Heather Roy's Diary
Bold Reform Or Nervous Tinkering?
Two recess week announcements made the headlines this week which give a steer as to the direction of a National-led government post November 26. On Tuesday State Sector Reforms were announced and on Wednesday a move towards private sector involvement in ACC was proposed. Both have potential to cut costs and gain efficiencies, but how effective are they really likely to be?
A government discussion document on ACC was released on Wednesday. The proposals include allowing choice of workplace insurance cover for employers from October 2012 and extending the Accredited Employer Programme (AEP) from April next year.
For a brief period in 1998 the work account was opened up to competition by the then National Government. Although only in place for nine months the early indications were that the numbers of injuries in the workplace were dropping and prices for most employer categories were lower than in the non-competitive environment. ACT was instrumental in pushing for competition in 1998 and again for this current proposal of greater employer choice.
The Accredited Employer Programme was introduced in 1996. Current experience shows the AEP delivers 12 percent fewer claims and lower costs of 15 percent. Strong financial incentives and involvement by employers in rehabilitation has resulted in a commitment to workplace safety. Programmes that incentivise employers in this way benefit workers and employers alike and should be encouraged. ACT is very pleased with the proposal to extend this programme.
Missing however from the talk of improving ACC is fairness. The artificial barrier that drives a wedge between illness and injury is no closer to being dealt with. Those eligible for payments because they have an accident will continue to be advantaged over those who suffer illness, even if the symptoms and outcomes are the same. I would have hoped we could have a real discussion this election about fixing this inequity. An insurance based health scheme which deals with conditions and needs regardless of how they are acquired would have been a good starting point.
State Sector Reform has been on the agenda since last election. Finance Minister Bill English announced on Tuesday the formation of the Better Public Services Advisory Group to investigate a number of proposals in order to achieve better value-for-money, innovation and high-quality service provision within the public sector.
Mr English noted that "New Zealand currently has 39 government departments, over 150 Crown entities of various types, not including school boards of trustees, and more than 200 other agencies” and "With the Government committed to returning to budget surplus in 2014/15, change in the state sector now needs to pick up momentum. This is about identifying the things that matter most to New Zealanders, doing them better and doing them with less back-office bureaucracy”.
There are seven proposals including: disestablishing the Crown Health Financing Agency, the Health Act Boards of Appeal, the Maritime Appeal Authority and the Land Valuation Tribunal; and transferring the functions of the Charities Commission to the Department of Internal Affairs. Consolidation of the audio-visual archiving by the New Zealand Film Archive, Radio New Zealand and Television New Zealand is also planned. The Education Review Office and the New Zealand Qualifications Authority would be merged into a single agency.
The full list of proposals can be found at http://www.beehive.govt.nz/release/government-reviews-more-state-agencies
It all sounds like movement in the right direction but has the look about it of tackling the easy areas first, as opposed to any overall vision of how New Zealand should look in two generations time or a plan of how to get there. Some would conclude this to be tinkering around the edges.
When it comes to State Sector reform government needs to show leadership. If smaller government is the aim – and I sincerely hope it is – then leadership by example would be wise. The 1999 referendum on reducing the size of Parliament to 99 MPs has been ignored, despite the support of 81% of voters, but would be a sensible first step in reducing the size of the bureaucracy, especially for a country with a little over 4 million people. A longer electoral cycle would help government plan more effectively too – but that’s another whole ball game.
Lest We Forget - 1 June 1941, The end of the Battle of Crete
The Battle of Crete is a significant part of New Zealand’s military history. The battle began on 20 May 1941, when Germany launched an airborne invasion of Crete. After the first day of fighting, the Germans had suffered heavy casualties with none of their objectives achieved. The following day Maleme airfield fell to the Germans due to miscommunication and the failure of Allied commanders to grasp the situation. The Germans flew in reinforcements and overwhelmed the defenders. The battle lasted for 10 days.
The Battle of Crete was unprecedented in three respects: it was the first mainly airborne invasion in military history and the first battle where “parachute rangers” were used on a large scale; the first time the Allies made significant use of intelligence from the deciphered German Enigma code; and the first time invading German troops encountered mass resistance from a civilian population.
