Nick Smith has called a press conference for 1.45pm today. He has no option but to announce his resignation.
The question now is why John Key didn’t take decisive action earlier. He promised to set high standards for his ministers, yet yesterday he was claiming Smith had done nothing wrong.
As late as this morning Keywas reported as saying if he sacked every Minister who made an error of judgement he wouldn’t have many left. Hardly a way to show his confidence in his own team…
Earlier this week the National government was once again caught fudging figures about ACC. When they took office, they manufactured a financial crisis in ACC in order to justify hiking levies and carving it up for privatisation. The cynical nature of their crisis beat-up was highlighted when just a few months out from an election they suddenly decided ACC was in great shape and the levies should be cut again.
Now it’s been revealled that this year’s Budget, the one in which Nick Smith heralded ACC’s dramatic turnaround, over-stated the savings ACC is supposed to be making. Documents obtained by Radio NZ under the OIA show that the Government ignored warnings from the Labour Department before the Budget that Treasury figures on proposed savings from ACC were too optimistic. The Labour Department predicted savings of $400 million over the next three years, but Treasury said $580 million would be saved.
Nick Smith has been all over the place on ACC figures. One minute it’s having a financial crisis the next he is ignoring Labour Department advice in order to make the Government’s financial position look better than it otherwise might. Nick Smith and National simply cannot be believed when it comes to ACC. There was never a crisis. ACC is an excellent scheme and National should stop trying to sabotage it so that they can make bigger profits for the Aussie insurance industry.
Earlier this year Phil Goff and I accepted a petition signed by almost 6,000 Kiwis concerned about the government’s cuts to compensation to those suffering from work-related hearing loss. Thanks to National, people with hearing impairment are the only group of New Zealanders required by law to demonstrate a particular percentage of disability before rehabilitation will be offered under the ACC scheme.
At yesterday’s Transport and Industrial Relations Select Committee meeting National members voted en-bloc to report back the petition of Louse Carroll and 5857 others to the House without hearing a single piece of evidence. That’s undemocratic and a slap in the face to all those who sought to have their concerns heard by their House of Representatives.
Having actively discriminated against those with hearing loss, the National government is now turning a deaf ear to their concerns. They aren’t even willing to allow them to come to Parliament and have their say. That’s frankly disgraceful. If almost 6,000 people were willing to take the time to sign a petition to Parliament, the least their elected representatives can do is allow them the courtesy of a hearing.
When National took office, they manufactured a financial crisis in ACC in order to cut entitlements and prepare it for privatisation. Nick Smith’s hysterical claims about the financial state of ACC have now been widely discredited, and even Smith himself is now trying to back away from them by claiming a miraculous financial turnaround in just 18 months.
Smith and the National government used the financial crisis to make a number of changes to ACC that undermine some of the central principles behind the scheme. The changes that they made to compensation for victims of work-related hearing loss illustrate it well.
Under National, the guidelines ACC works to when considering hearing loss claims have been changed and ACC now discounts a person’s hearing loss as they get older, regardless of whether or not that loss is age-related. They’ve also set up an arbitrary 6% hearing loss threshold before compensation is considered, regardless of where on the hearing spectrum the loss happened. It’s quite possible to have less than 6% hearing loss and still not be able to hear the person standing next to you in a crowded room.
One of the core principles of the ACC system is that it’s comprehensive, no-fault coverage. Hearing loss is now the only injury/accident where the victim has to meet an injury severity threshold before they’re covered. I’m pleased the Human Rights Commission has agreed to hear the case. The only fair way to deal with hearing loss cases is to deal with each one individually, based on its own merits. That’s how ACC should work.
Nick Smith’s argument in favour of privatising the ACC Work account has already been blown out of the water by the private insurance industry themselves, who openly admit that they can’t offer cover as cheaply as ACC can. This from the Dom Post story:
Vero’s executive general manager of new ventures Nigel Edmiston said his company – which is owned by the Australian SunCorp Group – had done some planning on entering the workplace insurance market but that the Government’s proposal “wasn’t particularly attractive”…
Edmiston said that private insurers would not be able to compete with ACC’s pricing and would prefer it was excised completely from the market.
“[ACC] have a huge market share, they have all the infrastructure and systems, they’ve got no set up costs, they don’t pay tax and they don’t pay dividends and they don’t need capital.”
He said at the outset private insurers would need to provide 80 cents in capital expenses for every dollar gained in premiums on such a product.
In other words, Edmiston is confirming what we’ve said all along. ACC is incredibly efficient and cheap, and it ensures that all of the money collected actually goes into helping those with injuries, rather than into the profit lines of the Aussie insurance industry.
