ACC expert: private compo may see return to lawsuits

US law professor Richard Gaskins says the original Woodhouse Report holds three vital lessons, reports BRIAN FALLOW.


WELLINGTON - The original 1967 blueprint for ACC, the Woodhouse Report, was decades ahead of its time and still has much to offer today, according to American scholar Richard Gaskins.

"ACC still provides greater coverage for more accident victims at lower cost than any other system in the world. Whether that can last, given the recent shift toward private insurance, is certainly open to doubt," he said.

Professor Gaskins teaches law at Brandeis University in Boston. He has just completed a six-month stint at Victoria University looking at the latest changes to the ACC scheme, which he has taken an interest in since the 1970s.

The work of the Royal Commission chaired by Sir Owen Woodhouse yielded three important lessons for the future, Professor Gaskins says.

One is that personal injuries must be deal with equitably somewhere in the social policy structure. Once the accident occurs, the costs of the accident have already been incurred. The only question is how much of the cost will fall on the victim, and who will pay for the rest.

The second Woodhouse lesson, Professor Gaskins says, is that accident prevention requires a comprehensive policy for reducing risk in modern environments.

The third is that these two separate policies - caring for and compensating the injured, and preventing injuries in the first place - should not be held hostage to one another.

Thinking in this area is bedevilled by the idea that accidents can be sheeted home to the act or omission of some culprit. Systems which require people to pay for accidents that are perceived to be someone else's fault are resented.

"But Woodhouse had it absolutely right that in industrial societies today, activities are so interconnected that it is simply artificial for people to think they can demarcate their accidents from someone else's," Professor Gaskins says.

"If this approach was hard to grasp 30 years ago, it makes clear sense today, where the public is quickly exercised about the health effects of pollution, the unknown risks of genetically modified foods, poorly engineered roadways, and the crippling effects of poorly designed workstations."

This has implications not only for the matter of who should bear the cost of injuries, but also for how to go about achieving a safer environment.

The Government argues that market signals, in the form of insurance premiums, will provide enough of an incentive for employers to lift their game on safety.

The Woodhouse Report, however, considered - and Sir Owen repeated the point last Friday - that safety is properly the business of an independent body able to regulate and enforce its regulations.

Linking that function with that of rehabilitating and compensating injured people just muddied the water.

"It is not a purpose to be promoted by any of the modest economic tinkering that could ever be applied through levies or insurance premiums," Sir Owen says.

Though not a supporter of a contractual privatised scheme, Professor Gaskins argues that employers should have financial incentives, based not on their accident or claims record, but on their ability to reduce risk.

He sees an objective basis for such risk assessment arising from environmental and occupational health and safety legislation.

"We had a raft of legislation in the 1970s which took us down a regulatory road we didn't entirely abandon in the 1980s and 90s when we turned against regulation. It is generating a lot of information about risks, especially about chemical and biochemical hazards."

Professor Gaskins agrees with Sir Owen that behind the privatisation of workplace accident insurance lurks the danger of a return to ligation.

"Public opinion will demand it at a certain point, if there are horror stories of people being badly mistreated by the insurance companies," Professor Gaskins said.

It is not a course he would recommend, saying that in his home town of Boston, injury cases can take five years to come to trial.

"I would counsel going back to a model where the responsibility for coordinating compensation rests in a central public authority.

"The Woodhouse Report abolished lawsuits, but rescued the goals of civil justice through the public principle of community responsibility. The latest ACC reform has now eroded that sense of public obligation and offers, instead, the freedom to purchase private insurance.

"Should this trend continue, the next wave of international scholars to study your ACC will come from a very different part of the ideological spectrum and New Zealand will provide a starkly different model for international comparisons."