Story: Workplace safety and accident compensation

Page 3. Accident compensation

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The system set up by the Workers’ Compensation for Accidents Act 1900 did not cover non-work accidents or motor vehicle injuries, which became increasingly common. It was also often difficult for injured workers to claim compensation if employers and insurers used legal arguments to dispute their obligation to pay. These issues were examined in 1966 by a Royal Commission on Compensation for Injury in New Zealand, headed by Chief Justice Owen Woodhouse. The commission’s report recommended that the state provide 24-hour, no-fault insurance for all personal injury. In return, New Zealanders would give up the right to sue for damages arising from personal injury.

Life experience

 

During the Second World War, Owen Woodhouse commanded torpedo boats and worked with Yugoslav partisans. These experiences gave him first-hand knowledge of the trauma caused by injury and death. Made a Supreme Court judge in 1961, in 1966 he was asked to chair the Royal Commission on Compensation for Injury.

 

These recommendations were supported by both main political parties and given effect by the Accident Compensation Act 1972. This required all taxpayers, employers, self-employed people and motor vehicle owners to pay a levy to a new state agency, the Accident Compensation Commission (later renamed the Accident Compensation Corporation). The amount of the levy on earners was set by the government each year on the basis of the risk of accidents in each industry – a coal miner paid a higher levy than an office worker.

Assistance and levies

In the 2010s anyone who was injured could apply for ACC assistance, regardless of whether they were working at the time of their injury or were to blame for it. If their application was approved and they were working before the accident, they received compensation of 80% of their weekly income – subject to upper and lower limits – while they were unable to earn due to the injury. Treatment and rehabilitation costs were also covered. In 2012/13, 1.7 million people had accident claims accepted by ACC and 76,000 received weekly compensation.

In 2012/13 ACC collected $4.7 billion from all levies. ACC invested this money locally and internationally, and used it to fund accident prevention, accident compensation and accident rehabilitation.

ACC spent part of its income from levies on campaigns to reduce the number of injuries, their severity and cost. Campaigns to reduce workplace injuries have focused on issues such as work-related driving while tired, occupational over-use syndrome (OOS), and hearing loss from loud noise.

Change and criticism

In the 2010s the ACC system continued the basic principles outlined when it was set up, but it has been altered over time. The Accident Rehabilitation and Compensation Insurance Act 1992 introduced experience rating, which based employers’ levies on the amount of previous claims they had made. It also reduced the level of payments for rehabilitation and compensation.

Since its introduction in 1974, the ACC scheme has been criticised at various times by trade unions, politicians and employers. A few ACC claimants have taken advantage of the scheme by continuing to claim compensation when they were capable of resuming paid work. Critics argue that because New Zealanders cannot sue for compensation, there is less incentive to prevent workplace accidents.

ACC’s monopoly on accident compensation has been claimed to be financially inefficient, and critics have questioned whether the government should own an insurance scheme. In 1998 the Accident Insurance Act opened part of the scheme to commercial competition, but this was repealed following a change of government the following year.

An independent evaluation by PriceWaterhouseCoopers in 2007 found that the ACC scheme achieved a level of benefits and performance comparable with Australia and other countries, at a lower cost. Nevertheless, political parties continued to campaign to reform ACC and reintroduce private sector participation in accident compensation insurance.

How to cite this page:

Hazel Armstrong, 'Workplace safety and accident compensation - Accident compensation', Te Ara - the Encyclopedia of New Zealand, http://www.TeAra.govt.nz/en/workplace-safety-and-accident-compensation/page-3 (accessed 22 May 2019)

Story by Hazel Armstrong, published 11 Mar 2010, reviewed & revised 18 Apr 2016