by Kevin Hague
Financial Review of ACC today, so I subbed in for Gareth on the Transport and Industrial Relations Select Committee. Usual thing – we and Labour make the running and when things get too hot the Government members take a turn with patsy questions.
ACC fronted with Chair, John Judge, by videoconference and CEO Jan White fronting most questions, assisted by Denise Cosgrove, who seems to mostly front the reduction in ACC coverage we have seen.
I started by drawing attention to ACC’s claim that they have had to make the “hard decision” to “stick more closely to the legislation” on who gets covered. Were they, I asked, meaning that previously, when more New Zealanders had cover, they got that illegally? No, not at all, said Dr, White. What ACC means is that there is a range of ways in which the legislation can be interpreted (“shades of grey”) and they have just shifted from a less restrictive interpretation to a more restrictive one.
So I asked what the process had been to guide this change of interpretation, thinking about the Woodhouse principles and their spirit of genuine compensation. Ah well, what had happened was that ACC now had more evidence to guide the decisions, in contrast to the old days, when apparently claims were just approved without scrutiny. Well I was surprised by that answer, all the more so because it seemed totally incompatible with the earlier claim that the change was one of interpretation. I started in on the line of which of these explanations was actually correct, when, of course, a Government member stepped in for a reprieve.
When I got my next chance I asked about the sensitive claims process. How had that gone so disastrously wrong? We were told that there had been no change to coverage there, but that ACC had underestimated the amount of time that was needed for some process steps, and this had caused all the problems. Another surprise for me. Because back at the time this disaster started to unfold ACC’s explanation was that the previous interpretation of the law had not been restrictive enough, necessitating a more restrictive interpretation of “mental injury”. So that was the second major inconsistency in the evidence we heard. Again, rescue by Government members before I could press further.
And then sadly we ran out of time (and kind of mysteriously, since we had an extra hour before the scheduled end time). Which meant that I couldn’t ask my last question: given that the sensitive claims changes were such an unmitigated disaster, and that was only finally acknowledged after an independent review, what on earth would give the public confidence that the reductions to cover in many other areas were not also catastrophic, except a full, independent and public review? I get to put that one in writing? Expect another post when we hear the answer.
Published in Economy, Work, & Welfare | Health & Wellbeing by Kevin Hague on Thu, February 10th, 2011
Tags: ACC, Kevin Hague, select committee, sensitive claims
More posts by Kevin Hague | more about Kevin Hague
on the trolls and those who are unable to keep on topic
Loading...
And great work on Backbenchers last night by the way, that summer tour has been a good laugh.
Like or Dislike:
4 
0 (+4)
Like or Dislike:
7 
0 (+7)
If you want a perfect example of how disgraceful this has become, have a read of Bruce Simpson’s blog today, and what his wife and he have suffered through over the past 18 months. This is a bizarre set of non-decisions that long-term will cost a hell of a lot more than the initial treatment costs. Just stupid!
Like or Dislike:
2 
0 (+2)
Kevin – if you are campaigning to have ACC pay out more, are you also campaigning just as loudly to increase everyones ACC fees to pay for it?
Cause if you are not, where will the money come from?
The main problem is there are more and more people realising they might be in for an ACC claim when the system was never set up to cover so much.
For example, when we get old and go a bit deaf, we used to buy a hearing aid. Now days deafness is always due to late onset from a work accident (loud machine/ music or whatever) so ACC suddenly has a level of claims that was never funded by fees in the first place.
There are thousands of people who rip off ACC, so they always have a difficult job when it comes to weeding out those who are scamming us – particularly around unprovable areas like back pain, and mushrooming areas like sensitive claims and deafness.
Personally I think ACC should be kept for accidents, and we should fund the health system to take care of non-accident issues.
Genuine cases can get treatment, and there would be nothing to be gained by scammers.
Like or Dislike:
1 
10 (-9)
photonz1, last year ACC achieved a $2.5 billion surplus.
