Thursday, July 17, 2008



Against ACC privatisation

I feel I should blog about National finally announcing that it plans to privatise the worker's account of ACC, but I don't think I have much to add beyond what has been said by the The Standard, or indeed, the Prime Minister. The basic principle of ACC is "community responsibility", that we cover everyone and insulate them against the risk of accident by socialising the costs and to some extent cross-subsidising. And pretty clearly, that goes right out the window if we let insurance companies cherry pick the least risky customers. As for National's justifications that injury rates have risen, that employers pay the same regardless of their workplace accident record, and that entitlements "are not of high quality", the CTU has a detailed dismantling here. The short version:

  • Workplace accident rates fell 6% between 2002 and 2005;
  • Differential premiums create a strong incentive for employers to falsify records and deny that accidents occur, thus denying workers cover;
  • New Zealand workers get greater entitlements and are back at work faster than those in other countries.

And all of this is done for half the price it costs in Australia. Don't believe me? Check out the PricewaterhouseCoopers report [PDF]. It found that ACC's universal, no-fault, socialised model covered more people at lower cost and with less hassle than any alternative, and that

[d]espite competitive market pressures, comparative evidence from other jurisdictions suggest that administrative cost levels under private underwriting would be likely to rise to some extent.
In other words, kiwis would end up paying more for private insurers' inefficiencies and profits. Contrary to right-wing dogma, the market is not the best way to handle everything.

All of this is strong empirical evidence that privatisation would be bad for New Zealanders. But it would be very good for foreign insurance companies, who stand to profit by tens of millions a year from even a part privatisation. Which shows you where National's true interests lie: not in working for kiwis, but in looting the state for the benefit of its donors and cronies.