In New South Wales, workers with psychological injuries will receive less compensation after a new deal between Labor and the Coalition. On Thursday, both parties announced that from early 2026, legislation will freeze workers' compensation premiums for 18 months. This move aims to save businesses and charities from a 36% premium rise over three years. The fresh agreement raises the "permanent impairment" threshold from the existing 15% to 25%. Workers with psychological injuries causing 25% impairment or less will only get two years of support plus one year to transition back to work. After that, even if they cannot return to work, they won’t get ongoing help. Previously, Labor sought to raise this threshold to 31%, a plan rejected by unions and medical experts as too harsh. Katrina Norris, vice-president of the Australian Association of Psychologists, warned a 31% threshold could deny almost all mental health workers fair claims. The new opposition leader, Kellie Sloane, said the deal was necessary to provide business certainty before Christmas and make the system sustainable. The agreement includes an 18-month freeze on iCare premiums and extends medical benefits and income support by 12 months for injured workers who enter a return-to-work program. This program includes retraining, mentoring, and specialist caseworkers, with participants receiving 60% of their pre-injury wage. However, Sloane did not clarify who will run the return-to-work program or how it will function, acknowledging it was still being worked out. Employers are not required to rehire workers or provide reintegration support. Sloane stated, "My priority was to reset negotiations with the treasurer to stabilise premiums for business while strengthening protections for workers with psychological injuries." NSW Treasurer Daniel Mookhey added, "The scheme has been in dire need of modernisation. It has been failing injured workers, employers, the non-profit sector and taxpayers for too long. Continuing to do nothing was not an option." Business NSW CEO Dan Hunter welcomed the deal, citing surveys that predicted a 36% premium rise could bankrupt one in five businesses. On the other hand, Unions NSW criticized the plan. Acting secretary Thomas Costa said, "Despite repeated evidence that a WPI of more than 21% means a worker has no capacity to work, the parliament looks set to raise the threshold for income support to 25%... The parliament has failed to deliver meaningful reform. Instead, it has taken a sledgehammer to the entitlements of traumatised and vulnerable workers." The deal also mandates that the state's chief psychiatrist develop a new tool to measure psychological injury severity. Costa questioned, "Why wouldn’t you introduce the new diagnostic tool and then reassess?"