The only reason levies are as high as they are is the policy decision (supported by Labour as well as National) that costs that will be incurred 25 years or more into the future have to be wholly funded out of this years’ levies if they relate to injuries that occur this year.
Assessing the levies on that basis is actuarial mumbo-jumbo. No-one has any real idea what new medical technologies and rehabilitation techniques will develop over the next few decades, or how they may assist in getting injured people back to work earlier, or what they will cost.
If ACC were to return to Pay As You Go, while retaining reserves at about their current level as a financial safeguard against major injury events such as earthquakes or floods, we could see levies reduced substantially at the same time as restoring the access to entitlements that the current Governmet has cut.
Like or Dislike:
10 
1 (+9)
toad – isn’t it a Green mantra that we shouldn’t use all the resources now and leave a great debt for our children?
Yet this is EXACTLY what you want to do with ACC.
You don’t want the current risks to be paid for by those who actually take the riaks and suffer injuries – you want to pass their liability onto the next generation.
Because some peple are still getting paid for injuries from a year ago, and five years ago and ten years ago, ACC claims build up and cost more and more every year, and you want to pass all this debt onto the next generation.
A second hypocrasy is that ACC has assets that generate income and lessen ACC premiums. And you want to SELL THE ASSETS that save us money.
Like or Dislike:
2 
4 (-2)
You (like the Government) are treating ACC as if it were a risk-based insurance scheme. It was never meant to be that. It was meant to be social insurance based on the principle of community responsibility.
If I take the injury risk of driving a truckload of goods to their retail outlets, I am not the only one who benefits from that. The workers who make the goods benefit from the wages they are paid. The shareholders in the manufacturing and distribtion companies benefit from the profits they receive. The consumers who purchase the goods benefit from the use of the goods. So the benefits are shared around. Why, then, should the cost of my injury risk be borne solely by me as the contractor who delivers them to the retail outlets when others also benefit from my doing that?
Ideally, I think ACC should be funded out of general taxation, rather than risk-based levies (although I haven’t managed to convince even the Green Party of that yet).
Like or Dislike:
6 
1 (+5)
taod says “Where did I mention anything about ACC selling assets, photonz1? I didn’t, and don’t support ACC’s assets falling much below their current level. You are making it up.”
You are right – I didn’t notice you said keep the reserves -sorry
toad sasy “You (like the Government) are treating ACC as if it were a risk-based insurance scheme. It was never meant to be that. It was meant to be social insurance based on the principle of community responsibility.”
But you are treating it like it has endless funding.
Your example of everyone benefiting from one person taking on their injury risk make no sense, because the same thing applies to everyone else as well.
And you idea of funding ACC from taxes would destroy one of the prime reasons for ACC – to encourage people and businesses to reduce accidents (though a private system would encourage this even more)
And you system of passing the costs forward means our children will pay for their injuries AND ours.
Like or Dislike:
1 
0 (+1)
I think regulation is far more effective at that photonz1. I’m much motre likely to drive safely because of the prospect of facing a $500 fine if caught driving carelessly (or of ending up dead or in hospital for weeks) than I am by the prosepect of my motor vehicle levy going up.
I suspect employers are much more motivated to keep their workplaces safe by the prosepect of being prosecuted by the Department of Labour and fined $100K than they are by their ACC levies.
Last time experience rating was in place for employers it didn’t cause any significant reduction in workplace injury rates, and there was no sudden jump in injury rates when it was abolished. We’ll see if it makes any difference this time around.
Like or Dislike:
3 
1 (+2)
I wonder how many fines there actually are?
Like or Dislike:
0 
0 (0)
taod says “I suspect employers are much more motivated to keep their workplaces safe by the prosepect of being prosecuted by the Department of Labour and fined $100K than they are by their ACC levies.”
I disagree. Except for the really dangerous and negligent employers, then there’s an extremely remote chance that you’ll ever face major fines.
Whereas in a private accident insurance system, EVERY employer would face higher or lower premiums depending on their accident rate.
It just means there would be an incentive for workplaces to improve safety. A tax funded system would be an incentive for businesses to cut corners and costs on safety.
