Lifetime medical benefits and legal representation need to be restored to injured workers, including amputees and those needing hearing aids, a review of the NSW workers compensation scheme has found.
A joint parliamentary committee, including three government MPs, reviewed the WorkCover scheme and unanimously recommended the reversal of government changes that slashed medical benefits in 2012.
WorkCover has also been criticised for failing to regulate phoenix companies - those that go into liquidation only to reform under a new name to escape paying unpaid liabilities.
Liberal Party MP Scot MacDonald said WorkCover needed to help stamp out criminality in the building industry. It also needed to respond to breaches of occupational health and safety, which have led to deaths.
Mr MacDonald said when phoenix companies go broke they cannot be prosecuted for breaching safety standards.
"It's not good enough for WorkCover to say it is too hard or not their responsibility. It directly impacts on their function, responsibility, efficiency and cost," Mr MacDonald said. "I am calling on them to show leadership."
The parliamentary committee has recommended tighter regulation of insurers offering workers compensation cover to ensure they have not been placed into administration or receivership in the past five years.
The committee has also called a separation in the WorkCover authority's conflicting roles as regulator and insurer.
Under the state government's 2012 changes, an amputated foot is not considered serious enough to qualify for lifetime benefits.
The committee has urged the government restore lifetime medical benefits for prostheses, hearing aids, home and car modificiations.
WorkCover actuary Michael Playford from PricewaterhouseCoopers told the committee it would cost about $20 million a year to restore those benefits.
The committee has recommended restoration of all lost medical benefits because the scheme is heading towards $6 billion by 2019.
In 2011, the government argued it needed to slash benefits to rein in a $4 billion deficit in the WorkCover scheme. The scheme has since recorded a surplus of more than $1 billion.
But a report by Mr Playford tabled to the NSW Parliament earlier this year revealed that, without the 2012 changes, the deficit was projected to fall to $2 billion next month and to $500 million in June 2018.
PwC documents have shown that, by 2019, changes to the WorkCover scheme will leave it holding 55 per cent more in assets than it needs to meet its liabilities.
In its report, the committee notes that evidence from the scheme's actuary suggests there are enough resources in the scheme to improve protection for injured workers.
In his report, Mr Playford said the scheme could have approached "full funding by 2021" without the 2012 changes.
The 2011 prediction of a $4 billion deficit was largely based on a temporary low point in returns from yields as a result of the global financial crisis.
The committee also said lawyers acting for injured workers should no longer be prevented from seeking legal advice and lawyers should be able to recover a reasonable fee for their work.
The committee heard injured workers had difficulty understanding their rights and responsibilities under the WorkCover scheme.
In late June, Finance and Services Minister Dominic Perrottet announced that seriously injured workers who had made claims before October 2012 would once again get hearing aids, prostheses and modifications to their homes and cars until they reached retirement age.
But the changes introduced by regulation did not apply to people injured after October 2012.
Mr Perrottet said injured workers would also continue to be eligible for weekly benefits until a disputed work capacity assessment had been resolved. This follows criticism raised in a recent parliamentary inquiry that found people were getting no benefits for the months it took for their disputed claims to be settled.
Entitlements to a second operation would also be relaxed in cases where the initial surgery required a follow-up operation after 12 months. The present system caps benefits to 12 months. The threshold for worker injuries will be lowered from 30 per cent of their body to 21 per cent to be eligible for medical benefits, until they reach retirement age.
NSW Greens MP and Industrial relations spokesman David Shoebridge said there was "no doubt the scheme can afford to return all medical benefits to injured workers to make sure that people who are injured at work receive reasonable and necessary medical treatment for life".
"It is just plain wrong that a worker can have an injury as severe as an amputated foot and, after a short period on benefits, be denied benefit and left to pay for their own prostheses, surgery and other treatment," he said.
"Since the 2012 reforms, many seriously injured workers have struggled to get their payments reinstated without help from lawyers, while the insurance companies have teams of well paid in-house lawyers to defend claims.
"The absence of legal assistance for injured workers is grossly unfair and the scheme must urgently be amended to restore the right to legal representation for all injured workers."
Unions NSW secretary Mark Lennon said the parliamentary committee's report "reinforces what we said in 2012, that the cuts to workers compensation were cruel and over the top".
"While we welcome the recommendation to restore some rights and entitlements, it doesn't go far enough," he said.
"Sick and injured workers are among the most vulnerable people in our community."
