ACC change a rushed answer to the wrong problem

2026-03-11 - 16:07

Opinion: Something desperately cynical is eroding our precious democracy. It seems that the worse a proposed change is, the less scrutiny is allowed, the faster it is rammed through parliament and the less reflection there is on the actual problem. You might have blinked and missed the latest example, but the Social Security Amendment (Accident Compensation and Calculation of Weekly Income) Bill was passed under urgency with very minor changes barely two weeks after it was introduced on February 18. The bill was described by the Government as solving a ‘”double dipping” problem. It was framed as “making it fairer” by treating all people the same when they received earning-related ACC payments. Someone who had been forced onto a benefit for months and often years as their ACC claim awaited a decision and, once accepted for the weekly payment, also got ACC backpay, was compared with someone who got their ACC payment immediately after the injury. Here’s the surprising bit: the first person was said to have been “advantaged” because they had received a benefit and often hardship “add-ons” during the time they were waiting. It’s been longstanding practice that when someone finally gets backpay, the Ministry for Social Development recovers the amount of the main benefit they were paid at the time, dollar for dollar. The recent controversy has been over more deductions for supplementary benefits such as the accommodation supplement, temporary additional support and disability payments. These payments allow the claimant to survive the wearyingly drawn-out decision-making process. Many submitters noted that if they had received ACC more quickly, they would have also received rehabilitation and counselling support without delay, which may have sped their recovery. If there is not enough backpay to cover the benefit and the supplementary payments, MSD creates a new debt they now must repay each week. A challenge in the High Court earlier this year found there was no legal basis for deduction of the supplementary payments. Clients with outstanding debt rejoiced. Instead of appealing this decision, the Government eyed the fiscal costs (a paltry $63m) and sought to change the law to clarify that these payments were to be deducted without discretion. The Government felt there was no need for a regulatory impact statement, or a select committee process or any analysis, framing it as a technical, clarifying issue. It thought it could get through under urgency, virtually overnight. But then, at the first reading, Labour voted for the bill on the condition it went to a select committee for scrutiny. A truncated process followed in which interested parties were given only two and a half days to make their written submissions. Only eight of these were heard orally by the select committee, whose final report was produced just three days later on February 26. Given the short time frame, and the personal time cost, it was amazing there were 855 unique submissions. They comprised a collective outpouring of rage (only two thought the bill had merit). Many were from people with sensitive abuse-related claims, or head injury claims, or were seeking loss of potential earnings compensation. Advocacy and legal firms also made detailed submissions involving hours of unpaid work. My own took at least a full day’s work. Imagine the pressure the select committee was under to do justice to all 855 submissions. But, as the subsequent debates in the committee stages and final reading showed, the coalition’s ears and eyes were firmly shut while they mouthed the ‘double dipping’ mantra to force it across the line (68 to 54 votes). Like other submitters, I argued that this bill was highly damaging to vulnerable people and a regressive step, a view reinforced by many passionate speeches by opposition parties in the closing debate. It should have been thrown out but instead will be implemented on April 1. In my submission I tried to focus attention on the actual underlying problem, which is that the bill tried to mesh together two very different schemes based on different purposes and principles. Partners of those receiving backpay are particularly disadvantaged. Weekly compensation paid by ACC is not a welfare benefit. It is earnings-related compensation for personal injury based on the individual’s case, not their financial position or that of their partner’s. Supported living payments and other main benefits aim to prevent poverty; they are flat-rate subsistence payments administered by MSD and are targeted by abatement against joint income. Deductions of joint benefits from the backpay of individual weekly injury compensation collapses these distinct purposes. The partner may then be denied any ongoing benefit because their partner has been awarded ACC weekly payment. This means there will be cases where the injured person and their partner would have been better off if their partner had not made the ACC claim. As I argued, the amended Act embeds outmoded, contradictory, complex and unfair 20th century welfare assumptions. One of these unfair assumptions concerns marriage where a couple is assumed to need less than two single people who share accommodation and so can be paid a lower rate of benefit. Another is the assumption they pool their income, justifying a joint income-test. The amendment to the Act has a disproportionate impact on women who are more likely to be affected as abuse claimants, secondary earners and benefit recipients. Their loss of a benefit may mean a draconian erosion of their financial autonomy and increased dependency within the relationship. New Zealand Superannuation isn’t so draconian, it’s individualised. A married retired person may receive a lower rate of Superannuation than a single person, but it is not reduced by the income of their spouse. A disabled spouse may lose her independent income because of her spouse’s income or ACC, but once she turns 65, she is automatically entitled to the full married rate of NZS. It is time to modernise the overall treatment of marital status. Several major court cases have challenged how relationship is defined and how the law is applied. We had moved a little in the right direction in 2019 by the final, hard-fought abolition of the spousal deduction where there is an overseas pension paid. This was hailed by MSD as the first step to modernise the welfare system with respect to relationships. The bill to amend ACC backpay payments was a lost opportunity to re-examine the role of marital status in determining policy direction. A lump-sum back-payment of ACC should not be diminished by either a partner’s past gross benefit nor most supplementary welfare payments made to the couple. Neither should a partner’s benefit be affected by the decision to award an ACC payment. If we want a fair and modern social protection system, we shouldn’t patch up existing laws with rushed fixes and instead confront the deeper structural flaws, and in particular, outdated assumptions about relationships that strip people of autonomy or justice.