Editorial: Don't discard good with bad

Last updated 05:00 20/06/2012

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OPINION: ACC is rightly regarded as a world-leading social insurance scheme. Introduced in 1974, it does away with the uncertainty and cost of litigation.

The no-fault scheme entitles accident victims to income-related compensation regardless of who was to blame and their ability or willingness to pay. However, like any piece of legislation, the scheme is not without its flaws or risks. Its history, as described in a 2010 Government-ordered stocktake, is one of "recurring crises resulting from rapid and unaffordable expansion of the claims liabilities ... followed by periods of greater focus on claims management and rehabilitation".

To that can be added recurring political crises driven by tension between claimants, medical professionals and ACC management into which politicians sometimes allow themselves to be drawn.

Those crises are not reason, however, to throw out the good with the bad. Recent developments suggest ACC has got wrong the balance between safeguarding the funds under its control and claimants' entitlements. Not every claimant is a potential fraudster, but, whatever ACC's critics might say, there are people who abuse the scheme. Who has not come across someone swinging a golf club or dangling a fishing line, who has, in a quiet moment, admitted they should be at work but are on "compo"? A certain amount of tension between claimants and ACC is healthy.

One way to maintain that tension is to sheet home the costs incurred by claimants to those who have agreed to pay them. The last National-led government's 1999 decision to switch from "pay-as-you-go" accident compensation to a fully funded scheme did that by making the present generation of workers, motorists, employers and taxpayers responsible for funding ACC claims incurred on its watch.

Now Labour's ACC spokesman, Andrew Little, wants a fresh debate on the merits of a pay-as-you-go-scheme versus a fully funded scheme and ACC Minister Judith Collins says the Government is "not ruling anything out at this stage".

For politicians the appeal of pay-as-you-go is easy to understand. It is simple to administer, and Mr Little's "back of the envelope" calculation suggests it would enable levies to be reduced by 20 to 25 per cent. What ACC minister would not want to take the credit for reducing the burden on workers, employers and motorists?

However, having got four-fifths of the way to fully funding the scheme it would be a retrograde step to stop now. This generation should not be writing out cheques for future generations to pay. The young are already being lumbered with a big enough burden in the form of liability for debts incurred funding pensions far more generous than those that will be available when they retire.

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If necessary the date for fully funding the scheme could be extended beyond the present target of 2019 but a principled adjustment to the scheme should not be abandoned. Fully funding ACC not only makes it fairer, it imposes useful disciplines on lawmakers and those responsible for administering the scheme.

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- The Dominion Post

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