Gutting ACC: What a shambles!


I’m planning to do a series of frogblog posts on National’s plans to gut ACC, highlighting the devastating impact of each of them on people who have been injured and their families.

But before I even got to post the first one, ACC Minister Nick Smith has revealed how badly National has politically managed their pernicious proposals.

Green MPs and staffers were all geared up today to oppose the Bill to implement the ACC cuts, which National had intended to introduce under Parliamentary urgency – a far too frequent and undemocratic tactic of theirs.  But when the Parliamentary Order Paper appeared, the Bill to gut ACC wasn’t on it.

The reason, as Radio New Zealand reports – National can’t get the numbers, even from their own support parties!

Act won’t vote for it because it doesn’t go far enough towards the privatisation they want, and the Maori Party won’t vote for it because they have some serious concerns about the unfairness of aspects of it – particularly to those in their voter base.

So, who knows when the Bill will surface in Parliament.

As suggested at The Standard, National fudge the numbers for the ACC accounts so they can claim a “blow out” to justify their cuts, but they didn’t even bother to ensure they can get the numbers in Parliament to pass their legislation through its First Reading.

Anyway, I’m a somewhat more relaxed frog now than I was this morning, because, thanks to National making such a mess of it, I have a bit more time for getting the nasty detail of this pernicious Bill out to frogblog readers.

Watch this space – there is plenty more to come on National’s plans to gut ACC.

28 Comments Posted

  1. Headgear? Bit like telling earthquake victims to buy thick socks – lets not dally with half measures here – they have a dreadfull way of falling short

  2. The idea that ACC levies should cover the cost (collective insurance) – in each “user” area seems fair. But then there will be some areas excluded by reason of society choice (a wish to encourage sport and recreation and not exclude the poor from these activities because of mitigating social and health benefits).

    Here maybe those in each user group could be consulted about how covered their group will be, or whether they individually could even adopt a lower cover for a lower levy within their user group.

    Then there is the non specific user general costs to be covered (and here the debate is about what and who should be covered, and to what extent).

    Finally, in what ratio should ACC participate with government in funding campaigns such as road safety?

    PS Sometimes regulation is both misguided and counter-productive, headgear as in American Football encourages more direct confrontation – anyhow the major injuries in rugby are not to the head but the back, shoulder, knee, ankle, broken arms and legs.

  3. the structure is based on unsound obsolete health practices – my naturopath (not covered – your money – mine) wept.
    The current ACC setup perpetuates waste, travels, at its own specific fiscal gravity – is a Tap on Public Funds, no more or less.
    My Professor threw his Mont Blanc against the wall…
    “Where do these people get off thinking that you bend an injured joint back and forth til it Heals!!!???”
    Keep you injured and on their books ad infinitum – one has to get away from the Funded to find any real answers…

  4. Lol, three thumbs down for my assertion that people manage risk and two for the comment that people are giving my posts thumbs down. 😛

  5. This voting is weird, I asked a question at the top of this thread, it gets three negative votes!
    Whats wrong with asking a question? Woops I just asked another one.
    Thus far only jgg has offered any thoughts on how to sort out the monster (road safety). I’m sure I haven’t got a grasp of it. Others input …I await…

  6. Yes, i would much rather keep ACC as it is now than have it gone or weakened. Im abit split as to partial opening to competition though, there are some areas where it could be beneficial but the costs would probally outweigh the benefits on the whole

  7. I agree with that notion Toad… I only suggest that we have to manage both sides of the issue SOMEHOW. I don’t really have a dog in this fight though I like the way ACC is working in general.


  8. bjchip, the risk doesn’t have to be mitigated by the fear of economic loss.

    We can still have a no-fault ACC system and mitigate the risk by regulation – eg, by requiring rugby players to wear head protection.

    But then we get accused of nanny-statism, I suppose.

  9. There are two threads of thought here. They actually oppose each other and that usually indicates that some compromise is appropriate.

    Wat and Sapient, and now I too, have noticed that the presence of ACC with no apparent deductibles or cost incurred for risk taking behaviours, encourages those behaviours. It does. People who think it doesn’t have been playing Rugby without a helmet for far too…. Oh yeah, it IS played without a helmet… that explains a lot. 🙂

    On the other side, fully privatized risk and the lawsuits that go with it, gut the soul of the country that applies that standard and excessively penalizes the poorest folks who haven’t any way to afford any insurance. Much as Rimu points out.

    I agree with both sides because both are true.

    They clearly require some balance be taken. I don’t know how that balancing act needs to be done, but it isn’t something that can be solved by taking on just ONE of the two arguments without the other.

    I suggest we consider how to achieve the balance rather than which side to choose.


  10. You know what happens in countries with no ACC?

    No one runs sausage sizzles because they’re afraid that if someone gets food poisoning they’ll sue. And the cost of the insurance makes it not worth having a sausage sizzle.

    Extrapolate that out to every little thing and you can imagine the effect on all kinds of voluntary and community activity. It’s horrible

  11. “Who did? Nats want to wait until 2019 don’t they?”

    I stand corrected – they don’t want it actually fully funded until 2019. But they do seem to be using caluclations based on the assumption of full funding now to define it as in trouble, when it’s not in trouble if you don’t measure it against that standard.