Greek and Allied forces, along with Cretan civilians, defended the island. Greek forces consisted of approximately 9,000 troops. The British Commonwealth contingent consisted of 14,000 British troops and another 25,000 Commonwealth troops evacuated from the mainland – the New Zealand 2nd Division (without 6th Brigade and division headquarters), the Australian 19th Brigade Group and the British 14th Infantry Brigade.
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ACT Welcomes ACC Recommendations
ACT New Zealand is welcoming today’s release by ACC Minister Nick Smith of a discussion document on reforms to ACC.
Parliamentary Leader John Boscawen says the proposals contained in the document are clearly in line with ACT’s policy of restoring choice and competition to the area of accident cover.
“We are especially pleased at the proposal to allow employers the right to choose private insurers over ACC for workplace cover from October next year,” says Mr Boscawen.
“The previous Labour Government’s overturning of this right was one of the darker deeds of that dark administration, and National’s tardiness in righting the wrong has been a bone of contention between us. We would urge Dr Smith to consider extending this proposal to all ACC accounts, not just the workplace.
“We are also delighted at the proposal to extend the Accredited Employer Programme from April next year. The AEP has enabled accredited employers to assume responsibility themselves for the direct cost of injuries and management of claims in return for a lower levy. It has already been highly effective in reducing the number of claims and costs of treatment.
“We would urge the government to give these proposals most favourable consideration,” Mr Boscawen concludes.
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ACT Leader Welcomes Moves To Introduce Competition To ACC
ACT Leader Rodney Hide today welcomed the release of the Stocktake Report and Financial Condition Report on ACC and the agreement in principle by the Government to provide employers with competition and choice in purchasing workplace insurance.
“This decision reflects the September 2009 agreement reached between ACT and National to work towards opening the ACC 'Work Account' to competition,” said Mr Hide.
“The Stocktake Report concluded that competitive private delivery of the ACC scheme is necessary to improve the financial performance of ACC, provide better incentives to reduce accident rates, and remove the risk from employers and other levy payers of further levies in future to meet the costs of unfunded liabilities.
"The case for competition is overwhelming and it is pleasing to see that progress is being made,” said Mr Hide.
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The Benefits Of Opening ACC To Competition
The Injury Prevention, Rehabilitation and compensation Amendment Bill does not reform ACC. This Bill keeps ACC in its current form, continues to fund ACC through compulsory levies, and does not apply ongoing commercial pressure to its operation.
All it does is manage the payout system a little differently – it stops those who harm themselves on purpose from getting payouts, it stops criminals who injure themselves while breaking into someone’s house from getting payouts. In reality, there is nothing of substance in this Bill – it’s the same kind of management of ACC that Labour undertook, except, as opposed to expanding entitlements, it is reducing them.
Nothing in this Bill deals with the fact that, from its inception, ACC was a flawed pyramid scheme. In the beginning, it operated on a pay-as-you-go basis. That meant that for many years, it seemed cheap, as the full cost was not apparent – all of those with long term injuries were not yet making claims. Unfortunately, those years of low cost also saw the entitlements expand – so that by the time the system had absorbed all those with long term injuries, and covered the expanded entitlements, it suddenly seemed to cost an awful lot.
These problems are set to get worse. We have an aging society. An aging society implies not only more payouts, but also a lower proportion of people paying levies to cover the Non-Work Account. Because it is a Ponzi scheme, it will require ever-expanding numbers of people working to pay the levies.
To their credit, Labour realised this was a problem. They realised that operating ACC on a pay-as-you-go basis was not viable when you have an aging society. That is why Labour announced that the scheme would be fully funded by 2014.
Unfortunately, they also undertook a massive expansion of the entitlements under the scheme, meaning that despite their promises to have the scheme fully funded, the unfunded liability has in fact expanded - its unfunded liability now stands at $13 billion – up $5 billion in just the past year.
If any private insurance company had the books that ACC has, they would be declared bankrupt. The only reason that ACC is still solvent is that it has the capacity to increase levies. In essence, it is solvent because it can force people to cover its costs.
The only viable way to ensure that ACC delivers results for reasonable prices is if it is open to competition. If people can get cheaper rates elsewhere, they should be allowed to leave. If that means risky workplaces start paying higher premiums, so be it – it will encourage them to improve workplace safety.
