Ports of Auckland have consistently said that they want to increase productivity. However the hardline approach and lack of flexibility from the CEO, Tony Gibson, has resulted in days lost to strikes, and now the threat of a lock out doesn’t create a productive workforce.   I wonder what the management’s real aims are, given that the company had previously drawn up a strategy to contract out the workforce, and Tony Gibson is threatening to call for expressions of interest while the contract talks were stalled.  This is hardly ‘good faith bargaining’ – and it quite likely breaches the existing industrial relations laws.

If the Board and management of POA were so concerned about increasing productivity and increasing the profit margins, how could they possibly consider a spend of $5million on redundancies – and potentially much higher costs resulting from legal action from the Maritime Union?

In the mainstream media comparisons are being drawn between the Port of Tauranga and Ports of Auckland.  Tauranga is partially privatised and has a casualised workforce.  Undoubtedly, it is cheaper to offload freight at Tauranga. However, companies like Fonterra who have chosen to move their operations are actually subsidised by taxpayers who pick up the externalised costs of moving that freight further by paying for the roading maintenance and railway infrastructure. Taxpayers pick up other costs too. Casualised workforces have poorer health and safety procedures – in the last five years three workers have died at the Port of Tauranga.

My concerns are that the real agenda is about breaking  the Maritime Union and reducing  the working conditions of the Port workers, but also it’s about privatising our assets and undermining the new Supercity structure.  POA is wholly owned by the Auckland Council, but its Board was appointed by the Directors of Auckland Council Investments Limited, who were in turn appointed by   privatisation advocate and former Local Government Minister Rodney Hide rather than by anyone democratically elected by the people of Auckland.

Auckland Mayor Len Brown was elected in 2010 on a promise he would resist asset sales.  Christine Fletcher, who leads the right wing minority Citizens and Ratepayers bloc on the Auckland Council, has already signalled that she believes selling at least some of the Ports of Auckland will, in her opinion, make vast improvements at the Ports.

This is the same as the National Party propaganda  the government is promulgating for the sale of  our energy companies – that the private sector is better at managing our state-owned (and council owned) assets.  And this is despite reports from the energy companies that their returns are excellent and from the Ports of Auckland that their returns have improved dramatically over the last few years as well.

On the Auckland waterfront, the Auckland Council and its Mayor have already endured meddling from the National government with Murray McCully snubbing Mayor Brown and issuing directives over Queens Wharf after the opening of the Rugby World Cup.  And the Mayor and the former Transport Minister Stephen Joyce have also clashed when the Minister refused to prioritise the Inner City Rail Link as part of the Auckland Plan.   The forced amalgamation that led to the Auckland Council was sold to the people of Auckland on the basis that the Supercity would ensure a better relationship with the government – and we’d have one voice for all of Auckland.  The trouble is the National-led government doesn’t like that voice.

John Key’s government has meddled in union matters before – they changed the law around contractors and employees on the behest of an international movie company in 2010.  But this time they would do well to stay out of the Ports of Auckland dispute. It’s not just capital that has global interests and connections – organised labour has too!

With a little bit of creative licence, the exchange went something like this:

Tony: We need to partially privatise them so that Government can raise capital to spend in other areas and so that the energy companies can get access to more capital.

Russel: But the energy companies could just issue bonds to raise capital, you don’t have to privatise them.

Tony: Yes but selling shares is better than issuing bonds.

Russel: But you just forced Genesis Energy to buy Tekapo A&B power stations from Meridian with $821 million in borrowed money, and then Meridian used that money to pay Government a special dividend of $521 million. So effectively you made the power companies go further into debt making it harder for them to get the capital.

Tony: They might have done that but we didn’t make them.

Russel: But if you do sell them, none of the proceeds of the sale goes to the companies, it goes to the Government, so it doesn’t help them get access to more capital at all.

Tony: That’s right. But they can then issue more shares to raise capital.

Russel: But if they issue more shares then the Govt’s share will be diluted and will be less than 51%, and hence you will lose control of them.

