'We need your help': premier's call to business leaders

Australia's largest workers' compensation scheme is not solvent and will not exist in five to 10 years without major reform, a frustrated premier has warned business leaders.

Major changes to insurance protections for 3.5 million private sector employees were delayed last week by a rare coalition of Liberals, Nationals, Greens and unions, irritating the NSW Labor government.

Premier Chris Minns on Tuesday implored business and civic leaders to take the case to coalition and crossbench MPs to get changes focused on mental health claims passed.

"It's not because we're not taking psychological injury in the workplace seriously," he told a business breakfast.

"We absolutely are, but a scheme that's not solvent, that's not financial, will not exist in the next five to 10 years.

"That's where we need your help."

Rising mental health claims, which have longer recovery times than physical injuries, have placed the NSW scheme under substantial pressure in recent years.

State agency iCare operates both the private sector scheme, protecting 3.6 million workers, and another fund covering most of the state's 450,000 government workers.

About $4.8 billion in premiums was levied on businesses in 2024, about $1.80 from every $100 in wages.

But that figure only covered about 85 per cent of claims.

"It went backwards by $1.8 billion in the last financial year, and that's while premiums are (rising by) eight per cent now," Business NSW chief executive Dan Hunter said on Tuesday.

"No one can make up that deficit gap, but businesses and premiums - that's our problem."

Without the reforms, insurance premiums are expected to be hiked further to 36 per cent over three years to cover the shortfall.

"This is a hard reform, but it's in the state's interest," Treasurer Daniel Mookhey said.

But unions, lawyers and opposition MPs warn Labor's proposed changes will all but stop lump-sum payouts for serious mental health injury.

"There is ample room for reform ... but what this government is proposing is not reform, it is dragging us back to a time where we ignored psychological injury and mental health wellbeing," Unions NSW secretary Mark Morey told a parliamentary inquiry in May.

Labor's proposed changes and the modelling showing the need for reform will be reviewed by a second upper house inquiry in coming weeks.

It's unclear when the bill will return for a vote in parliament.

The treasurer suggested it return in late June when he delivers his third budget, days before the nominal insurer revalues the scheme and "shed(s) further light into how big the problem is growing without reform."

"Parliament should get the right to have a vote on the legislation, yay or nay," he said.

Mr Mookhey has previously claimed credit for exposing troubles inside iCare, which drew media scrutiny in 2021 over workers being underpaid while executives scored huge bonuses.