The benefits of competition become apparent when you listen to the nonsense peddled by Labour in their opposition to it. The first thing Labour will tell you is that costs will increase, because we now have to pay for the profit margin of private companies. Well, the facts speak otherwise. The last time competition was introduced, premiums declined by around 30 percent. The argument that profit margins lead to higher prices is absurd – by that logic, the Labour party would nationalise everything.
The second thing Labour says is that premiums were only lower because they offered cheap rates as loss-leaders. Well, that’s very interesting. A private insurance company has to have their books signed off by an actuary, and that actuary has to say that the income in one year will cover the full cost of all accidents arising in that year. Labour, on the other hand, oversaw a scheme that was meant to be moving towards full-funding, and yet their unfunded liability moved in the other direction and actually expanded. So, who shall we trust – the expert actuary or the Labour party?
The system needs to be fully funded. But should it be open to competition?
Well, look at it this way. Every single monopoly – be it in forestry, shipping, or coal mining, has always delivered more for less when it has been opened to competition. There is no reason to think ACC will be different.
In fact, it is even more important to open ACC to competition. Currently, ACC sets a flat rate levy based on the risk in an industry. Those employers which have safe environments subsidise those who have unsafe environments. There is little commercial incentive to create safer workplaces.
By keeping ACC as a monopoly, and not properly allowing risk pricing to emerge, we are in fact increasing the number of workplace accidents. In the private market we have insurance excesses, we have no claims bonuses, we have risk-based premiums. The private market is all about mitigating risk. ACC, on the other hand, is about forcing the good employers to subsidise the bad ones.
That is why, last time it was opened to competition, costs not only decreased, but so did the number of accidents.
Those that oppose competition in ACC are not just wasting taxpayers’ money – they are also ensuring that more people suffer accidents in the workplace.
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ACC Choice To Cut Costs For All New Zealanders
All New Zealanders stand to benefit from the lower ACC charges that choice will guarantee, ACT Leader Rodney Hide said today.
Mr Hide was welcoming the Government’s agreement to work with ACT to open the ACC Work Account to competition.
“We will all benefit from the improved quality of service, innovation and lower costs that flow from greater choice and competition,” Mr Hide said. “Everyone gains from choice. People who can get a better deal will do so.
“The decision reflects the long-standing commitment of ACT to the principle of choice and competition in the provision of social services, including ACC.
“People should have a choice of insurance provider for work-related accidents in the same way that they have a choice for their home and car insurance. We are enabling people to assess the costs and benefits for themselves and make their own decisions.
“Significant changes are needed to sustain ACC. That’s been clear since the Government became aware of the serious and undisclosed financial condition of the scheme.
“The successful experience with the limited opening up of the ACC Work Account to competition between 1998 and 2000 provides confidence that this is the way to go.”
Mr Hide said ACT would be supporting the ACC legislation through all its stages.
“I am looking forward to the ACC Stocktake Group’s interim report in February, ahead of its final report in June 2010.
ACC's $5 Million Dollar Pat On The Back
ACC's "Covered" advertising campaign will cost Kiwi taxpayers $5.1 million over the next four years, and answers to Parliamentary Questions reveal that ACC's current television, newspaper, internet and planned radio advertisements are setting taxpayers back more than $2.3 million, says ACT MP Heather Roy.
"ACC has embarked on an ambitious advertising campaign, telling New Zealanders that they are 'covered' in the event of accidents.
Parliamentary Questions asked by Heather Roy reveal the cost breakdown for the current advertising campaign:
Art2Print $ 2,000
Clemenger/Aim Proximity $ 242,000
Television $ 1,100,000
Newspapers $ 888,000
Radio (starting April 8) $ 36,000
Internet $ 34,000
TOTAL $ 2,302,000
N.B. an additional $200,000 for research was not included in ACC's breakdown of the current campaign.
A further $2,598,000 has been allocated for future campaigns within the four-year timeframe.
"ACC is a state owned monopoly - there is no competition, no choice for the public, and it uses taxpayers' money. Instead of using that money to help injured Kiwis, it is diverting it to self-promotion", Mrs Roy said.
