The 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.