Pay more, get less with ACC

OPINION: The National government has embarked on an unprecedented attack on ACC, writes David Parker (Labour) in this week's From the Beehive.

New Zealand has the world's best accident compensation scheme and serves the community at a lower cost than overseas because it is a no-fault system run by a government-owned company.

Its administration costs are the lowest in the world. The very large lawyers' bills and insurance company profits that have to be paid under a private insurance fault-based system are avoided.

ACC's costs have increased in recent years for a range of different reasons. Nursing and doctors salaries have increased. Medical advances mean more people survive serious car accidents, but with expensive continuing medical and other needs. Our population is ageing and recent recession has also reduced the income that ACC earns on its investments.

For all of these reasons ACC's levies have increased, which is unfortunate, but it remains affordable and cheaper than overseas schemes.

The National/ACT/Maori Party government have used this as an excuse to exaggerate problems at ACC. They have asserted our ACC system it is fundamentally broken. They have claimed it is insolvent when it has more than $11 billion of reserves and even last year collected $1b more revenue from levies than it spent on claims. National has scaremongered and exaggerated about levy increases. They have encouraged the media to report increases in car registration and petrol levies of $130 a year – four times the actual increase of $30 a year.

National is now undermining ACC by reducing the scope of entitlements for injured New Zealanders, while it disproportionately hikes up levies for some groups such as motorcyclists.

To make matters worse, it is privatising major parts of ACC. The insurance and management of injuries is being privatised.

The current system has very low administration costs. There is no doubt the Government's plans will, over the years, see the scope of ACC cover reduce. More people will be denied cover by the private insurers and levies will increase.

More money will be spent on lawyers and insurance company profits and less on rehabilitation.

So New Zealanders will pay more and get less.

This in turn threatens the very viability of the ACC model. The social contract that underpins ACC is that New Zealander's gave up the right to sue in return for fair treatment of injured members of the community by a publicly trusted government organisation.

As others have noted, privatisation is likely to lead to its eventual demise.

» David Parker is a Roxburgh-born Labour list MP.

- © Fairfax NZ News

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