National confirms ACC privatisation plans

National’s plan announced today to privatise ACC will result in New Zealanders having to pay more to get less, says Labour’s ACC spokesperson Chris Hipkins.

“Independent studies have demonstrated very clearly that ACC has lower administrative costs than any comparable scheme around the world,” Chris Hipkins said. “The only way the private insurance industry will make money from taking on ACC’s role will be by reducing entitlement or increasing costs. Either way, Kiwis will lose.

“ACC Minister Nick Smith is trying to dress up National’s plans by using words like ‘competition’, but the reality is that the announcement he has made today amounts to privatisation, plain and simple. It’s yet another example of National carving up our public services and public assets to create profit-making opportunities for their mates.

“Since coming to office National has deliberately talked up a crisis in ACC and done its very best to erode public confidence in what should be a world-leading scheme,” Chris Hipkins said. “Its agenda all along has been to soften Kiwis up to privatising ACC.

“This is a purely ideological decision, as clearly shown when Nick Smith asked his officials to begin work on privatisation before his own stocktake had even been finished.

“There are big risks to Kiwis in privatising ACC, and the Christchurch earthquake has already highlighted two of them,” Chris Hipkins said.

“After the earthquake the Government directed ACC to provide income compensation for the first week of injury for those unable to work as a result of injury. Normally that cost would fall on the employer and the government wouldn’t have been able to take this step if ACC cover had already been privatised.

“The second big risk to the taxpayer relates to provider failure and ultimately collapse. Last time National tried to privatise ACC, one major cover provider was Australian firm HIH. Not long after the incoming Labour government had reversed National’s experiment, HIH collapsed leaving the Aussie taxpayer to pick up a tab of over $500 million.

“AMI’s financial troubles following the earthquakes also highlight how at risk we could be if an insurance company providing ACC cover collapses,” Chris Hipkins said.

“Labour will steadfastly oppose National’s ACC privatisation plans, and we extend a word of warning to the private insurance industry. We’ve reversed National’s ideologically driven ACC privatization plans before, and we will do it again. Insurance companies will invest in providing ACC cover at their own risk.”