Friday, September 11, 2015

Karl du Fresne: ACC and the law of unintended consequences

A letter in last week’s Listener magazine offered an interesting slant on the workplace safety debate.

The writer was a New Zealand geologist who had worked in Australia. He had gone there convinced, as most of us probably are, of the virtues of our no-fault accident compensation system.

He thought ACC was clearly superior to the Australian alternative, where people injured in workplace mishaps (or in car accidents, or even as the result of a fall on a slippery supermarket floor) can sue for damages. 

That used to be the way in New Zealand too. Personal injury cases were a profitable area of practice for lawyers until the well dried up with the introduction of the accident compensation scheme in 1974.

Under ACC, the state picked up the tab for all work and non-work injuries, regardless of who (if anyone) was to blame.

At first it seemed a bizarre notion that a burglar who accidentally slashed his arm while breaking into a house should be entitled, courtesy of his law-abiding fellow-citizens, to free medical treatment and weekly earnings while he recovered to steal again.

But we put those misgivings aside because the new regime seemed preferable to one where compensation hinged on being able to prove negligence, which involved hiring a lawyer.

In hindsight, ACC can be seen as the high-water mark of socialism – or, if you like, collectivism – in New Zealand.

Effectively, it was a state takeover of turf previously occupied by lawyers and insurance companies. But more than that, it took fault out of the equation.

It made us all collectively responsible for everyone else’s folly, whether it’s a company with lax safety standards or a snowboarder testing his skills on a slope strewn with rocks.

To put it another way, it absolved people of full personal responsibility for the consequences of their actions. It meant that if we fell over, the state could be counted on to pick us up and kiss us better.

This brings us back to the New Zealand geologist in Australia. He noticed that Australian employers were extremely risk-averse when it came to health and safety – more so, by implication, than bosses here.

As a supervisor, he was required to ensure not only that workers wore all the usual safety equipment, but long-sleeved shirts and long trousers as well, for fear that the boss might be held liable if someone got skin cancer.

Contrast that with a recent New Zealand court case in which a forestry worker wasn’t even wearing a high-vis vest when trees were being felled in the pre-dawn darkness. A workmate didn’t see him, and he was killed by a falling log.

The geologist wrote that he had been incredulous on reading about the infamously slack safety standards at the Pike River coal mine. “Our no-fault ACC system,” he concluded, “seems to mean just that.”

In other words, if I interpreted his letter correctly, no-fault compensation can serve as a licence for employers to disregard their obligations when it comes to workers’ safety.

Did anyone anticipate this at the time ACC was introduced? I don’t know. But it wouldn’t be the first time well-intentioned legislation has led to unintended and sometimes disastrous consequences. History is littered with examples.

The domestic purposes benefit was brought in to help struggling solo parents – an entirely laudable aim. It seems no one imagined that it would incentivise teenagers to have children at the taxpayers’ expense.

The Privacy Act was passed to protect personal information. Now it’s used to justify schools arranging abortions for girls without having to tell their parents.

Bike helmets were made compulsory to prevent cyclists suffering brain injury. Result? Women and teenagers stopped riding bikes because helmets were considered uncool or just too inconvenient.

In the United States, idealistic zealots successfully campaigned in the early 20th century for Prohibition – an event that gave birth to organised crime as gangsters exploited demand for illicit liquor. It was the best thing that ever happened to the Mafia.

The European Union arose out of a desire to ensure that the countries of Europe would never again go to war with each other, but its architects overlooked underlying economic, political and cultural differences that are now threatening to pull the union apart.

Likewise, when the 1985 Schengen Treaty created passport-free travel between 26 European countries, no one anticipated that Europe would be swamped with refugees from North Africa and the Middle East.

Often these changes are championed by idealists from the political left. Their intentions may be good but their faith in the ability of laws to control human behaviour is often misplaced.

Of course we can’t use fear of unforeseen consequences as an excuse for doing nothing. But if the geologist’s perception is correct, it’s possible that the accident compensation scheme perversely contributed to the culture of workplace complacency highlighted in 2013 by the government’s Independent Taskforce on Workplace Health and Safety.

I’m sure that wasn’t the outcome the ACC’s creators envisaged.

Karl du Fresne blogs at published in the Nelson Mail and Manawatu Standard.


Kiwiwit said...

Well written, Karl. ACC seems to have the same sacred cow status in New Zealand that the NHS has in the UK. It is about time someone started questioning what has become a dysfunctional parallel welfare system. It is supposed to be no-fault, yet motorcycle owners are stung in premiums while bicycle riders pay nothing, physiotherapists pay through the nose but their rugby player clients pay nothing, etc. At least, after years of ripping us off, the current government has forced them to lower premiums.

Anonymous said...

I'd support a $250 excess on claims.

Anonymous said...

Yes ACC has its weaknesses but the alternative of individual suing has unintended consequences for everyone. I lived in New South Wales during 2000. At the time it was second most likely place you could sued in the world after New York.
This generated massive compliance issues resulting from liability for example planning a bus excursion for a group of old people required that the organisers to travel the planned route first to identify hazard, verification of the drivers medical status and a range of other checks.
A problem becomes that your risk isn't about whether an activity is intrinsically risky but the likelihood of being sued.