Like or Dislike:
1 
1 (0)
Actually it means there would be an incentive for employers to do dodgy deals with insurers involving corrupt company doctors contracted to teh employer or the insurer who will either report the injury as caused by a “degenerative condition” or attribute it to non-work tasks and environment. The employer wins through lower premiums, the insurer wins through lower payouts. The only person who loses is the injured person.
It happens already with accredited employers under the Partnership Programme. Just ask anyone working in the meat industry who has tried to get cover for rotator cuff injury.
Like or Dislike:
4 
1 (+3)
“Whereas in a private accident insurance system, EVERY employer would face higher or lower premiums depending on their accident rate.”.
And that works so well in the USA.
Employees have trouble getting any payments at all even though the private insurance and legal fees are crippling to business.
US small employers I know dream of our system.
Like or Dislike:
0 
1 (-1)
Kerry says “US small employers I know dream of our system.”
The problem with the US is that if you don’t get the payment, you don’t get any medical cover at all, while we still have a free hospital system as a backup, so it wouldn’t be the same.
However I agree that the ACC system is cheaper overall to the country than many systems.
It just doesn’t have any great incentives for being safer for individual employers. So if you put a big effort into improving safety, your premiums will end up subsidising your competotors who don’t.
Also there is a problem with ACC with the mindeset of many people that it is some sort of infinite fund.
It is a fund of what we pay in. It is finite.
And of course the problem of millions upon millions being scammed from ACC.
Like or Dislike:
1 
1 (0)
Phot
That’s good considering all the reports and statistics point to exactly that huh!
Would that be all the insecure overseas investments the Government makes into things like tobacco companies where we’ve lost millions of taxpayer dollars?
Politicians from each of five political parties; some holding or having held relevant ministerial portfolios, or holding shadow portfolios. The other five participants were managers or senior advisors from the Ministries of Health, Education and Social Development, whose roles involved or had involved them in legislation, advice to ministers, or policy implementation related to tobacco.
All 10 interviewees appeared ignorant of the investment by the five Crown Financial Institutes (New Zealand Superannuation Fund, the Government Superannuation Fund, the National Provident Fund, the Accident Compensation Corporation [ACC], and the Earthquake Commission) in tobacco companies. They did not appear to have heard of, or have remembered, the media reporting of research.
http://www.nzma.org.nz/journal/119-1243/2269/
Like or Dislike:
0 
1 (-1)
Todd says “Would that be all the insecure overseas investments the Government makes into things like tobacco companies where we’ve lost millions of taxpayer dollars?”
But fails to say his following quote comes from five years ago in 2006.
As ACC investments have outperformed nearly every managed fund in NZ, your insinuation that ACC has lost millions could hardly be further from the truth.
In fact you could do a lot worse (nearly everyone does) than copying ACC’s investments.
If you scoff at people scaming tens of millions from ACC, don’t complain if there’s not enough for claims.
“In the last 5 years over 5000 cases have been investigated and ACC’s Investigation Unit has identified and dealt with fraud amounting to $150 million.’’
Like or Dislike:
1 
0 (+1)
Phot
Nothings changed within this format to steal our taxes. ACC has “lost” a significant amount of taxpayer money that should go to looking after injured people. They “lost” our money on bad and insecure investments.
http://www.accforum.org/forums/index.php?/topic/5813-acc-investments/
I’m a lot more concerned with white collar crime within our institutions.
http://thestandard.org.nz/what-theyre-hiding/
That $150 million over five years opposed to excessive political, business and investment fraud, in the billions of dollars, seems like a paltry amount photonz1. Please provide a factual and relevant link to corroborate that amount?
Like or Dislike:
0 
0 (0)
@photonz1 4:36 PM
You have just defeated your own (and Nick Smith’s) argument that the cuts to cover and entitlements were needed to address a “financial crisis” in ACC.
