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Kiwis will pay more and get less under ACC Bill

22 October 2009 Media Statement
Kiwis will pay more and get less under ACC Bill

The privatisation of ACC would result in higher levies and less cover for injured New Zealanders to pay for the profits of Australian insurance companies and lawyers, says Labour’s ACC spokesperson David Parker.

"ACT Leader Rodney Hide is misleading New Zealanders when he says that privatising ACC would result in lower levies. All the evidence suggests the opposite is true.

“The Employers and Manufacturers Association says employers are ‘wary’ and predict significant instability and fluctuating levies which will make it hard for businesses. Unions are clear that costs would go up and cover reduced.

“Not even Treasury is convinced, saying in a document released by John Key yesterday, that it is unclear whether privatisation would result in net gains. It says it’s ‘not clear that levies are excessive’ and that the current publicly-owned ACC system provides ‘a comparative advantage’.

“The reality is the real beneficiaries of privatisation would be the big Australian financial institutions. They are in a position to capture the market and hike up levies as they have done in Australia – where levies are higher. It is inevitable they will seek to impose similar levies here,” says David Parker.

“Lawyers will be the only other beneficiaries, as legal battles over access to cover mount, which is a feature of privatised schemes overseas.

''Treasury and last year’s major Pricewaterhousecooper’s report into ACC have both concluded administration costs would rise as a result of privatisation. The latter report found heavy regulation would be required if the scheme was to retain its integrity.

It also concluded the current publicly-owned scheme was ‘the best observable mechanism’ for the Work Account,” says David Parker.

“The inevitable result of creating profit margins for private insurance companies and higher administration and regulatory costs is that hard-working New Zealand families will pay more for less care and protection in the event of an accident.

“Unions are clear that in the brief period during which the account was privatised in the late 1990s, workers were pressured not to make claims to drive costs down. Doctors and other health professionals have described the period as a chaotic nightmare.

“The ACC Bill introduced today already seeks to reduce ACC entitlements for large numbers of New Zealanders. Privatisation will pave the way for a further erosion of the scheme and will inevitably re-open the argument that New Zealanders should regain the right to sue. When entitlements are removed, injured New Zealanders have to foot the bill for themselves – the costs do not go away,” says David Parker.

ENDS

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