COMPENSATION LAW

Dominion, Volume 30, Issue 24, 23 October 1936, Page 10

COMPENSATION LAW

New Legislation Approved By Opposition INCREASED PREMIUM COST Urgency vras taken for the second reading of the Workers’ Compensation Amendment Bill in the House of Representatives yesterday, discussion on the measure being resumed by Mr. S. G. Holland (Opposition, Christchurch North). He described the Bill as one in which the Opposition found agreement with the Government on the principles embodied. The late Government had recognised that an overhaul of the compensation law was necessary for the removal of anomalies, and had intended to bring about certain reforms. Mr. Holland urged that the Minister of Labour, Hon. H. T. Armstrong, should give -wide publicity to the Bill • by advertisement, in view of the fact that a very large section of the community was affected by it A situation could easily arise in which an employer, unaware of the full implications of the compensation law, might find himself unprotected to the extent of possibly £lOOO. v In commending the Minister on the introduction of various improvements in the law, Mr. Holland referred with satisfaction to the fact that employers of taxi drivers working on commission were to be held liable for compensation in event of an accident through a collision, and that share-milkers were henceforth to be covered. The latter class of workers could receive up to two-thirds of the basic wage for incapacity, and would, he predicted, be in a position to secure the equivalent of the full agricultural workers* rates. Mr. Armstrong: Make a guess what the basic wage will be. Mr. Holland: No, I will not do that, but you will find I am not far wrong. Experience in Queensland, The Minister, said Mr. Holland, had endeavoured in his second reading speech to make capital out of the State accident department of Queensland, where the Government had a monopoly of that class of business. He had admitted that Queensland had suffered a small loss in the last three or four years in its workers’ compensation operations, but had told only half the story. The actual position was that Queensland had lost £227,000 during the four years, 1932-35, or £69,000 a year. Could the Minister describe that figure as a small loss, asked Mr. Holland. The Minister: The loss of the last four years has been met out of profits accumulated during the past 20 years. The taxpayer has not been called upon to find the money.

‘•Let us see what happens to every £lOO of premiums collected for accident insurance in New Zealand,” said Mr. Holland. ‘‘The position here is that 71-39 per cent, goes to the worker in compensation, and 25 per cent, goes in expenses, of which a large proportion represents salaries and wages.” Mr. D. McDougall (Independent, Mataura) : What pays for the big buildings? Mr. Holland: The buildings were paid for out of interest on investments and by capital brought from, overseas. ' If the Minister had told the whole story of workers’ compensation in Queensland, said Mr. Holland, he would have had to say that whereas the maximum compensation paid in that State totalled £6OO, or in exceptional cases £7OO, the rate in New Zealand was as high as £lOOO. He would also have had to tell the House that the per capita cost of workers’ insurance was 7/2 in Queensland and only 4/6 in New Zealand. Profits for Shareholders.

The contention that insurance companies in New Zealand had been making profits for their shareholders at the expense of the persons paying premiums and injured workers was made by Dr. D. G. McMillan (Government, Dunedin West). He dealt with three insurance companies, and referred to various operations increasing the value of their shares since their incorporation. He stated that the dividends paid and the market value of the shares were out of all proportion to rhe original investment of the shareholders, and there was no doubt that injured workers, through the workers’ compensation branch, and the persons paying premiums, were being grossly exploited. The view that general accident insurance was not a profitable branch of an insurance company’s business was expressed by Mr. W. A. Bodkin (Opposition, Central Otago). He stated that figures in the Tear Book, taken over the period from 1924 to 1933, would show that. Dr. McMillan: If that was the case, no insurance company would continue with it. , , „ Mr. Bodkin: It is the other types ot insurance business which enables the companies to carry accident insurance without loss. , , Mr. Ttodkin said.that.a good number

r of local bodies, including the Dunedin City Council, of wbicb Dr. McMillan was a member, carried their own risks. Dr. McMillan: And we do very well out of it. Mr. Bodkin: That is because it is not a hazardous risk that is taken. Mr. Bodkin said he thought the Minister would have to go further than he had done and consider the compulsory insurance of persons working on their own account. It was just as necessary, for instance, that the taxi-driver working on his own account should be insured as the type of driver provided for in the Bilk Sharemilkers also came into that category. Extra £60,000. “Some speakers have emphasised the extra burden of £60,000 or so that will be .placed on industry as a result of this Bill,” said Mr. Bodkin. “I am not so much concerned about that, because if it does not go on to industry it will come on the Consolidated Fund. There is no doubt that this will cost about £60,000 a year, and it will be passed on to the consumer. If, however, the same amount has to be paid out in pensions or charitable aid it is the consumer who pays in the final analysis, and it does not make much difference. The manner of collecting the sum is of little moment.” Mr. Bodkin commended the Minister for clarifying the manner of computing compensation payments. The basis of computing payments had been the cause of much contentious argument in the Arbitration Court in the past, and the result of the Bill would be that many fewer cases would have to be fought out in the court. Mr. A. S. Richards (Government, Roskill), quoted the New Zealand State Fire Office when advocating the advantages of State control of compensation schemes. The New Zealand office, he said, had saved premium-pay-ers in New Zealand many hundreds of pounds. He claimed that at one period recently, because of private control of compensation insurance, the people of the Dominion had been threatened with the prospect of being robbed of a substantial part of their premiums. The very idea of anyone making a profit out of injury was almost immoral, he

said. (t Minister Replies to Debate.

Replying to the debate, Mr. Armstrong expressed his pleasure at the reception given to the Bill. The lack of criticism from the Opposition, he said, almost made him begin to wonder whether he was doing right in introducing the measure.

Replying to a point raised by the Opposition, Mr. Armstrong said that he doubted very much whether the increased premium cost would be as high as 14 per cent., as the underwriters had estimated. He repeated his assurance that the Bill did not go anywhere near as far as his original Bill intended, but That the present measure covered the most urgently necessary provisions. There had been a complaint of lack of publicity, he added, but actually easily a month’s notice had been given of the Bill, and the newspapers throughout the country had published full explanations.

Mr. Armstrong said that there was no instance of local body or State enterprise having failed in the field of insurance, and there was no likelihood of its being a failure in New Zealand. He did not think that any worker should be allowed to contract himself out of the right to compensation insurance. It had recently been found that such a practice had been going on in the public works, but a stop had been put to it. Such action should also be stopped in tlie case of other workers. He hoped the day was not far distant when workers’ compensation would be replaced by a national scheme for the benefit of all, whether stricken by illness or accident. The Bill was read a second time.

Replying in the committee stage to the Hon. J. G. Cobbe (Opposition, Oroua), the Minister said it was difficult to estimate what the increase iu premium rates was likely to be. The rates were fixed by arrangement between the State office and the other insurance companies. The estimate by the underwriters was that an increase of 14 per cent, would be necessary. He believed, however, that the increase need not be so large. ‘‘l do not think it would be a bad idea if the insurance companies gave it a go for a year without, increasing the premiums to see how they get along,” said Mr. Armstrong. The only amendment to the Bill was one introduced by the Minister. It provided, in effect, that advantage could be taken of the existing compensation law if it gave a greater benefit than the amended law.

The committee stage was completed within a quarter of an hour after the commencement of the evening sitting. The Bill was read a third time and passed.