[Solvent]

I don't currently have the motivation to engage properly in this debate, but I am curious whether many here have read much of the academic literature surrounding the privatisation of ACC?

Originally Posted by Andrew Stritch, Bishop's University, Quebec

Other than conventional assertions about the inevitable superiority of the private sector over the public sector, the insurance industry's case for greater efficiency and lower costs cannot overcome two obstacles. The first is that ACC's administrative costs are recognised to be lower than in a multi-insurer environment largely because of the extra expenses associated with competition. Second, the move from pay-as-you-go (PAYG) to full funding, which is a prerequisite for privatisation, will impose substantial cost increases on the system and will be reflected in higher than necessary premiums for employers and individuals. Full funding is essential for private insurance companies, but is redundant for a government agency such as ACC where the legitimate use of public authority ensures that commitments to accident victims will be honoured. ACC can operate on a financially sound basis with lower costs and lower premiums than the private sector, thanks to PAYG. Industry scaremongering about "unfunded liabilities" is simply an inappropriate application of a private insurance concept to the public sector where it is irrelevant.

In sum, privatisation would result in a system characterised by higher costs and/or lower benefits, where workers are vulnerable to choices made by their employers, and employers are vulnerable to choices made by insurance companies. Cross-subsidies would not be eliminated; there is little evidence that safety would be improved; and the resulting system could be a lot less fair to certain segments of society such as non-earners, general taxpayers, small businesses and victims of occupational diseases. Whatever the alleged benefits of privatisation in other sectors of the New Zealand economy, in accident compensation the consequences would be overwhelmingly negative.