Little advocates huge increase in ACC costs

November 6th, 2012 at 2:00 pm by David Farrar

Vernon Small reports:

Labour spokesman is urging his party to remove an “injustice” in the no-fault scheme by extending it to cover incapacity caused by illness or disease as well as accident.

First of all Andrew is correct that there is a disparity at the moment. If you are born disabled with only one leg, you get nothing from ACC. If you lose a leg in an accident you may get payments for life.

But his solution is massively expensive. It would lead to dramatic increases in ACC levies. It means that if (for example) someone was grossly obese and couldn’t work anymore due to their diabetes – they would get ACC payments based on their former salary for life. This would be far more costly than the Invalids Benefit.

Likewise as drug addiction is an illness, drug addicts would get ACC compensation rather than a benefit.

There is merit in looking at combining together the ACC and Welfare systems to remove the “injustice” but doing it by merely extending ACC to everyone with a temporary or permanent incapacity is likely to prove hugely expensive. It would mean a drop in take home pay for every employee and an increase in employer premiums.

He is also calling for it to dump the fully-funded model, which sets levies to cover the future cost of current injuries.

I’m against this also. Apart from the accounting argument, the benefit of having premiums reflect the full cost of current injuries is that it acts as a fiscal deterrent to widening coverage (as Labour did multiple times when last in Govt) because the premiums increase more under full funding (to reflect the full cost). It is all too easy under pay as you go to keep adding things into the scheme because the immediate impact on ACC finances is low. But the long-term impact can be quite massive. Basically full funding means that the Government is less likely to keep adding on extra costs to employees, employers, taxpayers and motorists who fund the scheme.

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23 Responses to “Little advocates huge increase in ACC costs”

  1. burt (8,272 comments) says:

    Massive increases in costs should not concern us – we’ll all have millions of dollars under the print more money plan ….. dooooh!

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  2. JeffW (326 comments) says:

    I have no problem if Mr. Little wishes to borrow from his grandchildren, but I resent the idea that he wishes to use the force available to the state to borrow from my grandchildren. Does Mr. Little have any awareness of what is happening in Europe and the US, i.e. that the welfare state has run out of money?

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  3. dime (9,972 comments) says:

    words fail me

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  4. Muzza M (291 comments) says:

    Can’t agree with you on drug addiction DPF, in my opinion it is not an illness, it is a chosen way to live. If you had dealt with as many so called drug addicts as I have you would find that the majority are quite happy with thier way of life. I recommend you read Theodore Dalyryples book Romancing Opiates.

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  5. anonymouse (716 comments) says:

    So Mr Little is floating this publicly as a policy idea why??, He is the Labour Party Spokesman on this, so either

    A) He has raised this at caucus and everyone ran screaming from the room, but he doesn’t care and will die in a ditch for it…

    B) Caucus actually all agree but don’t believe that it is publicly acceptable, so have sent him out on a flag raising exercise

    Someone should actually peg down senior Labour MPs including Shearer and actually find out what they think of this, and for how long this idea has been doing the rounds within labour, also has it been costed?

    I’m expecting this will be put in as another crazy members’ bill in the run up to the next election….

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  6. Manolo (13,780 comments) says:

    The socialist Little is supremely inept. Period.

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  7. Reid (16,471 comments) says:

    Lefties are attracted to big pots of public money that they don’t own and didn’t create and which they can redistribute to show how caring they are. This is just another log on that fire. They seem to lose all ‘common good’ perspective as soon as their numerically small but monstrously high-maintenance core constituents come into the picture and they become the people and only the people who now matter. Those of us who built the fund don’t matter anymore, we’re not “the victims.” Worse, if one of us objects to the policy then it means you’re a horrid, selfish mean-spirited swine of a fellow, who probably should be imprisoned.

    SoP in the loony lefty land of Liarbore’s caucus.

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  8. smttc (752 comments) says:

    It is not an injustice at all. It is certainly not the injustice the ACC scheme was designed to remedy which was the capricious nature and effect of tortious remedies and their applicability to claims for damages for personal injury by accident.

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  9. krazykiwi (9,186 comments) says:

    Personalised choices with socialised consequences are already strangling our nation’s future prosperity. Little’s ignorant suggestion would simply accelerate the process.

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  10. wreck1080 (3,917 comments) says:

    Maybe Little should be looking at sports injuries and qualification of foreigners first.

    I find it objectionable that people participating in high risk sports are covered by ACC.

    As for foreigners coming into our country with no personal insurance and being covered my us — it’s crap. Especially since I’ve recently forked over 20k to a US hospital for an accident (covered by my insurance, not the US taxpayer).

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  11. bhudson (4,740 comments) says:

    Let’s be clear – this is now different than deficit-spending (which is the economic cornerstone of both Labour and the Greens.) It is shifting the burden onto future generations.

