Editorial: ACC cost a ticking time bomb

Opinion

The financial pressure building up in our system of accident compensation has reached bursting point.

Claims have risen 57 per cent in the past four years; liabilities for which no provision exists rose from $4 billion to $13 billion in the same period; a $4.8 billion loss in the last financial year came on top of a $2.4 billion loss the year before.

To its credit, the Government has devoted little energy - except in counter-attacks in the House - to blaming the Clark administration for the predicament we now find ourselves in.

ACC Minister Nick Smith, the man with the unpleasant task of implementing what will be very unpopular changes, is not noted for his restraint in public utterance but he has impressed with his ability to explain the issues and his readiness to receive submissions from the public on the changes proposed.

Those changes are substantial and will be keenly felt at a time when the damage inflicted on household budgets by the recession is still fresh.

The introduction of a part-charge for physiotherapy presaged the upheavals announced this week, which seek to moderate levy increases by simultaneously cutting entitlements.

Many of those entitlements need to go. The plan to withdraw the compensation provided to people bereaved by suicide is sensible: suicide is by definition non-accidental and, in any case, the trauma suffered by those left behind is not notably worse than that endured by, say, parents who lose a child to cancer.

Even less objectionable is the proposal to deny compensation or income support to people injured while committing a crime.

By far the biggest change proposed is a steep increase in the ACC levy component of registration for motorcycles, which is now $252.69.

The levy on riders of mid-sized bikes (with engine capacities of between 126cc and 599cc would more than double to $511.43, and for riders of big machines (600cc and over) almost treble to $745.77.

The tiny mopeds which have proliferated since petrol price rises of the past few years go from around $60 to more than $250 - a more-than-fourfold increase. Motorcycles of less than $125cc get off lightly, with an increase of only a few dollars.

These figures assume that the target date for so-called full funding, by which ACC takes in enough each year to cover the ongoing future costs of claims received in that year, will not be postponed from 2014 to 2019.

If it is postponed, the increases will be mitigated and, in the case of small motorcycles, the levy will actually fall. But plainly the impact on ACC's finances of injuries to motorcyclists is insupportable without change.

The riders themselves point to official figures showing that more than half of accidents in which they are involved are the fault of car drivers.

In a no-fault system where entitlements to treatment are based on need, not blame, that cannot be regarded as a complete argument: the fiscal risk of motorcycling rises in proportion to the number of motorcycles, and it is idle to suggest that someone other than motorcyclists should bear the cost.

But it does point to the larger problem which needs to be addressed: in the 35 years since ACC was established, so many bits have been carved off and clipped on that it bears little resemblance to the original design.

Anomalies abound: people who work in dangerous jobs pay more in earner levies than people who work in offices, but rugby league forwards incur no more expense by way of premium payment than those whose leisure preference is macrame. The infamous regime of $10,000 payouts to people who had only to assert that they had been sexually abused was similarly inexplicable.

More profoundly, many of its conceptual assumptions have been corrupted by this piecemeal regulatory intervention. ACC has not been reviewed since the 1980s and, once it has dealt with the immediate crisis, the Government would do well to consider another reassessment of the entire system.

In 1974, we entered a social contract by which we surrendered the right to sue. As a society, we were keen to avoid the litigious and ludicrously expensive American model.

But it is not an absolute truth than our system is better. Anyone who spends time in the US will quickly notice the lengths to which people go to avoid posing a risk to others.

That carefulness flows from fear of being sued, of course, but it's worth wondering whether we here have grown too accustomed to being reckless of others' - and our own - welfare, in the knowledge that someone else will pay.

If nothing else, the crisis we face now reminds us that we are all that someone else.