Proposed reforms to the NSW scheme have been delayed amid calls for more scrutiny of the government's plans for workers' compensation.
Scrutiny has involved commissioning financial modelling from the state's nominal insurer iCare of the cost of some proposed amendments.
Treasurer Daniel Mookhey pounced on the scathing assessment of the report, which was requested by shadow treasurer Damien Tudehope.
He said the proposed amendments would "punish workers" and slug businesses with higher premiums.
"The Tudehope-Latham amendments will force every victim of sexual harassment, racial harassment and bullying making a claim to prove their perpetrator deliberately wanted to hurt them," Mr Mookhey told reporters on Friday.
"My message is clear to the Liberal party: side with small business, side with victims of sexual harassment. Don't side with Mark Latham."
The opposition has been criticised for working with Mr Latham after sexual abuse allegations were levelled against the NSW MP earlier in July.
Mr Latham has denied the allegations, contained in a private application for an apprehended domestic violence order to be heard in court on Wednesday.
The one-time prime ministerial candidate has also been accused of taking photos of female parliamentary colleagues without their knowledge, which he apologised for.
The financial analysis reported proposed amendments put the burden on victims of sexual and racial harassment, as well as bullying, to prove their perpetrator intended to harm them.
"The need to prove intent of the perpetrator to harm would effectively remove all types of bullying and harassment from the schemes," the report said.
It also said the private-sector workers' compensation scheme would be $800 million worse off by 2029 under the amendments, than it would be under the government's plans.
But Mr Tudehope criticised politicisation of the figures, saying the plan would deliver almost as much in savings as the government's proposals.
"However, ours does not desert seriously injured workers, and that's the difference," he told reporters.
Mr Tudehope said he can condemn Mr Latham's behaviour while continuing to engage with him on policy matters.
"Mr Latham has tainted the whole of this process ... and it does make it more difficult because he has been involved," he said.
"But it doesn't mean that a member of the committee should not make a contribution to getting a better outcome."
An inquiry has been called into the workers' compensation scheme, in which Mr Latham has taken part, with a committee hearing scheduled for Tuesday.
Mr Latham is expected to speak to reporters on Friday afternoon.
