KEY POINTS:
Forty years ago Sir Owen Woodhouse outlined the most revolutionary and innovative system for accident compensation in the world.
The outcome was New Zealand's universal no-fault accident compensation scheme, known widely as ACC, which is still a landmark social insurance arrangement of wide international interest.
Its two most defining characteristics were, and still are, 24-hour cover for all personal injuries regardless of fault and no right to sue for damages for such injuries.
In the early 1960s, an injured person could sue for damages in negligence provided they could establish fault on the part of the defendant. Without proving fault, they would receive no compensation. Even where the injured person succeeded, contributory negligence could be used to reduce any final payout. The result was that many seriously injured people received nothing, while minor injuries could result in large payouts.
It was an adversarial system that led to remedy for some while others languished before the courts for years.
If the injury was work-related and negligence could not be proven, the insurance-based Workers' Compensation provided a weekly amount, but this was limited and for a maximum of six years. After that, seriously injured people were forced on to means-tested subsistence welfare benefits.
The Royal Commission on Worker Compensation, known as the Woodhouse Report, has stood the test of time because of its clarity and brevity of style, as well as its clear and consistent principles.
The commission's approach started with the overriding objectives of injury prevention and rehabilitation and, regardless of "fault", a pragmatic concern that compensation services be economically sound and efficient.
Given the context of its time, it arrived at some original conclusions. For example, it acknowledged the economic value of unpaid work, and recommended compensation for non-economic losses suffered by those not in paid employment.
The commission developed five principles which are uncompromising. "Community responsibility" implies that as we all benefit from the productive work of all workers, the community should bear the costs of accidents on an equitable basis.
"Comprehensive entitlement" demands no distinction between workers and non-workers, place or time of accident. "Complete rehabilitation" requires that all possible is done to restore the position of the injured person. "Real compensation" recognises the real losses incurred and transfers the right to sue into the right to earnings-related compensation and fully funded medical care and rehabilitation.
"Administrative efficiency" is achieved in a collective scheme whose costs of administration are far lower than any private insurance arrangement could be.
The most radical change was the banning of all common-law actions for compensation for personal injury from our courts. With no strong political voice today for reinstatement of such rights, it suggests the Woodhouse principles have stood the test of time.
To mark Sir Owen Woodhouse's achievement, Auckland University is holding a one-day symposium, with guests including Sir Geoffrey Palmer, Ross Wilson, Professor Richard Gaskins from the United States and Professor Harold Luntz from Australia, at the Law School tomorrow.
* This article was written by Associate-Professor Rosemary Tobin, Dr Susan St John (both of Auckland University) and Dr Grant Duncan (Massey University).
