On Wednesday this week, Nick Smith is going to announce what amounts to the effective privatisation of a large part of ACC. You won’t hear the word privatisation uttered from his lips, he’ll use all sorts of other words like ‘competition’ and ‘market discipline’, but the effect will be the same. Accident cover for those injured at work will now be provided by the private, for-profit insurance industry. That’s privatisation.
What concerns me about this most is that the National government haven’t even attempted to produce a robust case to show that it’s a good idea. This is a purely ideological decision, based on National’s blinkered belief that the market will always deliver the most efficient outcome. But consider these facts:
There are only two ways that private insurance companies will be able to turn a profit from offering work-related accident cover in New Zealand. Either they will have to reduce entitlements, or they will have to increase the cost of that cover. In other words, we’ll all end up paying more to get less.
Since National became the government, Nick Smith has gone to some lengths to manufacture a crisis in ACC in order to justify his privatisation plans. As I outline a last week, ACC is in pretty good shape and Smith’s scaremongering is pretty transparent. His moves to massively hike up levies in 2009 were designed to erode public support. If ever we needed proof of how cynical a move that was, we got it a few weeks ago when he started talking about levy cuts just six months out from a general election.
ACC isn’t perfect, but the comprehensive, no-fault, 24/7, universal cover it currently offers is the right approach for us to take. We should be focused on how we can improve what we have now, not how we can create more profit-making opportunities for National’s mates in the private insurance industry.