"The Minister for ACC, Ruth Dyson, may see the $5 million spend-up as a small part of ACC's budget, but this would give 300 Kiwis hip replacements, 1,700 cataract operations or 180 coronary bypasses.
"Many Kiwis feel anything but 'covered' when they confront the bureaucracy and ambiguity of ACC's rules. This self-promotion campaign is yet another demonstration of poor judgement from a government monopoly with access to the public chequebook.
"Taxpayers would not prioritise advertising ahead of patients, and neither should ACC", Mrs Roy said.
Report slams King's PHO strategy
A highly critical report into Annette King's PHO strategy explains why she spent five months trying to stop it being released, ACT health spokesman Heather Roy said today.
The Review of Primary Health Organisation Management Services report released today, slams the Government's Primary Health Organisations strategy, with a litany of serious criticisms.
Mrs Roy asked for the report under the Official Information Act last September. Her request was refused and she appealed to the ombudsman, who then forced the release of the report which reads like a damning audit report in its revelation of the lack of accountability measures.
"Mrs King, who proclaims herself to be the Minister of Transparency and Accountability, has employed every trick in the book to prevent this report from seeing the light of day because of the embarrassing reflection it has cast on her trumpeted PHO Strategy," Mrs Roy said.
"The review reads as badly as the wanaga revelations. Lack of financial information from some PHOs, variable quality of financial information from others, inconsistent reporting, inability to compare costs between PHOs, lack of defined standards or service levels - all criticisms in the review - read as a indictment on Annette King's rushed construction of PHOs."
Mrs Roy said the report damns the Minister's PHO strategy into which she has poured millions of taxpayer's dollars, including millions on billboard and TV advertising. In short the report slams PHOs as unable to be measured in any way or monitored, Mrs Roy said.
"The report clearly questions the financial viability of small to medium sized PHOs saying that no matter what the size there are fixed costs. It is clear many small PHOs have only survived thus far because of the dedication of staff, many having to work essentially on a voluntary basis.
This damning report begs the question "Why the change to PHOs at great cost to the country?" Annette King has some explaining to do.
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Heather Roy MP
heather.roy@parliament.govt.nz
Phone: 04 470 6631 / 021 887 727
Fax: 04 473 3532
Michelle Brooker, Press Secretary
michelle.brooker@parliament.govt.nz
Phone: 04 470 6644 / 021 995 601
Nurses settlement costs DHB?s $413 million
More ACC And Labour Highway Robbery
ACT Auckland Regional Conference; Saturday November 6, 2004;
Tucked away in the ‘Public Notices’ section of the major daily newspapers on October 21 was an ACC advertisement advising the public of the ACC Board recommendations for levy increases for the 2005/06 financial year.
In short, the ACC Board is recommending that ACC Minister Ruth Dyson:
· Increase the cost of the annual vehicle licensing fee by $10
· Increase the petrol levy from 5.08 to 5.77 cents per litre
· Increase the self-employed levy by 3.9 percent
This would add around $36 million to ACC's motor vehicle account – one of seven ACC accounts that gather funding. Last year, the motor vehicle account reported a $221 million cash surplus – well ahead of the previous year’s surplus of $80 million. Motorists might well ask why they must contribute even more to an already burgeoning account. Last year’s surplus equates to taking $150 more than was needed from every average household.
The self-employed must be wondering why they bother. Many find it almost impossible to have a claim approved when they are injured, yet are expected to contribute more.
Our accident compensation scheme has been a huge failure for three decades – remember the 30th Birthday celebrations earlier in the year, at a cost of $800,000 to the taxpayer?
The scheme has endured endless tinkering over the years, but this has failed to overcome its fundamental problems – statutory monopoly, and a lack of incentive to provide value for money. In short, ACC is inefficient, inflexible, wasteful and it compounds the problems confronting our already struggling health sector. Fraud is also an ongoing problem, and it is not uncommon for those truly in need to miss out completely.
ACC has caused a terrible rift in healthcare – pitting those who have had an accident or injury against those who have suffered an illness.
But there are lessons to be learned from ACC – 80 percent of all surgery paid for by the Accident Compensation Corporation is performed privately. This begs the question: if ACC can provide a better service, why can’t our Public Health system?