The only way the private insurance industry could compete would be if ACC was excluded, in other words, the cheapest provider was arbitarily shut out of the market. How exactly would that be competition?
This all begs the question, however, of just how enduring Nick Smith’s commitment to his current proposal is. If National win the next election, don’t be surprised to see a more radical proposal for ACC reform suddenly emerge as National claims it has won a ‘mandate’ to do whatever it likes in dismantling our world-leading ACC scheme.
On Wednesday this week, Nick Smith is going to announce what amounts to the effective privatisation of a large part of ACC. You won’t hear the word privatisation uttered from his lips, he’ll use all sorts of other words like ‘competition’ and ‘market discipline’, but the effect will be the same. Accident cover for those injured at work will now be provided by the private, for-profit insurance industry. That’s privatisation.
What concerns me about this most is that the National government haven’t even attempted to produce a robust case to show that it’s a good idea. This is a purely ideological decision, based on National’s blinkered belief that the market will always deliver the most efficient outcome. But consider these facts:
There are only two ways that private insurance companies will be able to turn a profit from offering work-related accident cover in New Zealand. Either they will have to reduce entitlements, or they will have to increase the cost of that cover. In other words, we’ll all end up paying more to get less.
Since National became the government, Nick Smith has gone to some lengths to manufacture a crisis in ACC in order to justify his privatisation plans. As I outline a last week, ACC is in pretty good shape and Smith’s scaremongering is pretty transparent. His moves to massively hike up levies in 2009 were designed to erode public support. If ever we needed proof of how cynical a move that was, we got it a few weeks ago when he started talking about levy cuts just six months out from a general election.
ACC isn’t perfect, but the comprehensive, no-fault, 24/7, universal cover it currently offers is the right approach for us to take. We should be focused on how we can improve what we have now, not how we can create more profit-making opportunities for National’s mates in the private insurance industry.
Over the weekend I blogged about Nick Smith’s manufactured crisis in ACC. National’s agenda is pretty transparent. They’re trying to soften up public support for our excellent accident prevention, compensation and rehabilitation scheme as they prepare to privatise it. Labour will strongly oppose National’s plan to carve up ACC and hand it over to the private insurance industry.
But we’ll also be looking at how we can improve the scheme that we have now, because although we think the system overall is a sound one, we agree that it could be even better. Over the past few months I’ve been meeting with a wide range of ACC stakeholders, from claimants and their advocates through to medical providers and medical assessors.
One of the issues that I’ve become increasingly concerned about is the lack of independence in the specialist medical assessor process. It’s pretty clear to me that ACC have some “tame” medical assessors who are giving them the result that ACC wants, rather than the one that is in the claimant’s best interests.
In some cases, these assessors are working almost exclusively for ACC, making them reluctant to bite the hand that feeds. I’ve also met with specialists who have been all but ‘black listed’ by ACC because they haven’t been willing to give them the assessment results that they want.
So the question I’ve been contemplating is whether we need a bit more independence in the ACC medical assessment process. Should specialist assessors be required to be ‘current practitioners’ in the field they are assessing? Should there be a limit on the proportion of a specialist’s work that can be ACC assessments? Should claimants be given more ‘choice’ over who they go to for specialist assessments?
I’m interested in your views and your stories. Like I said above, I think ACC is a very good system and I’d hate to see it carved up as National want to, but that doesn’t mean I’m not willing to debate how it can be constructively improved.
Just before the Budget Nick Smith announced what he claimed was a major turn-around in ACC’s financial fortunes. Having beaten up ACC’s supposed financial ‘crisis’ since he became the Minister, Smith is suddenly crowing about its financial performance and mooting the concept of levy reductions (could it be an election year…?)
ACC was never in crisis. In fact, ACC was in much better shape when Labour left office in 2008 than it was when National got booted out in 1999. Back then, only 36% of the work account was fully-funded, in other words ACC had an outstanding claims liability for work-related injuries of 64%. By the time Labour left office, that had fallen to 45%.
In 2008, the year the “crisis” was supposed to have happened, ACC collected $3.65 billion in levy revenue and paid out $2.73 billion on claims. The remainder went towards reducing some of that outstanding claims liability.
Looking at the big picture, when National left office in 1999, ACC had $2.5 billion of investments. By the time they came back in 2008, ACC had investments in excess of $12 billion. It’s yet another example of how the Labour Party focused on saving and building up assets for the future, while National’s only plan is to cut stuff.
Nick Smith manufactured a crisis in ACC to soften the public up for changes he knew wouldn’t be popular. He then hiked ACC levies and cut entitlements. Under National, Kiwis pay more for ACC and get less in return. That situation is only going to get worse if they decide to press ahead with their plans to introduce competition (read privatisation) into the ACC work account.
