Private sector competition brings market disciplines and efficiencies to bloated publicly-owned monopolies. That’s the mantra, eh? That’s the indisputable truth… right? So, how come the Nats are planning to make ACC raise its levies and pay a dividend – for the first time ever – so that private insurers can compete? And how does that benefit NZ?
That the Nats are looking to raise ACC levies, having just dropped them in October, following hikes in 2010 that were needed to ‘save ACC’ (actually, ACC’s ‘crisis’ was just the fall in its reserves’ value because of the gobal financial crisis and it was ‘saved’ by those values rising again, not anything National did). But the annoyance and seeming incompetence of chopping and changing levy levels all the time isn’t as big a deal as why they want to raise the levies.
Here‘s the crucial bit:
The papers showed ACC “would be subject to regulatory safeguards to ensure it sets prices responsibly” and proposed legislation would require ACC to ”price prudently by incorporating a surplus margin into prices”.
ACC would also be required to pay built up reserves to the Government to “avoid a build-up of excess reserves that could reduce financial disciplines or be used by ACC to reduce its prices (which would make it difficult for insurers to compete)”.
So, ACC would be required to charge us more than it needs and then give that money to the government. It’s called a dividend.
That was never part of the deal. When New Zealanders’ gave away our right to sue for personal injury (and thereby realised massive savings in our court system) the quid pro quo was that we would get comprehensive, universal no-fault injury insurance that would be funded by universal, limited purpose levies. ACC has never had any right to raise money other than to pay for insurance claims and administration (which, for ACC is a far lower cost than for private insurers). The government can’t now try to grab some of that money as a backdoor tax for its general operations.
And it certainly can’t do that to give private insurers an easier time competing against ACC by raising the price New Zealanders pay for injury insurance. How is it good for New Zealand if we pay more on our ACC levies so that foreign insurers are able to come in here and make a profit?
We end up paying more for the same service. In fact, for a diminished service because private insurers make their money by not making payouts. They spend a huge amount of money on lawyers trying to get out of paying policyholders for claims, or shifting the liability for those claims to other insurers.
Don’t look for the economic or social logic to this. It doesn’t exist. This is simply more of National’s relentless privatisaton agenda; their ideological obsession with destroying publicly-owned wealth and letting the private sector vultures feast on the carcass.