WorkCover woes blamed on poor investments and rorters

HALF of the $4 billion deficit in the finances of the state's WorkCover scheme are the result of poor returns on investments, accountants have found.

Despite this, the NSW government has argued that rorting of the workers' compensation scheme has been a major reason for the problem. A government report has recommended slashing benefits to injured workers to reduce the deficit.

The Deputy Premier, Andrew Stoner, recently said WorkCover ''has to be a scheme that doesn't have loopholes in it, that doesn't allow for rorts and which is financially affordable''.

''We've got examples of people who are doing part-time work, yet they have been on workers' compensation for many, many years for some pretty questionable complaints,'' he said.

According to WorkCover's annual report for 2010-11, nine people have been prosecuted for defrauding the scheme.

A parliamentary inquiry into the workers' compensation scheme yesterday heard from Robert Lloyd, from the NSW Self Insurance Corporation, who said he supported removal of claims for nervous shock and injuries suffered on journeys to and from work.

''If they are not there, it is a saving,'' he said.

Michael Playford, a PricewaterhouseCoopers actuary, said there had been an increase in damages claims as part of an emerging ''lump sum culture''.

But an evaluation by PricewaterhouseCoopers says half the WorkCover scheme's $4 billion deficit was due ''to external influences impacting investment returns achieved''.