The New Zealand Experience
International Workshop – Beyond Compensation: Dealing with Accidents in the 21st Century
19 Pages Posted: 12 Dec 2012 Last revised: 5 Jun 2015
Date Written: 1993
The public opinion polls show in New Zealand that accident compensation is an accepted part of the social support system. Therein lies the reason why the most recent changes have not really disturbed the most fundamental aspects of the scheme although some important changes have been made to some of the details. This paper discusses the author’s experience in tort law, both academic and reform, and the introduction of accident compensation in New Zealand. The author refers to his difficulty in trying to find coherent, intellectually honest arguments in favour of the tort system. Its retention in the United States appears to depend upon a combination of vested interests and inability to reach a consensus on the nature of the replacement.
The problems of dealing with issues one at a time rather than approaching reform comprehensively are considerable. Inequities and inequalities are created which cannot be defended and which create social resentment. This remains one of the central difficulties in the mixture of systems that the United States has. It is important to observe that the New Zealand tort system never exhibited the same characteristics as the United States tort system. While both are common law countries, the diversity that exists within common law countries is not always capable of being analysed in terms of the legal rules which are operating.
A number of factors help to explain the differences in the way the law of negligence works. New Zealand law reform is the responsibility of the government, to be accomplished by legislation. And New Zealand’s governmental system is not democracy as Americans know it. It is more akin to an elective dictatorship. The principle of community responsibility on which the Royal Commission report, and the eventual accident compensation scheme, was based is a socially acceptable principle in New Zealand. Suing is a very prominent characteristic of the American legal system and of the American value system, but it was not availed of nearly with the same vigor or determination in New Zealand and was a very moderate system. More broadly, New Zealand has always had a developed welfare state which now includes an extremely generous national superannuation scheme. All of these factors led to accident compensation being accepted in New Zealand.
The widespread acceptance of the scheme by the New Zealand public has insulated it against efforts of those in government and in the Treasury who are interested in reducing government expenditure on income maintenance across the board. The significant feature of the Accident Rehabilitation and Compensation Insurance Act 1992 is the clear indication that the new National government wants to fence accident compensation off. It does not want accident compensation to be the instrument which remakes the income maintenance system. It wants to restrict it, and to have the scheme remain as the vehicle for dealing with accidents but nothing else. There also remains a determination in the government to avoid bringing common law remedy back.
The basic principle of the reform was to eliminate common law actions. In order to do that, it was necessary to introduce sufficient benefits that it could not be said that this was a mean scheme. 20 years later the common law remains gone. But the benefits have also been sharply reduced. There will be many legal and technical problems with the definitions in the new Act. The new legislation has also been attacked by Sir Owen Woodhouse as not compatible with the principles of his scheme. It is unprincipled, inconsistent and lacking in a coherent policy approach.
Keywords: New Zealand, accident compensation scheme, ACC, negligence
JEL Classification: K13, K19, K32
Suggested Citation: Suggested Citation