A NSW parliamentary committee has recommended restoring axed lifetime medical benefits and legal representation to the state’s WorkCover scheme.

The Standing Committee on Law and Justice wants lifetime benefits for amputees reinstated, along with funds for hearing aids, prostheses and home and car modifications.

Under cuts introduced two years ago an amputated foot is not considered serious enough to qualify for lifetime benefits.

“There has been ongoing debate in the community about the effectiveness and fairness of the reforms since they were implemented in 2012,” the committee’s report says.

Earlier this year the State Government rolled back some cuts for people who made claims before October 2012, but the committee wants this extended to all injured workers.

WorkCover actuary Michael Playford says the scheme is on target for a $6 billion surplus by 2019. He says restoring benefits would cost about $20 million a year for new claims incurred.

In May the scheme’s surplus was about $1.3 billion. In 2011 when the cuts were proposed the Government argued it had to rein in a $4 billion deficit.

The committee’s review also raises concerns about conflicts between WorkCover NSW’s role as insurer and regulator.

It calls for a separate agency to split the roles, and says WorkCover NSW’s annual report should show how often insurers breach timeframes for decisions on treatment.

The committee says the WorkCover Independent Review Office – created during the 2012 reforms to handle complaints and give legal advice to injured workers who disagree with insurers – should be funded as a separate agency.

Since the cuts the number of lawyers practising in workers’ compensation has fallen, “leaving injured workers vulnerable and without adequate representation in what is a highly complex area of law”.

Lawyers are no longer entitled to be paid or to recover costs from reviews of insurers’ work capacity decisions, and this should be amended, the report says.

The committee also calls for better regulation of “phoenix companies” – firms that go into liquidation to escape paying unpaid liabilities and then reform under a new name.

“It seems likely phoenix companies are responsible for weak health and safety practices, particularly on construction sites.”

Any company applying for workers’ compensation cover should have to disclose if any proprietor, director, senior executive or public officer has outstanding premiums or faced insolvency proceedings.