The Circle That Never Breaks: Why Victoria’s system still hurts the injured

Oct 24

3 min read

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The Injured Workers' Support Team works to help injured workers in Victoria navigate the workers' compensation maze just to get the help that is required to recover, get well and return to work.

“There is no uniformity between compensation systems throughout Australia… benefits differ not because of loss or need, but along geographical boundaries.” — Woodhouse, 1974. Cambridge University Press & Assessment

The promise we never kept (nationally)

In 1974, Justice Owen Woodhouse recommended a unified, national, no-fault compensation and rehabilitation scheme: prevention first, community responsibility, universal entitlement, real rehabilitation, and administrative simplicity. It was designed to replace fragmented state-by-state systems with one humane framework. National Library of Australia+1

The Whitlam Government began moving towards such a national scheme, including the National Compensation Bill (1974–75), but the momentum collapsed with the Dismissal on 11 November 1975 and Australia reverted to eight separate experiments whose rules and outcomes still vary by postcode. historichansard.net +1

Victoria’s big reform (1985) — and the seed of today’s problems

Victoria’s watershed came with the Accident Compensation Act 1985 (“WorkCare”). Treasurer Rob Jolly called it “the most significant economic and social reform introduced to the Parliament in a quarter of a century.” The ambition: fair benefits, real rehabilitation, and a prevention-first culture. ISCRR Research

But to pass the law, Victoria adopted the agent model, private insurers administering claims under a public scheme. That compromise still shapes injured people’s experience today. As Peter Rozen QC notes in his 2021 review, the enacted scheme was not what the government intended, and the agent model has been the focus of repeated criticism. NationBuilder

Lived reality for injured people: a loop of harm

Across a decade of inquiries, the same failings recur, particularly for “complex” and psychological injury claims:

Unreasonable decisions: cherry-picking evidence, defending decisions likely to be overturned. Victorian Ombudsman
Procedural pressure: notices and surveillance that retraumatise people already unwell. Victorian Ombudsman
Systemic pattern, not a few “bad apples”: this was the Ombudsman’s language, not hyperbole. Victorian Ombudsman+1

Rozen QC’s headline is blunt: the scheme too often fails to pay compensation “expeditiously” and in the “most socially and economically appropriate manner.” NationBuilder

2024–25: “Modernisation” in Victoria—what actually changed?

The Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Act 2024 (Vic) tightened parts of the scheme, including new eligibility rules for primary mental injury (diagnosis standards; predominant cause tests; exclusions where injury is predominantly caused by stress/burnout outside traumatic events). These rules apply to mental injuries sustained on or after 31 March 2024. Legislation Victoria+1

The Government and WorkSafe frame this as keeping the scheme sustainable while “continuing to support workers.” An independent review of the Modernisation Act reported in March 2025, reflecting ongoing concern about financial sustainability and whether reforms are landing fairly for injured workers. WorkSafe Victoria+1

Why we keep going in circles

Too many masters, no shared purpose. Treasury prioritises solvency and premiums; agents chase KPIs and closures; the regulator polices compliance; employers want stability; unions push safety; clinicians and lawyers try to hold the line, and the injured person sits at the collision point. Rozen QC names the core problem: conflicting objectives embedded in the system’s architecture. NationBuilder

The missed national anchor. Woodhouse proposed one moral compass, a national scheme with prevention and rehabilitation at its core. The Dismissal ended that path; fragmentation persisted. Victoria built on Woodhouse’s ideals but constrained them through the agent compromise. The result: reform as performance—KPIs and rebrandings—without structural change that centres healing. Cambridge University Press & Assessment+1

What would a Woodhouse-aligned Victoria look like in 2025?

Prevention first (funded like core infrastructure, not a discretionary program).
Trauma-informed claims (especially for psychological injury) with decisions accountable to health outcomes, not just timeliness and cost.
Public accountability for agent conduct (clear powers and duties for WorkSafe to remedy unreasonable decisions swiftly).
Inter-jurisdictional consistency (COAG-style agreement to reduce harmful variation until a national scheme is politically possible).