NSW workers’ compensation changes and NDIS support
Workers’ Comp Reforms Could Push Hundreds Into the NDIS — Crowding an Already Overstretched System
By Clickability · Originally published 27 October 2025
Original article and dated context
The NSW Government’s proposed workers’ compensation overhaul could leave seriously injured people without state support, pushing them toward the NDIS — a system already under intense pressure and cost-reduction scrutiny.
Opposition MPs and sector leaders warn the changes effectively shift costs from state to Commonwealth, contradicting federal Labor’s promise to reduce NDIS expenditure growth. Treasury officials have acknowledged the NDIS as a “pathway” for excluded workers, prompting fears of greater strain on participants, providers, and national budgets alike.
[Clickability update, October 2026: SIRA now describes enacted 2025 and 2026 legislation. Commencement dates and transitional arrangements depend on the particular change and claim. Consult SIRA’s current reform FAQs rather than applying the article’s proposed impairment thresholds to your claim.]
A state reform with national consequences
NSW Treasurer Daniel Mookhey and Premier Chris Minns have argued their proposed workers’ compensation reforms are about “saving a system on the brink.”
The scheme — which supports more than 3 million workers — has required multiple government bailouts worth nearly $6 billion in recent years and faces premium hikes of up to 36 per cent unless costs are contained.
Under the Workers Compensation Legislation Amendment Bill 2025, key changes include:
Doubling the Whole Person Impairment (WPI) threshold for some claims (particularly psychological injuries) from 15 % to around 30–31 %, meaning fewer injured workers would qualify for lifetime or lump-sum benefits.
Tightening definitions of compensable psychological injury.
Restricting payouts and review rights in some cases.
The Government’s stated goal: to restore financial sustainability to a scheme “in urgent need of reform.”
But the opposition, legal community, and unions say the changes will cut off thousands of injured workers from state support — leaving them little choice but to seek federal help through Centrelink or the NDIS.
“Shifting costs, not solving problems”
In the Upper House, Opposition Treasury spokesperson Damien Tudehope accused the Minns Government of a cost-shifting exercise:
“These changes would have the impact of transferring very seriously injured workers from the workers’ comp scheme to either the NDIS or other forms of Commonwealth social security.”
— The Australian, 26 Oct 2025
His concern isn’t hypothetical. When questioned during a Parliamentary Committee hearing on 17 June 2025, NSW Treasury Secretary Michael Coutts-Trotter confirmed that the NDIS has become a de facto fallback option:
“The big development since the last major reforms to the scheme is the creation of the National Disability Insurance Scheme.”
In other words: officials acknowledge that people excluded from state compensation may end up on the NDIS — not as an intended policy outcome, but as an inevitable by-product of narrowing eligibility.
[Clickability update, October 2026: The figures and predicted waiting-time effects below are historical assertions and projections. They do not establish present waiting times, individual eligibility or the number of workers entering the NDIS.]
The NDIS is already at its limits
This is where the contradiction bites.
At the federal level, Labor has spent the past year stressing the need to slow the growth of the NDIS from a runaway 22 per cent annually to around 8 per cent.
Social Services Minister Tanya Plibersek recently warned:
“The NDIS is a fantastic program which has changed the lives of many Australians, but it can’t continue to grow at that rate or it will become unsustainable.”
Yet NSW’s plan effectively pushes a new category of people — those with serious workplace injuries or psychological disabilities — toward that very system.
Economists call it “vertical cost shifting”: when states tighten their welfare or compensation responsibilities, forcing the Commonwealth to carry the load. For the NDIS, already serving over 640,000 participants and facing a $48 billion annual cost, every new influx adds both fiscal and operational strain.
Providers across Australia already report wait times of three to six months for approvals, plan reviews, or assistive-technology funding. Many therapy disciplines — particularly occupational therapy, psychology, and support coordination — are at or near full capacity.
If hundreds of injured workers enter the NDIS each year, the impact won’t just be budgetary; it will ripple across service delivery, workforce allocation, and participant outcomes.
What this means for participants and providers
1. Participants may face longer waits
If injured workers migrate from state coverage to NDIS plans, that inflow will increase competition for limited therapist hours, plan management resources, and review appointments. Existing participants may see delays in assessments or plan renewals, particularly in allied-health-heavy categories.
2. Providers must navigate two systems
Providers accustomed to state-funded workers’ compensation work will need to adjust to NDIS pricing, documentation, and portal requirements. Many already juggle multiple funding streams; this reform could make that balancing act harder.