Tony: [Pause] Um, well…. if that happens then the Government will buy some of the shares to ensure that we keep at least 51% ownership.

Russel: So to protect your 51% ownership you would need to buy 51% of new shares offered, so half the new capital raised will actually be provided by the Government?

Tony: Precisely.

Russel: What was the point of all this exercise again?

Tony: Life in Wonderland has its own point.

Here was Steven Joyce’s reply:

Nothing to say here. Nothing to say here. Nothing to say here. Nothing to say here.

So Gareth tried again:

Steven Joyce still wouldn’t take a call to respond.

As Toad, one of our regular frogblog commenters, has pointed out at g.blog:

Under the SOP, the restriction on foreign ownership will be gone.  The free local calling provision is supposedly protected.  But there will be a new and far less robust mechanism than the previous statutory requirements. The mechanism to do this will not be a special rights share, but according to the Ministry of Economic Development [PDF] will be:

“…a combination of constitutional requirements on the company, a small parcel of ordinary shares held by the Government, and a Deed between the company and the Government.”

So there will be no protection of free local calling in statute law.  The constitutional requirements and the Deed will be able to be reviewed by any future Government  without any reference to Parliament.  And if Don Brash and his Actoids are part of a future Government, you can bet the farm on free local calling being gone by lunchtime.

As Green Co-Leader Russel Norman said today:

How can we be sure that National or any future Government won’t break the promise to keep a majority ownership stake in our state-owned energy companies?

The underhand way the Government has handled this major policy change on the Kiwi share suggests that John Key can’t be trusted. He’s obviously committed to a privatisation agenda and seems to have learned nothing from the disastrous decisions made in the 1980s and 1990s.

• Selling off shares in our publicly owned energy companies, even though the loss in dividends to the Government will be greater than the interest payments on the debt that will be retired from the sale proceeds.
• Opening ACC’s work account to private insurers, even though an independent report by Price Waterhouse Coopers shows there will be no public benefit.
• Building roads that have a negative benefit to cost ratio, while Auckland’s passenger rail network grinds to gridlock.

Is it the case that John Key’s government is so ideologically inspired, evidence averse or economically illiterate that policies like these get past the Cabinet table with little scrutiny? Or are there more sinister forces at play?

Yesterday, Idiot/Savant at No Right Turn set out the case for greater transparency on lobbying.  And the Greens were the only party he gave a tick.  Here’s what the Greens would do:

1. Ensure lobbyists keep a public register of all clients utilising their services, whether for a charge or pro bono.
2. Model the registration system on the Canadian Registry of Lobbyists and ensure that the information is available online.
3. Ensure that such a registry contains, but is not limited to, detailed information about lobbyists and their activities including:
   • Lobbyist’s name
   • Client name
   • Institution being lobbied
   • Subject matter and particulars of the lobbying
   • Lobbying methods used
   • Government funding received by the client or employer
   • An indication whether a lobbyist was a former public office holder as well as details about offices held
   • For in-house lobbyists, the name of the corporation or organization, and the names of lobbyists employed there
   • Information on oral and arranged communications with certain public office holders

Curiously, no other party appears to be interested. Lobbying of public office holders has a major impact on the democratic process and lobbyists should be required to be transparent about their role.

Update 13 June 2011: The Greens now have a Bill to address this issue.  Russel Norman and Sue Kedgley launched it this morning.  A copy [PDF] is available here.

I couldn’t agree more with MacDoctor’s definition of the problem:

The worrying thing here is that Mr [sic] Smith apparently has no idea whether there is a problem with ACC claims and no inclination to find out.  Over 400 people have complained to the Herald and ACC lose fully one third of all their disputed claims. Yet Mr. Smith would like “a larger number”!

How many would be big enough, Mr. Smith. Ten thousand? A Million? Would losing 50% of all claims be enough? Or will you only do something when it hits 99%? All those management seminars which told you to put a specific action or date on something didn’t do you much good, did they, Mr. Smith?

