NSW workers compensation reforms attract cross-sector support, including ECEC

The NSW Government‘s proposed reforms to the workers compensation scheme, designed to address the rising costs of psychological injury claims, are gaining strong backing from key industry groups, including the Australian Childcare Alliance NSW.

With mental health claims placing growing financial pressure on the system, the reforms are being welcomed as a timely and pragmatic step to protect employee wellbeing while maintaining employer sustainability.

Under the changes, a clearer definition of work-related psychological injury would be introduced, along with more streamlined return-to-work pathways. The aim is to ensure that workers experiencing genuine psychological harm receive appropriate care and support, while minimising misuse and cost blowouts that threaten the scheme’s future.

“Without reform, employers could face a 36 per cent increase in premiums. These increases are largely being driven by the high cost of psychological claims, which makes the system unaffordable for many employers,” said NSW Treasurer Daniel Mookhey.

For early childhood education and care (ECEC) providers, a potential rise in insurance costs may present operational challenges. Given the sector’s financial constraints, such increases could require careful adjustments to maintain service delivery and workforce support.

In a rare show of alignment, industry groups such as AHA NSW, ClubsNSW, and the Australian Childcare Alliance NSW have voiced strong support for the reform package. Their endorsement reflects a shared concern about the current trajectory of the scheme and the increasing burden it places on employers delivering vital community services.

“The government’s approach is courageous, and these changes are overdue. This is about protecting educators’ mental health while also ensuring the viability of the services that employ them,” said ACA NSW CEO Lim.

ECEC leaders have emphasised that workforce wellbeing and service sustainability are inseparable. Educators need strong mental health protections, but these must be underpinned by policies that are financially viable and operationally practical for the services that employ them.