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Privatising ACC Would Increase Employer Costs

April 2, 2008
For Immediate Use

Report Says Privatising Accident Compensation Would Increase Employer Costs

“ An independent report on accident compensation shows that staff at the Accident Compensation Corporation are providing a world class service,” says Richard Wagstaff, National Secretary of the PSA, which has more than 640 members working at the corporation.

The report, by PricewaterhouseCoopers’ Australian office, says that New Zealand’s state provision of accident compensation “performs as well or better than most other schemes we can observe around the world.”

“It’s gratifying for ACC staff to have one of the world’s largest professional services companies conduct research and find that our accident compensation system is one of the best in the world,” says Richard Wagstaff.

He says the report also provides a ‘heads up’ for the country’s employers by showing that having private companies provide accident compensation would increase their costs.

The report states: “comparisons elsewhere indicate that privately underwritten workers’ compensation schemes, as a group, have higher levels of administrative cost on average than government monopoly schemes.”

“Pricewaterhouse Coopers says the higher cost of privatised schemes is likely to be driven by the need to cover profit margins and marketing expenses,” says Richard Wagstaff.

“As a result the report’s authors recommend that New Zealand retain its current system of having the state as the only provider of accident compensation,” says Richard Wagstaff.

The report states: “these observations lead us to form a moderately strong view that a government monopoly is the best observable mechanism for implementing the ACC employers account.”

The report also shows that New Zealand gains major economic and social benefits from having state provided accident compensation for all injuries, regardless of who is at fault. For example it states: ”We estimate that total increased workforce participation from effective injury management under ACC may be worth approximately $315 million per annum to the New Zealand economy.”

“State provision of accident compensation is clearly highly effective and beneficial for New Zealand,” says Richard Wagstaff.

He notes that National Party’s ACC spokesperson Pansy Wong stated yesterday that her party would keep the principles of having 24-hour, no fault, comprehensive accident compensation intact. But she also said in the Sunday Star Times on March 23 that National is looking at its ACC options and that “we certainly believe in choice."

“We think National should make it clear where it stands on ACC,” says Richard Wagstaff.

“Is it planning to increase costs to employers, by opening up accident compensation to private companies, as stated in its 2005 election policy?”

“Or will it retain the lower costs and huge economic and social benefits of our current state provided scheme?”


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