New Zealand's accident insurance system is a disaster in the way all socialised (state run, state legislated, state funded, monopolistic) systems inevitably turn out. They inevitably become weighed down with entitlement fiefdoms, self-serving ambition on the part of politicians, board and management, and blighted with gross inefficiencies. None of these cancers is easily recognised nor "excisioned" when the prevailing zeitgeist is "the state does it better".
But when New Zealand adopted a fully state funded accident insurance scheme we were promised that it would be the best in the world, and would be regarded with envy by all enlightened and developed countries. It was all part of building the socialist nirvana down under, fast following Sweden and Denmark. How quaint.
They say that socialism eventually runs out of other people's money. True. Socialist schemes also wilfully ignore or overtly deny human incentives and action. Socialist schemes always proceed on an assumption about human beings that bears no resemblance to reality. Socialist schemes posit that human beings always place a higher priority upon the interests of the collective than their own. Human beings are instinctively self-denialiers in favour of public interest--apparently.
A case in point: if you have an accident, the Accident Compensation Corporation ("ACC") will pay out you an income for the rest of your days, provided your injury is sufficiently debilitating or your deceptive malingering is up to scratch. Socialist ideology presumes from the outset that malingering will unlikely exist because people put the interests of the system ahead of their own self-interest. To put it bluntly: human beings will never or rarely rip off the system in pursuing their own advantage. Now, if that seems a strangely naive unreal world to you, you would be right. Welcome to the world of socialism--which posits, of course, that the Fall never took place.
ACC was faced with a blow-out in insurance claims and an unfunded liability. It had to be addressed for many reasons, not the least because it was in breach of its own law. New Board members (taken from the non-socialist, private sector) were brought in to effect change and reform. Consequently, ACC began to focus on its long-term claimants, with the working presumption that most of them were malingerers. It also sought to spruce up other parts of its business, but because it is a monopoly, efficiency gains are very, very hard to come by. In the event, the books of ACC are much better than they once were. But it has come at great cost to the Chairman of the Board, John Judge and the CEO, Ralph Stewart along with those other (reforming) directors. The Christchurch Press opines:
Both are highly regarded managers. When he took over the ACC portfolio, Smith said that the organisation's finances were in a dire state and he appointed Judge to fix them.But there is plenty of evidence that ACC has gone about this cost-reduction with all the finesse of a bureaucratic dinosaur infected with a severe case of Kafkaesque mindless rigidity. There are signs of a siege mentality: us against them. We know best. We will get you.
Whatever other shortcomings might have occurred during his chairmanship, Judge has done that. ACC's net deficit last financial year was reduced from $10.3 billion to $6.7 billion and it is on target to meet its legal obligation to be fully funded by 2019. Financial viability is crucial if ACC is to survive as a no- fault accident compensation system and meet its obligations to claimants.
In an world of open-market competition a corporate is soon dismembered and laid to rest if it adopts such attitudes and behaviours. But a state agency, operating in a legislatively protected and enforced monopoly, cannot easily be dismembered. People can only rarely be fired. The Minister, Judith Collins has called for a change of culture. Much, much easier said than done.
Why? Because the same human reality which leads people to malinger and take advantage in pursuit of their self-interest equally applies to the staff and management of ACC. It is the Achilles heel of all socialist dreams and schemes. Socialist schemes would be great if human beings were not involved. Men may be from Mars, and women from Venus but socialism is from another galaxy all together.