WorkCover NSW in the red
The revamped WorkCover NSW scheme will continue to lose money at least until next year, an independent assessment said recently.
The subject of controversial reforms in 2001, WorkCover's deficit blew out by another $430 million in the second half of 2002 to $3.23 billion, according to NSW Industrial Relations Minister John Della Bosca.
Della Bosca said poor investment returns outweighed a better operating performance by WorkCover, which manages NSW's workers' compensation systems.
But he defended the private investment advice, which led to the lower returns.
"To change an investment strategy in the middle of the kind of global economic change that we're experiencing would be foolhardy," he said.
The government's changes to workers compensation laws improved the scheme's operations by $919 million in the six months to 31 December 2002, PricewaterhouseCoopers actuary John Walsh said.
Walsh, who presented the independent valuation, said more than $500 million of this improvement was from lower legal costs.
"The other contributors are (savings on) other types of service provision and a restructuring of the way in which benefits are provided to injured workers," he said.
The WorkCover deficit was expected to rise by around $100 million in the next valuation before reducing constantly from 2004, Walsh said.
Della Bosca said compensation payments to injured workers were up $400 million over the year, despite the legal changes introduced.
Premiums would cover the cost of all claims in this policy year for the first time in more than a decade, he said.
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