It is a school staffroom in Melbourne's outer suburbs, on a Thursday afternoon near the end of term, and a teacher two decades into her career is filling out a WorkCover claim form for the first time in her life. She has been signed off work with an anxiety and depression diagnosis after a year spent covering staffing gaps, running a student wellbeing caseload built for two people, and absorbing a stream of parent complaints her school gave her no time to prepare for. Under the test that applied until March 2024, she would likely only have needed to show her work was "a significant contributing factor" in her injury. Under the test that replaced it, she must show her employment was the single largest cause of her illness — bigger than anything else happening in her life — and if a claims officer decides her exhaustion came mainly from workload pressures that are "usual and typical" for a Victorian teacher, her claim can be refused before her treatment is even funded. She is not an outlier: mental-injury claims made up 18 per cent of everything lodged with WorkSafe Victoria in 2023–24, up from 16 per cent the year before, and the scheme she is now navigating was rebuilt, in large part, because of workers exactly like her (WorkSafe Victoria, Annual Report 2023–24, tabled Oct-2024).
What the government did
WorkCover is Victoria's statutory workers'-compensation scheme, run by WorkSafe Victoria and funded by premiums that almost every employer in the state must pay. In the 2023–24 Budget, the Allan government lifted the average premium rate employers pay from 1.272 per cent of remuneration to 1.8 per cent, effective 1 July 2023 — a 42 per cent increase in the average bill, and the first rate rise since 2016 (WorkSafe Victoria, "2023–24 WorkCover premium changes," 2023; Victorian Chamber of Commerce and Industry, media statement, May-2023). On 31 October 2023 the government introduced the Workplace Injury Rehabilitation and Compensation Amendment (WorkCover Scheme Modernisation) Bill; it passed Parliament and most of its changes commenced on 31 March 2024. Separately, the government committed in March 2024 to freeze the average premium at 1.8 per cent for 2024–25 — and has since held it there for a third straight year in 2025–26 — a commitment industry groups linked directly to securing support for the reform package (Victorian Chamber of Commerce and Industry, "Cost relief as WorkCover premium held at 1.8 per cent," 2024).
For primary mental-injury claims, employment now has to be "the predominant cause" of the injury — its single largest contributing factor, ahead of anything else in a worker's life — replacing the older, lower bar of "a significant contributing factor." Mental injuries caused mainly by stress or burnout arising from duties that are usual, typical and reasonably expected to occur in a job are no longer compensable at all, unless they follow an unusual traumatic event, or bullying and harassment. A new statutory definition requires a diagnosed, DSM-classified mental injury causing "significant behavioural, cognitive or psychological dysfunction" before a claim can proceed. Separately, weekly payments now cut off after 130 weeks unless a worker can show a whole-person impairment of 21 per cent or more — assessed for psychiatric injury under the GEPIC guide — alongside no current work capacity likely to continue indefinitely (WorkSafe Victoria, "Scheme modernisation," 2024). Working the other way, the Act also introduced up to 13 weeks of provisional payments for every mental-injury claim, covering treatment costs while a claim is assessed — support that continues even if the claim is ultimately rejected (WorkSafe Victoria, "Provisional payments," 2024).
The strongest case
A scheme an independent review had already called unsustainable
Put the government's case at its strongest, and it does not start with the 2023 Budget — it starts with a warning received three years earlier. A 2020–21 independent review of WorkSafe's financial sustainability, commissioned by the government and cited by the Victorian Auditor-General, concluded the scheme's financial trajectory was unsustainable, driven chiefly by more workers making claims and those workers remaining on the scheme for longer. Mental-injury claims were the single largest driver: the same review found they were on track to consume around 50 per cent of the scheme's annual weekly-benefit costs in 2022–23, up from 38 per cent just two years earlier (approx.) — a cost base growing faster than the premiums funding it (Victorian Auditor-General's Office, Auditor-General's Report on the Annual Financial Report of the State of Victoria: 2020–21, 29-Nov-2021). The government had already paid WorkSafe a $550 million bailout in 2020–21 "to sustain its financial position over the short term," and by the half-year to December 2023, WorkSafe's insurance funding ratio — a long-run solvency measure — sat at 101.8 per cent, near the bottom of its own 100–140 per cent preferred range, after a $1.1 billion Performance from Insurance Operations deficit for those six months alone (WorkSafe Victoria, "WorkSafe half-year results," Mar-2024).
