ACC minister Nick Smith is ruling out a return to the "right to sue" as the Government looks to curb accident compensation entitlements after a cost blowout. The Government has ordered a review of entitlements after the scheme's costs grew from $1.4 billion a year to $3.2 billion during the past eight years.
It says that to pay for the cost increases, charges such as motor vehicle registration and payroll levies, will have to rise to levels unacceptable to the average worker or vehicle owner.
The extra costs include entitlements added by the last government, including lump-sum compensation, allowing claims for mental stress and trauma, free physiotherapy and widening the grounds for compensation from medical misadventure. They are now all under review.
Dr Smith said yesterday that the Government was committed to a "24-7" scheme of universal accident compensation and he did not accept that taking a responsible approach to costs would undermine its basic principles. But he wanted a scheme that did better, including in its core task of rehabilitation. There had been a steady deterioration in success rates. "People who have had accidents are not being successfully rehabilitated back into the workforce."
Paul Jarvie, the Northern Employers and Manufacturers Association occupational health and safety manager, said yesterday that the Government would have to either keep a no-fault compensation scheme with entitlements about the present level "or we'll go back to a litigation free-for-all where the only winners are lawyers and doctors".
But he said the previous government was to blame for "slow socialisation" of the scheme and it should be opened up to competition.
Dr Smith said ACC had grown to the extent that it rivalled Telecom, Fletchers and Fonterra in terms of turnover. But it was unrealistic to expect to trim costs substantially. His priority would be to peg back further cost increases. "I want to bring the cost increases down to a level that's more acceptable. I'm realistic that it is unlikely there will be any reduction in the budget. Rather, it's about stopping increases."
