Urgent $669 million top-up latest in NSW insurance liability bail-out saga

The emergency funding adds to a list of woes directly linked to the former Liberal-National administration’s mishandling of the NSW Insurance and Care (Icare) scheme.

This list includes: 

• Using premiums to pay a US Republican Party operative $700,000 to work in a Liberal Treasurer’s office.
• Overseeing an $18 million contract awarded to a Liberal Party printer and major donor.
• Introducing a claims management model which both injured workers and businesses agree was a disaster.
• Allowing $4 million in bonuses to go to eight top executives in 2018, despite losing $873 million the same year.
• The rescue package represents the latest budget black hole to be discovered in the books inherited by the Minns Government.

It follows revelations that more than 1000 public hospital nursing roles went unfunded by the previous government, as did Active Kids, Cyber Security, out-of-home care for vulnerable children and emergency fire trails programs.

NSW Treasurer Daniel Mookhey will next week deliver an economic statement to Parliament, as the Government continues to work through significant challenges ahead of a September Budget.

The Treasury Managed Fund (TMF) and other Insurance for NSW (IfNSW) schemes, which are managed by Icare, cover the State’s insurance risks.

This includes payments for NSW public sector workers compensation and property damage. 

The latest funding injection is required to help address a range of issues, including historical child sexual abuse liabilities, damage from natural disasters and workers compensation claims.

The former government made $5.03 billion in ad-hoc contributions to prop up Icare from 2018-19 onwards but failed to take decisive action to plan for the system's future.

The latest valuation as of 31 December 2022 shows the IfNSW schemes’ ratio of assets to liabilities is approximately 101 per cent rather than the required 105 per cent. The schemes need to be topped up by 30 June 2023 to ensure compliance with asset policies.

Falling below the ratio would create significant financial risks for NSW.

Treasurer Daniel Mookhey said:

“This $669 million injection of funds is meant to help ensure public sector workers receive financial support when they need it most."

“The investment shows our commitment to backing the men and women who work towards protecting the rest of us."

“The Treasury Managed Fund was created so NSW Government agencies are fully covered when something goes wrong. "

“Lagging return to work rates have been a persistent issue for the State’s insurance system."

“Reduced injury rates, reduced severity of injuries and better return to work outcomes are the key reforms needed to ensure these protections are available to workers today and in the future."

“This additional contribution will likely result in an increase in gross debt impacting the Budget in September but it is necessary to ensure our public sector workers and property are properly insured.”

Minister for Industrial Relations Sophie Cotsis said:

“The reforms have begun, but we need to be honest that it will take years to fix a decade of neglect and mismanagement of Icare by the previous government. "

“Work has already started on a whole-of-government return to work policy to ensure injured public sector workers can find meaningful employment."

“The current system is not fit for purpose and  workers who are affected by physical and psychological injury should not have to be punished and put through a tortuous process."

“We were elected to put injured workers first and to ensure a financially sustainable workers compensation system in NSW.”