Comment on agriculture - March 2009
12/03/09 13:12 Filed in: Columns
ACC costs are as significant for farmers as they are for any self-employed businessperson. Farming has its share of risk, so the premiums can be higher than in many industries.
I think ACC is far better for farmers than a personal liability scheme such as many overseas countries have. Imagine if farmers could be sued for personal injury to anyone who came on their land.
Currently the National government is getting ACC ready to be taken back to the failed system of the nineties, when businesspeople had to wade through bureaucracy to choose an ACC provider best suited to their needs.
Farmers should beware of a competitive ACC system. Costs are likely to rise far more for farmers than for others. It’s estimated that ACC levies for farmers would rise 250%. That’s three and a half times.
In 2004 the then-government of Australia got an independent report prepared on accident compensation costs over there. It found that levies in Australia’s competitive market were twice as expensive as those in New Zealand for the primary sector.
Not only that, but deadweight admin costs in New Zealand are about a third of the level in Australia.
There’s one thing even worse than higher levies – and that is not getting real coverage for your money.
When ACC is replaced by businesses competing with each other, one way they try to offer lower premiums is by reducing the amount they set aside to pay for claims that take a long time to show up.
This happened in Australia: when those claims finally started to come in, they didn’t have enough set aside. They couldn’t raise premiums to make up the shortfall because their customers would buy elsewhere. As a result, the business went under – and who was around to pick up the bill for the injured farmers who had paid their levies? Nobody. They had to pay all over again.
In the meantime, do you wonder what happened to the executives that ran the company into the ground? They probably got knighthoods. No wonder National wants to bring those back too.
A government that is fiddling around with taking ACC back to the failed policies of the nineties is a government that has its priorities wrong.
There is a global economic crisis underway. There is unprecedented risk and opportunity to our agricultural sector from the way our trading partners see climate change. Market opportunities and development of the rural economy at home are much more important than trying to find ways for insurance companies and money market dealers to make a dollar at the expense of farmers.
I think ACC is far better for farmers than a personal liability scheme such as many overseas countries have. Imagine if farmers could be sued for personal injury to anyone who came on their land.
Currently the National government is getting ACC ready to be taken back to the failed system of the nineties, when businesspeople had to wade through bureaucracy to choose an ACC provider best suited to their needs.
Farmers should beware of a competitive ACC system. Costs are likely to rise far more for farmers than for others. It’s estimated that ACC levies for farmers would rise 250%. That’s three and a half times.
In 2004 the then-government of Australia got an independent report prepared on accident compensation costs over there. It found that levies in Australia’s competitive market were twice as expensive as those in New Zealand for the primary sector.
Not only that, but deadweight admin costs in New Zealand are about a third of the level in Australia.
There’s one thing even worse than higher levies – and that is not getting real coverage for your money.
When ACC is replaced by businesses competing with each other, one way they try to offer lower premiums is by reducing the amount they set aside to pay for claims that take a long time to show up.
This happened in Australia: when those claims finally started to come in, they didn’t have enough set aside. They couldn’t raise premiums to make up the shortfall because their customers would buy elsewhere. As a result, the business went under – and who was around to pick up the bill for the injured farmers who had paid their levies? Nobody. They had to pay all over again.
In the meantime, do you wonder what happened to the executives that ran the company into the ground? They probably got knighthoods. No wonder National wants to bring those back too.
A government that is fiddling around with taking ACC back to the failed policies of the nineties is a government that has its priorities wrong.
There is a global economic crisis underway. There is unprecedented risk and opportunity to our agricultural sector from the way our trading partners see climate change. Market opportunities and development of the rural economy at home are much more important than trying to find ways for insurance companies and money market dealers to make a dollar at the expense of farmers.