Psychological Injury Compensation Amendments Sent to Second Parliamentary Inquiry
In March, the NSW Government announced major reforms to its workers’ compensation system. These reforms have caused quite a stir amongst politicians, unions, and workers alike, leading to the bill being referred to a second parliamentary inquiry. This comes after the bill has already undergone several changes since its dramatic unveiling.
What changes have been proposed?
The main controversies surrounding the bill involved changes to psychological injury workers' compensation claims. Workers' compensation is a type of insurance payout to employees who are injured because of their job. Different types of psychological injuries can arise in all types of work, ranging from witnessing something traumatic, long-term pressure and stress, and even harm from harassment and bullying.
The current most contentious change is to increase the Whole Person Impairment (WPI) threshold for primary psychological injuries from 15% to 31%, particularly for long-term injuries. For context, WPI is a system of measurement that determines the amount of permanent damage an injury has caused relative to the entire body. This measure applies to both physical and psychological injuries. As an example, loss of eyesight in one eye would be around 32% WPI. The change is specific to primary psychological injuries, that being the psychological injury was not ancillary to a physical injury. Depression that is brought on by bullying would be primary psychological injury, while depression that results from an injury sustained in the workplace would be secondary.
Essentially, under the proposed changes, after two and a half years, you would no longer be entitled to workers' compensation benefits unless your psychological injury has permanently impaired you by over 31%. This has been highlighted as an impossible threshold by politicians and unions.
Why have they been proposed?
Like proposed laws tend to be, the bill is framed with good intentions. The Government has repeatedly referred to the current system as ‘broken’ and in desperate need of reform, with the number of cases of workplace psychological injury compensation claims doubling in six years. Reference has been made to how workers with a physical injury have been able to return to work much faster than those with psychological injuries, with 40% unable to return after over a year.
The Treasurer, Daniel Mookhey, stated the reason that injured people aren’t getting back to work is because the system is not returning them to health, continuing the need for workers' compensation benefits to be paid. Therefore, the ultimate goal of the proposed changes is to get those with psychological injuries recovered and back to work.
The Government also referred to rising insurance costs, particularly for small businesses, as part of emphasising the need for change.
Why are these changes controversial?
On the face of the issue, the government’s ‘solution’ to these rising numbers is preventing the numbers from existing in the first place. If nobody qualifies for a claim, on paper, it would look like there was a reduction in psychological injuries. This has been raised as problematic by unions and the Opposition.
The Opposition further highlighted during debate that there had only been 27 cases where a WPI of 30% or higher had been recorded, a tiny number in comparison to the 9,195 total psychological injury claims recorded by the State Insurance Regulatory Authority.
To the Government’s credit, these changes were announced alongside a $344 million funding package that aims to support mental health in the workplace. However, if these measures are successful in their implementation without changing the WPI, the amount of claims would naturally lower over time.
What has happened so far?
The bill was debated in Parliament, where the Opposition, alongside other politicians, voiced their concerns. Proposed amendments were tabled from various sides of Parliament, including the Opposition, the Greens, and independents Roy Butler and Alex Greenwich.
A second print of the bill was subsequently issued, incorporating some minor changes, and successfully passed through the lower house. It nevertheless maintained the WPI increase. Upon reaching the upper house, the bill was referred to a parliamentary inquiry.
The Government has claimed this second inquiry is unnecessarily delaying the bill, causing costs to businesses. However, it could be argued that getting this bill wrong could lead to different costs to businesses. If the changes don’t actually assist in workers recovering from their psychological injuries, they may be forced to return to work while significantly less productive, leading to increased costs in the long term.
Why does this matter to students?
Most university students are likely to be entering professions where the number one work, health and safety hazard is psychological injuries. It is important for students when entering the workforce that appropriate safety nets are in place to ensure mental health safety in the workplace. This does not account for the significant number of students who already work part-time or casually in balance with their studies, the increased stress creating vulnerabilities to workplace psychological harms.
UNSW itself is also an employer, reporting over 7000 staff in 2023, including both academic and administrative staff. If the mental health of UNSW staff is compromised, this would almost definitely have flow-on effects to the quality of teaching and core university functions.
Thus, it is imperative, regardless of the scheme in place, that the workers' compensation process is easily accessible when needed and that genuine assistance can be provided to remedy psychological harms.
It is clear that mental health issues resulting from work are a rising problem that does need to be addressed, but it remains uncertain whether reducing workers' compensation payouts is the right solution.
Do you have any thoughts on these changes? You can directly contribute to the parliamentary inquiry when submissions open here: https://www.parliament.nsw.gov.au/committees/inquiries/Pages/inquiry-details.aspx?pk=3108
