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Mates’ rates for Aussie insurers will cost Kiwis

Hon Maryan Street
Minister for ACC


2 July 2008 Media Statement

Mates’ rates for Aussie insurers will cost Kiwis

Australian insurance company investors are being advised they would reap large profits if the ACC scheme was privatised, but it would come at significant cost to New Zealanders, says ACC Minister Maryan Street.

“The confidential Merrill Lynch briefing to Australian investors, made public today, says National has given insurers a strong message it would privatise the $10.3 billion public asset if ever elected - although the party consistently refuses to provide any policy details to the New Zealand public.

“The briefing says privatisation of ACC could be a “very positive development” for Australian insurers which should be able to “capture” what will become the New Zealand injury insurance market.

“Putting the world-respected ACC scheme up for sale will rob all New Zealanders of the security they have enjoyed in the event of accidents, wherever and however they occur, for several decades,” Maryan Street said.

“Once National has traded away the protection the current state monopoly offers, accident compensation will become a lottery.

“For a start, levies will skyrocket. The Merrill Lynch briefing notes that Australians pay significantly more for injury protection per person than New Zealanders and that they get less cover for the price.

This mirrors independent research by PriceWaterhouseCoopers released earlier this year which showed the same companies Merrill Lynch expects to take over the New Zealand market, charge Australian employers 250 per cent more in levies as a proportion of wages, Maryan Street said.

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“That report found ACC employer contributions were 0.78 per cent of wages, compared to an Australian average of two per cent. It found ACC motor vehicle levies were also significantly lower.

“Perhaps most worryingly, the report found that without ACC - and under a scenario similar to that in Canada, the US and Australia – roughly 70 per cent of current ACC clients would only receive benefits through social security and the public health system, a significant erosion of the support they now get.

“Under that scenario, individuals would be forced to take out private insurance in the event they fall off a ladder or injure themselves in a rugby game - and be left without accident compensation if they don’t,” Maryan Street said.

“They may have to pay to battle for their rights in court as do injured people in a number of other countries, including Australia – and if they do win the evidence is that insurers will pay less compensation and invest less in rehabilitation.

“The National Party sold off the railways and we have had to buy it back. Selling off ACC is so much more serious, because it’s playing with people’s health and wellbeing – and that of their families. New Zealanders make 5000 ACC claims a day. Are we really prepared to put that in the hands of Australian companies whose only driver is profit?

“What makes this a particuarly ugly underarm bowl by National leader John Key is that his Merrill Lynch mates and the Australian insurance companies know about his plans and the New Zealand public doesn’t,” said Maryan Street.”

--

Other findings in the PriceWaterhouseCoopers report.

• “The ACC under its current government monopoly structure performs as well or better than most other structures” worldwide, is often considered to be “best practice” and provides broader coverage than any other scheme in the world.

• The best mechanism for delivering the employers and motor vehicle accounts in New Zealand is the current government monopoly.

• ACC clients return to work faster than their Australian counterparts and ACC has lower claim management and administration rates.

• In the US, UK and several Australian states the use of lump sum payments, instead of the weekly compensation paid by ACC, generally disadvantages clients . Lump sum payments are typically used by private insurers and often fail to cover the needs of people with long-term or serious injuries in particular.

• Research shows private insurers are often less concerned about the vocational rehabilitation of injured clients – and that a significant group of people can miss out on injury cover altogether under privatised schemes.

© Scoop Media

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