Secret ACC plan to charge all victims $100

16:00, Oct 17 2009

EVERY ACCIDENT victim would pay the first $100 of the cost of their ACC claim, and injured workers would lose thousands of dollars in income compensation under secret plans to cut costs at the state insurer.

The Sunday Star-Times has obtained a shopping list of Accident Compensation Corporation proposals to pare back compensation entitlements as it deals with a $4.8 billion blowout.

The list justifies the worst fears of compensation recipients, particularly those who have been on the scheme long-term. While ACC Minister Nick Smith insists that the government will never dismantle the no-fault public-owned insurance scheme, the proposals obtained by the Star-Times suggest otherwise.

The ACC's hidden agenda:


An ACC spokesman confirmed the proposals had been discussed at a ministerial level but said it was nothing more than "kicking the tyres". A spokesman for the minister confirmed the discussions, but insisted they had not been to cabinet and were not part of changes now being debated.


The Star-Times revealed last week that taxpayers will be hit with steep hikes in the price of petrol and car registrations as the government moves to bail out the financially troubled ACC, which has posted a $4.8b loss. Wage earners will lose hundreds of dollars a year from pay packets as the ACC levy rises.

In addition, the government unveiled plans to curtail or stop certain ACC payouts such as money for the families of people who commit suicide. Other plans – which National will be able to enact only with support from minor parties – include reducing entitlements for casual and part-time workers, slashing physiotherapy payouts, and cancelling entitlements for criminals.

The plans have sparked protest, moped owners in particular reacting with outrage at news that their annual levies are set to soar from around $60 to around $260. Yet it is clear that within ACC there is an appetite to go much further in reducing the cost of payouts.

ACC has calculated that a $100 excess for every accident claim would save an estimated $170 million a year, or $2b over 10 years. "This would at least make people aware that every accident costs money, and it might stop some of those small claims that cost a lot of money to administer," said an insurance source who has knowledge of ACC's wish list.

Tens of millions more would be saved by reducing income compensation payments after the first year of payments. Currently, injured workers receive 80% of their income while off work. Under ACC's secret plan, this would reduce to 70% after one year and to 60% after two years. About 14,500 people are receiving long-term compensation.

The insurance source said although it was politically sensitive, ACC favoured the plan because of the savings double whammy: it reduced the level of payments for those off work and it forced people back to work quicker, a further saving. "This would save ACC significant amounts of money... The reality is, overseas they have found a whole lot of people get magically better as soon as... the compensation is reduced. So rehabilitation records improve. I understand that in Australia, which has this feature, it has encouraged people to go back to work."

The source said the most common soft-tissue injury claims were related to back pain, and a two-year cap on compensation would be a big saving.

"There's an issue as to whether you should just have to live with it – that's being blunt about it. If you couldn't work because you had a sore back, after two years your compensation payments would stop.

"One of the biggest issues the ACC has is that it's very difficult to diagnose sore backs," the source said.

While the ACC can employ investigators to spy on and film

people it suspects of defrauding the system, it wants increased surveillance powers. "There is too much anecdotal evidence about people on ACC that shouldn't be for this not to be an issue that should be investigated further," the source said.

"It is actually very hard sometimes to prove that people are cheating. Currently the ACC has its hands tied behind its back. Making it easier to detect and deal with fraud would give the public the confidence that money is being properly spent."

Smith was unavailable for comment yesterday but earlier told the Star-Times the government would never dismantle the no-fault state insurer, which was popular with New Zealanders.

While ACC would remain in government ownership, Smith said it was possible in the future that some components of ACC could be opened to competition.

Smith said just how much levies go up and entitlements are cut would depend on whether the government's coalition partners, Act and the Maori Party, support the reforms.

Act Party leader Rodney Hide has pledged support for change on the condition the government throws open to private sector competition the so-called Work Account, which covers all work-related injuries and is funded by levies paid by companies and self-employed businesses. The same account was opened to competition by the then National government in 1999 but Labour brought it back under state control. Hide will meet Smith and Prime Minister John Key tomorrow.

Publication of ACC's hard-nosed measures is bad timing for the state insurer. As it prepares to slash entitlements, it was revealed that the wages bill for ACC staff in the last year had blown out from $187m to $217m. While the government preaches restraint in the public sector, two ACC executives are now being paid more than $500,000 a year, with eight others on salaries of $300,000 or more. A further 18 ACC executives are taking home between $200,000 and $300,000.

Street marches have been organised for tomorrow to protest against proposed changes to ACC's funding criteria on help for sexual abuse and assault survivors.

Sunday Star Times