A stupid statement
The Herald reports:
Motorcyclists revving up for a mass rally at Parliament at noon tomorrow fear crippling accident-compensation levy rises will force some to scrimp on safety gear and courses.
Hundreds of bikers are expected to roar off from Whangarei and Auckland this morning for a two-day “Damn the Levies” protest ride to the capital.
Police expect the number to swell to 3500 as they are joined by others along the way and from the South Island.
I’ve got no problems with there being a protest. Good on them for getting involved. While I support the principle that if you choose a more dangerous form of transport, you should pay for the increased risk, there are some legitimate questions over whether the exact amounts proposed are fair.
But none of that excuses the stupidity of this statement:
But although the motorcyclists are angry about being singled out for annual levy rises of between $198 for mopeds and $493 for 600cc-plus machines, the Bikers Rights Organisation reports growing public support for their cause.
“Many of the general public are really affronted – they see it as just the thin edge of the wedge to a wholesale decimation of the ACC scheme,” Auckland branch president Les Mason said yesterday. “If they can get away with it with motorcyclists, who’s next?”
This is simply moronic. Increasing the levies is not decimating the ACC scheme – it is in fact the exact opposite – it is trying to raise the revenue to keep the scheme going,
What will decimate the scheme is not having levies increase, as Mr Mason wants.
Now as I said the motorcyclists have some valid points – especially about people who own more than one motorcycle – and I support some changes there.
But is is fundamentally dishonest to suggest their opposition to paying higher levies (I don’t like my levies going up either) is about stopping the scheme getting “decimated”.They are parroting nonsense from Labour.
This is like someone campaigning against higher bank fees on the basis increasing bank fees will decimate the banking sector.
November 16th, 2009 at 12:07 pm
DPF: But is is fundamentally dishonest to suggest their opposition to paying higher levies (I don’t like my levies going up either) is about stopping the scheme getting “decimated”.They are parroting nonsense from Labour.
This leftie agrees!
And those of us who own more than one car for recreational/restoration/hobby purposes usually have the registration of one or more of them on hold at any given time, as you simply can’t drive two cars at once. Is this too hard for bikers to do?
November 16th, 2009 at 12:11 pm
Yeah sure levy increases for an unaccountable out of control broken state monopoly is fine. Open ACC to competition and the levy increases would kill ACC.
“wholesale decimation of the ACC scheme”
Yes we can.
November 16th, 2009 at 12:17 pm
That’s up there with the shit heads protesting against ACC changes by protesting outside the local ACC offices, usually hurling abuse at the employees. As if they have anything to do with changing the law.
What fuckwits.
November 16th, 2009 at 12:24 pm
DPF, ACC was set up to be a no-fault scheme. It was set up to be based on the principle of community responsibility. Its author, Sir Owen Woodhouse, has criticised the Government moves – from exactly the same perspective as Les Mason is, and the Greens are.
Labour, for its part, continued National’s stupidity of insisting that future entitlements on existing claims have to be fully pre-funded – hence the current levy increases and entitlement cuts. Labour also allowed the motor vehicle account to be underfunded for political purposes. But to say Les Mason is “parroting nonsense from Labour” is itself nonsence. Labour are as much a part of the problem as National are.
Both National and Labour have treated ACC as if it is insurance. It is not, and never was intended to be.
November 16th, 2009 at 12:28 pm
So the person that negitive karma’ed me…
Are you saying that abusing employees of ACC is all good sport?
November 16th, 2009 at 12:34 pm
Lance – not I. (I don’t -ve people I disagree with, only nutters
)
But wouldn’t ACC office staff be professional enough to just pass the message on to the powers that be? That’s all the protest is after all.
As long as there’s nothing criminal in the protest eg violence, vandalism etc….
November 16th, 2009 at 12:41 pm
Giving him the benefit of the doubt, I believe he is inferring that fee increases are just the first of many changes that will lead up to ACC privatisation. Many equate privatisation with decimation which is a silly view which ever way you look at it.
November 16th, 2009 at 12:42 pm
ACC is based on a no fault system, which I think is great. In this case they are targetting a group when it is suppose to be no fault and then they are only tagetting part of it (just road using motorcyclist) not all the quad & off road riders who probably account for a reasonable amount of ACC’s injury list.
I can go for a mountain bike ride up at Makara Peak in Wellington break an ankle or worse be air lifted off in extreme cases either direct to hospital or a waiting ambulance and I have paid nothing as a moutain biker towards ACC levies for this. It’s the same for any daily activity of past time that has an element of risk. To me it is tagetting a small group of road users who more often than not end up in hospital or worse because a car driver didn’t see them or something similar.
I from experience know there are nut case riders out there but it’s the same for car, truck or bicycle riders, I would expect it to cost more to fix one as they have less to protect them but as I said in this case with ACC they are saying it;s a riders fault when ACC is no fault!
November 16th, 2009 at 12:43 pm
I am often driving on the open road; invariably I am overtaken at some point by motorcyclist(s) riding powerful bikes, weaving in and out of traffic, and exceeding the speed limit. If they were travelling point to point the trip could be made more safely and cheaper in a car but they choose to indulge in what is, after all, an adrenalin sport. No problem with that but they are exposing themselves to high risk; they are using a vehicle that cannot be stopped safely when faced with an unpredictable incident, and injuries in an accident are likely to be serious. Just like any high accident industrial grouping they are collectively required to pay a fair proportion of the costs of their accidents. Perhaps the bikies should stop bleating and request excemption from the ACC scheme so thay can individualize their insurance so that premiums can be set according to individual risk.
