National has issued yet another announcement starkly warning of dark days at ACC. Is it really that bad? Really?
It’s scarcely subtle. Since taking office, National ministers have led a string of announcements hinting at ACC’s dire prospects. Unforeseen fiscal blowouts are imminent. The scheme’s unsustainability is suddenly apparent. And there can only be one solution—the free market!
The jarring disconnect—which hints at the great con-job being undertaken—is why would the private sector want to touch something that is so costly and is losing so much money? Because ACC is, in fact, highly efficient and effective, certainly much more so than private comparisons. It is a market which private insurers are desperate to get into because there is some serious money to be made.
The Accident Compensation Corporation is, of course, facing somewhat tougher times because of massive hits to its investments. Like all investment funds, the last 12 months have seen the biggest loss of value in living memory. Anyone with a decent exposure to equities has taken a pounding. So too property. If ACC hadn’t taken a massive hit, we should be calling in the Serious Fraud Office to find out exactly how they avoided it.
But assuming the world economy is going to rebound some day, so too will ACC’s assets, and so too will its ability to fund its liabilities. At the moment it’s facing a paper shortfall. In time—perhaps five years—that shortfall will have disappeared as its assets regain value and new investments perform well.
National likes to attack the Left for having an ideological attachment to ACC. The Left has an ideological attachment to social justice. If the private, free market had been able to provide anything remotely approaching the level of cover at the level of efficiency that ACC does, ACC would never have been invented. It was put in place to correct a glaring failure of the free market, and it is envied around the world—at least in places where social justice is valued.
National’s opposition to a public health insurance system isn’t ideological. It’s just greedy. Guzzling-snout-in-trough-pig-greedy. National’s insurance company mates want a piece of the action, and they give the National Party significant funding to assist it to win elections so ACC’s fatted cow can be offered up.
What’s especially tragic is that if ACC is so bloated, so inefficient, so dirigiste, surely National would do the decent thing and provide some serious evidence for it? Something beyond a ministerial press statement, surely? Where is the serious academic literature showing that it is failing in its responsibilities and doing so in a way that presents society with poor fiscal and social outcomes? Where is the rejoinder to Sir Owen Woodhouse’s landmark Royal Commission report?
Do we want to return to the status quo? Prior to ACC’s no-fault, comprehensive insurance scheme, we relied on the free market and the law courts. Many studies have demonstrated that the tort system is not only slower to provide compensation than no-fault but also tends to overcompensate small losses and under-compensate large losses.
Furthermore, the problem with undermining the comprehensive nature of ACC is that National and its private insurance mates will cherry-pick those parts of the scheme where they see the most profit, leaving the less economic areas to the ACC. As ACC’s rump struggles to cope with those morsels left to it, the government will find good reason to make further cuts to the level of cover provided.
For those doubters, go and study the United States. There the mighty free market rules. Sure, a few individuals strike it big in the courts with multi-million dollar law suits. But those that get really rich are the insurers and the tort lawyers. Tort lawyers are often cited as the US’ most despised profession. And National wants to return us to that. Spare us.
The speed at which the announcements are coming hints at swift action. What price a piece of ACC being auctioned off after the Budget?