On that evidence, doing nothing was not a neutral option: a scheme paying out more than it collects eventually needs much higher premiums, a much larger bailout, or narrower eligibility — probably all three. The government can also fairly claim it did not simply cut costs onto workers. It legislated new provisional payments guaranteeing up to 13 weeks of treatment support for every mental-injury claim regardless of outcome — a genuine improvement on the old system, where a worker with no accepted claim often received no help at all while waiting months for a decision. And it secured the reform through Parliament with cross-bench support, rather than forcing it through on a party-line vote, by giving business two years of premium certainty in exchange. A government inheriting a scheme an independent reviewer had already called unsustainable, and choosing to legislate rather than let the deficits compound, is not obviously the reckless choice.
The evidence
WorkSafe's own published results show the reforms are doing exactly what they were designed to do to the balance sheet. The 2023–24 Annual Report — covering the year the changes took effect on 31 March 2024 — states the reforms reduced WorkSafe's outstanding claim liabilities at 30 June 2024, and its 2023–24 claims expense, by $1.2 billion (approx.), the clearest evidence yet that the eligibility changes are working as an actuarial lever, not just a political one (WorkSafe Victoria, Annual Report 2023–24, tabled Oct-2024). But the same annual report also shows the underlying pressure had not gone away: mental-injury claims kept rising as a share of everything lodged, from 16 per cent of new claims in 2022–23 to 18 per cent in 2023–24 — even as the new, harder test for those claims was coming into force.
That collision — a shrinking liability on the balance sheet and a growing share of claims trying to get through a narrower door — shows up starkly in claim outcomes. In the year before the reforms, July 2022 to June 2023, WorkSafe accepted around 3,695 mental-injury claims and rejected 1,565 — an acceptance rate of roughly 70 per cent (approx.). In the thirteen months after the new test took full effect, April 2024 to April 2025, only about a third of the 5,201 mental-injury claims assessed were accepted, and 61 per cent were rejected outright, with the balance still pending — a rejection rate reported to have roughly doubled (approx.; The Age, "Workers' mental health compo claims being rejected at twice the rate," Kieran Rooney, 25-Aug-2025, citing WorkSafe claims data). None of that collapse in acceptance shows up as a single line in WorkSafe's financial statements, but it is a substantial part of the mechanism by which the $1.2 billion improvement was achieved.
The critique
The government is entitled to say the scheme needed to change. It is harder to defend the specific shape the change took. A predominant-cause test does not simply filter out weak or opportunistic claims — by design, it filters out cumulative claims, and cumulative stress is exactly how burnout works in the high-pressure, understaffed front-line jobs the steelman above identifies as driving the cost growth in the first place: teaching, nursing, paramedicine, policing, child protection. A worker whose illness has ten contributing causes, none individually dominant but employment more than any other single one, can fail the predominant-cause test even though their case is, on any ordinary reading, work-related. The stress-and-burnout exclusion compounds this: it asks a claims officer to decide whether a worker's own job — the specific caseload, the specific staffing gap, the specific term — was "usual and typical," a judgement call with no bright line, made about a workforce the government's own reviewers had already identified as carrying the fastest-growing cost in the scheme.
The scale of the swing in accepted claims — from roughly seven in ten before the reforms to roughly one in three after — is larger than a plausible estimate of how many claims in the old system were genuinely undeserving. Some tightening of a scheme an independent reviewer called unsustainable was defensible; a near-halving of the acceptance rate inside little more than a year looks less like better sorting of claims and more like a fiscal target being met by moving the bar. And the burden has not, in fact, been evenly shared. Business still pays the historically high premium rate the 2023 Budget set: immediately after the increase, the Victorian Chamber of Commerce and Industry said it had given the state the highest average WorkCover rate of any Australian jurisdiction, a position the Chamber has continued to describe Victoria as holding even after the subsequent freezes (Victorian Chamber of Commerce and Industry, "Business slugged with 42 per cent increase to WorkCover premiums," May-2023). Employers absorbed the cost side of the fix; workers with rejected claims absorbed the eligibility side — and the $1.2 billion improvement in WorkSafe's own numbers suggests the second lever did much of the work the premium rise on its own could not.
The 13-week provisional-payments scheme is real support, but it is also a genuine limit dressed as a benefit: it guarantees treatment funding for roughly a quarter of a year, after which a worker whose claim is ultimately rejected — as the majority now are — loses that support and must fall back on Medicare, private insurance, sick leave or their own savings, none of which appears on WorkSafe's balance sheet. A cost removed from WorkSafe's ledger is not necessarily a cost removed from the system; for a worker like the teacher in the staffroom, it is simply moved somewhere else, onto a budget line — and a household budget — nobody audits with the scrutiny WorkSafe's own accounts receive.
