Gutting ACC – Employer disunity over ACC privatisation

Conflicting statements from business lobbyists reveal that there is no consensus amongst New Zealand business about the privatisation of ACC. 

Business New Zealand has issued a statement supporting foreign-owned insurance companies being able to compete with ACC in workplace accident compensation.  Phil O’Reilly from Business NZ said today: 

Business NZ welcomes the agreement between political parties to open the ACC Work Account to competition subject to the work of the steering group considering the Stocktake of ACC Accounts…

“The ability to choose is a key factor in gaining improved access to goods and services for people in all sectors of the economy. There is no reason why choice cannot also bring better service for ACC claimants and more competitive pricing for premium payers.”

But the Employers and Manufacturers Association disagrees:

Employers are wary about the reintroduction of an open competitive market for ACC workplace accounts, says Paul Jarvie, Occupational Health and Safety Manager for the Northern Employers and Manufacturers Association.

“The single year when we had a private market for ACC turned into a bun fight between insurers trying to capture business and employers trying get accident insurance within prescribed time frames,” Mr Jarvie said.

“Insurers at the time cut premiums to capture market share early on.

“Most commentators agreed at the time that the ensuing years would have seen large premium increases to offset the low entry price points.

“Having a full private insurance market won’t provide stability in the premium setting market, and it would make more forecasting and budgeting work for employers.

I’m with Paul Jarvie and the Employers and Manufacturers’ Association on this.  The 1999-2000 experiment with privatisation had foreign owned and vastly wealthy insurance companies prepared to take huge losses in the initial years of their entry into the accident insurance market.  They could afford to do this for a year or so to gain market share.  The ACC premiums would have inevitably been hiked massively once market shares were established. 

The private insurer that got the greatest market share in that experiment by the last National government was Australian owned HIH Insurance, which subsequently collapsed and had several of its high flyers imprisoned for offences of dishonesty.  Fortunately, the ACC scheme here had been re-nationalised before HIH’s collapse.  Or we would have all been deep in the brown smelly stuff. 

Phil O’Reilly and Business NZ need to do their own stocktake – one based on evidence – rather than blunder on with their “private good, public bad” Animal Farm ideology.  As do Nick Smith and Rodney Hide.

7 thoughts on “Gutting ACC – Employer disunity over ACC privatisation

  1. libertyscott – Concise Oxford Dictionary:

    privatize (also -ise) v. transfer (a business, industry etc.) from public to private ownership.

    National’s and Act’s proposal will transfer a substantial part of the workplace insurance industry from public ownership to private ownership.

    Okay, if you want to split hairs it is partial privatisation, because some will remain in public ownership.

  2. Yes, StephenR, they can. But it makes it difficult for employers to budget, provides uncertainty as to future premiums, and its likely that all providers will have to increase premiums after a couple of years of taking losses to establish market share.

  3. I’m with Paul Jarvie and the Employers and Manufacturers’ Association on this. The 1999-2000 experiment with privatisation had foreign owned and vastly wealthy insurance companies prepared to take huge losses in the initial years of their entry into the accident insurance market. They could afford to do this for a year or so to gain market share. The ACC premiums would have inevitably been hiked massively once market shares were established.

    What LS said. And if prices go up, employers can switch providers, even back to ACC, can’t they?

  4. No it’ll be Employers against some dam sharp pro bono Lawyers….oh Ruin National – why were you in the wilderness so long ? – tell us again – no don’t bother!

  5. Employers v Employers.

    Hey, what fun.

    I agree the EMA has taken a sensible and pragmatic position. Good on them for that.

    But Businsess NZ seems stuck in the Dark Ages with Hayek, Friedman, Thatcher, Pinochet and our own (Sir Roger the pig farmer)Douglas.

  6. Did you know NZ Post has been privatised? Because it’s been open to private competition since 1998.

    Did you know Kiwirail has been privatised? Because it’s been open to private competition from the start.

    Did you know Solid Energy has been privatised? Because private coal companies can mine in New Zealand.

    Did you know Genesis, Mighty River Power and Meridian have been privatised? Because privately owned power generators can freely compete with them.

    Did you TVNZ has been privatised? Because there is an free market to establish television channels.

    So why lie blatantly and claim ACC is to be privatised? While ACT may no doubt support this, National doesn’t and never has, and the present debate isn’t about it. There was no “experiment in privatisation” in 1999-2000, ACC was not sold and bought back – employers were able to choose alternatives.

    Isn’t it just because you find it easier to gain public traction by claiming it is privatisation (“a bad thing” to many people) rather than opening up a monopoly to competition (“a good thing” to many people)?

    Come on be honest. Who is saying sell ACC?

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