    Basically they want to spend the earnings of future generations today.

    And in the next breath they will try to take the high ground on “sustainability”..

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  12. calendar girl (1,236 comments) says:

    DPF: “Apart from the accounting argument, the benefit of having premiums reflect the full cost of current injuries is that it acts as a fiscal deterrent to widening coverage ….”

    Does that also imply a preference for the fully-funded model for meeting the full cost of current illnesses? Or of NZ superannuation? (I’m unsure of the reasons for differentiation, other than history of course.)

    [DPF: Yes]

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  13. F E Smith (3,305 comments) says:

    It is not an injustice at all. It is certainly not the injustice the ACC scheme was designed to remedy which was the capricious nature and effect of tortious remedies and their applicability to claims for damages for personal injury by accident.

    Exactly.  Well said, smttc.

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  14. PaulL (5,981 comments) says:

    @calendar girl: NZ Super should also be fully funded. Blame Muldoon. Kiwisaver is a step towards fully funding NZ super, but only a small one.

    ACC is explicitly an insurance scheme. Privatising it would fix much of the problem here – people can then choose whether they’d like the pay the premiums associated with accident insurance that covers accidents, or whether they’d like to pay the premiums associated with coverage for, for example, drug addiction.

    There’s no reason everyone in NZ needs to make the same choice, and I’m entirely OK with some other people making different choices than me. For me, I’d just take the basic accident insurance.

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  15. Chuck Bird (4,884 comments) says:

    “Labour ACC spokesman Andrew Little is urging his party to remove an “injustice” in the no-fault scheme ”

    Little is right so far but there are two ways to remedy the injustice.

    Firstly, we could do what he suggests and bankrupt the country even quicker than a thought the Greens could do it they were in power.

    Secondly, scrap the stupid scheme that Labour claimed other countries would be copying. I do not think any country has.

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  16. Manolo (13,780 comments) says:

    Secondly, scrap the stupid scheme that Labour claimed other countries would be copying.

    Open it to competition, to begin with.
    Ooops, you need a government with balls to do that, not a timid socialist one. Sorry.

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  17. Nigel Kearney (1,013 comments) says:

    The injustices smttc mentioned can be avoided by just making it compulsory to have private accident insurance. The reason we have ACC instead is to redistribute wealth without doing so directly and transparently through the tax system.

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  18. Paulus (2,627 comments) says:

    Believe it or not this was looked at seriously in the latter part of the Muldoon Government by some National current and former MPs at the time, as a broad committee. Many of those attending these broad discussion meetings are still around so will not name them.
    Other responsible advocates were invited to comment, but it fell by the wayside when Roger Douglas took the reins.
    The cost was considered unaffordable, but it was widely canvassed.

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  19. duggledog (1,558 comments) says:

    Anonymouse

    There is a ‘C’

    In my experience of working in the public sector, (not politics exactly but every work environment is political isn’t it) when people come up with utterly stupid ideas like this, the others tend to nod sagely knowing the architect will hang themselves with it.

    Which shuffles everyone else further forward.

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  20. Steve (North Shore) (4,563 comments) says:

    Drug Addicts to get ACC?
    Andrew Little is a Dope addict, not a Drug addict.

    He is surrounded and supported by dopes

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  21. pq (728 comments) says:

    utterly pathetic, send me money here Andrew I don’t feel well you make me sick.

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  22. Lee C (4,516 comments) says:

    And yet Little has remained strangely silent about his role as head of the EPMU, and what he was doing about advocating for and protecting his members’ safety and rights leading up to Pike River, despite losing a shop steward in the blast.

    Perhaps he was busy with other pressing issues, such as, cultivating his new career as an MP/potential ‘Leader’ of the Labour Party.

    This may read as ghoulish, I’m not trying to be, and say this with deepest condolences for the victims and their families, that I feel it in my bones, that those guys were not given the kind of backing they deserved from their union, as well as from their bosses, and feel it worth pointing out, and asking why?

    Has it even occurred to the EPMU to hold their own enquiry into how these members’ working conditions and safety could be so overlooked? – or does such soul-searching remain as an option for everyone else but them?

    Inform me, please, if you can.

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  23. Mark (1,488 comments) says:

    wreck1080 (2,490) Says:
    November 6th, 2012 at 3:00 pm
    Maybe Little should be looking at sports injuries and qualification of foreigners first.

    I find it objectionable that people participating in high risk sports are covered by ACC.

    As for foreigners coming into our country with no personal insurance and being covered my us — it’s crap. Especially since I’ve recently forked over 20k to a US hospital for an accident (covered by my insurance, not the US taxpayer).

    Given the way ACC premiums are charged through car registration is a foreigner renting a car paying for ACC or not?

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