Woodhouse: ACC not in crisis

Written By: - Date published: 9:23 am, October 19th, 2009 - 12 comments
Categories: ACC, privatisation - Tags:

A fascinating interview with the Sir Owen Woodhouse in the Herald today. Sir Owen has led an amazing life – after helping supply Yugoslav partisans fighting the Nazis, he rose through the ranks of our judiciary becoming a Privy Councillor and President of the Court of Appeal, and is still going strong at 93.  His most enduring achievement, though, is ACC, which is based on his 1967 report.

The scheme, implemented in 1974, was the first comprehensive “no-fault” accident compensation scheme introduced in any country using the British legal system, and ended costly legal battles to force employers to pay compensation for work injuries. Sir Owen said it cut administrative costs from about 30 per cent in private insurance schemes to 10 per cent.

It really is the envy of other countries but powerful insurance lobbies have prevented any of them completely following in our tracks.

Sir Owen said he saw the scheme as part of the social welfare system, not as an “insurance” scheme in which all future costs of this year’s accidents needed to be funded immediately. The “blow-out” in losses that led to last week’s changes stemmed from a decision by the last National Government in 1998 to allow private sector competition for accident insurance, which required transforming the Accident Compensation Corporation on to the same funded basis as private insurers.

Sir Owen said: “If you have children you’d be concerned if you found that they estimate your child will be at school for so long, will or won’t go to university and will cost so much, and that that full cost has to be paid at the age of 5 when they start school. It’s the same thing with accident compensation.”

There is an argument for forward funding, especially with an aging population but not being fully-funded isn’t the disaster National is making it out to be.

Sir Owen’s 1967 report proposed a single flat-rate levy on all employers and another flat rate on motorists, on the basis that everyone benefited from the work of people in risky industries such as aerial topdressing. Yesterday he disputed claims by ACC Minister Nick Smith that levies needed to reflect different accident rates in different industries and different kinds of vehicles because that would give employers and motorists more incentive to be safe.

“We are saying people are willing to risk killing themselves for the sake of a few dollars of saved premiums. That’s just ridiculous,” he said.

National always has this silly idea that money is the only thing that matters to people.

He opposed the Government proposal that accident victims should lose earnings-related compensation as soon as they were capable of going back to work in any job. “I think it’s an uncaring and predatory attitude to people who are handicapped,” he said.

“It’s pinch-paring and unnecessary. It’s all due to the fact that they regard it as an insurance scheme.”

The money that National will save from these cuts is trifling but National’s objective is all about creating a feeling of crisis to soften us up for privatisation (that’s just a conspiracy theory, eh, Colin?).

It’s disappointing no-one has asked Nick Smith and John Judge to explain just when ACC will collapse, as they claim, without these cuts. How will a scheme taking in $1 billion more in levies than it spends and with $11 billion in assets collapse? It won’t but if you think its in trouble and unaffordable, you might be OK with it being privatised.

12 comments on “Woodhouse: ACC not in crisis”

  1. BLiP 1

    With the announcement that National Ltd® is about to introduce a “excess” for ACC claims, its apparent they consider anyone who wants to access their entitlements to be little more than criminals. How long before there is a $50 fee for any contact one wishes to make with government – a $50 fee for registering to vote, perhaps, or a $50 fee to apply for an unemployment benefit?

    Thanks National Ltd® – I’m lovin’ it.

    • Armchair Critic 1.1

      I hope it is not like the $50 for victims of crime and ends up costing more than $50 to collect the excess.

      • See what happens when you have a cheap effective first world health system? There’s no dis-incentive for breaking your neck! all my mates are doing it.

        Jesus christ these people really need to read the definition of accident.

  2. Craig Glen Eden 2

    Exactly MG, the only thing I would add is the left need to rally against this because the Insurance lobby will feast on ACC if we dont.

    • ghostwhowalksnz 2.1

      And if a private insurance company goes bust ( as HIH did in Aussie and they were here as well during the short time they could operate) we all pay again!!

  3. toad 3

    A good analysis of the secret agenda over at frogblog.

    As frog suggests, why would someone in the insurance industry have access to a copy of National’s secret proposals unless privatisation is also part of the secret agenda?

  4. ghostwhowalksnz 4

    Last time national were the government they changed the smaller claims from lump sum to tiny weekly payments, back then it was pay as you go
    . So the future cost of say a lost finger went from the year it happened to become part of the ‘tail’. At say $9.60 pw
    The side benefit they got at the time was the levies didnt rise for a few years since the total payouts for each year dropped but were added to the future costs

  5. Ianmac 5

    Marty. Great post and great clear words from Sir Owen.
    Sir Owen said:” ….that they estimate your child will be at school and will cost so much, ….and that that full cost has to be paid at the age of 5 when they start school.”
    Now that puts it in perspective!
    And “it cut administrative costs from about 30 per cent in private insurance schemes to 10 per cent.”
    So this suggests that if private insurance is used, costs increase therefore the levy payer pays more, so this would justify making further cuts to entitlements and justify claimants paying $100 or so as an excess.
    Hells Bells! Nick the Dreamer!

  6. tc 6

    Stop the Press ! Is the herald finally developing a sense of balance……..sadly as they never displayed one before they played no small part in the 08 outcome as alot of people actually believe what it tells them to think.
    As this will actually raise the cost over time…..so business pay more to get less it’s a sad indictment of political ideology first, second and third……..long term outcomes…..a distant last with our mony market dealing PM and his backers as they’ll be long gone.

  7. The Woodhouse comments were very embarrassing for Govt.

    Most interesting for me is how the Herald have been willing to publish some pretty damning commentary about National lately.

    Doesn’t bode well for National if even Granny doesn’t love them.

  8. mike 8

    The Woodhouse scheme was great – but thats before labour turned it into another wefare system..

    • Galeandra 8.1

      You’d know? Ante up with some substance for a change, Mike. There’s nothing to beat evidence.

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