Of course, it occurs to me that the government is happy to let ACC get as belligerant [sic] as it likes. After all, they are saving the government money.

Spot on!  But as for MacDoctor’s proposed solution:

I can’t think of a better reason why ACC should be completely privatised. Monopoly government insurers have no place in compassionate, civilised society.

I could not disagree more.

Privatising ACC will exacerbate that problem.  Insurers want to minimise claim costs.  Employers want to minimize levies (or insurance premiums, as they would be called under privatisation).  The easiest way to do that is to deny legitimate claims, in the knowledge that most claimants don’t have the fortitude, legal knowledge, or financial capacity to obtain suitably specialised legal representation to contest wrongly denied claims in what is a complex area of law.  MacDoctor’s “solution” opens the way for collusion and corruption between insurers and employers and (dare I say it), the odd corrupt medical practitioner to deny legitimate ACC claims.

The result of the privatisation MacDoctor purports to be the solution will actually be more legitimate claims being denied, not less! The insurance market model breaks down seriously when the people who pay the premiums are not the same people who make the claims. Someone dissatisfied with their insurer normally has the option to go somewhere else. An injured worker does not, because his or her employer will determine the insurer under a privatised ACC regime.

The solution that will work for claimants is for Government to impose constraints on ACC’s zeal to reduce costs at the expense of justice to claimants, including key performance indicators re the percentage of claim declines overturned on review and appeal; and to give claimants a choice of suitably qualified assessor.  Sending all back injury claimants to assessors of ACC’s favoured choice, such as orthopaedic surgeon Brian Otto for example, with no choice to the claimant of an alternative  assessor should not be an option.

Experience rating will result in an individual employer’s ACC levies being adjusted up or down on the basis of their work injury record.  The idea is supposedly that individual employers will respond to the prospect of increased or reduced levies by improving workplace safety.

On the face of it, that doesn’t sound like the craziest of ideas, until we look at how experience rating operated when ACC were last required to use it.  When experience rating was in place in the 1990s it created perverse incentives both for employers and for ACC.  The 1990s experience revealed:

• Experience rating had a negative financial impact on the financial performance of the ACC scheme – more funds were paid out in levy rebates resulting from positive experience ratings than received in loadings on levies due to negative experience ratings.
• The formula for experience rating changed each year in an attempt to address the above problem – resulting in year to year uncertainty for employers.
• Experience rating placed pressure on ACC staff to remove costs by moving claims from the work account to other accounts and increased the likelihood of employers contesting that an injury was a work injury, with resultant uncertainty and delays in cover and rehabilitation for the injured person.
• ACC were required to spend significantly more time and money in defending cost allocation through the dispute resolution process rather than focusing on rehabilitation of claimants.

Helen Kelly from the NZ Council of Trade Unions hits the nail on the head when she says:

Rewarding employers for a lower claims rate doesn’t reduce accidents but provides incentives for accidents to be covered up – either not reported, or misrepresented as having happened out of work, or bullying employees not to seek treatment. This will weaken health and safety practice by distorting the incidence of and reasons for accidents.

It will also lead to the end of industry-wide approaches on health and safety issues as employers focus on their own enterprise, reducing innovation and the sharing of learning across employers in a sector. Workers will suffer because their industry as a whole will not learn from the experiences of others.

And as the author of the ACC scheme, Sir Owen Woodhouse, has himself pointed out, experience rating runs counter to the community responsibility principle upon which ACC was founded.

This isn’t about reducing workplace injuries at all.  It is about forcing ACC to behave more like an insurance company in preparation for its privatisation.

They both note this chart produced by Treasury:

Check out the blue line (post-earthquake) and the grey line (pre-earthquake) for the forecast impact on GDP.   Actually not much difference there.  It was all bottoming out regardless of the earthquake, and Treasury has even forecast that by mid-2012 the post-earthquake rebuild will be having a positive impact on GDP.

