If you’ve been following the talk about the NSW Government’s proposed changes to workers compensation legislation, you’ve probably heard that they’re being sold as “modernisation” or “reform.” But the truth is, these changes could seriously hurt injured workers — especially those suffering from psychological injuries.
On 3 November 2025, the Public Accountability and Works Committee (“PAWC”) released its detailed report on the proposed legislation. And the verdict? The Committee has major concerns – describing the NSW government’s plan as unfair, dangerous, and based on shaky evidence.
Here’s what you need to know.
The Big Change: Raising the Bar for Support
Under the proposed legislation, workers who suffer psychological injuries would lose access to payments of weekly compensation and treatment after 130 weeks (about 2.5 years) unless they’re assessed with a Whole Person Impairment (“WPI”) of more than 31%.
This is a huge increase when compared to the current law – one that would instantly cut off support for thousands of workers.
The government’s line is that the change will “encourage people back to work” and “create social connection.” But as the Committee bluntly pointed out, that claim doesn’t hold up.
Finding 3 of the report said the assertion of Mr Daniel Mookhey, NSW Treasurer, that anyone under 31% impairment “by definition” can work, was “demonstrably false.” The evidence showed that most people assessed between 21% and 30% WPI are not fit to work in any capacity.
In other words: the government’s central justification for the change simply isn’t true.
The Human Cost
The Committee’s report didn’t pull punches. It made it clear that cutting support to people with serious psychological injuries could lead to devastating consequences.
One section stated plainly:
“Leaving injured workers with serious mental health conditions without access to required supports… carries a significant risk that some injured workers may engage in self-harm and death by suicide.”
That’s not speculation — that’s based on tragic real-world data. The report noted that at least 59 injured workers have died by suicide since 2020, and at least another 33 have attempted suicide. Many of those cases were linked to earlier cuts made to entitlements in 2012.
To make matters worse, neither the government nor its insurer, icare, did any modelling on how many suicides or self-harm incidents might result from these latest cuts. The Committee called that “unconscionable.”
Shaky Numbers and Political Spin
The report also took aim at the Treasurer’s handling of the facts. It accused the government of using “selective statistics” and “spin” to make the situation look worse than it is – such as comparing current claims data to 2021-22 figures, which were artificially low because of COVID-19 lockdowns.
The Committee even said it felt like it had to “wade through layers of obfuscation and hyperbole” to get to the truth.
It turns out that, while the government keeps warning of an unsustainable financial hole, the scheme’s actual deficit was overstated by more than half a billion dollars.
So what’s really going on? The Committee’s view is that these so-called “savings” are coming from the pockets, and wellbeing, of injured workers.
What the Committee Recommended
The Committee didn’t just criticise – it made strong, and in our opinion, practical recommendations that, if followed, would protect injured workers and help fix the system.
Here are the key ones:
- Withdraw the 31% WPI threshold: The Committee’s top recommendation was that the government should scrap the plan to lift the WPI threshold to 31% (and even the interim 25%) and that, if the proposal is put to Parliament, MPs should vote against it.
- Fix claims management instead of cutting benefits: Rather than cutting off payments, the Committee urged the government to conduct a full review of claims management practices, with real engagement from injured workers, unions, and advocacy groups. If the government won’t do it, the Committee said it would consider holding its own public inquiry.
- Create an Injured Workers Advisory Committee: The report called for a permanent advisory body made up of injured workers and unions to give people with lived experience a voice in shaping reforms. icare and SIRA would be required to consult with this group regularly.
- Hold insurers accountable: The Committee recommended that insurers should have to prove they have a “reasonable prospect of success” before using public funds to fight claims, and that their legal expenses should be capped at 50% of the value of the claim.
- Speed up access to treatment: It suggested that insurers be required to provide access to psychological treatment within two weeks of a claim being lodged.
- Re-balance premiums: The government should review how premiums are set, shifting the focus back to rewarding individual employers who actually keep their workplaces safe, not just their industry average.
- Bring claims management in-house: The Committee urged the government to look at whether icare should stop outsourcing claims handling to external companies, many of which have been criticised for inefficiency and poor treatment of workers.
- Allow union support for return-to-work disputes: The report said unions should be allowed to take return-to-work disputes to the Industrial Relations Commission to help workers get back into employment safely and fairly.
- Let Parliament properly debate the Bill: Finally, the Committee recommended that the first bill be returned to the Legislative Council so MPs can consider the evidence presented in this inquiry before making any decisions.
Taken together, these recommendations make one thing clear: the problem isn’t the workers, it’s the system. The Committee said the government should focus on fixing how claims are managed and improving return-to-work rates, not punishing people who are already injured.
What Happens Next
The Committee’s report doesn’t require the government to scrap the proposed legislation but it does send a powerful message to Parliament: these changes are not fit to pass.
The Opposition, crossbenchers, and even some Labor members now face a test of conscience. Before the 2023 election, 80 MPs, including 19 current Ministers, signed a pledge to “fight for a system that provides ongoing medical and financial support for workers unable to return to work.”
The Committee’s report challenges them to honour that promise.
Why It Matters
If you’re dealing with a psychological injury caused by your employment, the stakes couldn’t be higher. These reforms would mean losing vital medical care, income, and legal protections while you’re still struggling to recover.
As the Committee made clear, this isn’t about numbers on a balance sheet. It’s about real people. People who’ve been hurt doing their jobs and deserve compassion, not cuts.
The Committee summed it up best:
“To implement those cuts would be unconscionable.”
We wholeheartedly agree.
What’s Next?
The report and its recommendations are now with the government for consideration. The government is required to respond within 3 months (by 3 February 2026).
What Should You Do?
If you have a workers compensation claim in NSW and are concerned about the impacts the proposed legislative amendments may have on you, get in touch with us today.
Give us a call on 1300 026 875 or contact us via our website – www.bourkelegal.com