November 16th, 2009 at 12:46 pm
I really wish people wouldn’t use the word decimate when they clearly have no idea what it means.
If this fool can show me how he arrived a figure of a 10% degroadation then he can say decimation. If not use something else.
I blame the media.
November 16th, 2009 at 12:46 pm
The real point here is (as previous posters have suggested) the many other accident prone occupations or sports that are not charged for their use of the scheme.
Motorcyclists and motorists are just an easy target for a cowardly self serving bureaucracy.
How about skate boarders, snow boarders, mountain bike riders and any number of other hazardous sporting events also attracting an ACC registration fee?
This is just more unfairness in the name of fairness. Typical socialist deceit.
November 16th, 2009 at 12:46 pm
Just call me silly… but if Parliament change a law, should the local member thereof be the person to “pass it on” to?
Tax goes up yet I don’t see the IRD being picketed?
It’s been many years since my wife worked there with the river of sewage these people have to put up with is beyond the pale. One of her co-workers and close personal friend was stabbed to death for telling some piece of shit that deliberately cutting yourself would not result in a lump sum payment so he can pay to go to Australia.
Not long after this protesters were abusing these same traumatised ACC workers because of govt changes, led by one Lila Harre… a good way to generate deep seated hatred amongst a bunch of people against the ‘Greens’ by the way.. and the word is hate.
November 16th, 2009 at 12:47 pm
But but but TOAD, Its all about the children (or have you forgotten that priceless campaign)
I assume you are the same Toad who railed strongly against borrowing now for infrastructure because it was passing the cost on to future generations. What did you call it “mortgaging our children and grandchildren” I seem to recall.
Far from being a Toad, you really are a Turkey
November 16th, 2009 at 12:48 pm
Well David, what do you expect when the Labour leader himself is a moronic bikie?
And as for Toad. Only the Greens could come out at this late stage and try to convince the populace that ACC really is a welfare agency, not an insurance scheme. Toad just doesn’t seem to understand the fact that all insurance schemes are welfare agencies. It’s just that they are funded by the participants, not the tax payer.
November 16th, 2009 at 12:52 pm
Hmmm. Maybe I’m a moron, but his point seems coherent to me. Those of us active in the biking community know the demographics. The social bikers probably make up the largest slice of the biker population. (Those mid 40s men who come back to biking after 20 years and, because they had a license 20 years ago, suddenly buys themselves a pocket rocket and ends up as an ACC statistic).
What is going to happen when their hobby gets prohibitively expensive? The goose that laid the golden eggs for ACC is going to up, sell their bikes, or deregister them and leave them in the garage. At least some of them will.
So, decimation of ACC? Perhaps a bit extreme but I can tell you now that the increase in levies they are expecting will not be as great as anticipated. A number of people object to being milked by a government.
Do I get a discount on my ACC premium for having personal medical insurance? How about income protection insurance? Why do I have to pay this increased levy then when I’m using a more environmentally friendly transport option than the gas guzzling Remuera SUV or one that is potentially safer than a 16 year old boy racer?
No? It’s a milking. That’s all it is. And disgusting.
November 16th, 2009 at 12:54 pm
RedBaiter:
Exactly. It’s starting with bikers, but when they discover that it’s not giving them the revenue they want who do you think will be next?
November 16th, 2009 at 1:05 pm
david – I actually support borrowing for infrastructure – as in the Green New Deal. I think you might be confusing my position on that with my position on the ETS, where I have been critical of passing costs on to future generations.
However, the unique thing about ACC is that we gave up common law rights in return for the social contract that is ACC, and are therefore morally bound to adhere to that contract. Otherwise we’ll have people starting to demand back the right to sue for personal injury.
Economist Susan St John has an interesting analysis of fully pre-funding v PAYG hot off the press that you might be interested in reading. She sees perils in both.
November 16th, 2009 at 1:12 pm
With motorcyclists sorted, will they consider bicyclists should be 1] registered, and 2] pay a levy?
November 16th, 2009 at 1:15 pm
And pedestrians be required under threat of criminal sanction to carry a log book that they have to fill in every time they cross the road, Yvette?
November 16th, 2009 at 1:15 pm
Pretty hard to argue with the numbers released that showed the cost of road accidents involving motorbikes that don’t involve a car is several multiples of the levies collected from all motorbikes. That still leaves accidents that involved car v bike or truck v bike and as we all know by now, ACC measures the cost of accidents, not the cause. Those who spuriously try to obfuscate and cloud the issue by burbling on about farm bikes (ACC levy for farming activities includes an overall measure of this risk as being higher than lawyering for example) or quad bikes on the sand dunes or dirt track bikes haven’t got a leg to stand on.
The issue of high risk recreatoonal activities is one that does need addressing though as a seperate issue. Skiing for example could easily have lift passes levied for ACC and you would get 99% of skiers and boarders but I concede that I haven’t found a logical way to levy rock climbers, mountain bikers or trailbike riders. But then again I haven’t seen the accident/cost stats for those either.
I suspect (but haven’t seen it confirmed) that professional rugby players have seperate medical cover for accidents as even ACC can’t work quickly enough to process knee reconstructions etc like they seem to be able to do. So they may not be such an ACC burden as is claimed by people equally as ignorant of the facts as me.
November 16th, 2009 at 1:20 pm
W.R.T. what Toad and Yvette were saying, IMHO as a motorist and cyclist, bicycles on the road should have a rego number and be paying acc levies through their rego.
