Father of ACC opposes changes

The father of New Zealand's accident compensation scheme, Sir Owen Woodhouse, says changes announced last week are "uncaring and predatory".

Sir Owen (93) says proposals to double and treble levies on motorcycles and mopeds, and to push accident victims back to work on much lower incomes than they earned before their accidents, breach the principles of the scheme he authored as head of a royal commission in 1967.

The scheme, implemented in 1974, was the first comprehensive "no-fault" accident compensation scheme in the English common law world, ending centuries of costly legal battles to force employers to pay compensation for work injuries.

Sir Owen said it cut administrative costs from about 30% in typical private insurance schemes to 10%.

Its five principles were community responsibility for causing and then supporting accident victims, comprehensive entitlement regardless of what caused the accident, complete rehabilitation, real compensation for the whole period of incapacity at 80% of previous earnings, and administrative efficiency.

Sir Owen said he saw the scheme as part of the social welfare system - not as an "insurance" scheme where all future cost of this year's accidents needed to be funded immediately.

The "blow-out" in losses that led to last week's changes stemmed from a decision by the last National government in 1998 to allow private sector competition for accident insurance, which required transforming the Accident Compensation Corporation on to the same funded basis as private insurers.

He said competitive private insurance was appropriate for fire insurance, "but there are some things that the state does better, and one is education and another is the hospital system".

"If you have children you'd be concerned if you found that they estimate your child will be at school for so long, will or won't go to university and will cost so much, and that that full cost has to be paid at the age of 5 when they start school.

"It's the same thing with accident compensation."

Based on the principle of community responsibility, Sir Owen's 1967 report proposed a single flat-rate levy on all employers and another flat rate on motorists, on the basis that everyone benefited from the work of people in risky industries such as aerial topdressing.

On Monday, he disputed claims by ACC Minister Nick Smith that levies needed to reflect different accident rates in different industries, and different kinds of vehicles, because that would give employers and motorists more incentive to be safe.

"We are saying people are willing to risk killing themselves for the sake of a few dollars of saved premiums. That's just ridiculous," he said.

"I think it's simply shocking that they are proposing to load people on bicycles and this kind of thing with the extra amounts they are talking about."

He opposed the Government proposal that accident victims should lose earnings-related compensation as soon as they were capable of going back to work in any job, regardless of what they did before their accidents.

"I think it's an uncaring and predatory attitude to people who are handicapped," he said.

"It's pinch-paring and unnecessary. It's all due to the fact that they regard it as an insurance scheme." However, Mr Smith said employers would be "a lot more focused on safety" if they had to pay the full future cost of workplace accidents in the year that they happened, and politicians would be less likely to increase entitlements without regard to the future costs.

Labour's shadow ACC minister, David Parker, said Labour also supported moving ACC on to a fully-funded basis because the alternative was to load future costs on to future taxpayers at a time when there would be far fewer taxpayers for every older person.

"One of the main increases in costs for ACC is people falling in their homes. That is associated with our ageing population," he said. "It's the same argument as pre-funding New Zealand Superannuation."