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Spin-busting: ACC rises and cuts

Written By: - Date published: 1:45 pm, October 15th, 2009 - 38 comments
Categories: ACC, privatisation - Tags:

acc-undermine-200The Herald’s editorial today largely reads like it was written by Nick Smith and John Judge, so let’s use it as the basis for some spin-busting (my source is the ACC annual report unless otherwise mentioned):

opponents say any change would be a prelude to privatisation. Yet all this exaggeration could not disguise the fact that ACC needed to be reined in.

No. The scheme brought in over a billion more in levies than it spent last year (p 73), it is not an undisputed fact that ACC needed reining in. In fact, this is about increasing public dissatisfaction with ACC by making us bear a higher cost for less coverage, softening us up for privatisation.

A certain laxity has pervaded its activities over the past few years, triggered perhaps by both the previous Government’s approach and a desire to keep its name off the front page. This has resulted in a ballooning of costs and, now, as a consequence, the need for fairly strong medicine.

No. The cost of paying for claims increased slower than the increase in levy revenue ($300 mil vs $500 mil). (p. 73) The supposed ‘loss’ was in fact an increase in the modelled cost of going fully-funded (p. 36)

Wider entitlements, partly the result of court rulings and partly prompted by the Clark Government’s wish to expand the coverage and increase the take-up rate, has resulted in the number of claims rising by 4 per cent a year, much faster than the population growth of 1 per cent.

No. The total number of claims last year was 1.755 million, the year before it was 1.752 million an 0.1% increase – less than population growth. (p. 50). The number getting income compensation: 122,000 last year, 120,000 the year before, less than 2% increase (p. 52)

Already announced was an end to free physiotherapy visits… Also scheduled to go are entitlements to the families of people who commit suicide… The Government will also find little resistance to its decision to further restrict entitlements for criminals.

These are all small beer designed to avoid the media looking at the big cuts – the rights for part-time, seasonal, and casual workers to cover in particular. It is telling that Smith has given no figures for the savings from cutting income compo for crims because very little or none has been paid.

Large motorcycles will attract a far bigger licensing levy, which reflects their likelihood of involvement in an accident and removes the subsidisation of their ACC bills by car owners. If so, safer roads are the logical outcome. And a change there would be as welcome as stricter control of ACC costs.

All this does is encourage the kind of larger car arms race we’ve seen in the States. At a time of climate change and peak oil, we shouldn’t be punishing owners of small vehicles. Motorcyclists are more likely to be injured but its cars that cause the accidents, hence the cross-subsidy in the past.

Little heed is paid to the fact that the corporation’s investment returns are bound to improve over the next few years. Nor is account taken of the beneficial impact of inevitably increasing interest rates on the net present value of ACC liabilities.

That is true. The value of ACC’s investments is likely to have shot up in the last few months, as the Cullen Fund’s has.

38 comments on “Spin-busting: ACC rises and cuts ”

  1. chris 1

    nice

    captcha: agree

  2. chris 2

    Good points, but Judge claims they had factored out bikers accidents which were not their fault.

  3. burt 3

    One more monopoly state provider with no accountability to the people who fund it heading for the chop. Excellent outcome.

    • BLiP 3.1

      Meanwhile, the public servants driving this idiocy are immune from National Ltd®’s so-called “cap”. Gotta give it Treaury, those mandarns know how to hand it out but don’t have to take it themselves.

    • businesstime 3.2

      actually burt, most business owners support having a single provider for ACC – it’s more efficient, more secure, and easily to deal with. check out the independent’s editorial and the interview on nine to noon this morning for examples.

      Of course, you wouldn’t know about the real business world because you’re some kid doing your Bcom or some such rubbish

      • Armchair Critic 3.2.1

        Spot on. As a small business operator the most profitable use of my time is working on contracts I can charge time to.
        Shopping around for insurance, comparing what is on offer and saving a few dollars (in the scheme of things) is a total waste of my time. Ideology or theory about competition, markets or whatever, is irrelevant – ACC as a monopoly is the pragmatic option.

