Tapu Misa: Sir Owen should be the guide on ACC

Several things make me proud to live in this country. ACC is one of them. Alongside other defining moments in this country's history - like being the first in the world to give women the vote, instituting a conciliatory process for honouring the Treaty of Waitangi and, on a lesser note, daring to give the most powerful nation on Earth the equivalent of a nuclear-free raspberry - there is ACC, our ground-breaking, world-leading, no-fault compensation scheme.

ACC, as its minister Nick Smith acknowledged recently, is popular with New Zealanders. Which is no doubt why National is careful to say it has no intention of dismantling the scheme, even as it declares itself open to policy changes that threaten to do just that. Like opening up the profitable work account, and possibly all of ACC, to private insurers, as it did back in 1998, with predictably negative results for claimants.

Of course, we've been down this road before. In 1998 National opened up the work account to private insurers, only to have that reversed by Labour when it came to power in 1999.

It's easy to forget how revolutionary ACC is. Or how visionary its architect Sir Owen Woodhouse was. It's also easy to forget what life was like, pre-April 1974, when ACC was introduced in a climate of bipartisan co-operation following a royal commission instituted by the Holyoake government. At 93, Sir Owen is among a dwindling number of New Zealanders who remember exactly why ACC was introduced. It's thanks to ACC that we don't have a thriving American-style medical misadventure industry.

"When you are peering into the future," Sir Owen, a former Appeal Court judge, Privy Councillor and Supreme Court justice, told a 1999 ACC conference, "it is not at all a bad idea to remember where you have been."

Pre-1974, he said, there was constant litigation, and arguments about how "accident" should be defined, and whether it had arisen "in the course of employment". The benefits were "meagre and limited in duration". The process could be long, expensive, uncertain and unfair. Before 1967, for example, only one negligence claim in every 100 was even partially successful.

To read Sir Owen is to understand how far we've strayed from many of the principles on which ACC was built. Like community responsibility, which goes against the idea that you should levy one section of the community more heavily than others, as proposed by the current government. Sir Owen held that as we all benefit from risky activities, we should all bear the cost equally.

"Just as a modern society benefits from productive work of its citizens, so should society accept responsibility for those willing to work but prevented from doing so by physical incapacity. And since we all persist in following community activities which year by year exact a predictable and inevitable price in bodily injury, so should we all share in sustaining those who become the random but statistically necessary victims. The inherent cost of those community purposes should be borne on the basis of equity by the community."

Sir Owen wasn't against private insurers. He was "a firm believer in the plural economic arrangements of our society ... I believe the business brought in and organised by the enterprise of the insurance world is an important, if not essential ingredient of commerce and production".

But in 1999, he questioned how private insurers could reconcile their efforts "to get back to the minutiae of injury compensation with their role as a central agent of all the free market activity, which is their province". What enterprise could there be, he asked, in carving up "a gift-wrapped, pre-ordained, statutory cake?"

As for private insurers being able to provide cover for lower premiums than ACC, "I am not merely a sceptic," he said. "It cannot happen."

Fast forward to 2009, and Sir Owen is no less damning of the National-led Government's proposed changes to ACC. The move to double and treble levies on heavy motorbikes and mopeds, and to push accident victims back to work on much lower incomes than they earned before their accidents, are "uncaring and predatory", and contrary to the principles that underpinned the creation of ACC.

And the idea that the changes are inevitable because the scheme is in crisis holds as little sway with him today as it did decades ago.

ACC isn't trouble-free. But it's a long way from broke. It posted a billion-dollar surplus in the last financial year, and has $11 billion in assets. A PricewaterhouseCoopers report has described it as a world-leading "best practice" entity that has performed as well or better than most similar structures worldwide. Its administration and rehabilitation costs are lower than its largely privatised Australian counterparts.

According to a June 2008 report by Merrill Lynch Australia, Australian insurance companies could expect to make $200 million a year if ACC was opened up to private insurers.

That may make sense to Act and private insurance companies, but the rest of us should be clear about what we're risking.

As Sir Owen has said, the kind of social responsibilities which underpin ACC "ought never to be tested by clever equations, or brushed to one side by economic dogma. In the end they depend on decent fellow feeling, and the ideas and ideals that support it".