NSW Premium Increases – WorkCover’s Big New Tax?

In a recent media release the CEO of NSW WorkCover Mr Vivek Bhatia gave no indication that large numbers of medium to large businesses across NSW were about to be hit with massive and unexpected premium increases (read Big New Tax).

Some insurers say that the average increase is 24%, which is only reduced by a 10% discount this year for an employer’s safety initiatives.

Regardless of what Premier Baird or Minister Perrottet may say in defence of the massive premium hikes, the NSW WorkCover scheme is $2.5 billion in surplus and growing, so what is the rational for the Big New Tax?

Yet again we see the indiscriminate and shocking effects of intervention from a Government Bureaucracy; there is no competition with WorkCover, it can do as it pleases.

Under the media release heading “New Insurance Reform Guide Good for Business[1]” WorkCover’s CEO Mr Bhatia said “Following the success of premium reforms for small businesses in 2013, similar reforms would be rolled out across medium and large businesses from 30 June.”

Mr Bhatia went on to say “As part of getting ready for the reforms, 14,200 medium and large businesses across NSW will receive a simple user guide to the new renewal process for premiums. It includes a copy of the new, streamlined annual premium renewal form,” Mr Bhatia said.

“We’re keeping business informed by providing this information as part of a campaign of awareness and engagement leading up to 30 June,” he said.

As we understand it, there has been no consultation with those businesses likely to be hardest hit by the Big New Tax, many of which have been given price signals through their past premiums that they are performing well above their industry’s average.

We understand that one of the industries to be clobbered by WorkCover’s Big New Tax is the Aged Care sector, an industry which deals with some of Australia’s most vulnerable citizens.  The Big New Tax is likely to result in the closure of beds and consequent loss of jobs.

A spokesman for WorkCover has stated at various briefings that 18% of NSW employers are performing 200% worse than their industry average, yet failed to identify who these employers are.  In work done in the lead up to the first Rate Filing by the Rating Bureau in the late 1990s similar statistics were identified, begging the question “Exactly what has WorkCover been doing over the last 15 years to improve the poorer performers?”

[1] http://www.workcover.nsw.gov.au/news/media-release/new-insurance-reform-guide-good-for-business

22 June 2015