I’m sure all of you would agree that it could happen tomorrow. But the present Government lacks the political will to allow it. They argue that healthcare is much too important to allow people to make their own choices.
As the Corporation doesn’t consider itself to be a charity, it looks for the best deal: quality treatment, at the best price, in the best time. No one is surprised to hear that private hospitals win these contracts, and no-one – not even socialist recipients of treatment – complain about being seen privately. I’m told that even they like the fact that they are seen quickly, and seem to enjoy the hotel-style surroundings.
But this leaves 20 percent of ACC paid treatment to be provided by the public health system, and the public hospitals like having this work – they get paid to do it. Consequently, to fulfil contracts that compete with their other work, public hospitals allow ACC patients to jump the queue. Again, those who haven’t an approved claim are disadvantaged.
Hawkes Bay DHB is a prime example. I have received a copy of a fax sent to those referring patients to Healthcare Hawkes Bay. It states:
“You will see below the estimated waiting times for each speciality depending on the priority of the patient”
The fax is sent by the Administrator of Elective services.
Top of the list are all ACC patients who are all considered to be urgent cases and will be seen in a two-four week timeframe. All other patients are divided into three categories – Urgent, Semi-Urgent or Routine. Orthopaedic patients are a reasonable comparison for the ACC patients, but look at the time difference: if you are an Urgent case you will wait six weeks to be seen, Semi-Urgent patients wait six months, and if you are considered to be a Routine case the wait you can expect is eight-12 months. The worst wait is for Ear, Nose and Throat problems – an Urgent wait is 10 months, Semi-Urgent 18 months and if you are considered to be a Routine case you will be seen “rarely”.
ACC patients are given priority – and when one group is given priority, all others are automatically disadvantaged. The question my critics always ask is: “Well, what would ACT do?” The answers are simple.
Only choice and competition will ensure that premiums reflect value for money and allow innovative products to emerge. We would allow everyone to choose their own accident insurance cover.
Government should not force Kiwis to buy ‘one-size fits all’ accident insurance against their will. ACT would allow people to buy cover against losses from accidents and sickness, and to buy lump sum protection.
Government should not impose monopoly, nor should it own insurance companies. ACT would remove the monopoly on existing schemes, and fully restore choice and competition.
The wholesale abolition of the right to sue was a mistake. ACT would review liability regimes – the issues of the right to sue, penalties under health and safety legislation and non-pecuniary damages.
ACT believes the role of Government should be limited to that of watchdog, and provider of a safety net for hardship cases. ACT believes Kiwis make the best choices for themselves, and that the Government should trust the people’.
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ACC And Labour's Highway Robbery
ACT New Zealand ACC Spokesman Heather Roy today urged ACC and Labour to quit its highway robbery and leave motorists alone, in light of ACC’s calls to increase the costs of annual vehicle licensing.
“Kiwi motorists have been a repeated target under this Government: last year ACC’s petrol levy rose from 2.1 cents to 5.08 cents a litre and, now, it wants to increase the cost of annual vehicle licensing by $10,” Mrs Roy said.
“This move, which would be funded by motorists and the self-employed, would add around $36 million to ACC’s bulging motor vehicle account – one of seven ACC accounts that gathers funding, and which reported a $221 million cash surplus for 2003-04, up from an $80 million cash surplus the previous year.
“The ACC Board has also recommended that the self-employed be hit with a 3.9 percent increase to their ACC levy – despite the fact that many self-employed people find it virtually impossible to have a claim approved when they are injured.
“This spells bad news for motorists and the self-employed – especially self-employed motorists – who could be forgiven for asking where the money is going, and why they’re again being asked for more.
“And they’ll receive cold comfort from the announcement that the planned five cents a litre tax grab – planned for next April – may be deferred, is cold comfort. Labour’s changes mean the increase can be adopted in secret by order in council – likely right after the election.
“The fact is that ACC already has more money than it needs. Last year’s $221 million cash surplus in the motor vehicle account equates to taking $150 more than needed from every average household.
“In the face of such operating surpluses further increases are obscene, and a discount would be much, much more appropriate,” Mrs Roy said.
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