Gary Moller
Gary Moller is a health practitioner who is focused on addressing the root causes of ill health or poor performance by making use of a key forensic tool – Hair Tissue Mineral Analysis – and administering healthy, natural and sustainable therapies.
The article linked here motivated me to write this article:
Preface
I have done my best to be accurate historically with the dates and people who helped start the Accident Compensation Commission – later changed to ‘Corporation’ (ACC). However, the ACC’s history seems to be patchy and inaccurate. Many of the people who helped start the ACC are dead now, sadly, or well into old age. With each passing, their knowledge and experience of those early days are lost unless they have written it down somewhere. I am writing this as a former employee of the ACC during its earliest days, and I suspect I am one of the few people still living who remember those times.
If anyone can contribute to the accuracy of what I am reporting here, mostly from memory, I welcome this and ask them to contact me via my website.
The Evolution and Decline of New Zealand’s Accident Compensation Corporation (ACC)
New Zealand’s Accident Compensation Corporation (ACC) was once hailed as a pioneering model of social welfare. Established in 1974, the ACC introduced a no-fault compensation scheme to support those who suffered personal injuries, irrespective of fault. At its inception, the ACC embodied a visionary approach, focusing on injury prevention, effective treatment, and comprehensive rehabilitation. I am emphasising ‘effective’ and ‘comprehensive’. However, over the decades, the organisation has veered away from its original mission, becoming mired in financial instability, inefficiency, and risk-averse practices. This essay explores the factors contributing to the decline of the ACC and offers recommendations for revitalising this once-revolutionary institution.
The Early Visionary Days
In the late 1970s, the ACC was a beacon of innovation. During my tenure with the organisation from 1977 to the end of 1983, I was tasked with establishing and managing its sports and recreation injury prevention, treatment, and rehabilitation services. I left the ACC at the end of 1983, totally disillusioned with its direction and disgusted with its chaotic leadership.
Ken Sandford led the organisation from its beginnings. He was responsible for creating and implementing the Woodhouse Report’s principles of no-fault compensation. The organisation embraced a forward-thinking attitude for the benefit of individuals and society. Sir Owen Woodhouse, while not the founder of the ACC, prepared the groundbreaking Woodhouse Report in 1967, which laid the foundation for the scheme’s establishment in 1974. Sandford’s visionary leadership, and the ACC’s uniqueness, attracted delegations from around the globe, eager to study this novel and untested scheme. The ACC’s holistic approach to injury management, from prevention to recovery and everything in between inspired admiration and set a global benchmark.
However, things shifted for the worse following the Quigley Inquiry and Report in 1982. Derek Quigley, a well-known New Zealand politician and member of the National Party, led the committee. While the stated purpose of the inquiry was to fix problems with the ACC’s work, especially its rising costs, I think there was a more sinister and ulterior set of motives. I think its public aspirations were the smokescreen for placating the National Party’s employer lobbyists and for the National government to raid ACC’s investments.
Quigley’s suggestions included making claimants pay for their first medical visits. They also suggested making it longer to wait for earnings-related compensation, removing most lump-sum payments, and looking at how to collect levy payments. These proposals were intended to improve financial sustainability but also marked a significant shift away from the scheme’s original principles. In 1982, the ACC changed from a fully funded model to a pay-as-you-go system. It also added measures like reducing weekly compensation from 100 per cent to 80 per cent of wages for the first week after a work accident.
These changes reflect a broader trend towards cost-cutting and financial prioritisation over comprehensive claimant support. The inquiry marked a turning point, steering the ACC away from its visionary roots towards an accounting and file-closure-oriented focus. This decline was driven by politicians who failed to properly read and understand Sir Owen Woodhouse’s report, instead eyeing the honey pot of money within the scheme.
Additionally, the politicking and bickering between competing groups, such as employer organisations and unions, further eroded the scheme’s cohesive vision and principles. Matters were made much worse by the abrupt leadership change that same year. Ken Sandford was unceremoniously removed as chairman and replaced by Len Fahey, who used to be the commissioner of Inland Revenue. Fahey’s close connections with the ruling National Party at the time were well known, and his appointment was seen as a move to do their bidding. This included preparing the way for implementing the Quigley Report’s recommendations and enabling the government to raid the ACC’s funds.
The appointment of Fahey and the recommendations of the Quigley Report enabled the government to tap into the ACC’s reserves. Instead of safeguarding these resources for future claimants, successive governments have used ACC’s funds to prop up the financial crisis brought about by Rob Muldoon’s “Think Big” projects and the economic pressures of a closed economy, and the “Brain Drain” by young and capable, mostly to Australia.
