Paul in NZ
22nd October 2009, 18:47
New Zealand is a parliamentary democracy based on the Westminster system. Currently we have an MMP system but interestingly, you have to look at the historical egalitarian ideals of our parents generation. While this can be twisted into a socialist ideal, its not where it grew from. Also, this is a small country, just over 4 million in a country similar to the UK and 2/3 of them live in the north. Delivering services across a sparsely populated hinterland has always been a challenge but up until the 70’s the theory was that no matter where you live, the service costs the same. (health, phone etc) Yes, this favoured the rural community but that’s what generated the wealth.
In 1900 New Zealand followed the example set by Bismarck in Germany 12 years earlier, and introduced a ‘no fault’ workers compensation system. The Worker’s Compensation Act lasted (with some changes) until 1974, and provided injured workers with weekly benefits and, in case of death, compensation for dependents.
The Act required that employers take out insurance to cover themselves for injuries to employees. Benefits provided by the Act were small and could only be paid for six years from the date of injury. Injured workers also had the right to sue an employer for negligence.
The Act didn’t cover non-work injury, or motor vehicle injury.
In 1928, under the Motor Vehicles Insurance (Third Parties Risk) Act, a compulsory third party motor vehicle accident insurance scheme was introduced. The scheme made sure that the victims of motor vehicle accidents could claim damages for personal injury.
1967: Woodhouse Commission recommendations
The Woodhouse Commission recommended a ‘no-fault’ accident compensation scheme
In 1967, as a result of complaints about the inadequacy of workers’ compensation benefits, a Royal Commission was established to report on workers’ compensation. The commission produced the well-known Woodhouse Report, named for its chairman Mr Justice Woodhouse (now the Right Honourable Sir Owen Woodhouse).
The report recommended a completely new ‘no-fault’ approach to compensation for personal injury. It recommended a scheme to cover:
• all motor vehicle injuries, funded by a levy on owners of motor vehicles and drivers
• all injuries to earners whether occurring at work or not, funded by a flat-rate levy on employers for the cost of all injuries to their employees. A levy on the self-employed to pay for injuries occurring at work or outside of work was also proposed.
Employers would have to pay a compulsory levy for injuries to employees, but they would also be protected from being sued for damages. The right to sue for motor vehicle injuries and non-work injuries to earners would also be removed.
The report recommended that the scheme be based on five basic principles:
1. Community responsibility
2. Comprehensive entitlement
3. Complete rehabilitation
4. Real compensation
5. Administrative efficiency.
‘Injury arising from accident demands an attack on three fronts. The most important is obviously prevention. Next in importance is the obligation to rehabilitate the injured. Thirdly, there is the duty to compensate them for their losses.’ ~ Sir Owen Woodhouse in the 1967 Royal Commission report from which the ACC scheme was born.
1974: ACC up and running
Accident Compensation Commission up and running
The accident compensation scheme came into operation on 1 April 1974 under the administration of the newly established Accident Compensation Commission (ACC). The Accident Compensation Act 1972, and the 1973 Amendment to that Act, defined ACC’s operation.
The 1972 Parliament voted unanimously to pass the Bill into law. The Act covered injuries to earners (both work and non-work injuries) and motor vehicle injuries. The Labour Government came into power later that year, and in 1973 passed an Amendment to the Act providing cover for those not already covered by the 1972 Act (including students, non-earners and visitors to New Zealand).
Three schemes were established under the 1973 Act:
• the earners’ scheme, funded from levies paid by employers on wages paid to employees, and paid by self-employed people
• the motor vehicle accident scheme, funded by levies paid by owners of motor vehicles
• the supplementary scheme, covering those not covered by the earners’ or motor vehicle accident scheme. The Government funded this scheme.
Under the Act, ACC benefits included:
• hospital and medical expenses
• rehabilitation costs
• associated transport costs
• earnings-related compensation (payable from the seventh day after the accident at a rate of 80 percent of average weekly earnings before the accident)
• lump sum payments for permanent loss or impairment
• lump sum payments (up to a maximum of $10,000) for pain and mental suffering
• funeral costs and lump sum payments to surviving spouses and children in cases of accidental death.
1979 – 1982: Reducing costs
Reducing the cost of the scheme and improving its administration
By 1979 there was growing dissatisfaction with the overall cost of the scheme, and employers had become increasingly vocal about paying the cost of non-work claims. The government established a Cabinet caucus committee chaired by the Hon Derek Quigley to review the accident compensation scheme.
The recommendations made by the Quigley committee included:
• the claimant should pay part of the cost of the first two visits to the doctor (they could recover this from the employer in the case of a work accident)
• the pause period for earnings-related compensation should be extended from one week to two weeks for non-work accidents (for work accidents the employer would pay compensation for the first two weeks)
• lump sum payments should be abolished, except for serious cosmetic disfigurement
• the levy system and the levy collection method should be reviewed.
As a result of the Quigley committee proposals, substantial changes were made to the Accident Compensation Act in 1982. More than 60 sections of the 1972 Act were deleted. The changes made included:
• moving the funding structure from ‘fully’ funded to ‘pay-as-you-go’ funding
• reducing employers’ obligations for providing weekly compensation from 100 percent to 80 percent for first week following a work accident
• joining the three ‘schemes’ into a single scheme (which continued to be funded from the three levy sources)
• moving work-related motor vehicle accidents from the earners’ account to the motor vehicle accident account
• increasing the maximum amount payable for permanent loss or impairment from $7,000 to $17,000 (maximum payable for pain and suffering remained at $10,000).
