icare increases will cripple businesses

The Sydney Morning Herald on Monday (21 November) reported the state’s compensation scheme icare, was financially unsustainable and warned that premiums paid by 333,000 businesses would need to be 33 per cent higher.

Council of Small Business Organisations Australia chief executive, Alexi Boyd, said if the projected increases are correct, small businesses would find it difficult to stay viable.

“It’s not just the cost of the premiums, it’s the burden of reporting which is required and the number of government agencies that small businesses have to deal with,” Ms Boyd said.

“It’s been one hit after another for small businesses. The cost of doing business is rising with increased energy costs, and we are still trying to get back on our feet after the pandemic and worker shortages.

“Combined with this it is like rolling waves of concern. There are many successful small businesses out there and we are seeing lots of green shoots and positivity, but suddenly this is another reason why an overly onerous government requirement makes it hard from a business perspective.

“The associations that we represent are hearing a lot of concerns from their members who are not sure what this impact will have.”

The SMH reported that a 33 per cent hike in premiums in staged increases to 2025 would cost employers as much as $1 billion more in 2025, based on the $3 billion paid by employers each year.

David Harding, executive director of Business NSW, said the organisation has been concerned about the rising workers’ compensation premiums for years and has made a number of submissions to the NSW Treasury and government.

“We’re very concerned about the premiums and the affordability of it, not just for small businesses but larger employers as well. For years we have called out the inefficient claims management process,” he said.

Mr Harding said Business NSW has made several recommendations to the state government in regard to streamlining the regulatory landscape of the scheme, but it has had little response.

“Investigations have been done and the McDougall Review into icare was handed down in 2021 but it is just gathering dust,” he said.

Mr Harding said while Business NSW welcomes the fact that the government has said it will limit any rises to 2.9 per cent, he questions whether that is realistic given the increase in psychological injury claims.

“The return-to-work outcome in this space is poor and getting poorer, and more costly,” he said.

“Business NSW want to contribute to the debate in a positive way with some practical help and understanding of what this means for small employers in particular.

“Small employers need to be better informed and educated about this and we need to develop a common language with GPs and lawyers, and look at the issue of injuries, and psychological injuries in particular, in a more wholistic way.

“Businesses need certainty about what is going to happen, or this issue will be a never-ending hole we are trying to fill. Both sides are playing politics with it, and they need to step up and tell us how they are going to fix it.”