A number plate on the rear would motivate at least a few cyclists to re-think their blatant and often total disregard for the rules of the road that are in place for their own safety as well as everyone else’s.
(To this day I recall an incident I witnessed years ago in Auckland, where a cyclist abused a bus driver at length and with great righteous indignation for getting a bit too close to him, and then he pedalled away through a red light…
)
November 16th, 2009 at 1:21 pm
This whole process shows how ridiculous the ACC monopoly is. Here you have motorcyclists riding from Auckland to Wellington arguing against a levy increase, and spreadsheet-toting employees of the ACC scheme arguing for it.
We know the motorcyclists, along with every other citizen, have no idea how ACC have come up with their new levies, and I’ll bet good money that there’s one or more major mistakes in the calculated levies.
Mediating between the two sides is the Minister for ACC, who cannot possibly know what the levy that maximises welfare is, or whether the levy increase is “fair” or “effective” or what. Furthermore, he has no reason to care. He just wants to get re-elected.
Absent competition, the advice he gets comes from models built by officials which are made of collections of assumptions about what they think a competitive market might look like. No doubt, they are wrong. No doubt, each model has errors. No doubt, a working insurance market is very very hard to model and these guys have no reason to try to make their model any good.
If you notice one thing about, say, the motorbike insurance market, when AMI wants to put premiums up, nobody rides motorbikes anywhere to complain. There is no Minister for Motorbike Insurance. You have a market and a) all the players in it are self-sustaining b) employers and contractors is not landed with enormous bills (2% of gross income!?) c) these companies do not ever run deficits of 3% of GDP even after sending out those enormous invoices, and d) the system works really really well.
It is not ideology that should convince people that privatising workplace insurance is a good idea. How bad do the results from ACC have to be before privatisation becomes an acceptable alternative? How many percentage points of GDP does ACC have to squander each year before an alternative to the current mess is considered?
November 16th, 2009 at 1:22 pm
As Yvette and toad have mentioned… walking? cycling? What about in-line skates, unicycles, sky-diving, jelly-wrestling, extreme tiddlywinks etc?
Or perhaps we stop treating ACC as welfare/insurance mutation, and let people decide what risks they want to cover themselves for?
November 16th, 2009 at 1:23 pm
ACC are saying that motorcyslists cost them more in payouts than they pay in levies. ACC say that this will still be the case after these levy increases.
I don’t know if that’s true — I haven’t seen the numbers. But if it is, then from ACC’s point of view, it would be great news if every motorcyclist sold their bike and started driving instead.
November 16th, 2009 at 1:23 pm
When will people realise that ACC stands for Accident “Compensation” Corporation –
that is to say like an Insurance Company it will financially INDEMNIFY for losses due to an “Accident” (without fault being abrogated).
It is not a Social Welfare scheme.
I am glad that up to 3500 Motorcyclists are able to have the time off work to take part in this ride to Wellington – a sickie perhaps?
November 16th, 2009 at 1:26 pm
Here’s an idea outside of the box…
Why not have a one-off AAC ‘tax’ at point-of-sale, on equipment used in activities that we know generate a lot of injuries?
I think it would be quite managable as the major variables you’d need to determine the fee/tax structure are well known:
- the useable life of the item
- the incidence rate of injury
- the average cost of said injury
and best of all; it’s a fully funded user-pay scheme.
One other upside is that prices in the second-hand maket for sporting goods would hold up a lot better than they do now (the fact i’m trying to sell my parents Kayak is neither here nor there).
November 16th, 2009 at 1:27 pm
But very bad for the environment Repton.
The community responsibility principle recognises that the various activities we undertake in society are all inter-related, and that benefit and harm flow on to others, rather than rest solely with the people undertaking those activities.
The community responsibility principle recognises, for example, that even though a disproportionately high number of motor vehicle injuries involve motorcyclists, a significant proportion of those injuries are actually caused by someone other than the motorcyclist.
The community responsibility principle also recognises that increased use of motorcycles where practicable has environmental benefits if single occupant car usage is consequently reduced, since the greenhouse gas emissions generated by a motorcycles are significantly less than from cars and the fossil fuel used per kilometre of travel is significantly less for a motorcycle than a car.
November 16th, 2009 at 1:27 pm
I take the point that road bikies have been singled out. And it is also true that wherever a fee is paid (in this case vehicle registration) there is an opportunity to whack on a tax (euphemistically called a levy) which can be collected under threat of not having registration. The building industry (and other industries no doubt) have levies (taxes) imposed to support the bureacracy when Building Consents are obtained. I guess if there was an admission fee to National Parks ACC would be quick to whack on a levy for SAR.
The whole concept of ACC (no fault – universal cover) is doomed because it is idealistic rather than realistic. The scheme will get more and more expensive and the service will continue to degrade. There is a limit to what each individual can pay to cover the stupidity of others. And the exasperation (from dealing with ACC) of those in real need will escalate.
November 16th, 2009 at 1:36 pm
Toad enunciates classic socialist b/s by somehow making the community responsible for individual choice and even stupidity. The excuse that an accident may not be the fault of the motorcyclist is a red herring; the motorcyclist has EXPOSED himself to higher risk and and more serious injury by travelling with little protection.
The environmental argument is also fallacious but it must feel good to write it. As mentioned previously most motorcycle trips are recreational; trips that would not be made in a car.
November 16th, 2009 at 1:37 pm
Smiths reforms are about SAVING the scheme. I would do nothing and let it tip over. The concept of no fault takes no account of human behavior and will ultimately mean the scheme is bankrupt.
