Cullen backs off ACC promises

By RICHARD BRADDELL and DITA DE BONI

The Government is backing away from promising lump sum and pain and suffering payments in a second accident compensation bill, scheduled to come into force next April.

The Minister for Accident Insurance, Michael Cullen, has said the one-off payments originally envisaged by Labour would not be as generous as first thought because both the Government and employers cannot afford them.

Dr Cullen denied the scaling back was a result of efforts to mollify business.

"What was starting to become clear a few weeks back was that some possible combinations of changes ... would have been well outside the realms of possibility both in impact on the Government's costs and on employers," he said.

One estimate of lump sum payments at pre-1992 levels came to $250 million. At that time, maximum payments were $17,000 for loss of faculty and $10,000 for pain and suffering. Recently the Government suggested payouts would go as high as $100,000 and $15,000 for the respective categories.

Several critics are against an accident compensation system with lump sum payments, saying the cost of ongoing benefits from the public purse to accident victims was higher.

Dr Cullen said there was still room for limited lump sums for impairment and possibly mental incapacity but it was not feasible to provide for events that might be classified as causing suffering - such as witnessing an accident.

The Government risks being forced to fund extra benefits in its ACC's non-earners account as well as costs it incurs as an employer. It also does not want employers to pay more than the average premium rate, set at $1.16 per $100 of payroll for the year to June 2001.

Dr Cullen said the scheme had already given a heavy priority to accident prevention, with a fourfold increase in expenditure.

But that did not mean lump sum payments under ACC were to be omitted indefinitely, he said.

"[It] does not mean that other things won't be done further down the track if they can be fitted into the same framework. But for the second bill, that rewrites the principle legislation, changes for entitlement will be dealt with in that kind of cost constraint."