The Victorian premier has threatened to further hike premiums paid by businesses to fund the state’s workers’ compensation scheme if parliament does not pass proposed reforms she says will secure its financial future.
The Coalition party room on Tuesday voted to oppose the WorkCover bill in its current form, joining the Greens and several other crossbenchers in effectively denying Labor the numbers it needs to pass the legislation in the upper house.
Jacinta Allan said WorkCover was “fundamentally broken” and without the reforms, the government may have to increase premiums to keep it afloat.
“We will need to look at what other changes will need to be made and that includes looking at premiums should the reforms not pass through the Victorian parliament,” the premier told reporters in Brunswick on Tuesday.
“This bill is about supporting workers. Let’s not have a consequence where businesses might be faced with some additional imposts should this bill not go through.”
The bill, now before the lower house, would limit support to workers who experience mental health issues such as burnout and stress to 13 weeks and offer payments for costs such as medical treatment, rather than wages lost.
The test for workers receiving weekly payments beyond two-and-a-half years would also be updated, with a “whole person impairment” rating of greater than 20% to be introduced.
The rating measures the level of permanent damage caused by a workplace injury, which is set at 35% in South Australia and 20% in New South Wales.
As part of the reform, the government also announced an increase to premiums paid by businesses, from 1.27% of their payroll to 1.8%, which came into effect in July.
This is higher than the premiums in Queensland (1.23%) and NSW (1.48%), but lower than those in the ACT (2.22%) and Tasmania (2.03%).
The changes have been met with opposition from business groups, mental health advocates and unions, with the latter to attend parliament this sitting week to lobby MPs to vote against the bill.
Announcing the reform in May, the former premier Daniel Andrews said WorkCover would report deficits of at least $1bn annually if it was not reformed.
He said the number of claims and their cost had tripled since 2010. This is partially driven by mental injury claims – now representing 16% of new claims.
Luke Hilakari, the secretary of Victorian Trades Hall, said the increase in mental health claims could be linked to growing awareness of the issue.
“You see a lot of men now putting aside machoism and saying they’ve got an issue,” he said.
Karen Batt, who heads the Victorian branch of the Community and Public Sector Union, said limiting support for mental health injuries did nothing to address “toxicity” of some workplaces.
“This is not a solution. This is a dangerous step to creating worse conditions in workplaces,” she said.
The opposition leader, John Pesutto, said the Coalition would seek to refer the bill to an upper house inquiry, describing the legislation in its current form as “half-baked”.
“If this bill is passed in its present form, it’s not a comprehensive solution to all of the problems plaguing WorkCover. We want a proper solution … that includes return to work, that includes better governance and accountability,” Pesutto said.
He said he was particularly concerned that a new body, Return to Work Victoria, which would be established as part of the changes, was not included in the legislation.
Pesutto said the government was unable to tell him whether Return to Work Victoria was its own entity, or whether it sat within the Department of Government Services or within WorkSafe.
“This government is making it up as it goes along,” he said.
Paul Guerra from the Victorian Chamber of Commerce and Industry said businesses could not afford another premium increase.
“It’s really important we find a way through this impasse because business cannot sustain another 42% premium increase like they did this year,” he said.
“We need to cut out the frivolous claims, we need to make sure that there’s no fraud in the system, we need a focus on prevention and we need both government and opposition to find us a way forward.”