November 16th, 2009 at 1:38 pm
If I walk across the motorway, a significant proportion of injuries will be caused by someone else. They will all be self-induced though.
Motorcycles are a less safe vehicle to take on the roads. It is more responsible for the community if you travel in a safer vehicle.
Nothing to do with it. It is not the purpose of ACC to control the climate.
Arguing for ACC leves based on whats cool or not. Trout you are a complete idiot, your postings here are doing alot to damage the Green Party brand because you are somewhat less intelligent than I even expected.
November 16th, 2009 at 1:39 pm
ACC now: compensation + administration
Privatised: compensation + administration + profit/dividends
November 16th, 2009 at 1:41 pm
Deaths per billion kilometres
Car 3.1
Motorcycle 108.9
November 16th, 2009 at 1:42 pm
Yvette,
Just go to cheaper insurance company. And do some research first.
November 16th, 2009 at 1:44 pm
DPF: You might want to throw a note on this up top. Folks are clearly confusing “no fault” with “no class-risk adjustment of premia”. ACC’s “no fault” policy saves us the transactions costs of figuring out who’s to blame in any particular accident. However, if folks employed in, say, mining, see bigger payouts for workplace accidents (more accidents and more costly accidents) than folks in data entry, then the folks in that industry, as a class, would need to pay higher premia. There’s nothing in charging those differential rates that violates “no fault”. Nobody’s looking at fault. They’d just be looking at relative accident rates by class of customer.
I’d be surprised if motorcycles didn’t pay more than cars for ACC: they use less petrol per kilometer and have at least as high of risk per kilometer as cars. Recall that a good chunk of ACC motoring charges come through the petrol levy that’s meant to capture the increased risk that comes with driving more. The intercept has to be higher for motorcycles (the base rate) ’cause they’re paying less per kilometer driven in petrol charges. John Small gives decent reason to think the relativities have gotten out of whack though.
November 16th, 2009 at 1:45 pm
@2boyz
ACC premiums are not based on the assumption of no fault. If that were the case, everyone would pay the same amount.
For example, high risk occupations pay higher ACC premiums than office workers.
So, it seems consistent that motorcyclists should pay more. It is the amount that is debatable.
November 16th, 2009 at 1:46 pm
If the Government doubled or tripled car rego there would be riots. Motor cyclists are just an easy target becasue there aren’t many of them in comparison.
November 16th, 2009 at 2:00 pm
Sounds like a fair statement to me, hikes such as seen with the motorcycle levy can easily have the effect of destabilising people’s perception of ACC.
Heaps of information here:
http://accworks.org.nz/
November 16th, 2009 at 2:04 pm
“What will decimate the scheme is not having levies increase, as Mr Mason wants”
That’s exactly what we need for ACC either succeed or fall on its own merits, without having to resort to extortionate rates, as the new proposed ones. From that point of view, the bikers’ actions are fully justified.
What are Smith and his boss Key doing to open up ACC to competition? Sunshine is the best disinfectant, so it would be good for this government to stop dithering and forging ahead with deregulation.
Will it happen? Knowing the spineless leaders we have, I doubt it.
November 16th, 2009 at 2:24 pm
@Crampton 1:44 pm:
Eric, it’s not so much an issue of the “no fault” aspect of the scheme – it is an issue of “community responsibility” principle of the scheme. If you look at the levies struck when the original Acciddent Compensation Act 1974 came into force, they bear no relationship with injury risk at all.
So, as Sir Owen Woodhouse says, the scheme was never intended to be an insurance scheme. It is the “community responsibility” principle of the original scheme that has been violated for many years now, and that the proposed motorcycle levies exacerbate.
November 16th, 2009 at 2:26 pm
@ tvb 1:37 pm:
A bit like Prebble’s reforms were about SAVING rail!
November 16th, 2009 at 2:35 pm
Yvette
You left out the inefficient overhead component.
I think you will find that makes a BIG difference and why private companies can offer lower cost premiums on some accounts.
November 16th, 2009 at 2:52 pm
God, how I wish this government had a Richard Prebble.
November 16th, 2009 at 3:05 pm
I don’t know if it’s information or misinformation. In the page of “facts” not one “fact” was substantiated with any evidence. In fact there wasn’t a single useful link from that site to any useful information but it did mention lots of National = bad and that scary P word.
November 16th, 2009 at 3:10 pm
Lance : ‘You left out the inefficient overhead component.’
I knew that was coming. Why can no government department ever work as efficiently as private enterprise or is that a myth without a proof either way.
Roger Douglas was a champion of privatisation but now he is taking holidays with taxpayers footing 90% of the cost.
Why is not a government unit set-up to slash and burn inefficiencies in all other departments – like Eliot Ness and the Untouchables.
It’s the 21st century – why can’t politicians like Key run an efficient government?
November 16th, 2009 at 3:22 pm
The cost for the Compulsory Third Party insurance for a 1600cc touring bike registered in NSW is in the order of $350 per year. CTP is equivalent to ACC (it is not third party in the NZ sense of the term), however you get to choose the insurer and they pay out a lot more if you are not at fault, so if a car knocks you off your bike, the car’s insurance company will pay.
So why does accident insurance in a no-fault system cost double that of an at-fault system? Simple. Milking by a single player in a non competitive market.
Simple solution. Remove no fault coverage and allow the private sector to compete directly with ACC. People will then get a fair go when they do get hurt by someone else, with the added bonus that premiums will cost less.
November 16th, 2009 at 3:25 pm
Yvette:
I knew that was coming. Why can no government department ever work as efficiently as private enterprise or is that a myth without a proof either way.
