ACC: National can't have it both ways on multi-insurer provision

Papers released under the Official Information Act reveal advice from officials to Ministers that raise questions about the effects of the present government's plans to introduce competitive provision of employers’ accident insurance.

A briefing from the Treasury to the Minister of Finance, dated 12 March 2010, advised that “competition is unlikely to lead to reductions in levies in the short term”. Instead, levies may have to rise as private-sector insurers seek to fully fund the costs of capital, marketing and reinsurance – costs which ACC, in its present form, does not have to face.

Both Treasury and the Department of Labour have repeatedly advised ministers that levies for most employers will probably rise under competitive provision – unless there are dramatic cuts to the benefits paid out to people injured at work.

Ignoring this advice, the National Party’s election manifesto of 2011 promised that competitive choice in ACC’s work account will ensure “the lowest cost for levy payers”. And yet it also promised to keep the same criteria for cover and level of entitlements.

The two promises contradict one another according to the government’s own advisors.

While Australian insurance companies stand to gain a new income stream from competitive provision of work-injury cover in New Zealand, it looks like most employers will have to pay higher levies in order to cover the costs faced by those private-sector insurers.

Annual benchmarking of ACC's work account with Australian states’ workers compensation shows that ACC, in its present form, performs well and that Australian insurers do not deliver results superior to ACC.

ACC provides NZ employers with excellent value for money, as well as comprehensive benefits to injured employees. The blinkered approach of the present government favours the interests of foreign insurance companies over local employers and employees. Without cutting statutory benefit levels for New Zealanders injured at work, it is highly unlikely that most employers will enjoy lower premiums under a multi-insurer scheme. The government’s own advisers in Treasury and the Department of Labour have made this point repeatedly.

An October 2011 cabinet paper released under the Official Information Act restates the intention to introduce competition by 1 April 2013. It is time to ask: if the proposal lacks credibility and appears not to be in the interests of New Zealanders, either as employers or employees, then what is the real motive behind it?

A plague on both their Houses

Protests and platitudes. There’s nothing like Waitangi Day to bring out the worst in us.

Political platitudes abound, like Mr Key’s claim that National’s economic policies (sell the assets and extract some oil and minerals) will be good for Maori. It’s unlikely that many Maori (or many other New Zealanders) will gain decent careers from Key’s dig-and-sell approach; and the money from the asset sales and resource royalties will only be funneled into Mr English’s budget deficit. So it’s unlikely that one new school will be built as a result. Mr Key should talk about reducing inequality, and then those with any social conscience could start to take him seriously.

And while I can understand why Maori wish to see Treaty provisions in the legislation that will empower the hocking off of state assets, what’s the need for such a heated protest? Why would the Maori Party stake its support for the Government on the question of whether the SOE Act’s section 9 would be rolled over in to the asset-sales Bill? Tariana Turia’s ‘letter to the nation’ on this issue is replete with sentimentality about the past, but devoid of convincing legal or political reasons that could apply to the future. She talks of acting with good faith and honour, but her party does not do so if they threaten to walk away from a governance agreement on such flimsy reasoning so early in the parliamentary term. Empty threats?

Having said that, though, there is so far no compelling reason put forward not to have a Treaty-rights clause in the asset-sales legislation either. The only reason National were hoping to get away without having one was because it might frighten off potential investors, and hence lower the price. But their asset-sales plan is a poorly conceived one to begin with, so I’m not going to let them off the hook even if they do include a clause like s 9.

There’s nothing particularly noble about demanding a Treaty clause in the asset-sales Bill either. Its main purpose will be to protect the future business interests of iwi corporations on a ‘just in case’ basis – say, for instance, to claim rights of first refusal if the power company puts land up for sale, or to charge a rent for usage of ‘sacred’ waters. It’s like giving the Maritime Union (about whom an equally sentimental historical case can be made) a special permanent right to strike, just in case something might affect their members’ well-being.

And of course one hears at this time of year those platitudes about how the Treaty is supposed to be the founding document of the nation, and Waitangi its birthplace.

New Zealand was, for administrative purposes, deemed by the British temporarily to be a part of the colony of New South Wales at the time of the signing of the Treaty. Once that process was over (it took a few months to peddle the Treaty around the country), Hobson declared British sovereignty, rightly or wrongly.

New Zealand was subsequently made into a separate colony (not a nation) by Letters Patent issued from London. While the Treaty gave permission to the British to govern New Zealand, it required Acts of the UK Parliament (in 1846 and 1852) to constitute a system of responsible government here.

It was not until 1947 that New Zealand’s Parliament finally (and reluctantly) adopted full law-making powers, and yet we still rely on the British monarchy for our head of state and to appoint our governor-general. Ironically it is the Treaty, along with many New Zealanders’ sheer sentimentality about ‘the Crown’ and its PR machine, that stands in the way of taking the final step to becoming a fully independent nation.

So, the question of when, and by authority of which document, New Zealand actually became the not-yet-fully-independent nation that it is today is a moot point. A hastily and poorly drafted Treaty signed in 1840 was an important stepping-stone along the way. But let’s not over-rate it.