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Workers suffering psychological injuries in New South Wales<\/a> will have their compensation entitlements slashed under a controversial deal between Labor and the Coalition.<\/p>\n The major parties announced on Thursday that they would pass legislation early in 2026 that would freeze premiums for 18 months, saving businesses and charities from a projected 36% increase over the next three years.<\/p>\n The new opposition leader, Kellie Sloane, ended a months-long stalemate by reaching a compromise with the NSW treasurer, Daniel Mookhey, that would increase the \u201cpermanent impairment\u201d threshold from the current 15% to 25%.<\/p>\n That means people who suffer psychological injuries at work that render them 25% impaired or less will, in the future, only get two years\u2019 support plus an additional year to transition back to work.<\/p>\n The threshold will ratchet up to 28% over the next three years.<\/p>\n Workers below the threshold will not be eligible for ongoing support under the state\u2019s workers\u2019 compensation scheme \u2013 even if they can\u2019t return to work.<\/p>\n Speaking at a press conference, NSW Treasurer Daniel Mookhey said \u201cthe compromise\u201d was aimed at getting people back to work and avoiding them being on benefits for life, while making the system sustainable.<\/p>\n He said of the 12,000 NSW workers who suffered psychological injuries from their work, only a relatively small number \u2013 around 900 \u2013 would be affected by the changes.<\/p>\n Asked what would happen to workers who were unable to return to work after three years, Mookhey said they could transfer to the NDIS or social security, which are provided by the federal government.<\/p>\n Sign up: AU Breaking News email<\/sub><\/a><\/p>\n Labor had wanted to increase the so-called whole person impairment (WPI) threshold<\/a> from 15% to 31% to reduce pressure on the state budget and private premiums.<\/p>\n The Australian Association of Psychologists vice-president, Katrina Norris, previously said<\/a> raising the threshold of \u201cpermanent impairment\u201d to 31% could exclude nearly all workers from making a legitimate mental health claim for lifetime care.<\/p>\n That higher threshold was opposed by the union movement, the legal profession and most medical experts as too harsh. They argued a person with this level of psychological injury would be socially non-functioning \u2013 unable to leave their home and feed themselves.<\/p>\n The minister for industrial relations, Sophie Cotsis, said the emphasis would be on getting people back to work. She said the government was currently piloting a scheme in the public sector involving health education and iCare to assist workers back into work.<\/p>\n Mookhey said with the changes, he expected the iCare scheme, which runs workers\u2019 compensation for small businesses and some of the private sector, would be back to solvency within five years. He was less forthcoming on the impact on the Treasury Managed Fund, which pays for injured public sector employees such as teachers and healthcare workers.<\/p>\n Sloane said the Coalition had done the deal because businesses and the not-for-profit sector needed certainty before Christmas. The new Liberal leader said the scheme needed to be sustainable.<\/p>\n Under the deal, iCare premiums will be frozen at the current rate for 18 months and there will be an additional 12 months of medical benefits and income support for injured workers, who will need to participate in a return-to-work program with retraining, mentoring and specialist case workers.<\/p>\n Those on the return-to-work program will receive 60% of their pre-injury wage, but Sloane was unable to say who would provide this program and how it would work, saying Thursday\u2019s deal was a \u201chigh-level agreement\u201d being worked through with the government.<\/p>\n