In October 2012, the NSW Government introduced the most significant changes to the workers compensation system in this state for decades. In February 2014, a report from Macquarie University commissioned by Unions NSW documented the severe consequences of those changes on injured workers. The report, titled “Someone has to pay: The impact on injured workers of changes to NSW Workers compensation” revealed some of the most egregious human costs of the changes.

The changes had occurred in response to a deficit crisis that was announced by the government. The report notes the rapid turnaround of the perceived crisis following the changes, and questions the actuarial assumptions underpinning the crisis discourse. The scheme rapidly improved its position from a $4 billion deficit, to a $309 million surplus. The report suggests that notions of crisis were overstated and that the deficit has been removed through disproportionately savage attacks on workers’ rights. These attacks were particularly scrutinised in view of the fact that scheme expenditure on workers’ entitlements had not increased at all in the decade preceding the changes. It noted that in bearing the brunt of the Government’s cost saving measures, injured workers and their families have suffered emotional, financial, and psychological traumas. The costs of the workers compensation scheme for the government and large insurers have diminished, but those costs are instead being borne by workers and their families.

Work capacity

The report noted with concern the operation of Work Capacity Decisions, in which insurers can unilaterally determine a worker’s capacity for employment, regardless of whether such employment is realistically available to them. After making a decision confirming work capacity, insurers are able to accordingly reduce or eliminate any liability they owe to an injured worker. The principle of WIRO, Kim Garling, has gone so far as to state: “…unless you’re in a coma, you have work capacity.” This power disparity is exacerbated by the exclusion of a workers’ ability to seek legal advice in relation to a work capacity decision.

However, the greatest impact on injured workers as revealed by the report has perhaps been the restrictions placed on claims for medical expenses. Workers with ongoing treatment and medicine requirements are generally excluded from claiming such expenses 12 months following the cessation of weekly payments. This remains the case even when the worker returns to work but requires ongoing treatment and care. It is a change that flies in the face of the imperative of rehabilitation and return to work on which the changes claimed to be based.

Overall, the report found that the burdens and obligations placed on injured workers were great, whilst little or no corresponding burdens or obligations were placed on employers and insurers.  The changes have resulted in a largely unfair system, which may cost less, but which is having an immense human cost. Many of Turner Freeman’s clients have experienced hardship as a direct consequence of the changes, leading to real questions about whether these workers’ compensation changes are operating in a fair and equitable way.

Read the report and the summary of Unions NSW here: