Editorial: Disease step too far for ACC scheme

Sir Geoffery Palmer. Photo / NZPA

Change would revise social welfare radically.

Sir Geoffrey Palmer can be relied upon to make a stimulating contribution to a conference. Speaking on the subject of accident compensation this week he said the scheme should be extended to cover disease and congenital disabilities to address a "longstanding injustice". He was referring to the difference between welfare benefits for sickness or disability and earnings-related compensation for injury. As the Disability Rights Commissioner, Paul Gibson, put it, "If you were to pick how you were to become disabled you'd choose an accident."

Sir Geoffrey was reviving an issue that was alive 45 years ago when the scheme was devised by the Woodhouse commission. Sir Owen Woodhouse clearly intended the scheme to be extended eventually to disease, said Sir Geoffrey, who had a hand in the commission's 1967 report. But neither the National government that set up ACC in 1971, nor subsequent governments of either party have seriously entertained the idea.

That includes the Labour government in which Sir Geoffrey had a leading role for six years, and the present one. Its ACC Minister, Judith Collins, dismissed the suggestion this week, saying the scheme was never designed to be health insurance. Nevertheless, the notion will not go away.

Those who find it logical and fair that ACC should be extended to all forms of illness and incapacity should be careful what they wish for. They are proposing - though they might not realise it - a radical change in our system of social welfare. It would no longer be financed entirely from taxation, it would be funded like insurance. A large slice of everyone's taxation would become a health and disability levy.

Some countries have long had welfare systems that operate like insurance and there are probably advantages in it. The cost becomes more visible to everybody. People can see at a glance how much of their taxation is going to the maintenance of health services.

The public would probably take a heightened interest in hospital costs, general practice subsidies, disability support services and sickness benefits. Health has been the hardest item of public expenditure for governments to control. Its costs keep escalating far in excess of annual inflation and practitioners meet little taxpayer opposition when they press for more.

The accident compensation scheme is a much more transparent fund and the corporation is more capable of limiting its liabilities, checking the claims made upon it and ensuring that people on compensation go back to work as quickly as possible.

The corporation would be no less rigorous if it was paying out for illness. The sickness benefit, which seems to have become the default category of social welfare in recent years, would be replaced with earnings-related compensation and recipients would be regularly assessed for a return to work.

New Zealand's no-fault scheme for personal injury insurance remains a rarity in the world. The Woodhouse commission was originally asked to consider only workplace accidents, that were previously privately insured. It took it upon itself to recommend a scheme for all injuries, paid from taxation and vehicle registration as well as employers.

A further step, to insure against incapacity of any kind, is probably too large to contemplate. But its possibilities for controlling public health and welfare costs should never be ruled out.