Compo reforms will stop a 28% premium hike: O’Farrell

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Compo reforms will stop a 28% premium hike: O’Farrell

Without the workers compensation reforms planned by the NSW Government, the state WorkCover scheme would not return to surplus for ten years, Premier Barry O’Farrell said in an address to the business community.

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Without the workers compensation reforms planned by the NSW Government, the state WorkCover scheme would not return to surplus for ten years, Premier Barry O’Farrell said in an address to the business community.  
 
Yesterday, the Daily Telegraph reported that the government planned to ‘slash’ workers compensation benefits to rein in the WorkCover Scheme’s $4b deficit. Although O’Farrell later told ABC News that there was ‘no proposal to cut benefits’, he said the Coalition would ‘have a look at everything’ before unveiling the reforms next month.  
 
Also on Monday, O’Farrell attended a business lunch where he told the Business Council of Australia, the NSW Business Chamber and the Sydney Business Chamber that reforms to WorkCover were necessary to grow the state economy so that it has a competitive advantage ‘within Australia, and in a global context’. 
 
The scheme costs $9m per day  
 
He explained that an actuarial report by Pricewaterhouse Coopers showed that the scheme’s $4b deficit had increased by $1.7b in six months and would require ‘immediate action to get it under control’. 
 
‘The … deficit equates to more than $15,100 per employer, and more than $1,300 for every worker,’ he said. 
 
‘Growth in the scheme deficit from June to December 2011 cost NSW more than $9 million per day.’ 
 
Premiums up to 60% higher than in other states  
 
‘Premiums paid by NSW employers are already estimated to be between 20 and 60 per cent higher than equivalent employers in our competitor states.’
 
The premier said that present projections indicate that the scheme would not return to surplus within 10 years.  
 
He also said that to return the scheme to full funding within five years would require premiums to rise by around 28%, which would mean, for example, that 
  • The base premium rate for a NSW residential construction company paying around $250,000 in annual wages would increase from 12,600 to $16,100 — six times higher than that of a similar company in Victoria and more than double the rate faced by its counterpart in Queensland. 
  • The base premium rate for a NSW café with 11 staff would increase from $8600 to over $11,000 — more than double its Queensland counterpart, and five times more than a similar Vic company.
  • The base premium rate of a NSW cleaning company paying around $150,000 in annual wages would increase from $10,700 to $13,700 — more than double its Qld counterpart, and three times what a similar Vic company would currently pay.
 
‘Things will get worse before they get better’
 
O’Farrell told the Chambers that there was ‘no leadership’ by the former government to ‘rein in spiralling scheme costs, produce better outcomes for injured workers, and a competitive deal for employers’.
 
‘Labor saw NSW employers as a bottomless pit of cash, and operated WorkCover on a “cost-plus” basis — ignoring the professional skills of good people who tried to fix a broken system,’ he said. 
 
‘The PWC report makes clear that if no action is taken, the scheme will rapidly and dramatically worsen.’ 
 
‘It also warns that even while reforms are implemented, the scheme performance will likely get worse before it gets better.’
 
Stakeholders will be consulted  
 
O’Farrell said that ‘getting WorkCover right’ and competitive would be one of the most significant drivers of the state’s economic improvement. 
 
‘And we are committed to starting this second year of change in NSW with a process to repair this broken system, ensure that injured workers get the best possible and most timely result in returning them to a productive and appropriate working life, and to make sure that individuals with catastrophic injury are looked after in the way that any of us would want to see our loved ones cared for,’ he said. 
 
‘The Government is now considering these issues — including the projected $4 billion deficit, and its consequences for management and policy.’ 
 
‘We are aware that schemes in other states strike a better balance between looking after injured people, promoting incentives for safe workplaces, and setting competitive premium rates, and we will be working closely with employers, peak groups, individuals and employee representatives in long overdue reforms to the WorkCover scheme.’
 
‘The reforms will hurt ordinary working people’
 
Meanwhile, Opposition Leader John Robertson said the rumoured government cuts to workers compensation payments were ‘heartless’ and would ‘hurt those who can least afford it’ — ordinary working people. 
 
‘Most NSW households run to a tight budget — but when mum or dad is injured at work, the toll on families can be heart breaking,’ he said. 
 
‘The workers compensation scheme is in place to ensure that no matter who you are, or how much you earn — if you are injured at work, you are looked after.’ 
 
‘Barry O’Farrell needs to explain why he is taking away protections for injured workers — rather than improving them.’ 
 
‘I implore Mr O’Farrell to think about what he is doing to ordinary working people across this State … and reverse this decision.’
 
The Shadow Minister for Finances and Services, Michael Daley, accused the government of ‘think[ing] that you can’t have a strong economy and safe workplace[s]’.
 
‘Labor proved in government you can, and should, have both,’ he said. 
 
‘Safe workplaces should never be traded off as part of a bargain with business [and] people who work hard for a living and through no fault of their own, are injured at work, don’t deserve to be thrown on the scrap heap.’
 
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