ACC under threat from privatisation


I’ve been lucky enough to claim ACC only twice in my life.

The first was when a stack of dumps (two wool bales compressed into one for shipping) in a Napier woolstore collapsed and broke my leg. The compound fracture left me with five months in plaster and several weeks of physiotherapy to follow.

The second was a week off work with an infected knee after being pierced with a wool hook. For most of the time since then I’ve worked in relative safety as a classroom teacher but at the time I needed it the ACC was a godsend. It paid 80% of my working income throughout that time with medical treatment and physiotherapy paid in full. I hadn’t experienced life before ACC which had only come shortly before my first accident so I took it for granted. And so should we all.

National are itching for a chance to undermine this pillar of community-provided welfare for accident victims and last week launched their first foray with a raft of proposed changes to increase levies and reduce cover.

Firstly ACC Minister Nick Smith set the scene for policy change with a dramatic announcement of ACC liabilities being far beyond the ability of the fund to cover. He said it was a billion dollar disaster and would wreck the economy if not reigned in. One might have thought he was talking about the big four banks but somehow their billion dollar taxpayer gouging is not on National’s agenda. Instead its state-provided services he has his ideological eye on.

As several commentators have pointed out clearly and succinctly Nick Smith’s announcement was grossly misleading but there is nothing like claims of economic crisis to soften up the public for bad medicine. The scheme in fact is cheaper and run than comparable schemes anywhere else in the world. The ACC architect back in the 1970s, Owen Woodhouse, points out it cut administrative costs from about 30% in private insurance schemes to just 10%. He blames the problems with the scheme to the National government’s decision in 1998 to allow private sector insurers to compete for accident insurance.

The government’s proposed increases in levies will hit motorbike riders the hardest and it’s true this group have a higher accident profile. When I was in the male orthopaedic ward around three quarters of the other patients had broken bones from motor bike accidents. So should these riders pay a higher levy? I can’t see why. There is no evidence bike riders are more responsible for accidents they find themselves in than are car drivers. It’s just that bike riders are much more vulnerable in accidents. In fact there is a case for reducing ACC levies for bikes. They are more efficient with a smaller carbon footprint and we could dramatically reduce the need for more roading if a higher proportion of road users were on two wheels.

But National’s further differentiation of levies is another step to “user pays” rather than “community pays” and this is a necessary element to privatisation.

Meanwhile Smith’s proposal for reducing cover for the families of suicide victims is thoughtless as were his comments comparing loss of life through suicide with that of terminal illness. But the biggest impact of the proposed reduced cover is for seasonal and casual workers. Calculating ACC payouts using the average of their yearly earnings rather than the previous four weeks’ earnings will result in lower payouts for these already vulnerable workers. Why should their down-time between employment be used to reduce their accident income? They are already the lowest-paid workers yet do essential work for the economy in the likes of horticulture and hospitality. Why should their payouts be cut simply because they are vulnerable workers and easy to pick off?

Meanwhile all of us will face stiff increases in ACC levies. This is another important prerequisite for National’s plans to privatise the service. Higher levies and the chance for bigger profits will encourage the private sector to move in. A cheaper public-service based approached is anathema to National.

Their plans are for the most valuable parts of the service to be run for private profit while the bulk of what remains will be left for the taxpayer to pick up. This follows a familiar pattern. The first step in privatising rail for example was selling off the profitable freight forwarding section which left the rump in an even more parlous economic condition.

Nick Smith isn’t having it easy. His proposed plans are under threat because he can only proceed with ACT backing and Rodney Hide wants the privatisation speeded up. National went into the last election with plans to privatise provision but want to leave the “p” word out of policy till their second term of government. ACT is putting the pressure on and John Key says he’s open to the idea. The rest of us shouldn’t be.

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