He is one of thousands of people who will lose their weekly benefits this month under state government changes to the scheme.

The cuts come as new research by The Australia Institute shows the workers compensation scheme has a $2.4 billion surplus, plus additional financial "padding" in the form of a $1.9 billion risk margin.

Mr Revelos, who seriously injured his back while helping build the M7 in 2004, has not worked for 12 years and will stop receiving a fortnightly payment of $1407 at Christmas. His wife is his full-time carer and receives a pension.

"Come the 26th December, I don't know how we are going to survive," he said.

"I don't know how we are going to pay our bills with no income."

Analysis by Dr Jim Stanford, economist and director of the Australia Institute's Centre for Future Work, found that government insurance agency iCare's reported liabilities are inflated by a 15.6 per cent risk margin, giving the insurer extra leeway in case some claims are more expensive than expected.

"This margin adds another $1.9 billion to the actual surplus maintained by the insurer, generating a total surplus in excess of $4 billion," Dr Stanford said.

"This ultra-cautious financial approach is not necessary in the context of a publicly-run insurance system - but perhaps is part of a longer-run plan to prepare the system for privatisation."

The Minister for Finance, Services and Property, Victor Dominello said there were no plans to privatise the scheme.

He said the report's assertions were not in line with actuarial advice the state government received in 2011.

"We undertook wholesale reform to restore the financial viability of the scheme, improve return to work rates and increase support for the most seriously injured workers," Mr Dominello said.

"Time limitations on compensation, similar to those introduced in 2012, exist in many other jurisdictions around Australia. The scheme is now in surplus, with a target funding ratio aligned to APRA standards."

Dr Stanford said the so-called fiscal emergency of 2011-12 which led the state government to slash benefits for injured workers was "largely a temporary accounting fiction resulting from the effects of the Global Financial Crisis (which suppressed investment returns and inflated the apparent cost of future liabilities)".

PwC reviewed the scheme in late 2011 and predicted a deficit of $4.1 billion.

A government spokesman said Ernst and Young reviewed the scheme in 2011 and financial statements were also reviewed by the NSW Audit Office.

"Now the system has a large and growing surplus, more than adequate to finance significant repairs in benefit levels (including protecting the thousands of injured workers about to be cut off from monthly benefits)," Dr Stanford said.

"Yet managers of the system are intent on continuing to accumulate further surpluses, instead of rebuilding benefits."

Dr Stanford's study also found that iCare's premium income fell by $18 million in 2016-17 as part of ongoing reductions in premiums for private sector employers. He said average workers' compensation premiums in NSW have declined by 40 per cent in the past decade.

"The erosion of premiums contradicts the claim that the system 'cannot afford' to sustain benefits for the over 4000 workers about to be cut off entirely," he said.

"[T]he argument that NSW somehow cannot "afford" decent benefits for injured workers is not credible.

"There is no fiscal necessity to deny benefits to the thousands of injured workers who are about to lose them."

Mr Revelos has five children aged from 12 to 27, two of whom are still at school and dependent.

He has attended Centrelink four times and was told he is not entitled to welfare payments because he received a lump sum payment for a back injury in 1994 that resulted in him having four titanium bolts inserted.

"Centrelink told me that just because workers comp is changing their law, we are not changing ours," he said. "It was brutal."

When Mr Revelos lifted a heavy plank of wood 10 years after his surgery during construction of the M7 he said he heard "a big crack which was the sound of two bolts breaking".

"I was stuck, frozen on the deck where I was working," he said.

A scan showed two titanium bolts had broken and ruptured a disc.

"I was told my back was unstable and I couldn't go back to work," he said.

After a period of being bedridden, the bolts were repaired and the ruptured disc was fused.

But Mr Revelos said while the surgery helped, he remained in constant pain and is reliant on morphine.

"I haven't worked since 2005," he said.

Mr Revelos said doctors assessed his whole person impairment at 20 per cent in 2004 and in September this year reassessed it at 26 per cent. Under changes to the scheme, injured workers with an impairment level of 20 per cent or less are losing their weekly benefits.

He said the latest assessment was rejected by his workers compensation insurer who wrote to him on September 13 to say his entitlements would be terminated on December 25.

Close to 4000 people will lose their benefits by the end of January.

"I definitely can't work and I can't live without my morphine so I don't know what I am going to do," he said.

Mark Morey, secretary of Unions NSW, which commissioned the Australia Institute study, said if the government can afford to "splash billions on unneeded stadium upgrades, why can't it support 4000 vulnerable sick and injured people who are at their wits' end?"

"The NSW government should cancel the Christmas cut offs and allow sick and injured workers to live with dignity," he said.

NSW Greens MP and Industrial Relations spokesman David Shoebridge said a multi-billion dollar surplus "only makes sense if the government is planning to privatise the scheme".

"The real tragedy is that there is more than enough in the surplus to prevent the thousands of seriously injured workers being thrown off the scheme over the next six months," he said.

"While the rest of us are sharing this festive season with family and friends there will be thousands of injured workers, and their families, who are losing everything from Boxing Day onwards.

"What should be making all of us so angry is that it's a tragedy that doesn't need to happen."

A spokeswoman for icare said it has taken every possible measure to inform workers of their options and available support services by telephone, fact sheets, letters and a digital video. She said icare would be there for workers beyond the transition via continued medical and other support.

"It is also important to note that Mr Revelos' medical benefits will continue," she said.

"icare has offered Mr Revelos personalised assistance through the process, including a referral to tailored community transition support services."

WHAT'S INVOLVED

• Workers compensation benefits were slashed in 2012 ahead of a predicted $4 billion deficit;
• The workers compensation scheme is now $2.4 billion in surplus;
• Income from premiums fell by $18 million during 2016-17;
• More than 4000 workers will be cut off workers compensation benefits by the end of January.