We're paying too much for ACC

20:12, Jun 25 2012

The Government is ripping us all off with ACC and Prime Minister John Key needs to stop it right now.

The farcical dramas being played out at the top of the organisation, with former National Party president Michelle Boag and ACC Minister Judith Collins slugging it out over what has become known as the Bronwyn Pullar affair are essentially just silly sideshows.

However, they are coming at a cost, with the subsequent resignations of chief executive Ralph Stewart and two board members, including chairman John Judge.

Then there was the ill-advised legal action Collins took against Labour MPs Andrew Little and Trevor Mallard, who alleged leaks to the media came from her office. Mind you, when it comes to leaks, ACC staff's ability to email large chunks of sensitive information that should never be allowed into the public arena would just about put WikiLeaks out of business.

But here's the rub. All that is irrelevant when it is compared with the real problem that infects ACC. It is not of its making, but rather of its political masters, and unfortunately, we are all paying for it. In fact, we are now paying far too much for it.

That is the fault of the present National Government and its predecessor in 1999. They tinkered with the way we pay ACC premiums and levies with disastrous effects and every one of us - at least those of us who work for a living - is paying too much.


Very simply, here's how: ACC started in 1974, based on recommendations by former Chief Justice Sir Owen Woodhouse, and it was visionary stuff. Everyone paid a small levy and it was designed to be an affordable way to financially support the injured. It was a simple equation that was generally welcomed.

Its political mentor was Sir Roger Douglas, a man whose name is seldom, if ever, mentioned in the Labour Party these days. To do so is to be treated as if you had just broken wind - you just don't do it in polite company.

Never mind that he was the architect of so many much-needed reforms, those who know better on the strident Left of the divide have ensured his demise in political history.

But back to ACC. With its advent we got rid of those silly, American-style nonsensical legal cases and gave up our right to sue each other, other than in exceptional circumstances. It was pioneering stuff. Sure it needed a tweak here and there, with the no- faults basis being carried too far - prisoners getting compensation for breaking a leg while escaping exposed the folly of the excesses.

But far from fixing the obvious, the National government in 1999 decided to change the way it was funded. Previously, as per Woodhouse's concept, enough money was raised annually to cover the cost of providing for claims. For some reason, that wasn't enough, and we all had to provide enough money for ACC to meet the lifetime costs of anyone injured in that year. That hasn't changed, and the prospect of alteration was crushed by Collins when it was raised again recently.

Again, the question is why?

We have a stalled economy struggling to gain any traction, and yet we have a supposed business-friendly Government with a huge tax grab - and that's what it is - at a time when we desperately need businesses to be investing in economic activity and the inevitable job creation that goes with it.

It is scandalous and needs an urgent rethink.

Ironically, the one good thing about ACC National did in the 90s was to introduce competition. Nothing changed, except private insurers competed for business and they succeeded in providing choice, which drove costs down.

Naturally, when former Labour leader Helen Clark and co got control of the corporation, their socialist instincts took over, and in 2000 that was thrown out, purely on philosophical grounds.

Woodhouse is now a sprightly 95, and while diplomatically declining to criticise any Government, in a paper he wrote last year on the topic, he described the current ACC model as "a needless funding exercise".

For the record, ACC has budgeted to raise $5 billion this year, while payouts are expected to reach $2.8b.

We are overpaying this Government behemoth more than $2b this year alone, and it's not as though ACC needs the money - it is already sitting on more than $19b in investments.

For a change, I agree with Labour and the Greens. Dump the nonsensical fully funded model and return to the pay-as-you-go system, which worked just fine.

Taranaki Daily News