Saturday, October 24, 2009

NZ does not exist in a microcosm

Reform UK has just released a report proposing ideas for reforming the current social security system. I thought the opening sentence was spot on;

Responsibility has drained away from the British welfare state, leaving a poisonous blend of entitlement and apathy.

A summary of proposals is;

> Abolish middle class welfare and benefit gimmicks, with immediate cuts that would save £14 billion. Further savings, including from migrating individuals from the state pension onto personal protection accounts, should be made as part of a medium term plan to restore the public finances.

> Hand benefit rules and operation to social enterprises and companies, funded through employee national insurance contributions.

> Develop flexible Personal Protection Accounts, building on the success of ISAs and the introduction of auto enrolment and personal accounts for retirement savings in 2015.

> Where possible, replace social security benefits with private provision, with private insurance being a potentially useful but largely underutilised tool, particularly for disability but also in other areas.


Of particular interest, however, given the overdue debate NZ is now having over ACC, and last week's Auditor General report showing MSD was not succeeding in reducing Sickness and Invalid benefit dependence, is further discussion about insuring for accidents and disability, and international activity;


As well as savings for the costs of retirement, personal accounts have the potential to be used for a range of other social policy purposes. This is the approach taken in Singapore, where, alongside pension funds, individuals contribute towards personal welfare accounts that provide support for unemployment, accident or injury...

A variant of personal accounts has been in place in Brazil for several
decades and has been introduced by several other Latin American countries. Uruguay has a dual public/ private insurance system which covers, among others, old age and unemployment insurance....

The OECD has identified private disability insurance as a potentially useful but largely underutilised tool. Private disability insurance has become an important part of welfare provision in countries such as the Netherlands and Finland. In the Netherlands, for example, the introduction of experience-rated premiums for public disability insurance was a key factor in explaining the recent sharp fall in the rates of inflow onto disability benefits....

The use of private insurance in Switzerland and Canada has also had similar effects on reducing the inflow and costs of disability. These positive effects reflect the financial incentives facing private providers to avoid the liability from people becoming unwell and, if they do become unwell, not recovering as quickly as possible...


So anyone who thinks we should or will stick with our current approach has their head in the sand. Historically welfare provision debates and outcomes have occurred in an ongoing and international fashion. Labour's reversal of ACC privatisation in 1999 was merely a stalling of reform.

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