Tuesday, March 10, 2009

ACC: the other shoe drops

Last week, the government began the first phase of its push for ACC privatisation, talking down ACC and hiking premiums in an effort to make it appear as if ACC was in trouble. Today, they started the second phase: presenting privatisation as a solution:

Private companies may be given an opportunity to compete for some ACC business in the future as the Government looks to rein in cost blowouts within the sector.


[John Key] said ACC would not be privatised, but private companies may have the opportunity to get involved.

"We campaigned on the ability to look at introducing competition to the workers' account.

"ACC would remain and possibly some private sector companies would have the opportunity to compete for business in that account."

What this means is that National's donors and cronies in the insurance industry would cherry-pick the profitable parts of the scheme, while leaving the expensive bits - including the long tail of historic liabilities - in the hands of the government. Again, its the straight out privatisation of profits and socialisation of losses. And with National's method - not selling anything, but rather removing ACC's statutory monopoly - they won't pay a cent for it. Except in donations to the National Party, of course.

Quite apart from the whiff of corruption which accompanies any privatisation, it also makes no sense. Last year, an independent review from PriceWaterhouseCoopers [PDF] found that there were no major gains to be made from privatisation. What this means is that the insurance industry’s profits - and they are in it to make a profit - have to come straight out of our pockets, in the form of higher premiums, reduced entitlements, and denied claims. National's policy is simply a wealth transfer from the many to the few - just like the 90's.