Faux savings from gutting ACC

Despite failing to get answers from Nick Smith, Kevin Hague has had some success in getting answers about ACC.  Perhaps it is because he asked some questions of a Minister other than Nick Smith.

Kevin asked Social Development Minister Paula Bennett how many people moved into the benefit system from ACC weekly compensation in each of the last ten years.

Here are the answers, graphed as a percentage of the total number of beneficiaries at the end of each year:

benefitfromACC1999 was the last year that the work capacity / vocational independence assessment criteria Nick Smith wants to reintroduce were in full operation.

In 2000 the new Labour-led Government announced that it would be changing the law to provide a greater focus on rehabilitating claimants into sustainable employment rather than just moving them off weekly compensation, and in practice ACC began assessing claimants on the basis of the proposed new law. A significant drop in the number of people entering the benefit system from ACC coincided with this.

There was another significant drop in 2003, by which time the new assessment criteria were fully operative for all claimants receiving weekly compensation, and the number of people entering the benefit system from ACC has remained relatively stable ever since.

Treasury have expressed concern about the ACC gutting Bill shifting costs onto other government agencies and the Regulatory Impact Statement for the Bill not quantifying those costs.  Based on the figures provided by Paula Bennett, that concern is well-founded.

Shunting injured people off ACC onto welfare benefits, where they may languish for years, rather than rehabilitating them into employment is a false saving – as bad for the economy as it is for the injured person.

7 thoughts on “Faux savings from gutting ACC

  1. I think it is fairly obvious now that the intent is not to do a better job for less, as if this were the case an analysis of the proposed changes would have been undertaken and enabled a robust Regulatory Impact Statement.

    The aim is to open ACC up for competition based on ideology and/or to provide oportunities to privatise some profits.

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  2. Recommendation 15 of the Brash-led 2025 Taskforce:

    All businesses owned by central government which are operating in markets where competition is actual or feasible should be sold.

    Seems that ACC is being treated by Smith and Key as a “business owned by central government” rather than the social insurance scheme it was set up as upon Sir Owen Woodhouse’s recommendations.

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  3. McTap, that’s why I’ve put the little “Undermine – Cut – Privatise” logo into every recent post on ACC.

    The Government’s agenda is glaringly obvious, but I doubt we’ll ever know the extent of the donations that went from the insurance industry into National’s campaign coffers via their secret Trusts to secure the shonky sham of a “crisis” in ACC and its ultimate privatisation.

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  4. Now an “Oldie”, I was a Polytechnic Tutor at the time ACC was designed and implemented.
    An expert from ACC came to speak to each/every group of students throughout the institution. ACC was greeted with great enthusiasm, by students and their employers alike.

    Previously I had worked between hemispheres as a ski instructor/coach, and was still coaching on weekends in Canterbury. Our ACC system was a dream come true,(as was the Canadian revamp into its still intact “universal health system” delivery, at about the same time).

    To those who want to “privatize” and add “competition”: from my experience I’d say “you don’t know what you’ve got till its gone.”
    If we need to do anything, it is to strengthen, improve and expand the system we have. We must NOT allow it to be watered down as a gift to a bunch of the National Party’s “mates” who are private enterprise /insurance company enthusiasts looking for the chance to make a personal profit.

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  5. well said there..eredwen..

    “..We must NOT allow it to be watered down as a gift to a bunch of the National Party’s “mates” who are private enterprise /insurance company enthusiasts looking for the chance to make a personal profit..”

    phil(whoar.co.nz)

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  6. The statement “Shunting injured people off ACC onto welfare benefits, where they may languish for years, rather than rehabilitating them into employment is a false saving – as bad for the economy as it is for the injured person.” implies that most ACC claimants can be rehabilitated. However, the ACC motorvehicle account stats for new claims and active claims in each of the last 15 years can only be reconciled if one assumes that 10% of the new claims each years will continue as active claims till the claimant either is moved onto natsuper or dies. The number of new and active claims in the late 1990s fell twice as quickly as the number of hospital admissions from car crashes with the opposite being true this decade. That makes it difficult to accurately determine what proportion of active claims are the result of injuries sustained in earlier decades but, for motor vehicle crashes it is highly probable that at least one-third of active claims have been active for at least 20 years. The ACC stats do not identify how much of the dollars paid out each year are for new or active claims but, assuming all claims are for income compensation or rehabilitation costing the same as a year’s compensation, then half of the current ACC costs is an inter-generational debt from the 1970s and 1980s. For car drivers this isn’t a problem as their are more registered cars now than 20 years ago so that the debt imposed by a previous generation is being shared by an ever growing number of car owners. The problem for motorcyclists is that only half of the young motorcyclists from the 1970s and 1980s still own motorcycles in their middle age and ACC is insisting that this much smaller number of motorcycle owners pay not just for the consequences of the popularity of motorcycling in the 1970s and 1980s but they should also make up for the fact that motorcyclists in the 1970 and 1980s were not charged the full cost that they imposed on ACC in those decades.

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  7. Kevyn – all very true and another example of how attempting to set levies on the basis of current risk of a particular activity deviates from the community responsibility principle ACC was founded on.

    ACC has an injury prevention role as one of its primary purposes. But that role should not be exercised through educative functions to make activities safer, not through setting prohibitive levies that preclude people from undertaking those activities at all.

    Of course some ACC claimants cannot be rehabilitated into employment and will receive weekly compensation until they qualify for NZ Super. We can’t change that (although the Government is trying to reduce the number who can by introducing a vocational independence assessment process that can cut off compensation for an aircraft engineer if he or she can do a minimum wage job as a carpark attendant).

    My view is that we should scrap all the levies completely and fund it out of taxation revenue (with a consequent increase in tax rates). People don’t assess the risk of injury associated with a particular activity, and decide whether or not to undertake that activity, on the basis of the ACC levy associated with it.

    Here’s a challenge for Nick Smith – find me one person who is going to be more motivated to reduce their accident risk by their ACC levy than they are by the prospect of being a tetraplegic for the rest of their life.

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