There’s a ton of evidence on this important question, and nearly all of it confirms governments run companies that cost more and do less. And there’s an entire branch of economics calls Public Choice which explains why we should not expect officials to do a very good job of running companies.
Roger Douglas was a champion of privatisation but now he is taking holidays with taxpayers footing 90% of the cost.
Even if Douglas is a hypocrite (I’m not sure he is, government actually ended up bigger under him contrary to popular myth), how is that relevant?
Why is not a government unit set-up to slash and burn inefficiencies in all other departments – like Eliot Ness and the Untouchables. It’s the 21st century – why can’t politicians like Key run an efficient government?
Because their incentives do not encourage that, and because they cannot get access to the information they need to do it. It is not about who is in government. We’d be having this discussion if Labour, Greeens or Act had won the election. The problem is intrinsic to large organisations where decisionmaking is centralised and by command.
November 16th, 2009 at 4:34 pm
“There’s a ton of evidence on this important question, and nearly all of it confirms governments run companies that cost more and do less.”
Nope, there is some research done, suggesting this maybe could be the case with the right circumstances in very select industries, (certainly not tons of confirmation!) many comparisons have been poorly made by supply-side economists who were more interested in reaching the conclusions they wanted, rather than following a realistic methodology.
In fact in the case of health insurance, no private company stacks up against ACC they generally have higher levies for less coverage across the board, of course the first year or so of competition will provide lower (slightly) rates as companies seek to undermine each other to gain an established market share, then what you will see is a steady rise on levies, and a reduction in services to increase profitability as the market stabilises. So what kiwis will be left with after a year or two of reasonable rates from “competition” is higher levies, less coverage and a great deal of insecurity.
November 16th, 2009 at 4:42 pm
You mean like the electricity market?
November 16th, 2009 at 4:49 pm
Ben : “Even if Douglas is a hypocrite … how is that relevant?”
I may have missed it but I haven’t heard a peep out of him about more efficient government departments – was all the chaos he caused for nothing? [Thinks : leaving myself wide open again, but what the hell]
Loco Burro : “So what kiwis will be left with after a year or two of reasonable rates from “competition” is higher levies, less coverage and a great deal of insecurity.”
I think that was sort of what I meant.
November 16th, 2009 at 4:54 pm
yep, my response was to Ben’s quote however
November 16th, 2009 at 4:56 pm
Loco Burro
Nope, there is some research done, suggesting this maybe could be the case with the right circumstances in very select industries, (certainly not tons of confirmation!) many comparisons have been poorly made by supply-side economists who were more interested in reaching the conclusions they wanted, rather than following a realistic methodology.
That’s simply untrue. Performance is measurable in many ways and the strong, close to overwhelming consensus in the empirical literature is that private owners run companies better (lower cost, higher quality, higher value added, take your pick) than public owners. Yes, there are exceptions – but not because government is more efficient but because circumstances, like time consistency, make private ownership hard (water reticulation comes to mind). The literature on this is enormous, and research suggests economists are MORE left-wing than your average punter, so if the research is running on pre-conceived notions then the bias should run the other way.
In fact in the case of health insurance, no private company stacks up against ACC they generally have higher levies for less coverage across the board
Where’s the evidence for this? ACC takes 2% of your gross pay, runs a deficit of $6 billion over two years, and pays out what looks to me very poor compensation for very large losses – and you’re saying there’s no room at all for the private sector to make things better? Please.
November 16th, 2009 at 5:06 pm
Currently Earner Premium is 1.7% (still too much)
Was this on operating losses, or was it affected by paper losses on investments (much of which will presumably have been recovered)?
November 16th, 2009 at 5:07 pm
Comparative approaches to studying health coverage and insurance show ACC performs administratively better than private insurers in like states, see comparative approaches and empirical evidence hurt the ideological theorems you are presenting as statements of fact – poor compensation?!?! you have not lived in a country reliant on private health insurance have you?, have you even taken out travel insurance before?!?
“economists are more left-wing than your average punter”
did you see the words ’supply-side’ I used, and when people use the term ‘average punter’ or ‘more right than their university colleagues’ I am not blown away by the language and probable scientific methods involved in their conclusions.
no time to get into the heart of it right now, sorry.
November 16th, 2009 at 5:08 pm
Yvette, Loco: what insecurity? I just got off the phone from AMI and insured by house, contents and car for the next year for about $1000. They are not allowed to offer workplace insurance in place of ACC, if they did I’d have probably taken that too. What is the insecurity in workplace accidents that is apparently so effectively avoided in home, contents and car?
And actually – ACC is not at all secure. They have no policy. Your compensation depends on convincing your particular case manager of your need. If you get a case manager who doesn’t believe you or misunderstands the problem, you’re partly stuffed and don’t have much recourse. ACC is a monopoly, so competition provides no protection from such incompetence.
In any case, if your argument is that ACC really does do a better job because it has no profit to worry about – what is the problem from competition? If you’re right, ACC’s advantages will automatically translate to continued dominance. The nice thing about permitting competition, even if you don’t get any, is that there is protection if ACC stuffs up. If ACC is charging some groups more than they receive in benefits, then competition can come in and fix the problem.
Of course we can all see ACC is a basket case. The minute competition was permitted 10 years ago there was a lot of entry. Now ACC is losing $4 billion per annum, there’s even more to fix. How badly must ACC be run before you think it’s time to hand the reigns to somebody else?
So what is the problem? If you believe your own argument then competition isn’t an issue.
