Labour will scrap ACC reforms

By Richard Braddell

WELLINGTON - Private sector workplace accident insurers will have spent more than $100 million for nothing if Labour forms the next Government, after it reaffirmed it would scrap ACC reforms that came into effect yesterday.

In an uncompromising statement of position, Labour said it had given private insurers "a clear, unequivocal and consistent message" that it would reverse their entry into the workplace injury market.

Labour now says it would even go as far as to extend the publicly-funded ACC scheme over time to cover sickness. The announcement drew strong reactions from ACC Minister Murray McCully and the Insurance Council.

"Who do they think is going to pay for the nationalisation, let alone expanding it to include illness?" Mr McCully asked, while the chief executive of the Insurance Council, Chris Ryan, said Labour's plans would put New Zealand in "the very worst light" from an international investment perspective.

Mr Ryan said the $100 million invested in the new market belonged to subsidiaries of foreign-owned companies and while he agreed that they had gone into the market with their eyes open, he said they would still not understand.

Far from a return to ACC as it was, Labour is proposing a substantial reorganisation of the public scheme that would put injury prevention and rehabilitation to the fore along with reinstatement of lump sum payments that were scrapped in 1992.

In addition to maintaining earnings-related compensation at 80 per cent of weekly earnings, a maximum lump sum of $100,000 would be paid for loss of a faculty and $15,000 for loss of enjoyment of life.

Harking back to a precept of the original ACC scheme designer, Sir Owen Woodhouse, Labour said it would set up new provisions to enable effective rehabilitation and it would also require a guarantee by large employers that jobs of injured workers be kept open for 12 months.

In a modest concession, Labour sees revival of the accredited employer scheme as vital although there will be limits on third party involvement.

For the six private sector insurers who have embraced the market enthusiastically, Labour's message is cold comfort.

"All insurers who have taken up the option of private underwriting have done so in the absolute knowledge that reversal of the National Government's actions will be undertaken by an incoming Labour-led Government," Labour said.

Under transition arrangements, no new private contracts will be entered into after Labour's legislation is passed. But in a recognition that the market will have been going only a short time, there will be an option for buyout of those liabilities.