Compensation levies not keeping pace

Press, 5 July 1978, Page 12

Compensation levies not keeping pace

PA Wellington Increased accident compensation levies, or a reduction in the level of benefits paid, were among the alternatives open to the Government to meet future commitments of the Accident Compensation Commission, said its chairman (Mr K. L. Sandford). Mr Sandford said that the act under which the commission was established required that levies collected in one year be sufficient: to pay compensation for ac-, cidents happening in that; year. “Some of that com- i pensation will be paid in I that year, but in some cases' will continue being paid for 20, perhaps 40, years, ahead," Mr Sandford said. The act expected the com-i mission to perform the near-I impossible task of estimat-l ing what levy was needed | today to pay compensation in the year 2010, even though that compensation would have been increased periodically by general wage orders to match inflation. “In the year 2010,” he said “we cannot go back to l

lithe 1978 levy-payer and ask 'him to provide more money -ion the ground that com- ■ 'pensation benefits have risen - in the intervening 30 years.” ; Mr Sandford said that ; what had been said in the : I annual report of the com- • mission to Parliament was -.that the cash balance of ■’s79M now held in the earn- | ers’ fund was estimated at “[present to be insufficient to 1 see out the total demands of • j the longest running claims 1 in the future. The commission was in a | perfectly sound financial . state and would be for many iyears ahead, he said. But to cope with the more distant I future, the Government < would have to decide on one i of the following alternatives: That levies be increased; } that benefits be reduced; : that the present funded sys- ’ tem be changed to one of ! pay-as-you-go in each year; I that matters remain as they are, in the knowledge that when the balances, or reserves, cut out some years earlier than they should demands will then be made on that generation of levypayers to pay for the residue of 1978 accidents.

t Mr Sandford said emphaIsis was laid on the fact that estimates of what would be required in the distant future were based on only four years experience. “Over the next few years, with increasing experience, those estimates wil] be able to be refined, and the opinion about adequacy of the I reserves may require to be [amended,” Mr Sandford said. , A member of the commission, Mr H. Watt, had said ! there was no call for the i“panic button.” I “We are a sound organisation,” he said. “The commission has worked better than I ever hoped it would.” Mr Sandford said the commissioners did not mean to indicate that any instant action was required. Mr Sandford said the commission was always looking at ways in which the act could be kept up to date. One of the problems now being investigated was that of relieving employers of the burden of sports accident payments. "But the question is *Who pays?’ Does the Government or do those involved in leisure activities?