Of course the value of ACC’s investments plummeted during the global financial crisis, as did every managed fund investment. The supposed “crisis” in ACC was almost entirely resultant upon that. But good investment management by ACC’s fund managers has reversed that very quickly, to the extent that ACC made a $2.5 billion surplus las financial year.
The cover and entitlement cuts National imposed were completely unnecessary to address a short term paper loss that would inevitably rebound with good management (as it did), and should be reversed. The privatisation plans are also completely unnecessary, and should be scrapped.
ACC is financially sound, and always has been. Its current problem is not its financial security but its fairness to claimants.
Like or Dislike:
1 
1 (0)
Todd says “They “lost” our money on bad and insecure investments.”
But then only provides a link to foreign exchange losses which is nothing more than the difference in value (of billions of dollars of investments)as they go down (and up) as exchange rates fluctuate.
And the period quoted was a brief period, several years ago at the start of the recesion.
It doesn’t even claim it was a realised loss – more likely a fluctuation on paper.
And it’s from an anonymous ACC serial complainer – not exactly an independent or reliable source.
Todd asks “Please provide a factual and relevant link to corroborate that amount?”
The info on 5000 cases totalling $150 million in ACC fraud comes from here
http://www.scoop.co.nz/stories/GE0807/S00075.htm
Like or Dislike:
1 
1 (0)
Toad – the investments are to cover long term residual claims – so it has nothing to do with current year claims.
Like or Dislike:
1 
0 (+1)
Phot
Relevant historical info from 2004:
http://www.accforum.org/forums/index.php?/topic/506-acc-fraud/
ALAP is of the opinion that ACC is misappropriating a large portion of the $2.3 Billion annual collection of funds from levy payers by channeling money that should go towards claimants’ rehabilitation into overseas investments. In other words, the Corporation is guilty of committing fraud against, not only levy payers, but also against the public of New Zealand. It is potentially the greatest fraud in New Zealand’s history, a scam of enormous proportions.
http://www.stuff.co.nz/the-press/news/3930838/Large-fraud-tops-72m-in-6-months
Large-scale fraud hit $72 million in the first half of 2010, but that is “only the tip of the iceberg”.
Was that $150 million part of this?
http://www.stuff.co.nz/business/3601126/ACC-calls-in-SFO
The public are right to want to know that money spent by agencies such as ACC is being spent with the highest levels of integrity. There is a serious question mark about that with respect to ACC.
I notice you haven’t provided any substantiated links to back up that figure phot, perhaps because your information is as usual… wrong!
Like or Dislike:
0 
1 (-1)
@photonz1 5:22 PM
We’re back to my 10:46AM comment here photonz1.
You (and the Government) are trying to compartmentalise various aspects of ACC’s operations.
I am looking at the big picture – its overall financial performance. And last year it made a $2.5 billion dollar surplus, so where’s the problem?
It is only when you start classifying injuries into different and pretty arbitrarily defined categories of injury and striking levies based on the financial performance of each of those categories that a problem develops.
Go down your path, why isn’t every sporting governing body charged a levy to fund sports injuries? The reason is because people playing sport keeps them fit, and therefore less likely to suffer the diseases that are consequent on obesity.
It is all inter-related across society as to who pays and who benefits, and that is why ACC should be based on the principle of community responsibility, rather than setting up artificial risk categories and levying them solely on the basis of their assessed risk.
Like or Dislike:
2 
2 (0)
Todd – you show total ignorance of how ACC operates its funding of current and residual claims.
You show complete ignorance of the purpose of the residual fund.
And from your comments it seems you don’t even have the slightest idea of who funds it.
Why don’t you go away and learn (even the very basics) of how the system operates before you spout b/s on something you obviously know nothing about.
Like or Dislike:
1 
0 (+1)
Phot!
Another fallacious argument! FFS! It’s obvious that I’m not ignorant of the machinations of ACC, your denial of the clear and concise facts within the links I have provided does nothing for your credibility or argument. You’re either too stupid to reasonably understand basic information or too arrogant to admit you’re wrong.
Why don’t you go away and try to find some of those things you’re sadly lacking in and come back with a reasonable argument if you can that does not include Ad Hominem.
