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Michael Cullen Speech - Hawkes Bay NZMA

Thursday 4 May 2000


Hawkes Bay NZMA
Annual General Meeting
8.30pm Thursday 4 May
Education Centre
Hastings Hospital

Hon Dr Michael Cullen
Treasurer
Minister of Finance
Minister of Revenue
Minister for Accident Insurance

Thank you for inviting me to speak to you today. It is a pleasure to be here, not just because I'm in my favourite part of the country (home) but because it’s rather a novel experience to be able to speak to a group of professionals about ACC and not feel like I am rubbing salt into an open wound.

This evening I want to spend a few moments looking back on ACC and what the future holds for you as treatment providers.

There is now an entire generation of young New Zealanders who have no memory or knowledge of how our unique accident compensation scheme came to be.

Let me take you back a quarter of a century.
It is 1974 - workers' compensation is meagre and inadequate.
At every turn, the insurance industry fights lengthy legal battles to protect its income. Endless volumes of law reports are filled and filed, describing all manner of ingenious arguments against liability.
In the words of Sir Owen Woodhouse - in the litigation lottery many are called but few are chosen. Fewer than one in 100 court actions brought by injured workers who allege negligence result in any award at all.

So it was in this environment that a decision was made. In an unprecedented show of parliamentary solidarity, with the cold facts of private enterprise all around, both major political parties agreed that accident compensation must be handled exclusively by the state.

The newly born accident compensation scheme was a major improvement of the previous workers' compensation model. It extended coverage to all injured people, regardless of place of accident and regardless of fault, but on the important proviso that their right to sue in the Courts was removed.

The "social contract" was struck.

The scheme was founded on a trinity of common sense: injury prevention, rehabilitation and compensation – in that order. The government is committed to rebuilding an accident compensation system that reflects Sir Owen's original intentions and principles.

We have taken the first step with recent changes to return accident compensation to a single state owned provider.

Many voices were heard during the passing of this legislation; employers crowed over cheaper premiums since privatisation and the Insurance Council boasted miraculous reductions in workplace accidents and deaths.

In fact, as it was told to the Select Committee, it seemed as if workplace insurance was bathed in the golden light of a new dawn.

In contrast, the medical profession's experiences cast a harsher light on the privatisation experiment - exposing a growing paper-war, higher costs and accident victims ill-served by the new order.

Treatment providers reported that accident victims have been encouraged or even bullied to not make claims on their employers and to disguise workplace claims as non-work injuries.

One GP, from a small town in the Bay of Plenty, told me his local business community were so paranoid their premiums would skyrocket if they claimed against the insurers that they laid bets to see who could hold out longest.

As well, a comprehensive report conducted by Blue Lotus Research for the Department of Labour, published too late to be of use during the submission process, nevertheless exposed the problems and frustrations you experience every day.

When a worker is injured and out of production, there is a cost involved. It’s a simple fact that health providers manage to grasp but which somehow escapes many privatisation enthusiasts.

There is no free lunch - someone has to pick up the tab: the insurer, the employer, the victim or the taxpayer. Hiding or transferring workplace accident claims saves insurers' money and keeps employers' levies down, but the victim is still injured, still off work and in need of treatment and rehabilitation.


The recent changes to accident insurance legislation are an important step in the Government's programme to improve health and safety in the workplace, and to improve the ACC scheme for the benefit of all New Zealanders.

The new law removes competition from workplace accident insurance, returns responsibility to ACC for all workplace accident insurance, and re-establishes the accredited employers programme.

Let's take a look at how the new legislation affects your business.

The Department of Labour has recently written to all treatment providers outlining these changes. If you did not see this letter I have some copies available.

The next step is to introduce a new bill to Parliament in the middle of this year that will make cover and entitlements fairer, and improve rehabilitation and injury prevention.

Alongside the development of this Bill, the government is at long last taking a look at the regulations that prescribe the amounts that ACC (or registered insurers) must pay for various treatments.

GPs up and down the country have been crying out "Please, somebody - give us a break from this paper war!" We have heard you loud and clear.

We propose a review of the regulations which prescribes the data required from ACC and insurers.
We need to strike a balance between making your lives easier so you can get on with the business of making people better, and collecting the right information so we know which injury prevention and rehabilitation initiatives to target.
Good, accurate information gathering is also useful to counter the infamous battle tactic - 'lies, damn lies and statistics'.
Let me give you an example:
Earlier this year the Insurance Council published statistics on workplace deaths. The figures, to be frank, seemed a little on the low side.
I asked ACC and OSH how many workplace deaths there were last year. A reasonable question you would think. However both agencies gave me different answers; from each other and from the Council. In the end, no one was able to convincingly prove or disprove the Council's claims that privatisation, in seven short miraculous months, halved workplace deaths.
The information review is in three stages and my officials will ensure that you and your representatives, such as the NZMA, are kept well informed during this process.

Another aspect directly relating to your work is the new accredited employers scheme now called the "Partnership Programme". This programme allows qualifying employers to “self-manage” their employees’ workplace injuries for a specified period.

Again, I have with me information from ACC advising you on some of the details related to this programme. In the first instance, providers should send claims and invoices to accredited employers. As part of the package, accredited employers have to pay their treatment bills on time. However, as a back-up, ACC will manage a "default" clearing house to make sure claims do reach the right employers even if they were sent to ACC to begin with.

I know the area of workplace accident insurance has become synonymous with towering piles of complicated forms but come July 1 with ACC as the sole workplace provider, this particular burden should be eased somewhat.

In the meantime you should continue to endeavour to send claims to the correct insurer. However, there will still be a number of ongoing claims managed by private insurers, and new claims made by accredited employers after 1 July. ACC is committed to making sure that this process is as simple as possible, and will make sure that information is readily available.

ACC's focus during the changes will continue to be on ensuring appropriate and excellent treatment is purchased for its claimants. ACC will continue to manage, monitor and to help health providers achieve this goal.

I recognise that people like yourselves, being front line, tend to bear the brunt of any changes to any part of the health system. I also recognise that over the past decade, you more than any other group have borne more than your fair share of change.

The government's decision to unwind the privatisation of accident compensation was well considered. The timing of the legislation was as deliberate. We foresaw no gain in playing for time as the longer privatisation continued the longer it would take to unravel.

I would like to take this opportunity now to thank you all for your professionalism through yet more change. I will do my utmost to ensure that this particular round of ACC reforms is not only easier for you than the last but also more long lasting. We, at least, had a mandate for change and with all commentators, even the opposition conceding this is a two term government, I am confident the rebuilt ACC will survive well into the future.

ENDS

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