ACC's unresolved policy paradox
Colin James's column for the Otago Daily Times for 19 June 2012
A nervy cabinet needs a "culture change" at ACC: three board members and the chief executive gone in a flash. The minister is in charge -- well, for the good bits.
Beware working for a jumpy government: a minister's ego can bruise easily. Then it's ego 1, you nil.
Actually, Ralph Stewart's much more communicative leadership of staff had been changing the culture. He was collateral damage.
So, too, is staff morale. Inducting new bosses will set the corporation back maybe a year or so. And it won't resolve ACC's policy paradox (about which more below).
Assembling Steven Joyce's Moby Dick superministry is similarly destabilising, even given David Smol's adroit and swift transition -- right when economic development policy needs reworking for a post-GFC world. So, too, at the Ministry of Foreign Affairs, where morale is so low that four of its staff are bidding for a part-time private sector job -- just when, to navigate turbulent global currents, steady nerves and high intelligence are needed in external policy.
Is this the leadership John Key promised in November? This year he has run the gamut from fast retreats (example: class sizes) to obduracy (examples: a rough truncation of select committee examination of the asset selldown bill to pass it while John Banks can still vote and specious rejection of two reports urging pre-emptive action on the 2020s superannuation blowout).
The Reserve Bank hasn't helped Key by reckoning the target on which his ministry stakes its credibility -- a budget surplus in 2014-15 -- is out of reach. Nor does the Euromess help: is it time for Bill English and Alan Bollard to emulate their British counterparts and build a big contingency plan?
Public opinion, societal change and hard fiscal numbers will sort out superannuation. The tide is running. National just has to work out how to get Key off the bank and on the tide while saving face. One possibility: a binding referendum. The Treasury is exploring others. (Peter Dunne also, sort of.)
ACC will not readily sort out. That is because it straddles a policy paradox that conflates two notions.
The origin of ACC was not a politician's solution to a defect in social arrangements. It was a lawyer's solution to a defect in the law.
The tort of accident developed through case law into a tangle between lawyers, often representing insurance companies, as to who, if anybody, should pay the injured person and how much. The legal fight often didn't leave much for the injured person.
The 1967 Royal Commission fixed that legal defect by proposing a no-fault scheme: the state should take over from insurance companies the injured person's "compensation". That proposition stunned the National government of the time and it took six years, a select committee inquiry and a change of government to be implemented.
It is admired internationally.
But it is in concept an insurance scheme. And it is unfair: ACC income support for accident-generated disability is far greater than social security support for illness-generated disability.
So social-security-minded left-leaning governments have bent the boundary between accident and illness to entitle more people to the higher payout. Those governments' focus is on fairness for the disabled people.
Right-leaning governments focus more on the levies business, car owners and wage-earners pay. The current government instructed the board to tighten the boundary and to get tougher with those who still qualified. In doing that, ministers were acting exactly as insurance companies do: trying not to pay out where practicable and legal. Keeping payouts down is how insurance companies make profits. That is how accountant John Judge reined in outgoings.
That ran into the Bronwyn Pullar/Michelle Boag objection to practices drive by a non-payout culture and a string of extraordinary events that ended four careers last week and damaged a minister.
The Judge line also illustrated the difference between "results" and "outcomes". Pushing people into any job, no matter how niggardly the pay, is a "result" (lower levies). Supporting them through to a reasonable job on which they would pay a reasonable amount of tax, would be an "outcome" (truly rehabilitated people and a less emaciated Exchequer), which in turn would fit the "better public services" line the government says it backs.
The only lasting way to stop this seesaw -- right-leaning governments and business seeing ACC as insurance and left-leaning governments and most of the public assuming it is social security -- is somehow to marry ACC with social security. (One wild idea: put both on earnings-related benefits which then decline over time to a standard benefit.)
That would be politicians remedying a defect in social arrangements. But it is much less taxing on ministerial brains and political courage to push the seesaw up-down-up-down as governments alternate.
Meantime, while the ACC paradox persists ministers will get antsy from time to time. As Judith Collins did last week.