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Peter Wilson: Labour Goes To War Over ACC

Peter Wilson
Peter Wilson

Here we go again. Tribal warfare over ACC.

Labour does it better than National. Rouse the masses under the banner of "fight privatisation" and warn of dire consequences.

National's hidden agenda is exposed. They're looking after their rich mates, hard working Kiwis will be pouring money into the coffers of Australian-owned insurance companies.

They will pay more and get less, and all this is happening because of National's mania for privatisation.

Unions are right behind it. The CTU is already saying ACC will be dismantled and then destroyed, replaced by a private insurance scheme.

This is Labour's best chance since the election to get its teeth into something, raise its profile and draw a sharp distinction between the two main parties.

They call it a litmus issue. Red or blue, hear them out and take your choice.

The catalyst for this was the Government's need to gain enough support for its ACC bill to get it through Parliament. Nick Smith's numbers game, reported in this column last week.

The ACC bill raises levies and cuts back some entitlements to deal with huge future deficits. Labour disputes the figures and blames Smith, the ACC minister, for talking up a storm to frighten people into believing he has no option but to do what he is doing.

Smith struck a deal with the Maori Party to support the bill on its first reading, but it didn't go further than that.

So he went to ACT, which was prepared to back the bill through all its stages in return for progress on what party leader Rodney Hide calls "choice".

ACT is the party of choice. National said during the election campaign it would investigate opening the ACC work account to private competition, although until last week it hadn't shown any enthusiasm for doing that.

So the two parties came together and reached an agreement, but it was the extent of the Government's undertaking that was a surprise.

The work account -- the part of ACC that covers people for injuries in the workplace -- will almost certainly be opened to private competition around the middle of next year.

That is conditional on a report from the group of experts currently working on a stocktake of ACC. Smith doesn't seem to be in much doubt about what the recommendation will be and talks about "the anticipated decision" to allow private competition.

And it could go further than the work account. Prime Minister John Key confirmed the group's brief would extend to other aspects of ACC.

Labour seized on his words. "John Key now admits National is looking at privatisation across the whole of ACC," said party leader Phil Goff.

"Privatisation means money from ACC levies will be diverted into profits and marketing costs."

Employers call the work account the employers' account, because they pay for it.

Obviously, the less they pay for it the better.

So Business NZ thinks competition is a good idea.

"There is no reason why choice cannot bring better service for claimants and more competitive pricing for premium payers," said Business NZ chief executive Phil O'Reilly.

Note the differences in terminology. ACT talks about choice, the Government uses competition, and Labour says privatisation.

We have been there before. The previous National government opened the work account to competition in 1998 but it didn't last long because Labour won the 1999 election and returned ACC to its monopoly position.

Labour and the unions say it was a disastrous experiment, with workers not knowing which insurance company was covering them and uncertainty about what they were covered for.

Why pick a fight over it again? For one thing, the circumstances are different. If the work account is opened to competition next year, and even if other parts of it eventually go the same way, it won't be reversed until Labour is again in power.

That isn't likely to happen in 2011 and if National is a three-term government it won't happen in 2014 either.

And if it does work, Labour could find it hard to do anything about it. It is vowing now to fight it "tooth and nail" and reverse it, but the longer it is in place the harder that will be.

National called the Labour government's Working for Families initiative "communism by stealth" but the scheme was set up by the time it won last year's election and it changed its mind.

This time, the reaction from employers and insurance companies has been underwhelming.

In 1998 insurers spent significant amounts getting in on the game and Labour says they were offering cheap premiums because they were prepared to take a loss to gain market share.

They were stung when Labour won the election, now they have to decide whether it is going to be worthwhile second time around.

Michael Barnett, chief executive of Auckland's Chamber of Commerce, made sense when he said the shake up of ACC offered opportunities to address what he called underlying issues.

Those included why New Zealand has one of the highest accident rates among developed countries.

"Our scheme is unique, but is it as efficient and effective as it could be or should be?" he asked.

"If it was truly a world-class scheme, by now you would think that other countries would be adopting it."

The Government is likely to take the advice it has received from Treasury -- there could be advantages to opening the work account to private competition, and if it works it could be used as a model for other parts of ACC.

Key is a pragmatic politician. If it works, do it. If it doesn't, scrap it. Step one will be opening up the work account and the Government will carefully watch what happens.

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