The reforms improved WorkSafe's balance sheet by roughly $1.2 billion. A large share of that improvement is measured in claims that used to be accepted and now are not.
The scheme's finances, in numbers
Follow the money through the scheme's own figures, rather than either side's framing of them, and a consistent pattern emerges: a fund whose capital buffer collapsed, was refilled from two different sources — taxpayers and employers — and still has not fully rebuilt the reserve WorkSafe's own strategy documents say it needs. WorkSafe's insurance funding ratio, the regulator's core measure of whether it holds enough assets to cover the claims it expects to pay, sat at just 101.8 per cent at the half-year to December 2023 — barely inside the floor of WorkSafe's own 100–140 per cent preferred range, and the culmination of a multi-year decline the 2020–21 independent review had already flagged as unsustainable (WorkSafe Victoria, "WorkSafe half-year results," Mar-2024). Two years into the reforms, the ratio had recovered to 115.9 per cent at the half-year to December 2025 — an improvement, but still short of the 120 per cent WorkSafe itself describes as necessary for long-term financial sustainability (WorkSafe Victoria, "WorkSafe half-year results," 6-Mar-2026).
- A scheme running low on capital was topped up more than once: the $550 million paid to WorkSafe in 2020–21 was followed by further government support, taking cumulative taxpayer injections to approximately $1.3 billion across 2020–23 (approx.; Mirage News, "Allan Labor's billion-dollar WorkSafe failures," 27-Nov-2025, citing Victorian Auditor-General's Office reporting).
- Employers absorbed the other side of the repair job. Victoria's average premium rate posted the largest nominal increase of any state examined — ahead of New South Wales, Queensland and South Australia — between 2018–19 and 2023–24, according to the Victorian Parliamentary Budget Office's own state comparison (Parliamentary Budget Office (Victoria), "Workers' compensation premium rates: state comparison," 13-Jul-2023).
- The freeze at 1.8 per cent since 1 July 2023 has narrowed, without closing, the competitiveness gap it was meant to help fix: by 2025–26 South Australia's average rate (1.85 per cent) sat above Victoria's, and New South Wales' rose a further 8 per cent for the year, even as Victorian business groups kept campaigning on WorkCover as a drag on the state's competitiveness (Bellrock Advisory, "Workers' Compensation Insurance Market Update," 9-Jul-2025; Victorian Chamber of Commerce and Industry and Committee for Melbourne, "Maximising Victoria's Potential and Competitiveness," 15-Jun-2026).
Put together, the arithmetic is straightforward even where the politics are not. Rebuilding WorkSafe's balance sheet has drawn on Victorian taxpayers to the order of a billion dollars, permanently reset the premium base every Victorian employer pays from, and — per the acceptance-rate collapse documented above — tightened who can draw on the scheme in the first place. Even with all three levers pulled at once, the fund WorkSafe is required to keep solvent is still running below the ratio its own strategy sets as the target. That is the trade-off any account of "the WorkCover crisis" has to hold in view at once: real money out of the budget, a real and durable cost increase for every business that pays a WorkCover premium, and a scheme that, on its own published numbers, has been stabilised rather than fixed.
The risk to the future
A fix measured in rejections is not the same as a fix measured in sustainability
WorkSafe's scheduled independent review of the reforms is not due until 2027 — meaning the government has committed to running the tighter eligibility test for roughly three years before anyone formally checks whether it solved the underlying problem or simply deferred it. The pressures the 2020–21 review identified — an ageing, more casualised, higher-stress workforce, and workers who remain on the scheme for longer once they are on it — have not been shown to have reversed; the 18 per cent share of new claims that were mental-injury claims in 2023–24 was higher, not lower, than the year before the reforms took effect. If claim volumes keep growing while acceptance stays near a third, the state risks two failures at once rather than the one it set out to fix: a scheme still under long-run cost pressure from an ageing, more stressed workforce, and a workers'-compensation system a majority of psychologically injured claimants can no longer access. Victoria would then be paying the country's highest average WorkCover premium for a scheme fewer injured workers can rely on — with the workers WorkSafe does not cover falling instead onto Medicare, the NDIS, or unemployment support, cost that does not appear on WorkSafe's books but does not disappear from the state's ledger either. The 2027 review is the point at which the primary record will show whether this was a genuine recalibration of a broken scheme, or a shift of its costs onto people and systems less equipped to absorb them.