National committed 'in principle' to opening up ACC

02:08, Mar 03 2009

The National Party says it is committed in principle to opening up ACC and allowing private insurers to compete for premiums and services.

However, in a policy released today the party is taking a cautious approach to changing the scheme.

Party leader John Key said National, if it won the election, would "investigate" opening ACC's work account to competition and decisions would be made carefully and only after a full evaluation of the benefits.

A background paper issued with the policy announcement said National was "committed to the principles of competition and choice as the appropriate means of ensuring efficiency of ACC provisions".

Prime Minister Helen Clark condemned the policy, saying it would have a devastating impact on ACC.

"It works on the basis of being a large social insurance scheme. You kick the guts out of it if you take workers' compensation out," she said.


"With private insurers, over time our people will pay more and get much less."

ACC Minister Maryan Street and Council of Trade Unions president Helen Kelly both warned that a "privatised" scheme would cost more and deliver less, but Business New Zealand supported the policy.

Mr Key said the overall aim would be to make workplaces safer while delivering certainty of coverage and more effective compensation under an improved scheme if it wins the election.

ACC was opened to competition by the previous National government, and Labour re-nationalised it after winning the 1990 election.

Mr Key said today the experience of competition in the late 1990s had been healthy for ACC.

"Levy rates are now substantially lower as a result of that experience, and the ongoing prospect of competition," he said.

"Despite Labour's rhetoric, it has actually retained the ability for larger employers to opt out of the state monopoly and either self-insure or use a private insurer."

He gave an assurance that National supported a comprehensive, 24/7, no-fault insurance scheme but said it could be improved.

Mr Key said incentives for employers to improve safety practices were poor on the existing scheme, and similar premiums were charged regardless of an employer's workplace accident record.

When accidents happened, incentives for quick, high-quality rehabilitation were weak and entitlements for injured people were not of high quality.

"National wants a more flexible scheme that rewards employers with good workplace safety records, penalises those with poor records, and encourages employers to buy more than the basic cover," he said.

"National supports the principle of competition and choice in the ACC Work Account, which covers employees and the self-employed at work."

Mr Key said the issues around competition in the Work Account were well known and understood, but the same could not be said for the other accounts.

"This is a highly complex sector," he said.

"New Zealanders are entitled to feel secure that the entitlements guaranteed by law will be delivered efficiently and reliably."

The main points of the policy are:

* investigate opening the Work Account to competition;

* conduct a full stock-take of the various components of the ACC scheme, evaluate progress to full funding, and identify areas of cross-subsidy or cost-shifting and underfunding of newly legislated entitlements; and

* investigate the introduction of an independent disputes tribunal to end ACC's dual role of judge and jury on disputed claims.