So why the panic from John Key and Bill English?  Why suddenly decide, under the pretext of earthquake recovery, to wipe $800 million of previously proposed expenditure?  And if there is a short-term problem, why not a temporary levy on middle and high income earners living outside Christchurch, as Russel Norman has proposed.

I agree with Keith Ng and Idiot/Savant – the Government is using the earthquake as an excuse to impose ideologically inspired right wing measures, such as public sector cuts, privatisation of SOEs, and the the undermining of the welfare state upon us.

All undercover of the earthquake.  And my money is on the Budget agenda all being rammed through under Budget urgency, with no opportunity for public submissions, passed through all stages over 2 or 3 days with the Government requiring Parliament sit till midnight.

True to form for National. Not just undercover of the earthquake, but undercover of the night:

So you would expect solid support from the Kiwiblog readership for privatisation of state assets, right?  Wrong!

Farrar has been running a readers poll on the privatisation of the state owned energy companies.  Here’s a snapshot taken this morning:

Although the numbers curiously don’t quite add up, what is clear is that even among those on the right who will dominate participation in Kiwiblog internet polls, there is no majority support for partial privatisation of the energy SOEs.  A scientific 3 News Reid Research poll is showing public opposition to partial privatisation as high as 60%.

Which makes sense really, because the idea is sheer economic lunacy.  Why on earth would the Government want to sell assets that return a dividend significantly higher than the cost of servicing their debt?  And, despite the Government’s rhetoric about “mum and dad” investors, as the privatised shareholdings are eventually bought up by overseas investors who repatriate the profits, New Zealand’s already dire current account deficit will blow out even further.

The asset sales are not motivated by sound economic principles.  They are motivated by blind ideology; or even worse, by pork barrel politics with wealthy business interests now being offered their reward for their support for the National Party.

So let’s put the challenge back to National. The Greens have a Keep it Kiwi petition opposing the privatisation plans which you can download and collect signatures for right up to election day on November 26.  Whatever Government is forms after the next election, let’s have a strong message of opposition to privatisation waiting for them.

You can read more here about the Keep it Kiwi campaign, including a flyer you can download and an e-card you can send to John Key.

This may be good news for some employers, because in the short term foreign owned private insurers will be able to loss-lead with lower levies to gain market share.

But it will be very bad news for claimants, because the easiest way for private insurers to keep levies low, reduce costs, and increase profits is to wrongly deny legitimate claims in the knowledge that most claimants won’t have the knowledge and/or resources to challenge adverse decisions.

Expect this to be a big political issue next year in the lead-up to the general election.

In the meantime, there are a couple of things you can do before the summer break:

• Register your opposition to the ACC privatisation plans by signing up to the ACC Futures website.
• Go to the ACC Futures Facebook page and spread the word about it.

Well, it turns out that the only crisis with ACC was the one in Nick Smith’s head.  Last Thursday Smith appeared before Parliament’s Transport and Industrial Relations Select Committee to answer questions about ACC’s budget appropriation: 

[ACC] would make about $1.5 billion from its investments this year, he said, and the total surplus would be about $2 billion because of a drop in the cost of claims, better rehabilitation rates and cuts to administration costs. 

That’s right, a $2 billion surplus, and that’s before the levy increases and entitlement cuts have any impact, as they are only now beginning to phase in. 

Meanwhile, the Government continues to roll out proposals to further cut ACC entitlements, including this pernicious proposal that will leave thousands New Zealanders whose hearing has been impaired by accident or workplace noise unable to afford hearing aids. 

The real agenda is clear – get ACC making mega-surpluses in order to facilitate flogging bits of it off to the Government’s mates in the insurance industry.

1. Make the lia­bil­ity cus­tomer feel at ease. Their claim has been accepted because due to the over­whelm­ing med­ical evi­dence from their own doc­tors there is no way that we (Fidelity Life) can weasel out of it, the med­ical evi­dence sup­ports their claim.