      • burt 3.2.2

        businesstime

        How wrong you are. I’m a business owner and I certainly don’t fit into the “most business owners” category you think you can speak on behalf of.

        You demonstrate very well why a one size fits all mentality is so hopeless.

        • Armchair Critic 3.2.2.1

          If the best use of your time is finding the best insurance you must either be an insurance broker or your business doesn’t make much money.

        • burt 3.2.2.2

          Armchair Critic

          You must be either a myopic apologist for big one size fits all govt or you have no idea what you are talking about. When my business buys anything substantive (computers, cars, desks, …) there is a process of getting prices and comparing options & features.

          Sure life would be easy if there was a one size fits all car dealer that sold one model for one price for all people – could save me time comparing features I guess. Likewise for computers, if there was just one supplier that sold one model I wouldn’t need to think about which one was best for the use I had in mind. My developer machines are a lot bigger than my end user machines so what would you suggest – just buy the same machine and save the time and effort getting one that is fit for purpose.

          You are a joke….

          • Noko 3.2.2.2.1

            What’s more efficient in this situation? A corporation which provides healthcare insurance, and doesn’t take a cut or a corporation which provides healthcare insurance and takes a cut? Furthermore, would you like to be covered for car crashes, but not a house fire? What about if you were a work at home and married, and your partner commited suicide would the efficient private insurance company cover the lost income for you?

            Hell, if a private corporation is more efficient, how come you aren’t with Southern Cross healthcare instead of whining about having to pay ACC to cover your staff?

            Captcha: honest the opposite of what most private healthcare providers are

          • felix 3.2.2.2.2

            Don’t be silly burt, no-one else is talking about cars and computers.

            • burt 3.2.2.2.2.1

              Perhaps if they actually knew what running a business was about they might have noticed that buying things is about getting what you need for the best price rather than having an easy option that fits an ideology. If so then I wouldn’t need to remind them that a business buys things everyday and that checking prices and options for anything is an essential part of business procurement.

            • felix 3.2.2.2.2.2

              But burt, no-one suggested that it would be a good idea for the entire country to buy the same computer or car.

              You seem to be saying that a person can’t support a universal non-profit no-fault scheme over a private system unless they also support having one type of computer and one type of car for every business in the country.

              That just doesn’t make any sense, burt. They’re not the same thing.

            • burt 3.2.2.2.2.3

              felix

              I was responding to;

              Shopping around for insurance, comparing what is on offer and saving a few dollars (in the scheme of things) is a total waste of my time. Ideology or theory about competition, markets or whatever, is irrelevant ACC as a monopoly is the pragmatic option.

              Where Armchair Critic was saying that shopping around for the best insurance option is a waste of time. I suspect all Armchair Critic knows about is trading his hours for $$$, clearly he has no concept of purchasing in a business.

            • felix 3.2.2.2.2.4

              Yes I accept the point you were making about sensible purchasing but when you say things like

              My developer machines are a lot bigger than my end user machines so what would you suggest just buy the same machine and save the time and effort getting one that is fit for purpose.

              and so on, you go a step further and argue against an argument which no-one is actually making. The analogy just doesn’t make sense.

              Off topic, but do you (or anyone) know what the theme music for Back Benches is?

            • Armchair Critic 3.2.2.2.2.5

              Nah, burt, I spent ten years purchasing. Contracts for tens of millions, adding to assets bases of over a billion dollars. Didn’t find it to be that stimulating, but to each their own.
              So, in addition to your discussion with felix – Yay for sensible purchasing, but boo for fussing over the little things. ACC is not a major cost to many small businesses, and opening it up to competition might possibly, on the face of it, save a small percentage on that comparatively small cost. As I see it, ACC is a bargain and even if competition is introduced I won’t chase rats and mice.

