025 were likewise overstated by more than half a billion dollars.
This politicking and misdirection is made all the more offensive by how dangerous the implications of the legislation, if passed, would be. For legislators to arbitrarily rip away injured workers financial and medical support while they are unable to support themselves presents an intolerable risk of self-harm and suicide.
The amendments that curtail longer-term support echo the changes made in 2012 (Sections 39 and 59A), which arbitrarily cut off entitlements for all injuries after 260 weeks, regardless of the workers’ capacity to return to work, unless their injury results in an assessment of whole person impairment (WPI) greater than 20%. These changes were condemned by the then Labor opposition as dangerous and cruel. There are a number of members, including a number of current Ministers, who spoke strongly and passionately against that legislation in opposition who now find themselves part of a government doing precisely the same thing. As a result of those changes, hundreds of injured workers have been identified as being vulnerable to self-harm in the years since, and hundreds more have self-harmed. Tragically, there have been at least 59 recorded instances of injured workers dying by suicide since 2020, and at least a further 33 attempted suicides.
The government, and Treasurer and relevant Ministers in particular, would be acutely aware of this. The repeal of Sections 39 and 59A was a core request of the Injured Workers Campaign Network pledge signed before the last election by 80 current members of this parliament including 19 out of 22 Ministers.
SIRA has confirmed that incidence of suicide remains under-reported in the workers compensation system. icare has confirmed they had done no modelling or calculations as to the number of suicides or self-harm incidents that might result from the proposed legislation. The committee agreed that the proposed cuts that leave injured workers with serious mental health conditions without access to required supports carries a significant risk of self-harm and death by suicide. To implement those cuts would be unconscionable.
There are further similarities between this legislation and that passed in 2012. Now, as then, the justification for the cuts is that the schemes are in financial deficit. In 2012, the deficit was $4.1 billion. History has shown that, while delivering a short term improvement to the scheme's financial position, the assumed benefits of the 2012 cuts were overstated and effects short-lived. Injured workers are already being failed. We must learn the mistakes of the past. Now, as then, the answer to the scheme’s long term stability is not to cut entitlements but rather to handle claims better, starting with treating injured workers not with suspicion and hostility but rather with dignity and respect, and provide doctor-led care with timely and appropriate medical treatment.
We received evidence that the biggest businesses have the worst rate of injuries, particularly psychological. Large employers represent 47% of the workforce, make up 58% of new claims, yet their claims cost only 49% of the total cost of claims. Meanwhile small and micro employers, representing 25% of the workforce, were responsible for only 15% of new claims – however these claims represent 27% of the total claims cost. This is evidence that it is not the volume of claims that causes financial difficulties to the scheme, but rather how the claims are handled. Meanwhile, Claims Service Provider remuneration continues to grow, costing the Nominal Insurer hundreds of millions of dollars each year despite declining return to work rates. I want to offer my thanks to all of the experts and advocates who have assisted the committee throughout this inquiry.
I want to give my particular and most sincere thanks to the committee secretariat. The empathy, sensitivity and compassionate approach they have taken in assisting those who have made submissions and provided evidence was vital and invaluable, particularly with proposed legislation that is so distressing to so many.
Unfortunately, the timeframe of the inquiry did not allow us to do justice to the breadth of evidence from injured workers who will feel the severe implications of these bills should they pass. To all the injured workers who contributed to the inquiry, we are deeply grateful for your contribution. Your perspectives and experiences show how deeply broken this system is. Your voices are central to the findings and recommendations that we have made.
Ms Abigail Boyd MLC
Committee Chair
Read the full report here
So what is the NSW Labor Government planning, and what does it mean for you?
Raise the Whole Person Impairment threshold for psychological injuries from 15% to 30%
You need a WPI above the threshold to access entitlements like:
- weekly payments beyond 130 weeks
- domestic assistance
- medical expenses and treatment for more than 2 years
- a lump sum payment for permanent impairment
For comparison, an above the knee amputation is equivalent to 30% impairment. A spinal fusion is unlikely to reach 30% impairment.
No compensation for injuries caused by bullying or harassment, including sexual harassment, without a court order or finding
If your employer or manager, or a colleague, creates a psychologically unsafe environment that causes you to suffer a psychological injury, in order to get compensation and assistance you will first have to take your employer to the Industrial Relations Commission. There you will be cross-examined and interrogated, and have to wait potentially months to receive a finding or order, before you can get the help you need.
Change the definition for “psychological injury” and “reasonable management action”
The government wants to more narrowly define what kinds of injury count, and make it easier for employers to treat their workers badly.
Limit the kinds of medical treatment workers can access
The government wants to cut medical expenses by limiting what is covered, preventing workers from accessing medically prescribed treatments and potentially making their injuries worse.
These changes will affect EVERYONE
Every year, thousands of workers in education, health, front line services, community sector, public safety, construction, transport, manufacturing, retail, hospitality and more suffer a psychological injury that requires some form of compensation and assistance. The government now wants to make that support almost impossible to access.
The Greens are fighting these cruel changes
These changes are dangerous and cruel - that’s why the NSW Labor government wants to keep them secret, but you deserve to know.
Don’t believe the spin, these changes are only about the government saving money, while workers pay the price.
Every worker deserves to go home from work safe in mind as well as body.
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