November 16th, 2009 at 5:17 pm
Gidday Sonny I would like to respond but you have attributed to me statements I have never made. I guess you have the wrong poster (this one is a conservationist, but not of the ‘Green’ (watermelon) persuasion).
I am pleased Toad keeps referring back to the concept of ‘community responsibilty’ and quoting Owen Woodhouse. Woodhouse is not God; he designed an idealistic scheme that was polished by Geoffrey Palmer and presented as the great new idea. Unfortunately it does not work; the community cannot afford to pay for every actual and supposed ‘injury’ and the consequemces – it is as simple as that. We are now seeing futile attempts to constrict the coverage in the hope that costs will reduce. At the same time ACC staff seem to be under instructions to resist approving valid claims, and delay decisions in the hope that claimants will be so frustrated they will get private treatment.
November 16th, 2009 at 5:17 pm
Comparative approaches to studying health coverage and insurance show ACC performs administratively better than private insurers in like states
That’s admin overheads – a small part of the system. About 4% from memory. And its hard to make an apples for apples comparison thee because NZ and US legislative burden is likely to be different.
, see comparative approaches and empirical evidence hurt the ideological theorems you are presenting as statements of fact – poor compensation?!?!
Nothing I’ve said has anything to do with ideology. There really is literature, there really are economists who measure this, they really do say what I said. What ideology?
you have not lived in a country reliant on private health insurance have you?,
Does the US count? If so, yes. I had private insurance. It was superb. No waiting. No bills to pay. And from memory compensation if I lost an arm was in the US$ millions. ACC does not pay that.
have you even taken out travel insurance before?!? Um, yes. Actually, as I noted above, I bought home, contents and car insurance earlier today from AMI. Good enough?
I don’t understand anything else in your post.
November 16th, 2009 at 5:22 pm
>Hundreds of bikers are expected to roar off from Whangarei and Auckland this morning for a two-day “Damn the Levies” protest ride to the capital.
Regardless of the fact their spokesman has no idea what he is talking about…
This is a risky strategy. It only takes one of these hundreds of bikers to have an accident on their way to Wellington and they’ll have scored a major PR disaster. I recall a protest against a law requiring motorcyclists to wear helmets in the US years ago, that ended with two of them colliding and needing to be taken to hospital with head injuries.
November 16th, 2009 at 5:45 pm
I can only speculate about DPF’s attitude had this taken place under a Labour government
…but since it is the Tories he can say “I don’t like them going up either” and shrug his shoulders and criticise those protesting about it.
No need to let a double standard get in the way of a good story…
On the other hand the attitude could be – this is a stealth tax increase, it is wrong, where can I join the campaign against it?
http://www.nightcitytrader.blogspot.com
November 16th, 2009 at 6:10 pm
Well DPF, colour me moronic as well. If this comes to pass National loses my vote.
[DPF: Read what I said. I said good on them for protesting and that there were some issues with the levy calculation. But what is moronic is claiming increasing levies decimates the scheme - is is the opposite.]
November 16th, 2009 at 7:02 pm
@ Ben
“There’s a ton of evidence on this important question, and nearly all of it confirms governments run companies that cost more and do less.”
The empirical evidence shows us that private ownership is by and large superior to state ownership, Nellis (”Privatization—A Summary Assessment”, Center for Global Development Working Paper Number 87 March, 2006.) for example, summaries this evidence as
“The vast majority of economic studies praise privatization’s positive impact at the level of the firm, as well as its positive macroeconomic and welfare contributions. Moreover, contrary to popular conception, privatization has not contributed to maldistribution of income or increased poverty – at least in the best-studied Latin American cases. In sum, the technical picture is generally positive.”
The following comes from the summary of chapter 4, ‘Empirical Evidence on Privatization’s Effectiveness in Nontransition Economies’, from William L. Megginson’s book “The Financial Economics of Privatization”, New York: Oxford University Press, 2005,
“The 87 studies from nontransition economies discussed in this chapter offer at least limited support for the proposition that privatization is associated with improvements in the operating and financial performance of divested firms. Most of these studies offer strong support for this proposition, and only a handful document outright performance declines after privatization. Almost all studies that examine post-privatization changes in output, efficiency, profitability, capital investment spending, and leverage document significant increases in the first four measures and significant declines in leverage.
The studies examined here are far less unanimous regarding the impact of privatization on employment levels in privatized firms. All governments fear that privatization will cause former SOEs to shed workers, and the key question in virtually every case is whether the divested firm’s sales will increase enough after privatization to offset the dramatically higher levels of per-worker productivity. Three studies document significant increases in employment [Galal, Jones, Tandon, and Vogelsang (1992); Megginson, Nash, and van Randenborgh (1994); and Boubakri and Cosset (1998)], but most of the remaining studies document significant-sometimes massive- employment declines. These conflicting results could be due to differences in methodology, sample size and make-up, or omitted factors.
However, it is more likely that the studies reflect real differences in post-privatization employment changes between countries and between industries. In other words, there is no “standard” outcome regarding employment changes.
Perhaps the safest conclusion we can assert is that privatization does not automatically mean employment reductions in divested firms, though this will likely occur unless sales can increase fast enough after divestiture to offset very large productivity gains. Since the empirical studies discussed in this chapter generally document performance improvements after privatization, a natural follow-up question is to ask why performance improves. For utilities, the need to introduce competition and an effective regulatory regime emerges as key, but there is no “silver bullet” answer for what makes privatization successful for firms in competitive industries. As we will discuss in the next chapter, a key determinant of performance improvement in transition economies is bringing in new managers after privatization. No study explicitly documents systematic evidence of this occurring in nontransition economies, but Wolfram (1998) and Cragg and Dyck (1999a,b) show that the compensation and pay-performance sensitivity of managers of privatized U.K. firms increases significantly after divestment. Studies that explicitly address the sources of post-privatization performance improvement using data from multiple nontransition economies tend to find stronger efficiency gains for firms in developing countries, in regulated industries, in firms that restructure operations after privatization, and in countries providing greater amounts of shareholder protection.”
