Compensation Act should be rewritten — professor

Press, 24 August 1976, Page 3

Compensation Act should be rewritten — professor

The Accident Compensation Act should be rewritten from scratch, a professor of law at Victoria University of Wellington, Professor G. W. R. Palmer, said yesterday.

Professor Palmer told the Australasian Universities Law Schools conference in Christchurch that the act would become ineffective unless it was made simpler to understand.

“A piece of social legislation should be written in such a way that ordinary people can understand it,” he said. “In fact, the public, the legal community, and even some people in the Accident Compensation Commission do not understand it.” Professor Palmer said the commissioners were aware of the problem, but were unwilling to “grasp it by the horns.”

“The commission readily resorts to legislation in an

effort to clarify the act. Strangely, the net result of all the changes has been to make the act more difficult to understand, but easier to administer.”

The commission was digging a hole for itself with each new piece of corrective legislation, because each new discretion required more work by administrators. Despite this, Professor Palmer said, the scheme had been working smoothly since its inception two years ago, with few signs of public dissatisfaction. However, new challenges remained to be overcome.

The most remarkable feature of the scheme was that problems were few, and none jeopardised its fundamental principles. This being the case, it was hard to understand why there had been so many amendments. “The commission has tended to rush into change,” he said. “It probably would be better to do a major reconstruction. Piecemeal amendments inevitably delay this.”

From April, 1974, when the bill became law, to March. 1976, the commission had handled some 235,675 claims. Only 1785 decisions had been appealed against. Of these, 141 appeals had be n rejected and 233 withdrawn. There had been no appeals to the Supreme Court. These figures demonstrated the effectiveness of the act in principle, but several major changes would have to be made'in-the future. First among these. Professor Palmer said, was the inclusion of coverage, for disease. “Sickness compensation will follow accident compensation as surely as night follows day,” he said. “It will not be possible politically to allow the kind of injustice that we have today to continue.” It would be natural for this task to be assumed by the Accident Compensation Commission.

Furthermore, the commission should be transferred to the Department of Social Welfare from the Ministry of Labour to avoid parallel functions. “This would avoid the problems of one side not knowng what the other side is doing. “The danger is that two parallel systems for payment

of monetary benefits will be allowed to develop, with consequent waste and confusion. There is a danger the commission will want to go its own way. This should not be allowed to happen,” he said. Other major problems facing the commission included setting clearer guidelines for compensating for loss of earnings by the selfemployed, victims of medical, surgical, or dental misadventure, and for claims for pain and suffering. A greater emphasis would have to be placed on accident prevention and rehabilitation. When the scheme was envisaged, it was hoped that pertinent data would become available through information on claim applications, which could then be used for research. “After two years, no such data has emerged,” Professor Palmer said. Frequently, forms had not been properly completed, and the gathering of evidence had become impracticable. “The commission tends to be working in the dark in this area,” he said. “The commission is empowered to impose penalty rates of up to 100 per cent on employers whose accident rate is hjgher than normal, and rebates of up to 50 per cent when it is better than normal. Because of the lack of data, it has so far been impossible to use either of these provisions.”

The commission had built up an investment fund of SBIM, Professor Palmer said. This fund would reach a plateau of S2OOM, which the commission would be able to invest freely, subject to authorisation by the Minister of Finance. Of these funds. SIBM was invested in mortgages, SIIM of which was in housing loans. Debentures totalled SI9M, commercial bills about $3.5M, and investments in the Development Finance Corporation, S6M. Only a small portion, about SI.6M, was invested in listed shares. The rest had been invested in the public sector, primarily in local body securities. Return on these investments would total about S6M this year. Professor Palmer said. The commission kept large amounts of money on call, and played an important role in the short-term money market. Once the fund reached the S2OOM plateau, the scheme could work on a “pay-as-you-go” basis. Administration cost the commission 5.95 per cent of its gross income. The gross income included $52.5M earmarked as reserves to meet costs of compensating longterm incapacities. However, administration costs amounted to fully 18 per cent of benefits paid, a figure Professor Palmer called “less than satisfactory/’