NSW Premier Kristina Keneally last week wrote to Prime Minster Julia Gillard saying that NSW would not be part of the national regime, due to come in from January 2012, unless two parts of NSW state OHS laws are made part of the national legislation: the right to prosecute employers for work safety breaches and employers carrying the onus of proof to show they exercised due care where breaches do occur.
But while the Federal Government and business groups have slammed the NSW decision, Greens MP Adam Bandt has indicated the party will support the NSW demands.
''The Greens support the move to uniform national laws for workplace safety but this should not come at the expense of existing protections,'' he said.
"I would hope that it could be fixed before it comes to Parliament. If it can't, both in the Lower House and in the Senate we'll move amendments to try and make the legislation better and improve the protection for employees to try and ensure that they don't lose out."
The move will further anger business groups, who have accused the NSW premier of "retrograde" policy and pandering to union interest.
The Australian Industry Group, the Australian Retailers Association and the Australian Chamber of Commerce are among those to condemn the NSW stance.
Stephen Cartwright, chief executive of the NSW Business Chamber, says the NSW system simply does not work.
"NSW has some of the highest fines and high prosecution rates of employers, yet safety outcomes are below the rest of Australia," says Cartwright.
"The 'guilty until proven innocent' system doesn't work. Other states have shown that the best safety outcomes occur when government and business act as partners in reducing accidents and injuries rather than acting as adversaries."
"The Prime Minister is acting in a principled way but the Premier is playing politics. The Prime Minister is putting the nation first, the Premier is putting the unions first."
Gillard has told the NSW Government that its opposition to the national OHS framework could cost the state up to $144 million in lost federal government payments.
However, Keneally is refusing to back down.
''I would hope that the Commonwealth and the Prime Minister isn't seriously suggesting that I have to make some sort of Sophie's Choice-type decision,'' she said, in reference to the 1982 film where a woman is faced with the dilemma of saving one of her two children in Auschwitz.
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