A.C.C. to axe lump payouts

Press, 11 December 1989, Page 1

A.C.C. to axe lump payouts

LUMP SUM accident compensation payments were impossible to sustain if the scheme was to be extended to illness, the Minister of Social Welfare, Dr Cullen, said in Tauranga yesterday. Hailing reforms to the Accident Compensation Corporation, as the biggest social policy changes since the scheme was first introduced, Dr Cullen said it proved the Government was not “adrift” just because it was not following “extremist theories of the New Right.” Dr Cullen said keeping lump sum payments was not only impossible because of their cost, but because they did not allow for continuing assessments in the case of sickness. “Improvements in health, changes in technology, the efficiency of drugs, and better rehabilitation all mean it is nonsensical to suggest that a single assessment is sufficient to establish a lifetime entitlement,” he said. The main features of the new A.C.C. scheme planned for April, 1991, would be: • Extension of the existing one week stand-down period to two weeks. • Reduction in the eamingsrelated rate of compensation from 80 per cent to 75 per cent. • All non-work related incapacity to follow the two week stand-down with up to 13 weeks on the basic benefit, equivalent to the new Social Welfare universal benefit. • Employers to pick up the cost of earnings-related compensation for the two week stand-

Wellington reporter

down, followed by employer topup of the basic benefit for up to 13 weeks. • At the end of 13 weeks on basic benefit, all those with incapacity move to earnings-related compensation. While lump sums would be abolished, it was possible that part of the benefit might be able to be capitalised in some circumstances, said Dr Cullen. Lump sums would be replaced by “ongoing periodic payment.” The new system would mean less rehabilitation under the scheme for short-term non-work accidents, such as sports injuries, but for other incapacities, there would be greater resources available.

“That loss is more than counterbalanced by at last bringing into the net long term disability from non-accidental causes.”