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Labour stands up for ACC

Written By: - Date published: 7:02 am, October 24th, 2009 - 14 comments
Categories: ACC, national/act government, phil goff, privatisation - Tags:

acc-aint-broke-200So – Labour have stood up for ACC. Bravo!

History repeats. In the last year of the last National government (1999) they flogged off the profitable parts of ACC cover to their mates in the insurance industry (“opened ACC to competition”). The incoming Labour government reversed those changes and re-instated ACC as the sole provider of accident insurance cover. ACC is an excellent system, the “envy of the world”, it ain’t broke, and it doesn’t need fixing. It certainly doesn’t need selling. National are determined to flog it off anyway, and last week announced Phase 1, again “opening” ACC to “competition”.

Some doubted that Labour had the mettle to fight for ACC, to stand up and say that they would reverse these changes again next time they are in government. Well, Phil Goff showed us that Labour still has what it takes. Labour will fight tooth and nail, and reverse any changes. On Friday’s Morning Report Phil set it out (audio):

Very clearly, this is a stalking horse for the full privatisation of ACC. It’s served New Zealand well, it’s been a better system than any other system in the world. But the National Party has never supported it.

They’ve been looking for an excuse to turn it over to mates in the business sector, they’ve found [made up!] that excuse. Labour is opposed to privatisation, we will fight that tooth and nail, and we will reverse it.

The interview goes on to quote insurance industry figures expressing doubts on whether it is worth getting in to the business on those terms.  The (hopefully short!) timeframe doesn’t justify the start up costs. So what next?  In the mean time, bravo Labour, and well spoken Phil Goff!

[The excellent Marty G has been covering ACC so well I hesitated to write this post.  But Marty seems to be away so be away and this development needed a post, so hope you don’t mind!]

14 comments on “Labour stands up for ACC ”

  1. Ed 1

    By ‘profitable’ I assume it is thought that this account will deliver the most profit to private companies. It is my understanding that no part of ACC currently makes any ‘profit’ – there are no shareholders that take any part of levies, or any surplus arising if levies are higher than claims in any period.

    I heard a radio commentator saying that the worker account was the only profitable account and that without it the other accounts would need more money from government – that doesn’t seem right to me – over time, each account pays for itself.

    Where introducing competition will hurt New Zealand is that we will divert resources to pay for:
    *The cost of introducing systems and processes into a number of different companies.
    *The cost of all sales costs and marketing costs needed with competition that are no otherwise needed
    *The cost of health professionals having to deal with multiple providers all with different forms and requirements
    *The cost of changing banking and payroll systems to cope with multiple providers
    *The cost of companies needing to each develop reserves for future claims – with smaller companies needing proportionately higher reserves than larger organisations
    *And also the cost of unwinding the system when Labour is next in government
    with all those costs being met by levies, and with no higher benefits,

    There are good reasons for saying that keeping ACC unchanged is better for employers and workers and the country, but implying that there is currently profit being made in the worker account is not one of them.

    Didn’t Key promise not to sell off state assets in this term? Selling part of the ACC market is selling a state asset in my view, even if the government ends up paying rather than being paid for the sale.

    • BLiP 1.1


      You highlight the idiocy so apparent in the introduction of “competition” into government functions. Millions and millions are being spent on pretty pamphlets, advertisements and legions of marketing and brand specialists now infesting universities in the competitive education “market” – thanks Labour – instead of text books, teachers and research. This same waste will become a feature of ACC as pretty pamphlets, advertising and associated leeches flood into that sector and detract resources from prevention, cure and rehabilitation.

      And, yes, The Goober did promise not to privatise government – that’s why the indolent media and the scurrying blog bugs are attempting to spin this not as privatisation but as competition.

  2. RedLogix 2

    But Goff has been vague about the exact terms on which ACC would be restored as the sole provider.

    Interesting questions arise in terms of what happens to those people who have paid out a number of years of premiums to an Aussie company and then have a long-term accident.. at which point that company closes up shop because ACC is restored.

    Would ACC then be liable for the on-going costs associated with that injury? Would ACC be able to reach back and re-claim the premiums from the company they were paid to?