          • Armchair Critic 3.2.2.2.3

            Have a bit of a read, burt, I didn’t say anything about government. My comment was about running my business efficiently, not about the ownership of an insurance provider.
            When I need to buy a car I don’t spend hours agonising over the decision, comparing models, makes, features, that sort of shit, because I don’t get paid to do this. And these things make FA difference to my business – I need a car to get from A to B and back, most cars do this.
            When I need to buy a computer I don’t spend hours agonising over the specifications, because I don’t get paid to do this either. And a computer either runs the software I need or it doesn’t. If it does, the difference in other features is irrelevant, and taking a couple of hours to decide which one to buy nullifies any price difference.
            Cars and computers either do the job, or they don’t. Just asking the sales rep whether the product will do the job or not, and evaluating their answer (which, incidentally, I don’t get paid for) is enough. If there was a one size fits all solution, provided by the government or private sector, I would take that. As long as it worked.
            Same with insurance, in case you haven’t got the idea yet. My business needs public liability insurance. Some clients require a million, others ask for two, some need none and there are potential clients that demand five. The price difference over the range (apart from those that need none) was about $60 per year, and the time I spent talking to the broker (which I couldn’t charge for) was worth more than this difference. Which reinforced my opinion – don’t fuck around, make a quick decision and run with it.
            Running a business may well be about “getting what you need for the best price” for you, but that just says to me that you know shit about running a business. For me it is ultimately about making a profit, which I do quite well, thank you very much. And in case you haven’t guessed it, I make a profit by sticking to my core skills, not shagging around with shit that is, quiet frankly, not my speciality and a triviality in terms of my cashflow and overall business. Like whether I will save a few bucks by being forced to select which provider I will use for ACC, because clearly any savings in insurance costs I make will be soaked up by talking to the insurance company. Thanks for suggesting my business should have increased costs and reduced coverage, just to meet the requirements of your fucked up neolib ideology, though.
            Like I said first time, if getting the best ACC-type insurance is the difference between success and failure for your business, that just says to me your business skills have room for improvement. So keep fussing over trivia, I hope it serves you well.
            BTW I’m shitted you couldn’t get a “retrospective” in there somewhere.

    • Draco T Bastard 3.3

      As far as insurance goes – a state monopoly is far more efficient and cost effective than multiple private providers and the massive amount of dead weight loss they entail through the act of profit maximisation.

  4. Herodotus 4

    If the reason for the increase is to fully fund all contigent liabilities(Not Frogs definition!) & this is inline with the current acts requirements, then why not prepare a private members bill to amend this requirement?

  5. Noko 5

    What’s more efficient in this situation? A corporation which provides healthcare insurance, and doesn’t take a cut or a corporation which provides healthcare insurance and takes a cut? Furthermore, would you like to be covered for car crashes, but not a house fire? What about if you were a work at home and married, and your partner commited suicide – would the efficient private insurance company cover the lost income for you?

    Hell, if a private corporation is more efficient, how come you aren’t with Southern Cross healthcare instead of whining about having to pay ACC to cover your staff?

    Captcha: honest – the opposite of what most private healthcare providers are

    • burt 5.1

      Captcha: honest the opposite of what most private healthcare providers are

      The opposite of what Labour were when they “opened” the books prior to the election….. If a private healthcare provider was as dishonest about the state of it’s books as Labour were the directors would be in jail.

      • Noko 5.1.1

        What’s Labour got to do with it? So you don’t have an actual argument so you go off on a tangent about a political party I’ve never even associated myself with, let alone voted for?

        • Armchair Critic 5.1.1.1

          burt occasionally has an argument, but he usually settles for a distraction, ad hominem attacks and weird obsessions with the concepts of “retrospective” and “apologist”. Sometimes he is good for a laugh.

          • Noko 5.1.1.1.1

            but he usually settles for a distraction, ad hominem attacks and weird obsessions

            Your average right-winger then?

  6. George D 6

    Throwing prisoners under the bus is the thin end of the wedge. If Labour do not stand up to this, then universality in ACC will be gone, and we will in all likelihood never get it back. National will then use this to attack other “unpopular elements”.

