“Workers’ compensation is a fundamental workers’ entitlement, and is central to every Australian’s safety net, having operated in some form for over 100 years. While all responsible policy makers, businesses and trade unions are on a unity ticket when it comes to ensuring Australian workplaces are safe, the unfortunate reality is that hundreds of thousands of Australians workers are hurt on the job each year, necessitating workers’ compensation schemes to ensure that those who suffer workplace injuries are not driven towards poverty.” It’s Broken, Workers Compensation in NSW Since 2012 McKell Institute
The Origins Of Workers’ Compensation
The primary premise of workers' compensation when it was initially established was to ensure the retention of some earning capacity for an injured worker following a work based injury or illness.
It is this simple premise that appears to have been lost as we now have a complicated ‘industry’ that seeks to oversee medical approvals for treatment and rehabilitation support for return to work. The GP as gatekeeper to the health system and already under pressure is expected to liaise with insurers who often have a competing goal to return to health for their patient and that is to minimize a claim payout. The system also needs to be sustainable and unfortunately it appears historically this has been almost impossible to achieve.
In addition, with so many players now operating in the Scheme, the injured at a time serious illness and incapacity, and with little or no knowledge of the scheme when they enter becomes a chess piece in a maze that is now modern Workers’ Compensation. All they really want to do is see their GP and get well and back to work.
The first statutory Workers’ Compensation Scheme began in Germany in 1884. It quickly spread in concept and was adapted by other countries around the world. The legislation emphasized the importance of improving workplace safety and rehabilitation facilities. The scheme assumed that if employees could return to work sooner, compensation costs would decrease while simultaneously retaining the status, morale and financial viability of the injured workers.
COMING SOON
Credit: Re-published with permission: Image Credit: John McKinnon/Australian Information Service/National Library of Australia, The Conversation, March 29, 2023 author Angela Woollacott from Australian National University
First introduced in Western Australia in 1902
The first workers compensation scheme was established in Australia early in the twentieth century and applied only to personal injuries from defined dangerous occupations such as physical labour jobs. Remember that was the nature of the world of work at that time, farm laboring, mining and so on. It was known as Workman's' Insurance.
Workers’ Compensation was first introduced in Western Australia in 1902, in Western Australia in 1902, in New South Wales in 1910, and in most other Australian States by 1915.
Prior to this time, an injured worker, even if severely disabled, could only receive compensation if self insured, an option not available to most blue collar workers last century (Ferguson, 1986).
One In Twelve Workers
Today, Australia's Workers’ Compensation System is a $60 billion dollar sector employing thousands of individuals across various roles, including claims management, rehabilitation services, and legal advisory. While exact employment numbers for the sector are not readily available, Safe Work Australia provides extensive data on work-related injuries and claims.
Over the past ten years, there have been more than 1,850 traumatic injury fatalities in Australian workplaces, and over 1,140,000 workers have made a serious workers’ compensation claim involving more than one week of working time lost. That’s around one in every twelve workers. Despite this large population of vulnerable Australians there is no Minister for Injured Workers or Commissioner to advocate for their rights.
Demographics: The average median compensation claim paid by sex is $16, 476 for men and $14, 604 for women (2021 – 2022)
According to Safe Work Australia there are also notable differences in the type of Work-related injury and disease suffered by men and women, as indicated by the compensation paid and time lost associated with serious claims for workers of each sex.
Claims for women have a higher median time lost (8.8 weeks) than claims for men (7.6 weeks).
However, claims for men have a higher median compensation paid ($16,476) than claims for women ($14,604).
This is due to the nature of injury and disease experienced, the types of jobs that women and men are more likely to work in, and differences in pay.
We say, this again highlights the gender pay gap.
For further detailed and updated statistics, Safe Work Australia is a primary source for information on workers' compensation and workplace safety in the country.
Resources: https://data.safeworkaustralia.gov.au/insights/key-whs-stats-2023
Workers’ Compensation Nationally
Currently each State and Territory in Australia has its own laws governing compulsory workers’ compensation and motor vehicle third-party insurance. During the 70's the name of Workmans' Insurance was also changed to Workers’ to better reflect the role women also played in the workforce. A national compensation scheme was considered by the Whitlam Government and a bill was before Parliament but the dismissal ended that opportunity.
Resources: The Clauses of the National Compensation Bill 1974
New South Wales
In New South Wales the 1910 Act was refined in 1926, the purpose of which was to make it a statutory requirement for employers to protect the income of the injured worker or to assist dependent survivors in case of death.
By the 1980s, the system faced significant challenges as businesses and insurers found it unsustainable due to rising costs and inefficiencies. The cost of workers’ compensation had become a burden to the community. Between 1974 and 1984 wage and salary costs increased 249.6% whilst workers’ compensation costs increased 479.7% (Office of the Commissioner for Employee Compensation, 1986). Moreover in NSW there was no systematic attempt to reduce workplace accidents or the cost of these accident.
1983 Occupational Health and Safety Act – Prevention Focus
In response, the 1983 Occupational Health and Safety Act was introduced to improve workplace safety and reduce the incidence of work-related injuries and illnesses. This act laid the groundwork for a more preventative approach, emphasizing the responsibility of employers to maintain safe working environments.
Establishment of WorkCover
The ‘modern’ workers compensation scheme was established in the late 1980s. It had a broader goal of promoting productive, healthy and safe workplaces. A single government entity, WorkCover, acted as both insurer and regulator for workers compensation. Its functions included: oversight and regulation; licensing of private insurance companies to manage claims; injury management; and oversight of the workers compensation fund.
Despite these measures, employers continued to face spiraling costs of premiums while insurers were concerned that premiums were not high enough to cover payouts (Meadowbank TAFE, 1988). The factors identified as contributing to this escalation of costs became the subject of many government inquiries which culminated in the change of legislation ( that is the Workers’ Compensation Act 1987) in New South Wales.