I think ACC is a fantastic system. Undoubtedly there are improvements that can be made, and I’ll talk more about some of those in coming months, but let’s not throw the baby out with the bathwater. We should be proud of our ACC system and National should keep their hands off it.
The Sunday Star Times has reported today that ACC expects the cost of compensation and treatment for those injured in the Christchurch Earthquake to be about $200 million. So far ACC has received 7666 claims, making the February quake the biggest single mass injury event in ACC’s 37-year history.
ACC’s head of injury prevention and insurance products, Peter Wood, said that although the long-term costs to the corporation would be high, they were manageable.
“Obviously additional claims from the Christchurch earthquake will increase costs and ACC funding requirements,” he said.
“However, the overall size of ACC allows for these increased costs to be absorbed with the current levies or funding structure without significant increases being required.”
The costs had to be seen in the context of ACC’s $16 billion in reserves and claims costs each year of more than $3b.
“It is therefore unlikely that the long-term cost of these claims will have an impact on ACC levy rates in the future.”
This highlights once again how crazy the National Party are to try and privatise parts of ACC. As a single, nationalised scheme, ACC is able to absorb the impact of a big event like the Christchurch earthquake without too many problems.
I blogged a couple of weeks ago about the impending collapse of AMI Insurance and how National’s ACC privatisation plans could lead to a similar outcome. I’m not at all surprised that Nick Smith is delaying announcing their preferred options. Carving off a big chunk of ACC and handing it to the private insurance industry right at the time you’re having to bail out one of the big players isn’t a good look in anyone’s book.
Then there is the issue of Nick Smith’s (sensible) move to ensure that victims of the earthquake received cover for the first week of injury if they weren’t able to work. Normally that cost would either have to be met by the employer for a work-related injury, or the individual themselves. Had the government already privatised the ACC work account, they wouldn’t have been able to do this as they would have effectively been instructing a private insurance company to provide cover over and above what the victim was entitled to.
ACC is a good scheme. Sure there are some areas that we’d all like to see improved, but National’s plan to farm it out to the private insurance industry is just nuts. They should go back to the drawing board and leave ACC alone.
It looks increasingly likely that the Kiwi taxpayer is going to have to bail out AMI Insurance in some way or another following the Christchurch earthquake. I think it’s important that those who have insurance with AMI are given certainty, so I support the government’s decision.
But it highlights the risks involved in another National government policy – the privatisation of ACC. Under National’s privatised model of accident cover (they try to dress it up by calling it ‘competition’ but it’s privatisation by any other name) a private accident insurance company, faced with an unforeseen influx of claims due to a disaster such as an earthquake, could find themselves in the same boat as AMI does now.
I asked Nick Smith in Parliament a few weeks ago whether or not the government would guarantee Kiwis that if their private ACC insurance provider collapsed they would still be covered. Naturally he evaded the issue. He had no choice really. If he’d said no, he’d basically be saying that privatisation would mean thousands of New Zealanders could find themselves without cover. If he’s said yes, he’d basically be writing a blank cheque to the insurance industry.
I think there are a lot of Kiwis who are getting pretty fed up with the government having to constantly bail out private companies who rack up massive profits when the going is good and then turn to the taxpayer for assistance when things get a bit tough. Why would we want to replicate the problem in ACC?
NewstalkZB revealed this morning that Nick Smith had asked his officials to begin work on privatising the ACC Work Account before his own ACC stocktake report was even finished. It’s pretty clear that the Nats cooked up a deal to privatise ACC with the private insurance industry before the last election and everything they’ve been doing since then has been leading towards that inevitable outcome.
The documents released clearly show that their blind rush to privatisation could shift even more costs onto other parts of the health system while benefits and entitlements are reduced. In other words, ordinary working Kiwis will pay more to get less. National has already been forced to provide an additional $10 million per year to the health sector to cover the cost of ACC refusing increased numbers of people treatment.
This has nothing to do with getting better outcomes for those who have accidents and everything to do with National’s obsession with creating profit-making opportunities for their mates. Who is going to end up paying? You and me. And if the private insurance companies collapse, the taxpayer will probably end up footing the bill for that too (when HIH insurance collapsed in Australia, the govt picked up a $500 million liability. HIH were one of the companies offering cover under the previous National government’s privatised ACC scheme, which was thankfully stopped by the incoming Labour government in 1999).
New Zealand’s ACC scheme is a world leader. Rather than trying to run it down in order to justify privatisation, the National Government should be looking for ways to improve what we already have. Nobody has been able to find a single alternative system anywhere in the world that offers better outcomes at a cheaper cost.