    And somebody needs to point out that “Accident” is merely branding. ACC covers all injuries (that are not sustained over a period of time).

  7. dan 7

    Let’s not forget that before the election,anyone close to the insurance industry was crowing that the Nacts were a shoe in, and that ACC was to be privatised. It went against all logic, but it did offer big profits for insurance people.
    At the same time other countries around the world look to ACC as a model to be followed, our 1960 fossils will put their money on privatisation. The reality is it will cost more, as the money once spent on getting people back to work and productive will instead be spent on wasteful litgation.
    Smith is a joke. When will the righties face reality instead of following their long discredited mantra of “privatisation’!
    Yeah, right!

  8. Outofbed 8

    Full interview with psycotherapist Kyle MacDonald about ACC cuts
    Video

    First he came for the sucide victims
    and then he came for the sexual abuse victims…

  9. Captain Rehab 9

    national have taken a big hit on this. It might not show right away but it’s major legislation and they’ve fcukd it up. It’ll be a touchstone for how they are perceived. Don’t let up on them on this one.

    • George D 9.1

      The left’s hope is that National piss off more and more constituencies with this kind of shit. They might be small (in the thousands in many cases), but they add up.

  10. Outofbed 10

    Not one post on ACC at Red Aert not one
    WTF

  11. gingercrush 11

    National can do what it wants. They’ve had an absolutely awful week and I love John Key and National. But this week has been fucking terrible. Doesn’t matter though. Labour have proved themselves to be utterly incompetent. Their blog doesn’t focus on the real issues. Instead its personal attacks on National politicians or ramblings about climate change (get the stuff into the media not their bloody blog). Why they let Clare Curran blog on anything is beyond me. She really should be told to shut up. She does the left no service. Too many of them appear to be blogging rather than getting issues out into the media or even in the house.

    You wouldn’t know it but Goff has been in America. He gets no media exposure except for some wee bit in the Herald. Nevermind that even when he is in New Zealand. He’s largely forgotten by everyone. The guy needs to get himself exposed.

    Perhaps the most shocking thing is while you lot hate this government. You’re quite happy to circle jerk around how well Labour is doing. When they’re not. They may perform in the house better than National. Their members may actually be smarter than National. But they don’t act like an opposition. They don’t get enough media exposure. They can’t set any type of agenda.

    Meanwhile, the other left party the Greens are becoming pathetic They’re polling below 5%. Turei and Norman are not political leaders that will inspire anymore Greens to vote. In fact I worry they’ll get even less people to vote Green. The accusations that Sue Bradford cause distractions to the Green message may be partly true. But neither Russel or Turei provide the environmental focus the Greens need. And with Fitzsimmons going in many ways the old Greens is gone. Outside of Delahunty your party resembles middle-upper income/class people. That may well be who votes for the Greens (and its true look at where the Greens get votes). But something tells me Green voters rather enjoy voting for a slightly odd bunch of people. That and you lose the substantive issue focus.

    So while you lot on the left decry this horrible National-Act-United Future-Maori Party government. You might actually look at your own backyard. Because from where I’m standing. I’m seeing both Labour and the Greens in real trouble. And if you lot continue to ignore it. You will suffer a horrible defeat in 2011 as we National did in 2002. Meaning National will get three terms not two. You lot surely can’t look forward to that.

    Instead of spending your whole time attacking this government (outside the one odd post ie. Eddie’s recent piece on Labour) you should be looking at the left. And how dangerously close they are to becoming totally irrelevant in New Zealand politics for the next five years.

  12. Herodotus 12

    Try to be tactful here…
    Why is suicide covered by ACC (From TV somewhere upto $1-$2m) to surviving dependants. Yet if you get killed at work, and the employer is found to be negligent that from my experiences a wee fine and the petty cash gets raided?

  13. Hooton is showing how far removed from reality he is. Check out here

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