Businesses will have to pay higher premiums and face stricter criteria around mental health claims in reforms to Victoria’s WorkCover system.

The planned changes have come under fire from businesses, who criticise the Andrews government for a substantial increase in levies to address what the government calls a “fundamentally broken” system. 

The surge in costs is largely attributed to a rise in mental health injury claims within the public sector. 

Premier Daniel Andrews recently announced a premium hike, prompting Australian Industry Group Victorian Head Tim Piper to urge the government to minimise claims and costs.

Starting from July 1, businesses will shoulder an average of 1.8 per cent of remuneration, up from the previous 1.27 per cent, to fund the WorkCover scheme. Comparatively, Queensland's premium stands at 1.23 per cent, while New South Wales is at 1.48 per cent. 

Changes are also being made to the eligibility criteria for mental injury claims, with workers suffering from stress and burnout no longer having access to weekly WorkCover benefits. 

Instead, they will receive provisional payments for 13 weeks to cover medical treatment and enhanced psychosocial support services.

Paul Guerra, the Chief Executive of the Victorian Chamber of Commerce and Industry, expressed concern over the 42 per cent premium increase, stating that businesses with a $2 million payroll would have to contribute an additional $12,000 annually, while those with a $10 million payroll would face an extra burden of $60,000. 

He emphasised the need for a more balanced approach, asserting that no business should be expected to endure such a drastic rise in premiums to sustain the system.

The changes to eligibility requirements and testing have also drawn criticism from the Victorian Trades Hall Council. 

Secretary Luke Hilakari argues that workers are being denied much-needed support, claiming that the recent modifications represent a significant setback for one of the nation's top schemes.

To address the escalating costs and growing deficit, WorkCover's claims liability, which has tripled since 2010, will see the introduction of a whole person impairment threshold for claims. 

Additionally, the government plans to establish Return to Work Victoria, further recognising the need for reform. 

Premier Andrews has acknowledged the system's shortcomings, describing it as broken, and emphasised the importance of ensuring the sustainability of WorkCover for the future.