Employers seek to alter ACC

By RICHARD BRADDELL

WELLINGTON - The Employers' Federation has asked Government to provide a fully funded workers' compensation scheme once it reverts to ACC monopoly.

Employers have also called for procedures to ensure that ACC's performance is independently monitored.

While remaining staunchly opposed to the reinstatement of a state monopoly, the federation has asked that the Government at least modify its stated policy, and is recommending a fully funded scheme rather than pay-as-you-go or a partly funded one.

However, the federation said there should also be strict controls to ensure that reserves accumulated in the new employers' account would not be available for the Government or any other agency.

In the absence of competitive pressures, it also called for benchmarks and targets for the Accident Rehabilitation and Compensation Insurance Corporation's performance.

"While any accountability mechanism is likely to be a poor substitute for the discipline of a contestable market, annual targets for ACC are essential in order that ACC's performance can be monitored over time," the federation said.

It also slated proposals to set premiums based on industry risk, arguing that assessing the risk of individual employers was essential to encourage workplace safety.

Any group ratings should be based on a particular group's risk rather than on the industry assessment, because the risks within an industry could vary widely according to its types of activities.

In addition to putting disputes procedures into the hands of an independent company at arms length from ACC, the employers also asked for a third-party contractor to be used to consider applications to the accredited employers' scheme.

The scheme, which would enable employers to partly self-insure and manage injuries, should be broadened to allow medium and small employers to take advantage of the partial insurance option, the federation said.

However, it said the reforms would cost $100 million during the transition.

Savings under the present system, helped by the elimination of cross-subsidies under the old scheme, enabled employers to invest in health and safety measures, and to employ more staff.

Surveys of members by regional employer associations found almost universal support for a contestable accident insurance market and the federation considered reversion to state monopoly to be a "retrograde step which defies logic."

Nevertheless, it noted that international research had not settled whether private or state schemes were better, although it had found evidence of a deterioration in claims costs over time - with and without competition.

The federation noted that without a competitive market, an employer was simply a price-taker from ACC and could not shop for a better deal.