Do you remember the famous expression of the times, “Will last last person please remember to turn off the lights,” and Muldoon’s quip that the mass exodus of people from NZ to Australia “was increasing the IQ of both countries”. As an aside, I feel we are entering another period of economic decline and the loss of young talent, except it threatens to be a lot worse! Do you agree?
History repeats itself for those who fail to learn.
However, an even greater cynic said:
History repeats itself for those who remember!
The impact of Great Britain (GB) joining the European Economic Community (now the European Union) in 1973 also influenced this exploitation of the ACC. This event reduced New Zealand’s access to traditional and secure markets. While the negative effects of this move by GB were gradual, they compounded the financial challenges facing New Zealand over the following decade or so. This exploitation of ACC’s resources undermined the corporation’s financial integrity and public trust, with lasting consequences. The ACC went from ‘public darling’ to being one of the most hated organisations in the country.
Transformation of Financial Models
The funding methods utilised by the Accident Compensation Corporation (ACC) in New Zealand have undergone significant changes since its inception.
Shift to Pay-As-You-Go (1982):
Initially, the ACC operated on a fully funded model, where levies collected were enough to cover the lifetime costs of each injury. However, in 1982, the scheme transitioned to a pay-as-you-go model, where annual levies were expected to cover all claims for that specific year. This method, although straightforward, deviated from the original actuarial principles of the ACC and led to increasing costs over time. Additionally, funds that were initially invested to cover future injury costs were moved into the government’s Consolidated Fund, reducing the government’s massive spending deficit. However, this change ultimately resulted in financial instability for the ACC, leading to insolvency in 2009.
Reversion to Fully Funded Model (1999):
In 1999, the ACC shifted back to a fully funded model, aiming to match annual tax revenues with the cost of that year’s injuries, thus avoiding future unfunded liabilities. However, this model faced hurdles, culminating in a $4.8 billion loss in 2009 due to increased claims, broader entitlements, and costlier services.
These politically driven funding model changes have profoundly negatively affected the ACC’s financial health and its capacity to deliver extensive injury compensation and rehabilitation services in New Zealand, to the kind of standards expected of a developed nation.
Financial Misuse and the ‘Honey Pot’ Mindset:
The ACC’s financial troubles are exacerbated by governments treating its reserves as a source of funds, or ‘honey pot’, for broader fiscal mismanagement rather than securing them for future claimants. This practice has damaged the corporation’s financial integrity, eroded trust, and threatened its sustainability. There is an urgent need for stricter financial management and less political interference to stabilise the ACC’s finances.
Cultural Shifts and Escalating Costs
New Zealand’s cultural evolution has also played a significant role in the ACC’s challenges. As society has become increasingly urbanised, sedentary, and fragile, we have seen a shift away from our pioneering roots that once exemplified resilience and stoicism. This transformation has fostered a ‘victimhood’ mindset, where individuals are less inclined to adapt to adversity and more likely to seek external solutions or compensation for challenges they face.
The costs of ACC have skyrocketed as a result of this cultural shift. The rise in claims reflects not only an increase in injuries but also systemic issues such as poor healing outcomes, diminished resilience, and the adoption of ineffective treatments. The widening of the definition of what constitutes an injury, such as including mental abuse and trauma, has further added to the scheme’s costs. The surge in vaccine injuries is the most recent cause for the beginnings of what stands to be the ‘mother of all’ cost blowouts – one that could totally bankrupt the scheme.
Many injuries that might have healed effectively with the application of more hands-on and disciplined rehabilitation are instead prolonged, or they never come as right as they could be. This is due to safe ‘cotton-wool’ therapeutic regimes and an over-reliance on passive treatments, including drugs. These do not facilitate healing, nor do they build physical or mental strength, and resilience – key components of treatment and recovery from physical injuries. My experience is that around 80 per cent of the treatment sessions funded by the ACC are sub-optimal, and a waste of time and resources.
Additionally, the growing trend to ask for treatment and compensation for minor injuries – which might have been ignored before – has put a huge financial burden on the scheme. I know of athletes who use massage and physiotherapy subsidised by the ACC to make up for bad training methods, poor diets, and too much training and competition. They do not address the root causes. The ACC has unwittingly facilitated this kind of behaviour and to the cost of the taxpayer. Many times I have said to an athlete or parent, ‘You do not need a physio – you need a new coach and a better training programme!’ Such advice typically falls upon deaf ears, since doing more of the same is the easiest path to be taking, and the ACC facilitates this kind of lazy behaviour.
