Editorial: ACC deal must be shown to be fair

OPINION: There is no such thing as a free ACC system.

That must be central to the honest conversation the Government is asking New Zealanders to have about the scheme. Stripped to its essentials, the scheme is an insurance one, and that means any entitlement in the scheme costs money, and must be paid for by levies.

The debate must also recognise that the ACC was established to compensate people who are injured. It was not meant to be an extension of the social welfare system, cushioning people against all misfortune. The distinctions it makes are arbitrary, and can be seen as unfair – a person disabled in a car crash is compensated, a person disabled through motor neuron disease is not. However, that was the deal struck when the scheme was introduced in 1974, and there is little serious will to change it.

Labour, according to the Government, bolted on additions that have made the current version unsustainable and which contributed to a $4.8 billion loss last financial year. ACC Minister Nick Smith says changes are necessary because ACC's claim costs have risen by 57 per cent and its unfunded liabilities have grown from $4 billion to $13 billion in just four years.

The Government, according to Labour and other critics, is scaremongering. They argue the losses are the result of a smoke-and-mirrors exercise designed to soften up the public for cutbacks and the eventual privatisation of at least part of the scheme.

There are grounds for questioning the Government's figures – for example, how the funding of the long-term liabilities has been calculated – but it is clear that the scheme, expanded under Labour, does face a shortfall. That means trimming what is on offer or putting up the levies.

In opting for a mixture of the two, the Government has taken the pragmatic option. The increases proposed by ACC were too high, especially at a time when the economy has only just crawled its way out of recession. Even with the cuts in entitlements announced yesterday, levies will still rise. By one assessment a family on the average income of $45,000 will be paying an extra $315 a year.

Some of the cuts in entitlements will provoke few squeals. Few would believe that those injured while indulging in serious criminal activities should get compensation – though there could be boundary issues in areas like drink driving.

It is also hard to argue against an end to compensation for those who intentionally injure themselves, or the survivors of those who commit suicide. In those cases, help is more appropriately delivered through the welfare system.

There is more room for debate around changes to the rules for compensating casual and part-time earners, and non-earners, changes to the rules covering vocational rehabilitation and other measures announced yesterday.

The job facing Dr Smith and his colleagues is to convince the public that what is being done is fair, and within the spirit of the deal that saw New Zealanders trade away their right to sue for a no-fault right to compensation.

That deal remains a good one. It should be made to work and made affordable, not torn up.