2. Arrange for the first monthly pay­ment to be made and imme­di­ately go to phase one of the under­mine and destroy your liability’s cus­tomers self esteem

Phase one: Send a pri­vate inves­ti­ga­tor to wait out­side the liability’s cus­tomers house every morn­ing. Do not con­cern your­self with blend­ing in. You want the lia­bil­ity cus­tomer to know that they are under surveillance.

Phase two: Fol­low the lia­bil­ity cus­tomer when­ever they leave their home. Have the PI fol­low them on foot into shops etc and stand there behind a news­pa­per look­ing like an actor from a bad 70’s T.V series. If the lia­bil­ity cus­tomer approaches and makes it clear that they know that they are being fol­lowed, instruct the PI to imme­di­ately scurry back to their car and then ini­ti­ate phase three.

Phase three: At every meet­ing with the lia­bil­ity cus­tomer men­tion how poor insur­ance com­pa­nies have to pro­tect them­selves from lying cheat­ing lia­bil­i­ties cus­tomers but then assure the lia­bil­ity cus­tomer that you are sure that they are in fact ill as that is what their doc­tor reports state after all. How­ever they must under­stand that the poor insur­ance com­pany can­not let down their guard even for a sec­ond, and that if any­thing, no mat­ter how small, changes for them they must imme­di­ately inform the com­pany as oth­er­wise the con­se­quences will be dire as they will assume the worst.

Phase four: By now the lia­bil­ity cus­tomer is scared well aware of the con­se­quences and will inform you when they leave the home and what they do dur­ing the day. Once you have estab­lished that they are leav­ing the home most days and have some kind of rou­tine estab­lished total how many hours they are spend­ing out of the home. Do not worry if this time is spent at the gym, hang­ing out with a friend or going for lunch, it all helps with Phase five.

Phase five: This part is fun impor­tant and will reward the hard work you have put in thus far. It tunes up makes it clear to the lia­bil­ity cus­tomer that Fidelity Life is not a com­pany to be tri­fled with. With no warn­ing cut the pay­ment in half. Say that they have estab­lished that they can work because they are spend­ing x hours away from home. Explain that X hours sub­tracted from the monthly amount equals 50%.

Phase six: When the lia­bil­ity cus­tomer points out that they are not in fact work­ing or earn­ing for that period of time and that the pol­icy does not reduce until they ACTUALLY have a job make sure that you say noth­ing and just wait. The goal here is to starve encour­age the lia­bil­ity cus­tomer so that they will be more atten­tive to job seek­ing despite it being clear that they are fucked in the head suf­fer­ing a men­tal ill­ness. Once they get a job you can then say if you have a job you must be 100% well, if you are well then you no longer are cov­ered by the policy.

Phase seven: If phase six fails after 3 months rein­state the pol­icy and back­date the missed pay­ments. Apol­o­gise and explain that as some lia­bil­i­ties cus­tomers are liars you have been forced to test them to see if they are being hon­est. Ignore any men­tion they make of Doc­tors reg­u­lar reports that state that they are ill. Specif­i­cally call them in to the Fidelity Life Offices and explain to the lia­bil­ity cus­tomer that it would really be bet­ter if they went and got ECT. The short sharp shock will be bet­ter for them in the long run. If they react or tell any­one about this just deny it hap­pened, they are loony tunes men­tally ill any­way and no one will believe them.

Phase eight: Patience is your friend here. After the tune up edu­ca­tion pro­gramme the lia­bil­ity cus­tomer will be sus­pi­cious watch­ing our every move. Wait another year then repeat phases five through seven.

Phase nine: It is now clear that the liabil­ity cus­tomer isn’t get­ting the mes­sage get­ting well, we must move now to slash­ing min­imis­ing Fidelity Life’s expo­sure to the lia­bil­ity cus­tomer. imple­ment Phases 5 through s7 except this time make it 100%, and dig in for the long haul. Con­stantly explain delays in response as “wait­ing for the re-insurer”. The lia­bil­ity cus­tomer will even­tu­ally give up sui­cide seek bet­ter cover elsewhere.

That’s pretty much how injured people were treated by private insurers during the failed ACC privatisation experiment back in 1999-2000, I recall.

