Fixing workers compensation requires more than lowering costs – It’s about simplifying the system for small business too

The Council of Small Business Organisations Australia (COSBOA) is urging the NSW Government to ensure that reforms to the state’s workers compensation system deliver relief without adding complexity for small business.

With premium hikes already locked in and major changes proposed under the Workers Compensation Legislation Amendment Bill 2025, COSBOA says the current system is overdue for reform – however, warns that unless small business realities are factored in, the changes risk doing more harm than good.

COSBOA CEO Luke Achterstraat welcomed the NSW Government’s attempt to address unsustainable costs but said reforms must also make the system more workable for small operators.

“The current system is like trying to run a small business while bailing water out of a leaky boat,” Mr Achterstraat said.

“Yes, the NSW Government is right to try and plug the holes, but we also need to make sure they’re not redesigning the boat in a way that makes it harder for small businesses to steer.”

With an 8% premium hike in workplace compensation already locked in for the new financial year and the scheme's deficit ballooning by $1.8 billion last year – equating to nearly $5 million a day – COSBOA acknowledges the need for action. But it warns that added complexity, vague definitions, and administrative burdens will sink the very businesses the system is meant to support.

Following the NSW Upper House Standing Committee on Law and Justice’s May 2025 report on psychological injury entitlements, COSBOA has outlined its support for parts of the Workers Compensation Legislation Amendment Bill 2025, along with key recommendations to make it work in the real world for small business.

What COSBOA supports:

• Reasonable Management Action Provisions (Section 8D): Clear boundaries protecting everyday management activities like performance reviews and disciplinary action.

• Tribunal Requirements for Psychological Claims (Section 8F): Ensures an objective threshold before triggering compensation, reducing speculative or vexatious claims.

• Time Limits on Psychological Injury Claims (Section 39A): Helps contain costs.

• Medical Expense Controls: Tightened language could curb excessive or inappropriate costs.

Where it still falls short – and what’s needed:

Cost vs Capacity: “You can’t promise a high performance vehicle and expect it to run on fumes,” Mr Achterstraat said.

COSBOA urges a phased rollout of new benefits and caps on premium increases for businesses with fewer than 50 staff. Premium increases should be capped at 5% for small businesses.

Support for Small Business: “Small business owners aren’t compensation lawyers. They need tools, not red tape.”

Proposals include a dedicated mental health support program, a small business advice unit, and clear, accountable claim contacts.

Clarity and Communication: Clear definitions, free training, and sector-specific templates will help business owners meet new requirements with confidence.

Cut the Complexity: Streamlined processes and a clearer burden of responsibility on insurers are essential to avoid overwhelming small operators with paperwork.

Mr Achterstraat said small business must be brought into the reform conversation in a meaningful way.

“If we want this system to stay afloat, we need to do more than patch it up. We need to build something that small business can actually operate – not just survive in.”

“Let’s make sure this isn’t another well-intentioned reform that leaves small business bailing water without a lifeboat.”

For more information, visit www.cosboa.org.au.  

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For media enquiries or interviews, please contact Luke Achterstraat, Chief Executive Officer, COSBOA on ceo@cosboa.org.au or call +61 (0) 433 644 097.

About COSBOA

Established in 1979, The Council of Small Business Organisations Australia (COSBOA) is a member based not-for-profit organisation exclusively representing the interests of small businesses. The capability, representation, and reach of COSBOA are defined by a mix of over 50 national and state-based members. COSBOA's strength is its capacity to harness its members' views and advance consensus across policy areas common to many.

Our member organisations work with the COSBOA team to assist us with policy development and guide our advocacy - not just for small businesses but also for the benefit of the Australians they employ. In this capacity, COSBOA makes submissions and representations to the government, including its agencies, on issues affecting small businesses and to pursue good policy.

For more information, visit www.cosboa.org.au