ACC had to call the serious fraud office on itself because its employees were ripping the system off, that is a fact.
If funds raised from various taxes are not required immediately for expenditure, then the tax is at a rate that is too high in the first place or not being deployed in the proper way. That is a sad fact!
Any fraud that is undertaken which you have highlighted to try and discredit rightful claimants, pails in comparison to white collar crime in this country. That is a fact.
I can understand why you have difficulty arguing against facts phot.
Like or Dislike:
0 
1 (-1)
Todd – what a laugh – you think becuase you say something is a fact, then it is one.
And you just proved you have no idea of why the residial fund is needed and how it is run.
You’d rather have an unsustainable system where we transfer our responsibilities to our children so they have to pay for not only their injuries, but also our generations ongoing payouts – that’s very anti Green of you
Like or Dislike:
1 
0 (+1)
Phot
It’s on alright… I’m glad you find it amusing. Most of what I say is factual photonz1. I try very hard to not post untruths. If others determine my innacuracies, that is there business. At least my posts are not blatant lies like yours. Again you question my integrity when you should be more concerned about your own. Please photonz1, don’t tell me what I think. That is for me to decide.
That’s your argument, not mine. I’m too busy to be baited today.
I never said that. Quit opposite in fact. I totally fail to see where you can get that inference from all my previous posts about ACC corruption and the millions of taxpayer dollars they have illegally lost. Of course I prefer a sustainable system wherever it is possible. I probably do have a few beliefs that are not in line with Green policy, but fail to see their relevance here.
Like or Dislike:
0 
1 (-1)
Todd, photonz1 – be nice to each other.
Don’t forget this is a blog, and you can’t so quickly clear up misinterpretations and misapprehentions here like you can on Skype or on a phone call.
A warning to both of you (although not yet a “you will be banned” one, as Farrar tends to do when he changes the rules).
I feel sorry for what happened to you there Todd. The KB comments thread (and in particular the General Debate) is indeed often a sewer, and good on you for the parody you inserted into it.
But methinks you went too far, and like here, the first rule is to never incur the wrath of the blogmeister.
Like or Dislike:
1 
1 (0)
Oh, and BTW, back to ACC, which is the topic of this thread.
Like or Dislike:
0 
0 (0)
appologies frog – I was just a bit tired of Todd continually saying things are facts, but never being able to back it up with actual facts (or links).
I find it surprising that there seems to be a lot of people on the left think the residual fund is a bad idea. Getting enough of a fund together so it covers all long term payouts seems like a good idea, when it means we are not burdening our children with todays long term injuries.
Effectively that would be asking them to pay for their present injuries, and our past ones, while we only pay our present ones.
Like or Dislike:
1 
1 (0)
Well said frog. Just off topic… another small upgrade could be a special sarcasm and irony font so that the subtlety is not lost
Photonz1
I have absolutely no problem with this argument, however that is not how it is being utilized. If there is enough taxing to build up funds to invest as well as look after injured people (which is not happening) then that means there is overtaxing. The overtaxing scenario to invest in secure and appropriate investments and look after the injured is an acceptable compromise. Being that secure investment is a just reason in itself. But I do not see this happening without a huge shift away from political incompetence. I’m still unsure why imposed ACC taxes go towards something they were not initially intentioned for and the public has not been consulted. There are other areas where such Governmental investment can be funded from and a hypothesis is not relevant unless we can drastically change the realities concerning ACC’s bad investment decisions.
Hm! Six relevant links and counting on this thread to your one photonz1… on scoop no less.
Like or Dislike:
0 
1 (-1)
Todd – ACC set up and collected for it’s residual fund, so it can invest and the RETURNS will fund payments for long term injuries instead of passing responsibility to our children.
If it did not invest the fund, it would give the return needed to make long term payments.
Yet you give links to nutters on ACC winge forums (and then call them relevant) who try to claim that by making these investments, ACC has commited fraud on a massive scale. It’s total nonsense.