Sunita Kikeri and John Nellis write in their article, An Assessment of Privatization, “The World Bank Research Observer”, vol. 19, no. 1 (Spring 2004)
“This article takes stock of the empirical evidence and shows that in competitive sectors privatization has been a resounding success in improving firm performance. In infrastructure sectors, privatization improves welfare, a broader and crucial objective, when it is accompanied by proper policy and regulatory frameworks.”
Mary M. Shirley and Patrick Walsh write in “Public versus Private Ownership: The Current State of the Debate”, Working Paper, The World Bank,
“Our review found greater ambiguity about ownership in theory than in the empirical literature. In the debate over the effects of competition, theory suggests that ownership may matter and if so, that private firms will outperform SOEs. The empirical studies squarely favor private ownership in competitive markets. Theory’s ambiguity about ownership in monopoly markets seems better justified, since the empirical literature is also less conclusive about the effects of ownership in such markets. Theories that assume a welfare maximizing government suggest that SOEs can correct market failures. In contrast, public choice theories are skeptical of the benevolent government model. Corporate governance theories suggest that even well intentioned governments may not be able to assure that SOE managers do their bidding. The empirical literature favors those skeptical of SOEs as a tool to address market failures. In studies of industrialized countries, where we might expect more developed political markets to motivate greater government concern with welfare maximization or better information and incentives to overcome corporate governance problems, private firms still have an advantage. The private advantage is more pronounced in developing countries, where market failures are more likely.”
November 16th, 2009 at 7:31 pm
“So the person that negitive karma’ed me…”
Don’t be concerned with negative kharma if you’re attacking the sacred cows of the left Lance. Its like flak, a sure sign you’re over the target.
November 16th, 2009 at 8:27 pm
Give the bikies the option to opt out. It is uneconomic to have them in. Some of them could even afford to self insure. Insurance is really for the poor. The rich do not need it.
November 16th, 2009 at 8:35 pm
Decimate means to kill one in ten (Roman Legionnaires as punishment). I find it hard to follow the article if I replace the words ‘decimate’ with ‘kill one in ten’!
November 17th, 2009 at 9:19 am
Thanks Paul.
November 17th, 2009 at 10:23 am
I like a social police department.
I like a social education system.
I like a social health system.
I want to keep these things socialised.
And if they want to start running things in a user pays fashion then i expect them to be consistent at least.
Triple or quadruple the prices of ski lift passs, get all the thugby players to start paying a thousand dollars a year each etc etc, one standard for all
November 17th, 2009 at 11:51 am
Menace, I agree with you that users should pay their way. But thousands of dollars for skiing it ain’t. Travel insurance generally covers skiing injury medical and transport, including in the US. From memory I could buy that insurance for about $230 which covered me for a year. Provided I did less than three weeks of skiing in that period, I was covered. So it’s not remotely astronomical at all.
In contrast, ACC is unbelievably costly. Its deficit for this year alone amounts to just under $1000 for every man, woman and child in the country, and roughly $1800 for every working person. And that’s just the deficit. They take 2% of your gross pay as well. And still they can’t make ends meet.
It’s not just skiers and rugby players paying thousands of dollars/year under ACC. Absolutely everybody is.
November 17th, 2009 at 12:33 pm
Hi Ben, I wasn’t saying that i support a user pays system i was just saying that if its run that way then i hope that the rules are kept fair accross the board, skiers and rugby players sure cost more than motor cyclists, and that doubling the price of lift pass’s and charging rugby players a thousand doallars per year to play for the season would probably be fairly in line with the extra costs that are proposed to the motorbikers.
I am a socialist so think that if acc costs more then we all just pay it, i am totally against privatization so im attacking the ideah before its officially on the table. I don’t know enough to know if the numbers you speak are accurate or if they are portryed correctly in the grand scheme(over years and not just one year) of things. But i have no problem paying th eincreased levies.
i spend a lot of time with non kiwis that are traveling here in NZ and recently i have been asking a few of them regarding the systems in there countries and what they cost.
Just roughly what i remember……
Switzerland(school teacher) 4 percent to the government system plus 400 kiwi dollars per month to a private scheme, both schemes are compulsory for him to pay into and he can’t have it any cheaper than that.
Germany you must have your own private insurance and its about 1000 nzd per month.
Travel insurance, mine cost a lot more than that 7 years ago(the last time i bothered with it)
Most of you will find this little story very interesting, a month ago the german girl i spoke to about this was with me and a few other friends doing some bouldering and she broke her leg, we took her to the hospital and had her patched up etc. Now she has travel insurance to cover her for these kinds of things. The interesting part is that her travel insurance doesn’t get used in thsi instance as it is our policy here in NZ to pay for the treatment of all people, kiwis or not. So although she has insurance it does not get used and ACC covers it.
Madness i know but i suppose we either have a policy where by we(nz tax payer) pay or we don’t.
November 17th, 2009 at 12:36 pm
DPF:
Increase costs to cover expenses.
People stop using the service that costs them.
Revenue for scheme drops.