At the risk of being told that all governments do it, National has really out done itself for the week before Christmas dump of stories you don’t like. Not content with the OIA release that shows that a large chunk of the Hobbit debacle was totally unnecessary and opportunistic, and that Gerry Brownlee called Helen Kelly a liar when he knew that was not fair, we now have confirmation of the privatisation of ACC. Bear in mind Ministers have had this report for six months and have refused OIA requests for it. This is political cynicism at its worst.
Of course there is no chance of getting comment from John Key or Gerry Brownlee because they have already left on their holiday. Mr Key has been unavailable to explain whether he or Murray McCully misled Parliament about the Dalai Lama. Apparently they don’t have phones in Hawaii.
The ACC decision will most definitely be a major political issue. I am more than happy to see the focus go on privatisation and asset sales next year, as it seems that is where National is going. We have rehearsed the arguments around privatisation of ACC before- ordinary New Zealanders will pay more and get less as insurance companies seek to maximise their profits. Our globally well regarded scheme, with lower overheads than private schemes is compromised and we go back to the 90s for no good reason.
Anyway, at least we all know one question for the first question time of next year.
I don’t think so.
Nick Smith has announced he will be implementing a new experience rating scheme under ACC saying that this will bring down our high rates of workplace deaths and injuries. He’d better be sure of that, because hardly anyone else is.
The evidence suggesting that experience rating sends a signal to employers and incentivises safer behaviour is tenuous and unproven at best. Most researchers have been cautious about crediting experience rating for lowering overall actual injury rates. Experience rating can provide an incentive for injury under-reporting and employers are more likely to dispute whether personal injuries are work-related and therefore, contribute to its claims record.
Experience rating is a concept from private insurance where the events to be insured against and the potential size of the losses must be measurable and defined clearly. But workplace health and safety can be complex and responsibility hard to apportion. An experience rating approach assumes that costs can be sheeted home to those who are responsible for them and there is no cross-subsidisation, yet our ACC scheme is based on the principle of ‘community responsibility’, where cross-subsidisation can and does occur because :
Nick’s racing ahead with this, along with his secret “Stocktake” on privatising the work account, even although his officials told him that it would take two years to design an experience rating scheme, and before that more research should be done.
I’m already getting an increased number of ACC cases through my Northcote office due to the changes the government’s made to ACC. I reckon there’s a lot more to come.
As predicted by Labour, it looks like the government is getting ready to privatise areas of ACC.
An interim report from the ACC stocktake working group has said that opening up parts of ACC’s business to competition is workable. Minister Nick Smith was given the report a few days ago, but he’s keeping quiet so far.
National made a deal with ACT that in exchange for support for their last miserly ACC bill, passed recently, the government would open ACC to competition.
Anyone who experienced the disaster the last time ACC was opened up to private insurance companies will be steeling themselves up for a repeat of the terrible experiences of workers, health professionals and even employers.
The only people who benefited from National’s last foray into the privatisation of ACC were Australian financial institutions and the lawyers called in to fight legal battles. One of the major workplace insurance providers, HIH, later collapsed owing $1 billion.
Don’t be fooled by the rhetoric the government will use. What they call “opening up of ACC to competition” is actually “privatisation”.
National sees ACC and workers’ injuries and livelihoods as a tradeable commodity. Labour doesn’t.
We have said we will reverse any privatisation of ACC, but in the meantime, it’s coming our way.
The report from the Transport & Industrial Relations Select Committee on the government’s ACC bill was tabled in the House today. This is the bill that slashes ACC entitlements. I blogged on just one of the provisions recently, and Labour’s media release outlines the other changes.
The protests will continue. The bikers have joined ACC Futures Coalition and will rally outside parliament next Tuesday. Labour and the Greens will fight the bill throughout all parliamentary stages, because it is wrong, wrong, wrong.
The Maori Party have a call to make on this one. Remember, they agreed to support the ACC bill when ACT was refusing to. which gave the numbers to get the bill through first reading. ACT later came to the party, agreeing to support the bill through all stages with a deal to open up ACC’s work account to competition (in other words, privatisation).
The Maori Party said they wanted to let the people to have a say on the bill, and they would listen to the submissions and decide on whether they continued their support.
Rahui Katene said during the first reading that :
“……..We agreed to support the introduction of the bill and its referral to a select committee so that people can express their views. We want to hear about people’s experience with the scheme. Among others, we want to hear from workers and their wh?nau who have suffered an injury, health workers, and providers of rehabilitation services. We do this so that the accident compensation scheme can once again be a world leader; so that it can be affordable, fair, and culturally competent; and so that it can remember always to focus on the best interests of the community.”
