Workplace injuries: feeling the payout pain

By Brian Fallow

Between the lines

It was a phrase from an earlier, more civilised era.

Sir Owen Woodhouse, architect of the accident compensation scheme 30 years ago, said last Friday that the kind of social responsibilities embodied in the legislation should not be brushed aside by economic dogma.

In the end they depended, he said, on "decent fellow feeling".

Sympathy for the injured is not something we have heard much of in the changes to ACC this year.

There was much about the need to reduce the burden of costs borne by employers.

There was some talk about the potential efficacy of market signals, delivered via insurance premiums, in encouraging employers to lift their game on workplace safety.

But there has been no attempt - as Sir Owen noted somewhat caustically - to explain, or even acknowledge, the radical departure from ACC's principles represented by the moves to privatise the employers' account.

ACC Minister Murray McCully is content to say that for 25 years ACC has failed to get the incentives right for employers to focus on safety and rehabilitation, and a failure to get efficient pricing for employers from the monopoly provider.

There seem to be some members of the Government who do not think the latest changes are all that radical, that they are merely changing the funding arrangements for part of the scheme, while leaving claimants' entitlements intact.

But Professor Richard Gaskins, an American expert in this field, has no doubt that this is a slippery slope.

Private insurers, he says, want the market to dictate accident prevention policy and would ultimately like to see private contracts dictate the terms on which the injured are compensated.

"When the dust settles on these arrangements, you can bet that compensation and safety measures will move down to levels achieved 30 years ago by the lawsuit lottery," he says.

Having rescued accident victims from the lawsuit lottery, the original ACC established consistent, universal entitlement for benefits, measured by the standards of lost income and lost capacity to work. The aim, Professor Gaskins believes, was to exert some upward pull on other benefits such as sickness, unemployment and family support.

Instead - and this is a global trend in workers' compensation systems - the reverse has happened and ACC entitlements are being drawn down to the level of a low-slung safety net.

A private insurance scheme will surely accelerate that trend, he says.

Maybe. It is always possible that this may yet prove to be a case where he who pays the piper never gets to call the tune.

But the point is that reducing payouts does not reduce the costs of personal injury. It just pushes them back on the victims and to taxpayer-funded programmes.