Employers and busineses would be far better off under your way of running things. I wouldn’t have to pay my own employEE residual fee. I wouldn’t have to pay my employER residual fee for myself. And I wouldn’t have to pay employER residual fees for any of my employees.
But my kids would have to pay more for their own generation, as well as our generation’s long term payouts.
Like or Dislike:
1 
0 (+1)
If a tax is being made on the general public to rehabilitate injured people and ensure workplace safety, that’s where it should go. It should not be another revenue stream for the Government to play with. I understand the premise that investing to secure long term ACC expenditure on the injured is a good idea, but this is not where a lot of those levies are going.
Perhaps you should peruse ACC forum to find out how many cases there are where people in need are not funded at all because of ACC’s policies to decline claimants. Considering there are many more thousands that would not have posted there, it is a sad indictment of ACC failings. It’s also a big site so you might be gone for a while.
http://www.accforum.org/forums/
If ACC did its job properly to rehabilitate the injured, that site would not exist.
There are thousands of injured New Zealanders who struggle on sickness and invalid benefits because ACC is failing to meet its obligations and many injured people do not have the energy and/or finances to afford legal action. Privatisation will do nothing to fix ACC ineptness in this area. Only restructuring from the top can ensure that the ACC model returns to what it was intentioned to do. Which is just as sound and valid now as it was way back in 1972.
When ACC’s new policy to decline claimants was enforced, SB & IB numbers grew dramatically. So with less funding going to where it was needed, some
nutterspoliticians decided that throwing a few hundreds of millions of dollars into insecure overseas investments was a good idea… I don’t think so. Most people with half a brain don’t think so. Whether that tax was initially devised to be invested is neither here nor there, it’s the use of those funds and return on investment that is in question.http://www.3news.co.nz/Hard-line-on-ACC-claims-to-continue/tabid/419/articleID/191929/Default.aspx
Your generational argument means nothing when the funds are not going to those who require them the most and when considering the millions of dollars that have been lost in loose overseas investments. It has little relevance concerning residual fees if any profit goes into the Governments slush fund, although I have no particular link as evidence of this assumption.
How can you argue that such an investment system will save our children from paying for current accident victims who require long-term assistance in the future be effective when the current model is dysfunctional to begin with? You can not, therefore insecure overseas investments should stop being funded through ACC, funding should go towards its intended purposes. If there is then a surplus, ACC levies should reduce and/or be invested at a moderate percentage of that surplus in secure and morally sound investments.
Unless you’re totally inhumane and only see dollar signs instead of people, savings or cuts should not be made at the detriment of the injured.
Like or Dislike:
0 
1 (-1)
Todd – you gave me the impression you were strongly against selling assetts that earn (and save) us money as a country.
Last year (09/10)
Genesis Energy earned us $69 million.
Solid Energy $69 million
Meridian Energy $184
And
ACC’s investments earned $1,411 million.
That doesn’t sound like a loss to me.
In fact even in late 2008 when most investments funds were haemorrhaging, ACC still made a profit.
Rod Oram says “In fact, for the seven months to the end of January they earned a positive return of 2.73%, a gain almost all other fund managers only dreamed of as global markets crashed.”
Like or Dislike:
1 
0 (+1)
Todd says “some nutters politicians decided that throwing a few hundreds of millions of dollars into insecure overseas investments was a good idea… I don’t think so.
We’ll if you don’t like what they did, you know what to do. Don’t vote for the left wing govt that got ACC to invest overseas.
Like or Dislike:
1 
0 (+1)
I am. Please don’t confuse the issues. This is the wrong thread to discuss whether privatisation saves/earns New Zealanders anything.
I never said ACC did not make money, just that it lost millions in stupid insecure overseas investments and that levies were not going to their intended purposes. If we need to pay more in ACC levies to look after the injured because of workplace safety and training issues then so be it. That’s the price we pay for disincentivizing safety and a skills based economy.
The lesser of two evils. It’s a no brainer really.
Like or Dislike:
0 
1 (-1)