You do not need a physio – you need a new coach and a better training programme!
Additionally, societal shifts towards risk avoidance have exacerbated these challenges. When I was an officer of the ACC, we often started our meetings with a reminder that we wanted to keep people safe. But we also wanted to make sure that people had fun, excitement, and challenges in their lives and activities. We were careful not to be ‘wrapping people in cotton wool’. The emphasis on ‘keeping safe’ at all costs often discourages individuals from engaging in activities that could build physical and psychological resilience. This culture of avoidance has not only made minor injuries more common but has also hurt recovery efforts. Effective rehabilitation often requires discomfort and stress, which are now often avoided because people are afraid of complaints or lawsuits.
The emphasis on ‘keeping safe’ at all costs often discourages individuals from engaging in activities that could build physical and psychological resilience.
These factors have made it harder for the ACC to keep its original goal of preventing injuries, treating them well, and helping people get better quickly and completely. To solve these cultural problems, we need big changes. We need to encourage people to be strong and responsible. We need to change how treatments are judged and funded, and focus on real needs. We need to make sure that treatments are based on results and are supported scientifically.
Ineffective Rehabilitation Practices
One of the ACC’s most glaring shortcomings is its risk-averse approach to rehabilitation. Instead of prioritising therapeutic efficacy, treatments are selected primarily for their safety, with effectiveness as a secondary consideration. This approach stems from a pervasive fear of complaints or legal repercussions, leading to suboptimal outcomes for claimants. Effective physical rehabilitation often requires the application of stress and discomfort to facilitate recovery. However, this essential component is frequently neglected by the therapist out of fear of the patient laying a complaint of professional incompetence against them.
This safety-at-all-costs mindset is now intergenerational, with many effective therapies now forgotten. This leaves claimants inadequately rehabilitated and perpetuating their dependency on the ACC, or other welfare services. There is now an excessive reliance on drugs, which come with long lists of terrible side effects, such as dementia.
The Current State of ACC
Today, ACC is an organisation bereft of vision and leadership. Its primary focus has shifted to risk avoidance, claim denial, and file closure, often at the expense of genuine claimant eligibility and their access to effective treatment and rehabilitation. This bureaucratic mindset, obsessed with not spending money, has eroded the core principles of injury prevention and effective treatment and rehabilitation that once defined ACC. To reduce the cost of injuries to society, we need to invest a lot of money in prevention, treatment, and rehabilitation. It will take years to see the benefits of this approach. Current prevention is little more than window-dressing, and current treatment and rehabilitation are about as effective as rearranging the deckchairs on the Titanic.
Without decisive action, the corporation risks financial ruin yet again, and a continued decline in public confidence.
A Path Forward
Revitalising the ACC requires bold and informed leadership. Key recommendations include:
- Effective Leadership: ACC needs leaders who focus the organisation on how to prevent, treat, and recover from injuries. They should not focus on file closure, or shifting the burden of care to another agency. The corporation needs leaders who are brave enough to challenge bad practices, question therapies, and to stand up to political interference and lobbyists.
- Prioritising Therapeutic Efficacy: Rehabilitation strategies must focus on proven methods, even if they involve discomfort or challenge conventional risk-averse norms.
- Protecting Financial Independence: Safeguarding ACC’s investments from political interference is critical to ensuring its long-term sustainability.
- Fostering Resilience: Promoting a cultural shift towards resilience and self-reliance will help reduce the growing dependency on ACC. Strong, visionary leadership is key.
- Implementing Transparent Metrics: Clear benchmarks for effective prevention, treatment, and rehabilitation outcomes should be established to ensure accountability and effectiveness.
Conclusion
The ACC was once a source of national pride and international admiration. When I joined the ACC, it was my dream job and one I wanted to have for life, but political interference in the scheme changed all of that several years later, and I resigned. Its decline into financial instability and inefficiency is a cautionary tale of mismanagement and negative cultural shifts.
By addressing these challenges head-on, the ACC can reclaim its position as a world leader in injury compensation, treatment, and rehabilitation. Strong leadership, a return to visionary ideas and principles, and a commitment to effective prevention, treatment, and rehabilitation are essential to restoring ACC’s legacy and ensuring its future success.
This article was originally published by garymoller.com.
