Australia’s workers’ comp costs soar to $7.9B in 2024–25, driven by rising mental health claims, with reforms underway to fix the system.

Australia’s federal government faces escalating budget pressures as workers’ compensation costs surge to $7.9 billion in 2024–25—up from $5.5 billion projected in March—and are expected to reach $9.6 billion by 2028–29, driven largely by rising claims for psychological conditions linked to employment. Finance and Public Service Minister Katy Gallagher acknowledged the trend, stressing the need to investigate root causes without cutting staff, as costs stem from employee welfare obligations, not workforce size. Wage and salary expenses are now forecast at $31.1 billion, with superannuation costs peaking at $24.2 billion. Comcare cited increasing claim frequency and administrative burdens as key drivers of higher premiums. In December, the Albanese government released a major review of the Safety Rehabilitation and Compensation Scheme Act, recommending 141 reforms to simplify the system and reduce its psychological toll on claimants.