3. Support coordinators face more complexity
Support coordinators and plan managers will likely need to assist clients who have transitioned from workers’ comp to the NDIS, ensuring continuity of care, transferring reports, and preventing funding gaps between systems.
4. A potential new advocacy front
For advocacy organisations, this reform highlights a growing trend of cost transfer between levels of government — with participants caught in the middle. It may trigger new calls for national consistency in how injury, disability, and rehabilitation supports are delivered.
Government defence: “unsustainable without reform”
The NSW Government rejects claims of cost-shifting.
A spokesperson said workers with a WPI above 15 % “would not automatically transfer onto or be eligible for the NDIS,” adding:
“The workers’ compensation system is financially unsustainable, in urgent need of reform, and not a single injured worker will receive assistance from it if it collapses.”
Treasurer Daniel Mookhey argues the alternative — rising premiums and an insolvent insurer — would leave all workers worse off. He maintains the reforms are designed to “save the system for future generations.”
Still, that defence sits uneasily alongside Canberra’s own mission to reduce reliance on the NDIS. The tension underscores a broader national problem: Australia’s safety nets are interlinked, and when one tightens, the others stretch.
Expert reactions
Legal experts and industry bodies have warned that raising thresholds could make compensation “virtually impossible” for many with psychological injuries (The Guardian).
Business groups are split.
The Council of Small Business Organisations Australia (COSBOA) supports cost control but has flagged concern over new union access provisions embedded in the same bill. The Business Council of Australia says the reforms are necessary but must not “punish legitimately injured workers.”
In short, few dispute that reform is needed — but many question whether this version achieves sustainability without human cost.
A reform at odds with the bigger picture
While NSW seeks to stabilise its finances, the unintended effect may be to destabilise the NDIS.
What looks like responsible state budgeting could in practice add to the very national burden Labor is trying to reduce.
The irony isn’t lost on sector observers: one Labor government tightening a state scheme to save money, another Labor government in Canberra trying to cap growth in the system now expected to pick up the slack.
Without coordination between the two levels of government, injured workers could fall through the cracks — and participants, providers, and taxpayers may all end up paying the price.
What happens next
The Workers Compensation Legislation Amendment Bill 2025 is still before the NSW Parliament, with a crossbench-heavy Upper House inquiry underway. Amendments are likely, but the underlying challenge remains: balancing cost control with fairness.
[Clickability update, October 2026: The bill is no longer simply awaiting passage. The current SIRA timetable includes changes commencing on 1 October 2026 and others scheduled later. NDIS and NSW compensation tests remain separate.]
For providers and NDIS-connected professionals, it’s time to prepare:
Audit your referral and intake processes for clients transitioning from state injury schemes.
Review internal workflows for plan management or case coordination between funding systems.
Keep participants informed — particularly those waiting for or appealing NDIS decisions — about possible impacts from these reforms.
The Clickability team will continue to monitor how these changes evolve and what they mean for both participants and providers navigating an increasingly interconnected care landscape.
Looking for NDIS supports that truly fit your needs? Explore verified, reviewed providers on Clickability today.
Clickability editorial update: October 2026
If you have a workplace injury, keep both funding decisions clear
Start with your actual claim documents: the injury date, the insurer’s decision, the benefits affected and the reason given. Ask which transitional rule applies before assuming a headline impairment threshold determines your entitlement. A change in compensation benefits is not an NDIS access decision.
If you apply for or receive NDIS support, tell the NDIA about relevant compensation. NDIA compensation guidance explains why compensation may affect funding and recovery arrangements. Keep records of which scheme funds each support, so the same service is not claimed twice. Do not surrender a compensation entitlement on the assumption that an NDIS plan will replace it.
Coordinate the handover without promising replacement funding
List the services the person relies on and identify who currently pays for each one. Confirm consent before transferring reports between the insurer, practitioners and the NDIA. Record any decision dates or interruption risks so the person can seek advice before a service stops.
Separate three questions in your explanation: compensation entitlement, NDIS access and the supports funded in an approved plan. They can have different outcomes. Compensation and NDIS funding need coordination; a referral alone does not establish coverage.
Questions readers ask
Does losing workers’ compensation automatically qualify someone for the NDIS?
No. NDIS access is a separate decision; compensation status alone does not establish eligibility. Official guidance
Can both systems pay for the same support?
The NDIA must be told about relevant compensation. Do not assume duplicate funding is available. Official guidance
Are the original proposed thresholds the current rule for every NSW claim?
No. Use the current SIRA guidance and the rules applying to the particular claim and commencement date. Official guidance
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