Accident Compensation in New Zealand: The First Two Years

Abstract

With the introduction of the Accident Compensation Scheme 1972, people injured in New Zealand after 1 April 1974 are entitlement to benefits and the right of accident victims to proceed in tort was taken away. Some conclusions can be made about the performance of the accident compensation scheme in New Zealand during the first two years of its life, although it is too soon to offer any final and comprehensive appraisal. The signal achievement of the first two years lies in the simple fact that the scheme is running fairly smoothly, and it has done so since its inception with few signs of public dissatisfaction. Many problems and challenges remain to be overcome, but the success in the first two years would indicate that the ultimate prognosis for the scheme must be favourable.

While the details of some of the review cases under ACC provide enlivening social interest, it is remarkable how wooden and devoid of legal interest are the issues the cases present. Gone are the great issues of fault. The overall impression from reading the decisions is how simple it all is. The dominant feature of the scheme after two years seems to be an air of pragmatic experimentation.

In any scheme as comprehensive and novel as the accident compensation scheme problem areas will emerge. These problems so far are few in nature and none of them touches the fundamental principles of the scheme. Rather they are problems of second or third order of importance often involving complex technical issues. The following issues appear to constitute the main problem areas: 1) Assessing earnings-related compensation for periods of incapacity suffered by the self-employed; 2) Pain and suffering compensation under s 120; 3) Section 14 permanent partial incapacity; 4) The need to obtain authoritative medical assessments, especially for cases of permanent incapacity; 5) The proper limits of compensation available under s 121; 6) Occupational diseases; 7) The range of cover included by the words “medical, surgical, dental or first aid misadventure” in s 2; 8) How to obtain adequate accident statistics; 9) Classification of risks and variable levies for employers; 10) Increses in claim rates resulting from 100% compensation for first week of incapacity where the injury arises out of and in the course of the employment; 11) “Dependency” in death cases. This article touches upon these questions and upon others in the course of reviewing the performance of the scheme in the first two years of its operation.

The paper also discusses the inception of the ACC scheme from the Royal Commission’s Report of 1967 to the appearance of the Accident Compensation Act in 1972, and discusses the alterations from the original Woodhouse Report. The cut and fill approach to legislative reform has now become so ingrained with the accident compensation legislation that the pattern will be difficult to alter. The trend of the amendments has been to give more and more discretion to the Commission. At present neither clarity nor predictability exist.

Keywords: ACC, accident compensation, New Zealand, legislative reform

JEL Classification: K19, K32