Unfortunately, no MP from the Maori Party was at any of the Select Committee hearings to listen to the people, including those representing the 400,000 seasonal and casual workers, many of whom are Maori and the large number of Maori who work in primary industries, where injury rates are high – who will lose big time from this bill.
However, it seems that the Maori Party might have other interests. Katene said during the first reading that :
“There is another dimension to our decision to vote for this bill’s being referred to select committee to let the people have a say on accident compensation, and that is the potential for M?ori entrepreneurship and enterprise to rise to the opportunity for innovation. In 2007 ACC undertook a risk-profile review with groups within the Ng?i Tahu umbrella, resulting in a considerable annual levy reduction. The Federation of M?ori Authorities has also been interested in pursuing dialogue around levy rates and the possibility of a M?ori consortium leading a corporate arrangement with ACC, possibly focusing initially on specific industry sectors such as forestry, fishing, construction, and farming.”
Another big call for the Maori Party. I wonder if this one is a deal-breaker – or indeed if anything is?
Last night Lianne Dalziel and I shared a cab from Parliament to Wellington airport. Nice driver, Chinese migrant and keen to talk about politics.
He told us he voted National last time, but he and his wife are returning to Labour next time! Why? “ACC, growing unemployment and crime.”
Lianne asked him why he changed his vote in 2008 and he said he bought into the idea of ‘It’s time for a change.’ “Big mistake!” His words.
When I arrived in Auckland I asked my Punjabi migrant driver the same question, “Who was he doing to vote for at the next election?”
“Labour!” he said.
Actually he fessed up to always being a Labour voter, but said that many of his fellow Punjabi drivers had changed their vote in 2008, and now were going back to Labour. Again, ACC charges and disillusionment with the current Government.
I know that two taxi drivers is only a very small sample, but I would urge readers to question their driver when they’re next in a taxi to see where the political wind is blowing.
P.S. A message to Cameron Slater. Cameron, you seem to think that as Foreign Affairs Spokesperson I’m “silent” on international issues. I suggest you check my website at carter.org.nz to read some of my releases. My full report on the St Kitts and Nevis general election will be online soon.
Last month when Rahui Katene suggested more public money be put into providing stomach stapling operations as an answer to obesity-related health complications I knew in my gut that it was the wrong message and needed to be challenged.
But I also know a couple of people for whom this type of operation has been extremely beneficial and has extended their life expectancy immensely. As a final option – when all other avenues have been explored – it should be considered.
Today, however, the completely arse-about-face approach to healthcare the National / Act / Maori Party government take has taken a step into the ludicrous.
Reports this morning bemoaning the additional costs to ACC of dancing-related accidents typify the thinking:
Prevention = Bad, Cure = Good
or
Long term plans = Bad, Short-term stats in time for the election = Good
Should we discourage kids from playing sport because they might get injured? Should we not go to the gym because we might pull a muscle? Should we all sit on the couch and watch TV or play Playstation rather than go for a walk as a family?
And having lived that type of lifestyle, will the Government then pick the tab on surgery to make it all OK?
There is no sense whatsoever in taking away the services that teach people to take responsibility for their own health and assist people to make early interventions and then putting more ambulances at the bottom of the cliff.
Earlier in the year John Key sent a letter to every senior citizen in my electorate reiterating his promise to resign if the National-led government cut the rate of superannuation or raised the retirement age. It was a hollow promise. Key knows it’s a promise he will never need to keep because he will be long gone by the time the crunch comes. It will be at least 10-15 years before the real pinch starts, and about 25 years before we feel the full effects of the “baby boomer” retirement. Key’s promise is all the more hollow because he, along with Bill English and the rest of the Cabinet, have cut savings to pay for future superannuation entitlements.
Under Labour, Michael Cullen set up the New Zealand Superannuation Fund and set aside some of the money that we’ll need in the future to pay for Super. Cutting contributions to the fund was one of Bill English’s first moves as Finance Minister. It was a stupid decision. Latest Treasury figures show the fund with higher than forecast returns of the $1.3 billion for the four months to 31 October. That return would have no doubt been higher if more money had been paid into the fund. National argued the cut was necessary due to the recession, ignoring that the best time to invest is when prices are low.
National’s scaremongering over ACC has a similar hollow ring to it. John Key and Nick Smith used the lower returns from the ACC investment funds to justify huge levy hikes and cutting of entitlements. But ACC’s investment funds had returns of $600 million in the four months to 31 October, which like the NZ Super Fund were higher than expected. Week by week, the National Party’s economic track record is looking all the more superficial and lightweight.
