The architect of a globally recognised scale designed to measure psychological injuries in worker compensation cases says changes proposed by the Minns government will effectively kill the scheme by making it next to impossible for injured workers to claim damages from employers.
Retired Sydney psychiatrist Dr Julian Parmegiani, who led the design of the Psychiatric Impairment Rating Scale for the Carr government in the late 1990s, said NSW Labor’s proposal to lift the level of Whole Person Impairment needed to claim lump sum damages from employers for psychological injuries from 15 to 30 per cent was tantamount to ending the scheme.
“If you’re going to take that step and say ‘we’re increasing it to 30 per cent impairment’, you might as well euthanise the entire scheme and just say: ‘We’re not paying out any claims for any psychological injury’, because that is the effect,” he said.
“They might as well come clean and say that is what they are going to do.”
The government’s proposals – which it says are still subject to consultation and yet to be finalised – also include plans to require injured workers to take claims to the Industrial Relations Commission before seeking workers compensation.
The government says the changes are necessary due to the rising number of psychological injury claims and falling return-to-work rates. Mental health compensation claims have doubled over the past six years, a rise that is placing financial pressure on the state’s nominal insurer, icare, and forcing insurance premiums up by 36 per cent over the three years from 2026, the government says.
NSW Treasurer Daniel Mookhey has said the laws are not about curbing workers’ rights; creating a bullying and harassment division of the IRC, he said, would create an avenue for workers to report unsafe workplaces before an injury occurs.
“Far from trying to curb people’s rights to take action, this is about expanding them,” he said during an interview last month.
But the reforms have drawn the ire of unions, legal professionals and the NSW Greens, who say they will cut workers’ rights by severely limiting workers – including nurses or child protection workers – who seek compensation for injuries such as post-traumatic stress disorder.
And despite backing from the NSW business lobby, the reforms have raised the eyebrows of the NSW Coalition. Shadow treasurer Damien Tudehope said that while the Coalition would not adopt a position on the reforms until the government releases a bill, expected next month, any move to double the level of impairment required for lump sum damages required scrutiny.
“The current method of calculating the whole-of-person impairment percentage for psychological injuries is extremely complex,” Tudehope said.
“Before simply lifting it from the current 15 per cent to, say, 30 per cent, which has been mooted, it would be necessary to understand from the relevant experts what this would mean in practical terms for injured workers.
“Any change to the workers compensation scheme needs to be carefully examined for its long-term impacts, and not rushed.”
Parmegiani, who led the design of the Psychiatric Impairment Rating Scale used to measure serious psychological injuries in NSW, has no doubt about the impact of the change. He said the scale, which has been adopted with variations across Australia and in the US, rates a person’s impairment based on factors including their ability to keep up personal hygiene, enjoy social activities and maintain relationships.
“The benchmark is already very high,” Parmegiani said. “At 15 per cent, a person is not functioning in their day-to-day life. You’re not able to enjoy yourself, you’re not leaving the house, your marriage has broken down, you’re not showering or looking after yourself.
“At 30 per cent, you’ve basically got to be in an institution, or at home with carers.”
Now retired, Parmegiani is a Liberal Party councillor in Woollahra. But after spending more than a decade in workers compensation, he lays much of the blame for the increasing cost of psychological injury on icare itself.
“Their board doesn’t have a single occupational psychiatrist on it, and most of their business is psychiatric impairment and function,” he said.
With the government yet to reveal the legislation, it remains unclear whether it will push ahead with all the proposals floated so far. The NSW Police Association says it believes it will be exempted from some of the changes.
In opposition, Labor mounted a long-running campaign against icare’s management. Mookhey attacked its executive pay and the lavish contract spending at the nominal insurer.
Tudehope said that while Mookhey was “quick to criticise the Coalition for perceived flaws in how workers compensation schemes were managed” from opposition, he was “ready to diminish access to workers compensation to solve his problem with Labor’s bottom line”.
Source: Sydney Morning Herald