Begin decimation …
I do not want to fund a ludicrous rates scheme I have no choice. I would prefer to pay my own insurance where having appropriate safety gear, going on safety courses, etc. will decrease my rates and increase my chances of survival.
I want the choice to shop for my own insurance, and not have the nanny state government decide it for me.
November 17th, 2009 at 12:37 pm
edit, German private is $1000nzd per month not “100″.
November 17th, 2009 at 12:41 pm
Anybody seen the film Sicko? Another one of moores informative films, great insight iinto the private system in america.
November 17th, 2009 at 1:31 pm
menace:
You know, I’d never have guess you to be a Socialist. What a novel ideah.
November 17th, 2009 at 1:53 pm
Menace, well I can’t argue with the idea that the rules get applied across the board. But of course they will not: in a socialised system, politicians are answerable for ACC’s pricing (one important reason why governments make bad owners of companies) and politically-favoured groups will get a discount (one important example of the social cost of public ownership – even for a socialist you can hopefully see it’s not all roses when the government is owner).
So who will get a discount in the socialist system? At a guess: the elderly, sports people, large companies, and unions. These groups have political clout. Who does not? Motorists, contractors, non-union employees, and small businesses. The political clout of companies, unions, etc, does not come out of thin air – it comes from investments in lobbying – hikois, newspaper ads, setting up web sites, donations to political parties, commissioning reports – and all of that is (very considerable) deadweight loss.
This is an important reason why competition is valuable: there is usually no point investing in lobbying.
We are seeing politically-favoured groups being exempted from greenhouse gas obligations right now for exactly these reasons. Farmers have the power to make it easier or harder for Nick Smith and his party to be re-elected – and so he listens to them. Your average Joe/Josephine does not have that power, and carry the can. There’s no getting around it when politicians, who are granted the power of coercion, instead of companies, who are not, hold the purse strings.
November 17th, 2009 at 1:59 pm
Menace, I didn’t respond to your later points about the costs of insurance in Europe. I too have noticed the high cost of car insurance in Britain and I do not understand why those costs are so high. One possibility is that those costs are produced by the lack of a no-fault scheme. Of course, in NZ even if competition is allowed no-fault can be preserved. I strongly suspect other institutional factors have driven up the costs of insurance in Europe, but I don’t know more than that.
November 17th, 2009 at 2:07 pm
Menace, one more thought. The argument for raising taxes or outright bans on smoking, drinking, cell phone use in cars etc. is that it is not fair for smokers/drinkers/phoners to impose costs on others via socialised medicine. These people should pay their way. Casual observation indicates to me that is an argument favoured by socialists.
Yet you are arguing the opposite for ACC: in a socialised system, skiers and rugby players, etc, should be able to pass the costs of their voluntary, risky activity onto others via a socialised ACC system.
If the argument holds for smoking and drinking, why is it appropriately reversed for rugby and skiing?
November 17th, 2009 at 5:03 pm
Looks like we can add angry bikers to the list of the politically favoured.
When a deciding factor in pricing your workplace insurance scheme is the willingness of a group to ride a really long way on their motorbikes, then you have a scheme that makes no economic sense whatsoever. Does anybody really think the competitive alternative could be so bad as to be worse than this?
November 17th, 2009 at 8:31 pm
Erm, at the same time if people stop using the dangerous service then accidents reduce and payouts from the scheme are reduced, cancelling the decreased revenue out. That is assuming the ACC levy on motorcyclists is correctly priced.
As it looks likely that the motorcycle levy is going to be lower than what is appropriate to fully cover motorcyclists, there is a net debt per user of the “service”, and if people are quitting the service will actually reduce that debt.
Hence quite the opposite of decimation – it will be better for ACC’s bank balance if people stop riding the bikes.
I’d also introduce another side of the arguement to those who say raising the levy is social engineering, trying to dictate how people live there lives.
The current amount motorcyclists pay is below what they’d be forced to pay in a private competitive insurance system (the intake from the levys is less than the amount payed out to bike accidents). Thus what we have here is the dumbest form of socialism imaginable: we are effectively providing a subsidy for people to partake in a dangerous activity.
This actually illustrates perhaps the worst problem with public provision of services: even if you keep a govt service as lean as a private enterprise, you still have decisions influenced by political considerations. We can’t raise the levy on motorcyclists as it will upset a large block of voters, even if costs of their accidents more than merits it.
November 18th, 2009 at 10:02 am
Good point Paradigm, I had not considered that, thank you. My preferred alternative is still a private scheme. They could look at the German model where below a certain income threshold you have a mandatory contribution of (I think) 15% of your gross wage. Which covers all costs and nothing is levied through petrol / acc / registrations / etc. But you also have the option of shopping for a private provider. Which makes more sense to me.
Have a mandatory, low cost scheme for people earning the average wage or below. Give them the option of choosing a private provider. Everybody above that can opt into the public provider at a percentage of wage system, or choose to go private. That way those of us that reduce our risk can be rewarded through lower premiums and we’re still ensuring those lower on the socio-economic ladder are taken care of.
It will be interesting to see what comes out of this. I’d personally prefer for all vehicles to be treated equally. Especially considering the lower environmental footprint of motorcycles, the reduction in congestion and other benefits associated with them as commuter vehicles.
I keep a 250 for commuting. It costs me $10 in petrol every two to three weeks and my trip home in rush hour takes about 15 minutes, compared to just over 50 minutes in a car or just over two hours using public transport. (No direct line, so need to take the train to town, change over and then take the other line or do the bus hop)
So for me, I’m saving about $500 in direct petrol costs and about 40 hours a month in time with my family by being on a motorcycle.