New Zealand's Accident Compensation Scheme: Twenty Years On

52 Pages Posted: 13 Dec 2012 Last revised: 13 Jul 2015

See all articles by Sir Geoffrey Palmer QC

Sir Geoffrey Palmer QC

Victoria University of Wellington - Faculty of Law

Date Written: 1994


Since New Zealand’s Accident Compensation Act took effect on 1 April 1974, despite many amendments, reorganizations, and statutory reconstruction, it has been impossible to bring a tort action in New Zealand for personal injuries. New Zealand’s pioneering efforts in abolishing tort law for personal injury compensation has attracted a steady stream of overseas interest, the published results of which can be sorted into three categories. The first sees New Zealand’s reform as a warning against the dangers of making such changes; the second finds the New Zealand experience a useful exemplar of how the world ought to be; and the third merely reflects an interest in the subject. In short, people cite the New Zealand scheme and extract the meaning from it which suits their policy preferences about reform of the tort system.

This article deals with the New Zealand developments on their own terms to attempt to explain the policy dynamics. Twenty years after the New Zealand revolution, no one else has copied it. Nowhere in the common-law world, not Australia, the United Kingdom, Canada, and certainly not the United States, has any consensus developed which has led to political action to abolish the personal-injury tort system root and branch. In the twenty years since reform, a great deal in the world has changed. New Zealand itself has been a leader in bringing about change through deregulation, corporatization, privatization, public-service restructuring, and reforms of public finance.

The author examines the New Zealand experience over the past twenty years with some particular questions in mind. What did the designers of the scheme fail to anticipate? With the advantages offered by hindsight, how could things have been done better? How can the overall performance of the scheme be assessed? The fresh statute passed in 1992 in New Zealand requires some analysis, not only because the changes made then were misguided from a policy point of view, but also because of their implications for the future of the New Zealand scheme. In terms of the net gain to human welfare over the years, the achievement of ACC must have been considerable compared with what went before. Even in its reduced form since 1992 legislation went into effect, accident compensation in New Zealand is better than what it replaced for the majority of injured people. The coverage is comprehensive, the cost relatively low, and the lessening of human suffering clear. These points must be remembered as we walk the winding paths of policy development.

The paper considers the development of New Zealand’s scheme from its inception in the Woodhouse Report of 1967 onward. It discusses the financial decisions made regarding funding of the ACC scheme, including reductions and increases of levies over the years and the political nature of many of the funding changes. It considers the relationship between tort law and corrective justice, and asks whether the continued unavailability of the right to sue under tort law is fair or just, given the reduction of the benefits of the scheme. Anyone who would advocate a return to corrective justice tort law has stronger arguments in the New Zealand context of 1993 than have existed at any other time since the scheme began. Corrective justice has been sacrificed for distributive justice, but not enough is now being distributed to make it fair.

Keywords: ACC, accident compensation, New Zealand, tort system, corrective justice, distributive justice, policy

JEL Classification: K19, K31, K32

Suggested Citation

Palmer QC, Sir Geoffrey, New Zealand's Accident Compensation Scheme: Twenty Years On (1994). 44 University of Toronto Law Journal 223, 1994; Victoria University of Wellington Legal Research Paper Series Palmer Paper No. 79/2015. Available at SSRN:

Sir Geoffrey Palmer QC (Contact Author)

Victoria University of Wellington - Faculty of Law ( email )

PO Box 600
Wellington, 6140
New Zealand

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