    Premiums are paid today, but the liablibity extends into the future… Goff needs to make it clear to any private company entering this market, that if and when ACC is fully restored, that ACC will attempt to recover the premiums paid to that company in order to cover the pre-exisiting liabilities that ACC would be inhereting.

    • gitmo 2.1

      “if and when ACC is fully restored, that ACC will attempt to recover the premiums paid to that company in order to cover the pre-exisiting liabilities that ACC would be inhereting.”

      What all the premiums, or just those that relate to the those persons with liabilities ?

      • RedLogix 2.1.1

        Premiums (or levies) are paid into a collective pool annually to cover accidents that may or may not occur any time in the future.

        If a restored ACC is required to unconditionally assume these future liabilities, then it needs to recover the ‘hole’ in the levy income that would be created by a period of privatisation… would it not?

        Logically a future ACC needs to go back to the private insureres and say… we are now covering the risk you accepted premiums for and we want to recover it. (Less of course any payouts the private companies may have made in the meantime.)

        This illustrates a major difference between ACC and a private insurer. Private companies are essentially taking a bet with you, a bet that you will not have an accident during the period your premium covers, usually just one year. If you don’t pay your premium, the bet expires.

        By contrast ACC is a social contract that covers all citizens unconditionally without time limit. ACC is not ‘public insurance company’, and the whole artifice of ‘workplace’ and ‘motor vehicle’ accounts exist solely for accounting purposes, and have nothing to do with it’s underlying purpose or principles.

        • gitmo

          I see complete fantasy land stuff.

          • RedLogix

            Of course in reality what will happen is that a future ACC would simply have to recover the lost levy income from the taxpayer (either by direct injection or increased levies)… and the private Aussie insurers will make out like dingos. It’s called privatising the profits and socialising the losses, and it’s how so called ‘private enterprise’ makes it’s real money all the time.

            I was just fantasising a scenario in which that didn’t happen for once.

    • Ed 2.2

      I can”t remember how it was done last time, but in a competitive model there must be a way of agreeing who is responsible for which claims. The private companies would probably be responsible for claims arising from the period they provided cover (including all future payments under those claims.

      Some very large companies already effectively self-insure (there are some criteria they have to meet to be allowed to do it), and if payments last more than a few years ACC takes over the ongoing liability for a premium. I think the company only pays up to 2 or 3 years. There was a legal battle a few years ago about a company which had not realised how expensive a long term claim could be.

      (Incidentally, this is the reason all employers are not allowed to self-insure – you would not want a claim to bankrupt a business (or more likely to find that an employer goes into liquidation to avoid paying a claim). I’ve never understood why large companies are allowed to do it actually having a subsidiary insurance company.

      So there is no real need for Phil Goff to set out how it would happen. The insurance companies know that it would be fair as regards the company paying enough money for ACC to take over the liabilities – but if they spend a lot of money setting up systems and sales structures, that is their risk.

  3. dave 3

    Labour has NEVER stood up for ACC. If you think Labour has done so, you obviously dont know much about ACC, have never tried to get home help or other rehabilitation and have never had a vocational rehabilitation assessment.

    • Craig Glen Eden 3.1

      Gee Dave you not being able to get the service you need = Labour not standing up for Acc.
      No logic their buddy in short you are talking CRAP

      I know hundreds of cases where Labour MPs have gone into bat for people to insure the get what they need from ACC, unions as well for that matter. Labour has already reversed the privatization of ACC once and have said they will do it again.

      I am not sure where you live but Labour will be down the Avondale Market in Auckland talking to people about ACC and campaigning to stop the cuts to ACC. So Dave if you live in Auckland put your brain in gear put your money where your mouth is and come and campaign for ACC.

  4. JM 4

    Seems to me that by their action to open up ACC, National have locked in place a significant proportion of their support funding for the next election.

  5. felix 5

    Good one, Labour. This is the direction you need to be moving in.

    You need to say this louder and more clearly, but it’s a good start.

    Moar like this plox.

  6. swimmer 6

    Yus, Labour! Yay Goff! 😀

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