IF A visitor to New Zealand is hurt in an accident, the last thing he or she has to worry about is paying for medical treatment or getting financial compensation.
That is no-fault insurance at work, a scheme covering all New Zealanders, permanent residents, migrant workers and foreign tourists – all paid for by taxpayers.
The scheme is one of those things that visitors to NZ find so endearing. If you get your thrills in mountain climbing, skiing, bungy-jumping and off-track biking, do it in NZ where you will be well looked after if you get hurt.
Set up in 1974 and administered by the Accident Compen-sation Corporation (ACC), it provides a range of entitlements to injured people, from contribution towards the cost of treatment, to weekly compensation for lost earnings (paid at a rate of 80% of a person’s pre-injury earnings), and even home or vehicle modifications for the seriously injured.
In return for this largesse, people who have suffered personal injury surrender the right to sue an at-fault party, except for exemplary damages.
But, after 35 years, the ACC is $4.8 billion in the red, reeling from the growing gap between the corporation’s assets and liabilities, with outstanding-claims liabilities ballooning to $23.8 billion in just four years.
“ACC cannot sustain the huge ongoing increases in claim costs arising from greater numbers, deteriorating rehabilitation rates and unfunded scheme extensions,” said ACC Minister Nick Smith.
“The underlying problem is that ACC has drifted from being a state insurer to a welfare provider.”
The system is heavily abused with people seeking ACC-paid physiotherapy or compensation for all sorts of injuries, including many which are fake.
What taxpayers find really unacceptable is the payment of compensation to those who injured themselves while committing crimes and to families of people who had committed suicide.
Also, a person can collect a tidy $10,000 by simply having been sexually abused.
Somewhere along the way, administrators at the ACC seem to have forgotten it was set up to deal with injuries sustained in accidents, that suicide is a deliberate act and crime is not a legitimate activity.
Many bits of the ACC have been carved off and clipped on so that it bears little resemblance to the original design. Anomalies abound: people who work in dangerous jobs pay more in earner levies than people who work in offices, but rugby league forwards incur no more expense by way of premium payment than those whose leisure preference is macramé, the Herald on Sunday pointed out in an editorial.
Scrapping such entitlements is the right thing to do although it may appear insensitive or uncaring to those left behind by suicides. But their trauma is not notably worse than that endured by parents who lose a child to cancer and get no ACC support.
To save ACC, Parliament will be asked to approve changes that will require NZ taxpayers to pay higher levies on their income and the kind of motor vehicles they use.
The average worker will have to pay 21% more – from $1.40 to $1.70 per $100 earned – from next April with their ACC bill next year rising from $658 a year to $799.
A person on the average wage of $47,000 per year currently pays $658 a year or $12.61 a week to ACC for the levy funding the earners account. The employer and self-employed levy would rise from $1.26 to $1.31 per $100 of payroll.
Motor vehicle levies are set to rise from $287 to $317.80. The increase will be collected in increased registration fees and petrol tax.
But motorcycle riders, who are 16 times more likely to be involved in a road crash than any other road user, will bear the brunt of the increased levies.
All petrol-powered motorcycles currently pay $252.69.
The levy on riders of mid-sized bikes (between 126cc and 599cc) would more than double to $511.43 and for riders of big machines (600cc and over), almost treble to $745.77.
The levy on tiny mopeds will rise from $60 to more than $250 while motorcycles of less than $125cc get off lightly with an increase of only a few dollars.
People injured on the sports field and in their homes will have to pay a part-charge for physiotherapy.
Saving ACC is going to cost taxpayers heaps but it has to be done. The alternative is even worse – the ludicrous American model of a litigious society where people are quick to sue others for gadzillions. at the drop of a hat.
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