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NZ Herald
June 7, 2000
Cullen backs off ACC promises
by Richard Braddell and Dita de Boni
The Government is backing away from
promising lump sum and pain and suffering payments in a second accident
compensation bill, scheduled to come into force next April.
The Minister for Accident Insurance, Michael Cullen, has said the one-off
payments originally envisaged by Labour would not be as generous as first
thought because both the Government and employers cannot afford them.
Dr Cullen denied the scaling back was a result of efforts to mollify
business.
"What was starting to become clear a few weeks back was that some
possible combinations of changes ... would have been well outside the realms
of possibility both in impact on the Government's costs and on
employers," he said.
One estimate of lump sum payments at pre-1992 levels came to $250 million. At
that time, maximum payments were $17,000 for loss of faculty and $10,000 for
pain and suffering. Recently the Government suggested payouts would go as
high as $100,000 and $15,000 for the respective categories.
Several critics are against an accident compensation system with lump sum
payments, saying the cost of ongoing benefits from the public purse to
accident victims was higher.
Dr Cullen said there was still room for limited lump sums for impairment and
possibly mental incapacity but it was not feasible to provide for events that
might be classified as causing suffering - such as witnessing an accident.
The Government risks being forced to fund extra benefits in its ACC's
non-earners account as well as costs it incurs as an employer. It also does
not want employers to pay more than the average premium rate, set at $1.16
per $100 of payroll for the year to June 2001.
Dr Cullen said the scheme had already given a heavy priority to accident
prevention, with a fourfold increase in expenditure.
But that did not mean lump sum payments under ACC were to be omitted
indefinitely, he said.
"[It] does not mean that other things won't be done further down the
track if they can be fitted into the same framework. But for the second bill,
that rewrites the principle legislation, changes for entitlement will be
dealt with in that kind of cost constraint."
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