Now ACC privatisation is back on the agenda again, thanks to Nick Smith, and Paula Bennett and her Welfare Working Group are even hinting at replacing welfare benefits with some form of income insurance.

Funny how those on the political right don’t seem to get it – until it affects them personally, that is.

“Is this the real reason Telecom called their new network XT?

Seriously though, this text book case of how not to run a business has got well beyond a joke. When the 111 call system fails lives are at risk. Add Telecom to the list of dodgy privatisation decisions (NZ Railways, electricity) that aren’t looking so flash in retrospect…”

[Clue here, for those under 35 who don't get the joke.]

The XT network is such a shambles, maybe Telecom should consider rebranding it “National Standards XT”.

There is a Save ACC rally at Parliament on 16 February to fight back against National’s cutbacks. The good people at the CTU have got these ads running at the Sevens: 

You can check out all three videos here

This is one of the oldest political tricks in the book – introduce unpopular legislation just before the summer recess and hope that people are so preoccupied with summer holiday activities that hardly anyone gets around to making a submission before the closing date.  The Government can then argue that most people weren’t all that concerned about the Bill because there were few submissions.

This is a truly appalling Bill – it’s packed full of measures that undermine local democracy and promote the privatisation of Auckland’s assets.

Sue Kedgley and David Clendon have prepared a submission guide to assist people wanting to make submissions.

And don’t forget the closing date – 12 February 2010.

The Bill reveals a hardcore anti-democratic agenda for privatisation.

Sue Kedgley and David Clendon are preparing a submission guide, which should be available before the end of the week.

Meanwhile, they’ve alerted me to a few of the turds gems the Bill proposes to deliver:

• The Minister of Local Government, rather than democratically elected local politicians, will decide what Council Controlled Organisations to establish and appoint their initial directors.

• The new Council Controlled Organisation “Auckland Transport” will have between 6 and 8 voting directors, but only 2 of them can be elected members of the Auckland Council.  This transfers effective control of transport-related powers and functions from elected councillors to unelected Ministerial appointees.

• Elected councillors will be prohibited from being directors of all other Council Controlled Organisations, again transferring effective control of vast areas of Auckland’s governance from elected councillors to unelected Ministerial appointees.

• Watercare Services Limited’s water pricing will not be subject to Auckland Council policy or direction from mid-2015, and the Auckland Council will be permitted to privatise it from that date.

• The Auckland Council will be permitted to sell strategic assets from mid-2012, meaning that privatisation plans can be completed before voters get a chance to have a say on them at the 2013 local elections.

• A tokenistic and toothless board will be appointed to advise on issues of significance for mana whenua and Maori within Auckland.  The Auckland Council will have no obligation to follow its advice.

It is highly likely that the Bill will be open for submissions for little more than the summer holiday period to minimise opposition to it – another favourite trick of those who have no respect for democracy.

Update:  Submissions on the Bill have been opened to close 12 February 2010.    Sue Kedgley and David Clendon have now published a submission guide to assist people wanting to make a submission.

NZ Council of Trade Unions economist Bill Rosenberg has calculated:

• The increase in the earner’s levy needed to fund the cost of non-work accidents is 4.7%, but the Government has increased this by 17.6%.
• The employer-funded work account needed an increase of 3.6% to fund work accidents. Instead the employer’s levy is increasing by 12.2 %.

The reason for the difference?  It’s the Government’s insistence that all future costs on current claims be financed from current levies.

We don’t fund the public health system like that.  We don’t fund the education system like that.  And even though we partially pre-fund NZ Superannuation through the Cullen Fund, no government has ever suggested it be fully pre-funded.  So why fully pre-fund ACC?

The only answer I can come up with is to prepare it for privatisation.

If it is made to work like an insurance company, then it’s a lot easier to flog bits of it off to insurance companies some time in the future.  Levy increases and entitlement cuts will undermine public confidence in ACC and soften up public opinion for the privatisation agenda.

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.

