The Victorian Government says it’s working with business and other groups to look at options to improve the state’s “fundamentally broken” workers’ compensation scheme.

WorkSafe reported a net profit of $43 million last financial year, its first positive net result since 2017/18, but the Performance from Insurance Operations was a deficit of $1.6 billion.

The annual report noted a growing gap between premium revenue collected and the annual cost of claims, with the State Government providing an operating grant of $450 million, while holding the average premium rate at 1.27%.

“The WorkCover scheme is fundamentally broken. The scheme is no longer fit for purpose and does not meet the modern needs of those it was originally designed to assist more than 30 years ago,” a Victorian Government spokesman said yesterday.

“The Victorian Government is working with business and worker stakeholder groups to look at all options and take urgent action to continue the ongoing sustainability of the WorkSafe program.”

The spokesman says the priority is helping people return to work after an injury, and ensuring the sustainability of the scheme.

Media at the end of December reported that the State Government had released a 2020 report by consultants Finity that found the scheme was at a tipping point in its history and facing internal and external threats to its stability.

Increases in mental health claims are adding to stresses on the scheme, with the annual report noting that mental injuries also often take longer to resolve and require more services and supports.

The Victorian Chamber of Commerce and Industry says it recognises that the current WorkCover system is not sustainable and adjustments need to be made to ensure its viability.

“The Government has been consulting with us in good faith to ensure the business position is taken into account,” CEO Paul Guerra said. “While we’d like to see additional costs to business minimised, we recognise that the ongoing viability of the system is paramount.”

Shine Lawyers Special Counsel Thomas Bradley urged the Victorian Government to consider increasing insurance premiums, which he says haven’t been lifted for years.

“The government should also address the delay tactics used by insurers when assessing claims as they ultimately increase medical and legal costs by dragging out disputes and allowing injuries to worsen,” he said.

WorkSafe Victoria is the trading name of the Victorian WorkCover Authority.