The South Australian government will rewrite compensation laws for workers to slash the system's unfunded liability and cut premiums to companies.
Premier Jay Weatherill says the current WorkCover scheme has also failed to support injured workers properly so they could return to work.
"These reforms will be the most substantial changes to WorkCover in nearly 30 years and will be vital for South Australian businesses, big and small, to remain competitive," the premier said on Tuesday.
"These are savings in the order of $180m per year for South Australian businesses.
"It is equally important for injured workers who have often been let down by the scheme in the past and must be supported as best as possible to return to work."
The government will talk with key interest groups before presenting legislation to parliament by July.
It hopes to have the new scheme up and running by mid-2015.
Industrial Relations Minister John Rau said recent operational changes to WorkCover had helped but major legislative changes were now required.
"This will be a completely new bill," he said.
"We are scrapping the current one and starting again."
Opposition Leader Steven Marshall said reforms to WorkCover were welcome but the Liberals were yet to see the government's draft legislation.
He said the current scheme was clearly not working - for workers or employers.
"We remain the worst scheme in the country by a country mile," he said.
