Alliance commits to pay-as-you-go public ACC model
With a single public ACC scheme there is no reason to continue with the inefficient fully funded system which simply protects the interest of private insurance companies, Alliance spokesperson for ACC Laila Harre said today in a speech at the Rebuilding ACC Beyond 2000 conference in Wellington.
A Labour Alliance government would return to a single public ACC scheme, and the Alliance is committed to the more cost-effective and flexible system of pay-as-you-go.
"The private insurance companies wanted to get out of the business of accident compensation in the 1970s. Now this government has seduced only seven of them back in under false pretences.
"The fully funded system of collecting revenue to pay for any future accidents is only necessary under a private system. Fusion Insurance for example doesn't know if its customers this year will be its customers next year. Therefore they have to collect and save enough this year to fund any accidents that might happen in the future. They can't go back in a years time to raise more money from clients.
"By privatising ACC Mrs Shipley's government has just made it impossible to improve entitlements, ever. Who would pay the extra costs? Again insurance companies can't back-date their premiums when suddenly they are required to pay the cost of all GP visits of injured employees, for example.
"A fully funded system simply allows insurance companies to do what they do best: invest that lump sum of money to increase their profits. Wouldn't it be better to have a pay-as-you-go scheme, which is only possible under a single public ACC scheme?
"Pay-as-you-go means that you only pay the actual costs as they occur, and in the meantime the money that you may need next year or the year after to fund compensation is kept circulating in the economy until needed.
"Switching over from a fully funded scheme to a pay-as-you-go scheme is likely to create a reduction in premiums, because there won't be a need to build the massive reserves of cash to support the fully funded scheme. Some of that cost reduction will be used to increase entitlements.
"The single public ACC system was set up for a reason: because everything else was a mess. The New Zealand public gave away their right to sue, for an equivalent right, which was no fault compensation.
"It is extremely unlikely that New Zealanders would have traded their common law lotto ticket for a system managed by private insurance companies, paying 80% of earnings only until a person was judged, by the insurer, fit to return to an inferior or lower paid position, or line up in front of Christine Rankin for the dole," said Laila Harre.