by Kevin Hague
On Friday, the Government released consultation papers on levy increases and experience ratings for ACC. They are calling for submissions by 29 October. Let them know what you think!
Reading between the lines, the papers also make clear that there is no financial crisis in ACC. As we have pointed out all along, ACC is taking significantly more money than it is spending. The so called crisis was a result of ACC investment portfolio taking a hit during the global financial crisis.
Last financial year ACC took in a surplus of $1.5 billion dollars, this year it has a surplus of over $2 billion dollars.
It is now clearer than ever that John Key’s Government manufactured a crisis in ACC to justify cutting services and raising levies. Their long-term aim is the privatisation of ACC so they want it to run more like an insurance company. They seem ideologically committed to a private model for injury compensation, despite the international evidence that this will reduce coverage and raise costs.
So where does experience rating fit into this picture? Experience rating links ACC levies to the safety record of the individual employer, which on the face of it doesn’t seem like a crazy idea. But as Helen Kelly of the CTU has pointed out, the evidence shows that all this does is incentivise the under-reporting of accidents.
Nick Smith has claimed that employers won’t be able to hide serious accidents but when this system has been trialled overseas (pdf) this is exactly what happens with accidents being downplayed or not reported at all.
What works in terms of reducing accidents is providing staff training, information in the workplace and health and safety standards. But the budgets for these types of programmes are being slashed under John Key’s Government.
The Key Government’s attempts to undermine ACC are unfair and unnecessary. Our no-fault system is a world leader, and while not perfect it provides a fair go for people regardless of their job, income or the sports they play.
The time has come for an impartial review of the sweeping changes the Government is making to ACC to see if reducing services and moving towards privatisation will benefit the people or the insurance companies.
If you are concerned about the direction that John Key’s Government is taking ACC, let them know. Submissions close on the 29th of October.
Help us to keep them honest. Truth to power!
Published in Environment & Resource Management by Kevin Hague on Mon, October 4th, 2010
Tags: ACC, Kevin Hague
More posts by Kevin Hague | more about Kevin Hague
on the trolls and those who are unable to keep on topic
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Of course ACC has to take in more money than it gives out in any year.
Beacuse payments this year not only have to cover this year accidents, but have to keep paying for some of those same accidents for many years to come.
Or to you want to get new generations to pay for continuing payments for historic accidents that happened before they even started working.
If you want to do that, then you are probably one of those terrible boomers that Gareth talks about in his post about boomers ripping off the future generations.
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This means they don’t have to pay ACC levies. In order to do this they have to abide by strict guidelines from ACC.
They keep full records and incident reports or all injuries They also have a running total of how many days since the last injury. However they are usually encouraged not to register the injury at all and to just go and see the Dr that the company pays. The Dr is under a contract from the company, earning a nice easy payday, and is under pressure to get the employee back to work asap.
I had one client where the Dr gave him a week off work as he had a deep cut from a knife. A supervisor rang the Dr and told him to reduce it to one day as he wanted the employee back at work the next day and promised to put him on “light duties” and the Dr did.
There are no light duties at meat processing plants!!!!
I here these stories all the time. The employees are worse off as all treatments are controlled by the company and not a health provider as under ACC legislation.
They are treated like robots until finally they are so broken they cant work at all.
Although ACC could run into problems with funding in the future as Baby boomers retire and there are less working age adults to pay for current injuries and treatments, the model isn’t broken, it just needs a little work. You dont have to throw the baby out with the bath water!!
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That’s really interesting, Kim. Whoever came up with these EP programs/schemes must have *known* that stuff like that would occur…
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It was a sop to big business introduced by Labour in an attempt to mitigate adverse employer reaction to Labour’s re-nationalisation of ACC in 2003. And, yes, I believe that Labour knew full well it would result in exactly the same sort of employer abuses of the scheme as had occurred during the 1999-2000 period when workplace accident insurance was privatised. But they didn’t care – it was more important to them to neutralise the big business reaction.
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@photonz The Green Party has, in fact, had a consistent position of believing that ACC should return to being funded on a pay-as-you-go basis (i.e. levies in a given year need to cover the expected costs in that year). That is the same basis on which we fund other government services. If I am diagnosed with diabetes today, we don’t expect the tax that I pay to cover my future lifetime’s treatment needs. Yes that does mean that the levies paid by future generations will be funding some costs associated with historic accidents, but the needs that will be met by the levies will be current needs, and in any case generations after them will do the same.
In contrast both National and Labour support “full funding” of ACC, where the levies paid in a given year need to cover the lifetime costs for accidents occurring in that year. This is the same model used by the private insurance industry, and it’s pretty clear that National wants to use the same funding model to facilitate its privatisation agenda for ACC. Why Labour supports this funding mechanism is anyone’s guess.
By the PAYG approach ACC is in robust good health, with substantial operating surpluses and very large reserves. However, according to the full-funding perspective ACC has not made progress as quickly as was planned to be able ti fund all future costs of accidents occurring today (reserves aren’t yet big enough) and so according to Nick Smith was in a financial crisis. In fact the largest factor behind the reserves not being as big as anticipated was that the global financial crisis eroded some of the value of ACC’s investments – so even from the point of view of full-funding protagoinists there wasn’t any rational reason for all the grave tones and slashing of cover and entitlements that we saw. A whole bunch of vulnerable New Zealanders are suffering for no good reason.
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