ACC Minister Nick Smith has now confirmed these proposals are all on the table:

• Introduce a $50 or $100 excess on every claim.

Try selling that one to someone on the minimum wage!  Go to your local A&E clinic to get your cut finger stitched and a quarter of your take home income disappears – even if the accident happened at work and was because the employer’s equipment was faulty.

This will end up like National’s ill-fated public hospital out-patient charges from the 1990s – costing more to collect the fees than is returned in revenue, because people either can’t pay or won’t pay.

• Reduce income compensation from 80% to 70% after one year and 60% after two.

This breaches the social contract under which New Zealanders gave up the right to sue for personal injury, and will leave many people with insufficient to live on.  For someone on the minimum wage, 60% of their pre-injury earnings is only $255 after tax a week.  For a couple or family this is clearly inadequate, so the “savings” to ACC will just be loaded onto Work and Income as they are forced to apply for an invalid’s benefit or sickness benefit to top up the ACC payment.

• Impose a two-year limit on compensation for soft tissue injuries, such as back pain.

This ignores clinical evidence that while soft tissue injuries normally heal reasonably quickly, some develop into a secondary consequential injury known as chronic pain syndrome.  Chronic pain syndrome is classified as a mental injury, so ACC will need to contract an army of psychiatrists and clinical psychologists to do the assessments for each long-term claimant.  More likely, they will just boot people who cannot work because they suffer chronic pain syndrome off weekly compensation, so they too will end up on a Work and Income benefit – but receiving far less than they were getting from ACC.

• Introduce wider surveillance powers for ACC investigators to stamp out fraud.

What more do they need?  ACC already have contracted private investigators undertaking surveillance on claimants they are suspicious about.  Surely they are not contemplating search, seizure, and telephone tapping powers?

• Legislate to make it easier to get workers back to work.

How on earth can they legislate to make it easier to get workers back to work? Whether someone can get back to work or not is a medical decision, and ACC already have the power to refer a claimant to a doctor of their own choice if they are concerned a claimant might be malingering.  I suspect what they really mean is legislate to make it easier to get claimants off weekly compensation – whether they have a job to go to or not.

And they are already planning to do that.  If they can get the numbers in Parliament, that is.

It’s just not fair!

‘Shooting the messenger’ is a classic case of the kind of unhealthy politics that the Greens are trying to reform. While we believe debate can be robust, we nonetheless believe in treating others with respect and debating ideas rather than allowing an exchange of insults to substitute for grown-up behaviour. In consequence I won’t be responding to these smear tactics. We also believe that Ministers should actually have to answer questions, so for the sake of those for whom National’s tactics may have obscured the issue, here’s what we learnt this week:

• Despite Tony Ryall’s rhetoric about involving health professionals more in decision-making he did not consult the Association of Salaried Medical Specialists (essentially the NZ organisation of senior doctors) before deciding that DHBs should contract more of their surgery to the private sector. His reason for not doing so was that he had talked to them about National’s health policy before the election.
• There is a long-standing set of rules for DHBs contemplating contracting out surgery to the private sector. In amending these to facilitate more private surgery he has removed the explicit requirement previously placed on DHBs to consult their health professionals before doing so. His explanation for this was that he expected DHBs to be consulting health professionals all the time, so no special protocol was necessary.
• The Government refused to answer whether they had any information about how much public hospital operating theatres are used before Mr. Ryall made the decision to contract out more surgery to the private sector, but it appears this was not something they had considered.
• In fact analysis undertaken by the Ministry of Health comparing theatres in NZ public hospitals to a benchmark from Victoria Australia found that the theatres in 10 out of 26 hospitals were used at less than 60% capacity, while just 4 were used at full capacity. The Government is now aware of this information and argues that this under-used capacity will be insufficient in the future. This explains why more theatres may be needed in the future (although that decision looks rushed and ill-considered too) but has no relationship to the private contracting decision.
• The Government dodged questions about whether they believed more people should have private health insurance and whether they were deliberately weakening the public sector to engineer this outcome, to shift health cost away from Government.

