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HA10 Law Commission report

HA10
Law Commission report
In 1987, following the publication of the officials committee report, the Government asked the New Zealand Law Commission (the chair of which was Sir Owen Woodhouse) to review the accident compensation scheme. The terms of reference were:
“to examine and review that part of the Accident Compensation Act 1982 which recognises and is intended to promote the general principles of community responsibility, comprehensive entitlement, complete rehabilitation, real compensation and, in particular, administrative efficiency, as propounded by the 1967 Royal Commission Report on Personal Injury in New Zealand. It may be accepted that those principles are broadly acceptable and deserve to be supported.”
The Law Commission report was published in May 1988. It proposed changes to the scheme designed to remove some of the perceived anomalies between the earnings-related compensation available to accident victims and the means-tested welfare benefits payable to those who were incapacitated through sickness or disease. It was aimed at simplifying the administration of the scheme and removing some of the inconsistencies, which had been met in applying the concept of “personal injury by accident”. It proposed the abolition of lump sums for permanent loss or impairment of bodily function and for pain and mental suffering and loss of enjoyment of life, and advocated that they be replaced with periodic payments.
Six recommendations of the Law Commission are set out below.
HA10.01
Safety and rehabilitation
A Minister should be charged with a general policy responsibility for the promotion of safety and the prevention of accidents of all kinds, and for the optimum rehabilitation of all persons who suffer physical or mental impairment, whatever the origin or cause.
The best statistical picture should be compiled by the Accident Compensation Corporation.
HA10.02
Entitlement
The rights to benefits depended on injury, and sickness should be included as soon as possible.
HA10.03
Accident and incapacity
Physical or mental injury should be related to the comprehensive list of external causes of injury formulated by the World Health Organisation. Medical mishap should not be excluded from compensation simply because there was some recognised risk in advance of the therapy, in the same way that the risks of using the highway could not sensibly disqualify victims of road accidents
Special provisions should be made for victims of sexual assault or other criminal attack involving significant or lasting mental distress or other impairment.
HA10.04
Benefits
Periodic benefits should, in general, be earnings related, have no means test qualification, be payable during incapacity until age 65 (or dependency in the case of survivors) and be assessed at a level for total incapacity of 80 percent of earnings.
Incapacities suffered after age 60 should carry a benefit for a maximum period of 5 years.
There should be a waiting period of 2 weeks, rather than one, before commencement of earnings-related benefit; with a statutory obligation upon the employer to pay an employee in a work-related accident an amount equivalent to the benefit to cover the waiting period.
Housewives and other non-earners should have a periodic benefit assessed against notional earnings equal to average ordinary weekly earnings for “all sectors all persons”.
HA10.05
Permanent disability
Lump sums for permanent impairment or for pain and suffering should be abolished.
Instead, to encompass lost physical faculty and any economic consequences, any significant partial disability should be evaluated as a percentage of total disability by reference to the American Medical Association, Guides to the Evaluation of Permanent Impairment.
However, to avoid over-compensation for higher paid and sedentary earners, or under-compensation of manual and lower paid earners, the base for everybody, including non-earners, should be average ordinary weekly earnings.
There should be a discretion to increase that earnings base in order to avoid injustice in any particular case.
In exceptional cases there should be a discretion to commute part of a periodic payment to a present capital sum where it would clearly be in the beneficiary’s real interest to do so.
To qualify for a permanent partial benefit the impairment should be 5 percent or more of total; and impairment of 85 percent or higher should be assessed as 100 percent.
HA10.06
Income
The motor vehicle levy should be geared to changes in the consumer price index.
An appropriate part of the excise duty paid on petrol should be paid in support of the accident fund.
Employers and the self-employed should no longer be levied by reference to classified business activities, but at the same uniform rate for all.
The recommendations of the Law Commission were given careful consideration by the Government. A Cabinet Committee on Social Equity was formed, comprising the then Deputy Prime Minister Geoffrey Palmer MP, the Minister of Social Welfare, and the Minister of Health. Further work was done by officials committees and, in the budget presented on 27 July 1989, major changes were proposed. The scheme was to be extended to cover incapacity from sickness and disease and was clearly to be directed towards compensating the more seriously incapacitated.

From Personal Injury in NZ

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