A workers’ compensation bill that would change psychological impairment thresholds failed to pass NSW parliament in the final week of sittings for the year.

The bill, based on independent MP amendments, has passed the Legislative Assembly but was not debated in the upper house.

NSW Work Health and Safety Minister Sophie Cotsis says businesses face significant premium rises and changes are needed to the way lifetime benefits are calculated.

“The icare annual report confirms further reform is required to ensure the state’s workers’ compensation system is sustainable, affordable and able to support injured workers into the future,” she said.

“This parliament is where this action must occur. Independent crossbenchers have offered a compromise position which was passed by the Legislative Assembly.”

The government said last week that NSW premiums are expected to be 74% higher than Queensland’s and 40% higher than Victoria’s by 2028.

The parliament this month passed separate legislation introducing a range of reforms, but it has rejected proposals raising psychological whole person impairment levels.

The compromise bill relates to the threshold used to determine access to psychological injury weekly payments beyond a new 130-week maximum, introducing changes more slowly and to a lower maximum of 28%.

The chief psychiatrist would also be required to develop a new way of measuring permanent impairment for psychological injuries.

Parliament still has the opportunity to debate the bill in the upper house when sittings resume next year.