21 Dec 2010

Labour and unions accuse Govt of privatising ACC

9:42 pm on 21 December 2010

The Labour Party and the Council of Trade Unions (CTU) say the Government is effectively privatising ACC with its decision to open up workplace insurance coverage to competition.

The Government announced on Tuesday that, while it will not legislate for the change until after the next election, it has decided in principle to allow employers to choose their own workplace insurance provider.

CTU president Helen Kelly says that approach led to a reduction of entitlements and more claims being denied in the late 1990s. She says the ACC scheme is world-class and should be protected.

Labour's ACC spokesperson, David Parker, says privatisation will mean either that costs rise or that entitlements are cut. He says insurers will cherry-pick the profitable business and leave risky companies to ACC.

The Insurance Council, however, has welcomed the move, with chief executive Chris Ryan saying competition will provide the initiative to make workplaces safer.

He says the change will open up new business for insurers, though he has no objection to ACC staying in the market.

It'll bring levies down, says minister

Announcing the reform, ACC Minister Nick Smith said it would bring levies down and put pressure on ACC to provide effective and efficient coverage.

Reform is needed, he says, to provide incentives for workplace safety, improve services for claimants and keep levies affordable. He says it's aimed at promoting greater choice and contestability, while also being pragmatic.

Dr Smith also announced that from next year ACC will introduce a new risk-rating system for companies, allowing those with a low accident rate to pay up to 50% less.

He says there will be no increase in workplace, motor vehicle and earner levies in 2011.

Dr Smith says he declined recommendations by ACC for further levy increases because he does not want to add to the financial pressures on households and businesses.

The Government will consult on the detail of the changes, which ACT leader Rodney Hide says reflect agreements between his party and National.