  12. Kahikatea,
    When I worked at New World I knew many people out back whom would frequently take unneeded risks ranging from lifting too heavy objects in the wrong way to climbing around on the shelves high above the concrete to diving in front of speeding forklifts, heck I did it myself when I worked such areas, undetered because the knew that if something did happen they would be covered and thought they may even be better off since they would to need to work so much relative to their income.
    Rugby players would be another good example, while there are a lot of idiots whom play that sport, I would think there would be less should they be faced with covering the eventualities.

    Despite the externalising effect and the increase in risk taking behaviour I strongly support the presence of ACC and compulsary third party insurance. Though, there are some modifications I believe would enhance the functioning; i touched on some above.

  13. “Insurance acts to decrease the perceived potential costs and as such tends to encourage more risky behaviour.”

    That certainly happens with insurance of property. But I find it hard to imagine that someone would be undeterred by the threat of possible physical injury but deterred by the cost of paying for medical treatment for that injury.

    the certain cost of compulsory insurance for that risk, on the other hand…

  14. I wouldn’t start by declaring, in the middle of a recession, that the scheme has to move from a pay-as-you-go system to a fully-funded-in-advance system NOW

    Who did? Nats want to wait until 2019 don’t they?

  15. Rimu,
    Yes, people manage risk. But that management involves balancing the perceived potential benefits against the perceived potential costs. Insurance acts to decrease the perceived potential costs and as such tends to encourage more risky behaviour. It is a well documented psychological and economic phenomenon, though at present I cannot remember its name.
    Consider; someone on a bike will be more likely to observe the environment around them closely than someone in an SUV simply because they are more likely to come off worse in an encounter. Ideally, the rates that an individual pays should depend on their driving, perhaps as indicated by history, and on the type of vehicle. The rates should be detirmined by the potential damage to others so as to avoid externalisation of costs. This would result in the SUV driver being more careful simply because they are on the line more, though risk would still be encouraged due to the presence of insurance.

  16. Don’t people choose to manage risk already? I don’t need a financial incentive to drive carefully or to not play daft sports like boxing…

  17. Yeah Rimu, because people cannot choose to manage risk, and thus minimise the chance of an accident, in most cases…

    Jesus the Christ.

  18. jgg,

    – “One of the great advantanges of ACC is that it makes public the significant costs of accidents and injuries. “Reforming” ACC to reduce compensation does not eliminate these costs, it simply hides them by transferring them to the individuals concerned, away from the scrutiny of the public accounts.”

    The essential difference is that people’s spending is vastly more prudent when it is coming out of their own pocket. Hence much of the cost really is eliminated.

  19. @samiam 8:39 pm

    What is at the heart of the problem is silly accounting practices that are deliberately designed to make the scheme look unsustainable.

    ACC actually still claims more levies each year than it expends in claims.

    Fully funding future entitlements can only have one purpose – make the scheme more prone to privatisation, and Smith’s panic attacks are designed to soften up public opinion for that possibility.

    This reminds me of a very old joke.

    An employer has three applicants for a management position: a mathematician, an engineer, and an accountant.

    The mathematician is interviewed first, and the last question is: “What is 2 plus 2”. The mathematician pauses a moment, and then says “if you can give me a couple of minutes I can deliver you a short proof that the answer is 4”.

    The engineer comes next, and is asked the same question. The engineers’s reponse (yes, very old joke) is to pull out a slide rule, and say “I can assure you that the answer is between 3.998 and 4.002).

    Next up is the accountant. Same question.

    The accountant jumps up, opens the door, looks left and right, closes the door, locks the door, pulls down the window blind, and then whispers to the prospective employer:

    Tell me what you would like it to be.

    That’s what is going on with ACC at the moment. I don’t deny there are some issues that need to be addressed, particularly with the motor vehicle account and non-earners account (the latter of which is funded by Government appropriation rather than levies, in any case), but the Government rhetoric and response is totally OTT.

  20. The ACC is actually a really good example of how to “sort things out” and only seems like a monster because New Zealanders are isolated from the alternatives.

    One of the great advantanges of ACC is that it makes public the significant costs of accidents and injuries. “Reforming” ACC to reduce compensation does not eliminate these costs, it simply hides them by transferring them to the individuals concerned, away from the scrutiny of the public accounts.

    I am particularly concerned with the deliberate dishonesty of the Minister and the Chair in saying that the fact that the Nett Present Value of the fund is negative is the same as a loss. The scheme is currently making a massive annual profit. The argument is however being made that this is insufficient to allow full funding of claims over the lifetime of the scheme.

    Rather than reduce ACC entitlements, the key action needed seems to be to reduce the level of claims. One obvious way would be to take action to reduce road traffic crashes and associated injuries. New Zealand could save close to half a billion dollars annually in direct costs by reducing our road traffic injury rate to the level in say Denmark. The social, economic and environmental benefits would be much larger.

  21. samiam
    Posted October 15, 2009 at 8:39 PM

    “and how would you sort this ACC monster out?”

    I wouldn’t start by declaring, in the middle of a recession, that the scheme has to move from a pay-as-you-go system to a fully-funded-in-advance system NOW

  22. Great opportunity for Goff to participate in a motorbike rally – sure will put a dent in Nick Smith’s brazen ways too.

    How long can they get away with such constant abuse of democracy? It hasn’t been a year yet and they’re getting slammed across the political spectrum – including copping their own “nanny-state” rhetoric.

    Honeymoon over? About time!

  23. Yeah, pretty embarrassing for Smith – and Brownlee as Leader of the House.

    Introduce a Bill as a Minister without the political management to know you can even get the First Reading through.

    A very bad look. And the content of the Bill is an even worse look.

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