Parliament’s Law and Justice Committee
Concerns about the financial viability and conflicting roles of NSW’s workers’ compensation agencies have persisted for decades.
By the early 2000s, WorkCover NSW faced an impossible dual mandate — acting as both insurer and regulator.
In 2014, the Law and Justice Committee of the NSW Parliament launched an inquiry into WorkCover’s operations, recommending a clear separation between insurance delivery and oversight.
2012 – Reforms That Rewrote the Rules
In 2012, the O’Farrell Government introduced sweeping legislative changes to the state’s workers’ compensation scheme.
Benefits were reduced, entitlements capped, and return-to-work thresholds imposed.
A 2014 statutory review found the reforms had widened inequities and left many injured workers financially and medically stranded.
2015 – From WorkCover to icare
In 2015, NSW Treasurer Dominic Perrottet dismantled WorkCover and created three new agencies:
icare (Nominal Insurer), the State Insurance Regulatory Authority (SIRA), and SafeWork NSW.
Intended to restore stability after a $4 billion deficit, the restructure instead produced years of mismanagement, whistleblower complaints, and mounting debt.
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2024 – 2025 – The System Turns on Itself
In July 2024, the NSW Minister for Customer Service and Digital Government appointed The Hon Alan Robertson AM SC, a former Federal Court judge, to lead a Special Inquiry under section 82 of the Government Sector Employment Act 2013 into the State Insurance Regulatory Authority (SIRA).
Robertson delivered his report on 6 December 2024, identifying governance and complaint-handling failures later described in Parliament as “defective administration.”
(NSW Parliament, Gov Response August 5 2025; Roberston Report Finalisation, 6 Dec 2024)
Weeks earlier, Robertson had assisted Inspector Gail Furness SC of the National Anti-Corruption Commission (NACC) with her review of the Commission’s handling of referrals from the Robodebt Royal Commission.
The Inspector announced that review on 13 June 2024, and Robertson’s report, dated 30 August 2024, was released as Attachment B to her final report on 30 October 2024.
(NACC Inspector Report, 30 Oct 2024)
By 2025, several agencies criticised in Robertson’s SIRA Special Inquiry were also involved in the government’s Modernisation Taskforce, charged with redesigning the same system under scrutiny.
At the same time, proposed reforms before NSW Parliament sought to raise the impairment threshold for psychological injury claims — a change that could exclude thousands of workers from access to compensation.
Though the appointments were legally separate across Federal and State jurisdictions, the overlap raised broader questions about independence when governments investigate their own administrative systems.
Ongoing Scandals
In 2020 a combined investigation by The Age, the Sydney Morning Herald and ABC TV’s Four Corners into the NSW scheme found it had underpaid up to 52,000 injured workers, with compensation shortfalls estimated at $80 million.
What followed was a series of further investigations, parliamentary inquiries, resignations and sustained public scrutiny.
Tension in Claims Management
Workers’ compensation was originally designed to unite employers and employees around recovery after workplace injury.
In practice, the system has increasingly become adversarial.
Insurers are required to administer legislation, yet their financial performance can be influenced by the cost of claims. This creates a dynamic where employers and employees may find themselves in conflict while insurers manage the process. In some psychological injury claims involving workplace bullying, the alleged perpetrator may remain the insurer’s primary workplace contact.
This structure can require injured workers to pursue recovery through the same authority connected to the harm.
For many workers the experience is isolating. Reports of stigma, disbelief and workplace exclusion are common, particularly among those with psychological injuries.
Case managers themselves often operate between competing obligations to insurers, employers and workers — a triangle of divided loyalties that can erode trust.
Communication can break down entirely. Many injured workers report refusing phone calls and relying only on written communication to protect themselves from further distress.
When recovery systems create adversarial relationships, the goal of rehabilitation becomes harder to achieve.
The Moral Inversion of Care
It is a striking moment in any society when people injured at work begin to be treated as liabilities rather than citizens in need of care.
Employer premiums now flow into Treasury-managed funds invested for returns, while the people those funds were meant to protect can struggle to obtain basic support.
This is not simply administrative reform. It reflects a deeper shift in how social protection systems operate.
Historically, societies have repeatedly attempted to manage vulnerability through administrative efficiency.
In the nineteenth century, poverty in Britain was institutionalised through workhouses following the Poor Law Amendment Act 1834.
Later, Otto von Bismarck’s accident insurance system in the 1880s established the principle that workers injured in industrial economies should be protected through compensation — a model eventually adopted internationally, including in Australia’s early compensation laws.
More than a century later, many compensation schemes now operate as large financial funds, where success is often measured through investment performance and cost control rather than recovery outcomes.
Context Note
The phrase “moral inversion of care” describes the moment when systems created to protect people begin to prioritise financial or administrative objectives instead.
Historical precedents illustrate how this can occur:
• The Poor Law Amendment Act 1834 (UK) institutionalised poverty management through workhouses.
• Otto von Bismarck’s accident insurance reforms of the 1880s established compensation as a social right later adopted globally.
• Australia followed this model through early workers’ compensation legislation, including the 1910 and 1926 NSW Acts.
More than a century later, many injury compensation schemes operate as large pooled investment funds. Their financial sustainability has become a central policy focus.
Shattered examines what happens when that financial logic begins to shape how care itself is delivered.
Overall, the present system is creating significant social inequality. It punishes someone for being injured at work. Despite this intense pressure on a system that is failing to keep injured people safe and inquiry after inquiry a Royal Commission has not occurred and thousands of lives are being needlessly destroyed by a system that harms. Women are particularly vulnerable to systemic abuse as we show throughout the documentary, Shattered.