1986 – 1990: More reviews
More reviews to the scheme
In 1986 a review of the scheme was undertaken. A committee was set up of representatives from ACC, the Department of Social Welfare, the Department of Labour, the Department of Health, and Treasury. The Officials Committee report, published in 1987, placed particular emphasis on the disparity between New Zealand's treatment of accident victims and the illness-disabled. Numerous other social policy reviews were also under way at this time.
In 1900 New Zealand followed the example set by Bismarck in Germany 12 years earlier, and introduced a ‘no fault’ workers compensation system. The Worker’s Compensation Act lasted (with some changes) until 1974, and provided injured workers with weekly benefits and, in case of death, compensation for dependents.
The Act required that employers take out insurance to cover themselves for injuries to employees. Benefits provided by the Act were small and could only be paid for six years from the date of injury. Injured workers also had the right to sue an employer for negligence.
The Act didn’t cover non-work injury, or motor vehicle injury.
In 1928, under the Motor Vehicles Insurance (Third Parties Risk) Act, a compulsory third party motor vehicle accident insurance scheme was introduced. The scheme made sure that the victims of motor vehicle accidents could claim damages for personal injury.
1967: Woodhouse Commission recommendations
The Woodhouse Commission recommended a ‘no-fault’ accident compensation scheme
In 1967, as a result of complaints about the inadequacy of workers’ compensation benefits, a Royal Commission was established to report on workers’ compensation. The commission produced the well-known Woodhouse Report, named for its chairman Mr Justice Woodhouse (now the Right Honourable Sir Owen Woodhouse).
The report recommended a completely new ‘no-fault’ approach to compensation for personal injury. It recommended a scheme to cover:
• all motor vehicle injuries, funded by a levy on owners of motor vehicles and drivers
• all injuries to earners whether occurring at work or not, funded by a flat-rate levy on employers for the cost of all injuries to their employees. A levy on the self-employed to pay for injuries occurring at work or outside of work was also proposed.
Employers would have to pay a compulsory levy for injuries to employees, but they would also be protected from being sued for damages. The right to sue for motor vehicle injuries and non-work injuries to earners would also be removed.
The report recommended that the scheme be based on five basic principles:
1. Community responsibility
2. Comprehensive entitlement
3. Complete rehabilitation
4. Real compensation
5. Administrative efficiency.
‘Injury arising from accident demands an attack on three fronts. The most important is obviously prevention. Next in importance is the obligation to rehabilitate the injured. Thirdly, there is the duty to compensate them for their losses.’ ~ Sir Owen Woodhouse in the 1967 Royal Commission report from which the ACC scheme was born.
1974: ACC up and running
Accident Compensation Commission up and running
The accident compensation scheme came into operation on 1 April 1974 under the administration of the newly established Accident Compensation Commission (ACC). The Accident Compensation Act 1972, and the 1973 Amendment to that Act, defined ACC’s operation.
The 1972 Parliament voted unanimously to pass the Bill into law. The Act covered injuries to earners (both work and non-work injuries) and motor vehicle injuries. The Labour Government came into power later that year, and in 1973 passed an Amendment to the Act providing cover for those not already covered by the 1972 Act (including students, non-earners and visitors to New Zealand).
Three schemes were established under the 1973 Act:
• the earners’ scheme, funded from levies paid by employers on wages paid to employees, and paid by self-employed people
• the motor vehicle accident scheme, funded by levies paid by owners of motor vehicles
• the supplementary scheme, covering those not covered by the earners’ or motor vehicle accident scheme. The Government funded this scheme.
Under the Act, ACC benefits included:
• hospital and medical expenses
• rehabilitation costs
• associated transport costs
• earnings-related compensation (payable from the seventh day after the accident at a rate of 80 percent of average weekly earnings before the accident)
• lump sum payments for permanent loss or impairment
• lump sum payments (up to a maximum of $10,000) for pain and mental suffering
• funeral costs and lump sum payments to surviving spouses and children in cases of accidental death.
1979 – 1982: Reducing costs
Reducing the cost of the scheme and improving its administration
By 1979 there was growing dissatisfaction with the overall cost of the scheme, and employers had become increasingly vocal about paying the cost of non-work claims. The government established a Cabinet caucus committee chaired by the Hon Derek Quigley to review the accident compensation scheme.
The recommendations made by the Quigley committee included:
• the claimant should pay part of the cost of the first two visits to the doctor (they could recover this from the employer in the case of a work accident)
• the pause period for earnings-related compensation should be extended from one week to two weeks for non-work accidents (for work accidents the employer would pay compensation for the first two weeks)
• lump sum payments should be abolished, except for serious cosmetic disfigurement
• the levy system and the levy collection method should be reviewed.
As a result of the Quigley committee proposals, substantial changes were made to the Accident Compensation Act in 1982. More than 60 sections of the 1972 Act were deleted. The changes made included:
• moving the funding structure from ‘fully’ funded to ‘pay-as-you-go’ funding
• reducing employers’ obligations for providing weekly compensation from 100 percent to 80 percent for first week following a work accident
• joining the three ‘schemes’ into a single scheme (which continued to be funded from the three levy sources)
• moving work-related motor vehicle accidents from the earners’ account to the motor vehicle accident account
• increasing the maximum amount payable for permanent loss or impairment from $7,000 to $17,000 (maximum payable for pain and suffering remained at $10,000).
1986 – 1990: More reviews
More reviews to the scheme
In 1986 a review of the scheme was undertaken. A committee was set up of representatives from ACC, the Department of Social Welfare, the Department of Labour, the Department of Health, and Treasury. The Officials Committee report, published in 1987, placed particular emphasis on the disparity between New Zealand's treatment of accident victims and the illness-disabled. Numerous other social policy reviews were also under way at this time.