The take-out message is that Government was determined to contract out more surgery to the private sector. This determination was not based on evidence, but either some promise made to the private health sector or simply ideology. They are entirely prepared to remove obstacles to this decision (like consultation with doctors!) should they stand in the way.

The other action sought by the private health industry from Government was encouragement of more New Zealanders to take out private health insurance (who knew?). We haven’t yet been able to confirm that this is what Government is trying to deliver – it could just be inadvertent – but their actions so far seem to fit this agenda.

Neither the Minister of Health nor the Ministry of Health has been able, under questioning at the Health Select Committee, to say how well the current operating theatres in New Zealand’s public hospitals are being utilised. For that reason I have written directly to all DHBs to ask.

I am aware, from my own experience as chief executive of a DHB and familiarity with many hospitals around the country, that many of these operating theatres stand unused for significant amounts of time. For example, they’re almost all unused at weekends; most hospitals would have at least one theatre “on standby” to deal with emergencies; and often theatres aren’t being used because there are insufficient staff in key roles, or because the staff and the patients aren’t both available at the same time that the theatre is free. It seems to me that we should have considered this information before Mr. Ryall committed to building another 20 operating theatres around the country and funding the private sector to deliver more surgery.

The practical effect of the change will be an increase in the uptake of private health insurance, representing a significant rollback of the Government in funding healthcare.

Of course it is legitimate to debate how much of the cost of healthcare should be shouldered by the State, and how much by you and me personally. But Health Minister Tony Ryall has not bothered with such debate, instead opting to substantially shift these costs without hearing others views.

This year’s Budget, while providing for increased Health costs in the current year, signals intent to decrease spending in future years. For those people who have been paying attention, this will have struck an ominous chord, as the need for health services continues to increase, and indeed to accelerate, due to an aging population, development of new (and more expensive) ways to treat, and epidemics of long term conditions such as diabetes and heart disease.

One way of managing the increasing need is to increase investment in programmes aimed at improving health in the long term. That is clearly not the Government’s strategy, as it has instead chosen to take the axe to exactly such programmes. For example, the substantial investment in Healthy Eating, Healthy Activity programmes by the previous Government has been decimated by the new regime. There is no evidence to support this decision; it is purely ideological. Unfortunately these were programmes aimed at producing gains in the long term, and their loss won’t be felt until well beyond the tenure of this Government.

At the same time, it has become apparent that Government instead plans to deal with the problem of increasing demand for health services by making more of us take out private health insurance.

Government has put pressure on district health boards to contract out more surgery to the private sector, as if this will enable the overall system to produce more operations. However, there is a fixed number of professionals in the system, and the Government’s decision won’t create any more – it will simply shift professionals from the public system to the private sector (where pay rates are substantially better). There isn’t a bunch of surgeons, anaesthetists and members of theatre teams standing around idle in the private sector waiting to do more.

This approach will further reduce the capacity of public hospitals, creating more and more hole, and increasing reliance on the private sector. Some cost in the public sector will fall although not as much as Government might think, as many of the costs are sunk in underutilised buildings and equipment.  Just enough however to enable the Government to meet its promises of decreased expenditure, while more and more of us are forced to take out private health insurance and thus perpetuate a vicious spiral.

Of course there is another theory: Tony Ryall doesn’t understand the system well enough to realise the consequences of his decisions. Perhaps there is not yet evidence to support this theory, but when the Surgical Hospitals Association presented to the Health Select Committee recently calling for more public contracting to private hospitals, and more Government encouragement for people to take out private health insurance, was some kind of debt was being called in?  Certainly this would explain the Budget.

There is no doubt that it will be more and more challenging for the sector to meet the increasing need for elective surgery. But there is another way: no attempt has been made to match up people in need and specialist skills against our existing theatre capacity.  Instead the system is saddled with the inefficiency of 21 separate queues. With collaboration, we could extract more efficiencies from the publicly-provided health sector in New Zealand before we give up and shove the cost burden back on to individual citizens.