Martin Hoffman had warned that problems with Australia’s biggest workers’ compensation scheme could “get way out of hand really quickly” more than a year before allegations of misconduct regarding the scheme were aired by the media.
The then-secretary of the NSW Department of Finance in June 2019 emailed customer service minister Victor Dominello’s office and executives from the State Insurance Regulatory Authority (SIRA) regarding the scheme run by state-owned insurer icare.
The scheme was recently the subject of a joint investigation by The Sydney Morning Herald, The Age and ABC’s Four Corners, which aired a number of allegations, including that icare had underpaid 52,000 injured workers by up to $80 million in compensation, and that NSW Treasury documents had shown icare’s executive team was “likely the highest paid in the NSW government sector”.
Hoffman’s email — which was sent during SIRA’s investigation into the scheme — urged the state government to address issues within icare.
“The situation [at icare] could get way out of hand really quickly. Not a time I think when govt/public service can be slow and cautious, or we get in another 12-18 months, a real crisis,” he wrote.
“This needs decisive engagement.”
Hoffman also shared a LinkedIn post by retired actuary Peter McCarthy — who spent more than three decades advising governments across Australia — in the email. McCarthy wrote that there had been “a major deterioration” in the scheme in a “relatively short period of time”.
“This is very bad news for employers who pay premiums and a poor social outcome for injured workers,” he said.
Dominello’s office then forwarded Hoffman’s email to the office of the treasurer (and minister responsible for icare) Dominic Perrottet.
In June last year, Dominic Perrottet was warned about a potential workers’ compensation crisis. He was warned by the Finance Secretary and Minister Victor Dominello.
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He ignored them and worse – covered up iCare’s failures instead of cleaning them up. pic.twitter.com/HuRVMhqlLK
— Jodi McKay (@JodiMcKayMP) July 29, 2020
Following the media revelations aired on Monday, Labor leader Jodi McKay grilled Perrottet over Hoffman’s email.
“Why did the treasurer ignore that important advice from then-secretary Hoffman? Why did the treasurer ignore his alarming warning?” she asked at Wednesday’s question time, to which Perrottet replied:
“I do not call ‘alarming’ a scheme that has a funding ratio of above 100%. I do not call ‘alarming’ strong financial management of a scheme that provides lower premiums for businesses right across the state,” he said.
“Issues are regularly raised between ministers and their departments about all aspects of government and action is taken to ensure the best scheme possible to support injured workers right across our state. I call a deterioration of the scheme a $4 billion deficit presided over by the Labor Party.”
In a statement on Tuesday, icare said some of the allegations aired by the media were “misleading and inaccurate”.
“Recent media reports last night and today have raised several issues about icare’s performance and the management of the NSW workers compensation schemes.These are historical issues, many of which have been previously addressed,” the statement said.
icare board member Mark Lennon has since resigned.