Editorial: Why the shock over sacking of ACC chair?

Much hot air has been expended on the Government's dismissal of Ross Wilson, chairman of the Accident Compensation Corporation. The Labour Party leader, Phil Goff, feigned surprise and outrage, and contended Mr Wilson had been removed for political reasons. The Prime Minister "utterly refuted" the assertion. Why, it might reasonably be asked, did either bother when the roots of, and reasons for, such acts are so self-evident?

Mr Wilson was appointed to chair the ACC because of the political persuasion implicit in his trade union background. As a lawyer, he may have dealt previously with cases involving accident compensation, but no more so than hundreds of other lawyers.

None of them became chairman of the ACC. Now, Mr Wilson has been axed for political reasons. John Key sought to mask this. The Government, he said, needed "a competent board that can actually run ACC in the way we want it to be run". Again, why bother? Wasting time on such a charade is not a good use of prime ministerial time.

The new ACC chairman, John Judge, has also been appointed for political reasons as much as any financial expertise.

The former Ernst & Young chief executive will, unlike Mr Wilson, be in tune with the Government's wish to implant greater cost controls at ACC. He can also be assumed to have a greater bent for market forces and minimum state involvement than a former trade union leader. But, like Mr Wilson, he can expect to be dismissed if Labour wins the next election. The sham will end only if parties stop making appointments on the basis of political affiliation.

One of Mr Judge's first task will be to look at the entitlements to a scheme that ACC Minister Nick Smith says has become more about welfare than insurance. That is a reference to the previous Government's push to expand the scheme's coverage and increase the take-up rate.

Extras, such as "mental trauma" becoming a workplace injury, were introduced on the back of buoyant ACC investment returns that, subsequently and inevitably, have dwindled. Those additions contributed to a surge in claims, which, with high rates of inflation in the health industry, propelled a 55 per cent increase in ACC's overall cost of medical treatment in the three years to June, 2008.

Mr Smith has said entitlements will have to be cut, and has pinpointed free physiotherapy. The alternative of large increases in levies for workers, employers and motorists was not acceptable, he said.

This also sets the scene for the opening of workplace accident insurance to private competition. The Prime Minister is guarded on this, probably because there is no obvious public demand for it. But that was also the case in mid-1999 when workplace cover was briefly a competitive market, only to be scotched in 2000 when Labour took power. The Shipley government said the more efficient pricing of private insurers would mean lower costs for employers and would give them a stronger incentive to improve workplace safety. A few snags notwithstanding, competition appeared to deliver, particularly in saving companies something like an annual $200 million in insurance costs.

The short period before this initiative was cancelled meant no definitive judgments could be made. One thing can be concluded, however. Since then, ACC has proceeded down a road that demands tighter cost controls. These must be imposed in some way or other. Mr Wilson can hardly be surprised that he has not been entrusted with the task. Nor can those who appointed him. Normal political transmission has been resumed.