Victorian businesses’ WorkCover premiums will be frozen for a year under a political deal to get a modernisation bill for the scheme passed.

The Liberal state opposition agreed to pass the Labor Government’s WorkSafe reforms if WorkCover premiums were frozen at the current average of 1.8% of remuneration for the 2024-25 financial year.

“There will now be much greater oversight of the operation of WorkCover to help the scheme become sustainable into the future,” opposition WorkCover spokesperson Cindy McLeish said.

Employer association Ai Group’s Victoria Head Tim Piper says the deal is a “win for the state economy and a win for employers”.

“That’s a big deal for employers. It also enables the Government to offer a new and improved WorkSafe business model, together with a future review, which will look at how to improve the WorkSafe system further,” he said.

The agents for WorkCover are Allianz Australia Workers’ Compensation, EML, Gallagher Bassett Services Workers’ Compensation, and DXC Claims Management Services.

Victorian WorkCover’s claims liability has tripled since 2010, mainly because of the increased cost of weekly income support. Many workers are staying on the scheme longer, with mental injury accounting for 16% of new claims. The scheme required an extra $1.2 billion to offset rising costs over the previous three financial years. 

The average premium for businesses was lifted to 1.8% of remuneration in July and the Government estimated that without reform, the average premium would have to rise to 2.4% this year – the highest in Australia.

Under the reform bill, WorkSafe’s board will be expanded to six members and an advisory committee on the creation of Return to Work Victoria will be established.

The proposed legislation will mean workers suffering stress and burnout can no longer access weekly WorkCover benefits and instead will be eligible for 13 weeks of provisional payments to cover medical treatment, along with support services. 

Workers receiving payments beyond two-and-a-half years will have to undergo another impairment and capacity test.  

WorkSafe Minister Dany Pearson says WorkCover is “fundamentally broken”.

“We’re pleased we can now get on with delivering these important changes, making sure our scheme can continue to support Victorian workers when they need it most,” he said.

The State Government had hoped to introduce the changes this month but met opposition from the Greens and the Coalition. It is establishing Return to Work Victoria alongside the bill, working with employers, unions and health experts.

An independent inquiry on the impact of the reforms will report to Parliament by the end of this year.