ACC levy ‘co-design’: great idea or gothic horror?

Will a ‘co-design’ of a new ACC levy incentive system lead to a universal embrace from businesses and deliver better H&S outcomes for workplaces, or will it lead to a bolt-on Frankenstein-like policy to replace a scheme that is already turned off? And, asks Hamish Howard, does it matter anyway if you’ve got an effective H&S system already operating? 

Remember the original purpose of ACC levies and loadings? They exist in order to not just punish dangerous and unhealthy workplaces, but also to encourage and incentivise the companies that take care of their staff and keep them safe while at work.  

That was before the ACC announced another levy shake up in April, meaning it would no longer offer its Workplace Safety Discount (WSD) and Workplace Safety Management Practices (WSMP) products. ACC has pressed pause on the existing offering, in favour of consulting with the business community on a better way to incentivise businesses and improve health and safety practices. 

It’s called a ‘co-design’ approach to enhancing the wider claims programme.

The WSD and WSMP were based on experience ratings (ER), which take into account a business’s claim history when calculating the ACC levies that a business will need to pay. This means a company with a lower-than-average injury rate, with better-than-average rehabilitation or return-to-work rates, could receive a discount. Of course, if a company has a worse-than-average claims experience, the company might receive a loading on their levy.

The ACC offered a no-claim discount programme for small businesses, which rewards them with a 10 percent discount, or alternatively a loading on their levies. 
For medium and large businesses, it applied an experience rating that offered a discount of up to 50 percent or a loading of up to 75 percent. They’ve also got a nifty table on their site: http://www.acc.co.nz/for-business/experience-rating/index.htm for some quick back-of-the-envelope-type calculations.  

That’s no small beer. But on the topic of ACC, opinions are like certain parts of one’s anatomy – everyone’s got one. Therefore, ACC is going out to the business public to seek its input, and to see if someone out there knows a better way to incentivise companies, which will simultaneously deliver better health and safety outcomes for New Zealand’s workplaces. 

To give ACC credit, it is aware that this is no walk in the park, and its information advising on this significant change was rather honest.  

“We’ve got more work to do in shaping how ER might motivate businesses to drive improvements in their health and safety performance,” opines ACC’s dedicated co-design project website. 

In the meantime, it has already flicked the switch off on the current system.  
Now, I love a good bit of co-design as much as the next business owner, but while ideas and co-design action intrigues and inspires business managers and management consultants across the nation, ACC have turned off any incentives in the meantime, specifically its Workplace Safety Discount (WSD) and Workplace Safety Management Practices (WSMP) incentives.  

Although not all companies were big fans of these schemes, they were available and perhaps went some way in dangling both the tasty carrot and threatening stick. With nothing yet to replace them, and delays in the process already, there is some trepidation about when and what scheme will eventuate.   

What is certain though is, if a company has a good health and safety management system in place, including one that is solid on data, it shouldn’t fall foul of the new output of the ‘co-design’ process or fear a re-audit – even if the new ACC co-designed process does resemble some sort of “Son of Frankenstein” mix of new and old levy rules. 

The answer in the long run might mean ACC needs to drastically increase the levies paid by employers for those with high injury rates because, until then, nothing much will drastically change for those high-risk sectors such as forestry and construction. 

Brandishing my trusty biro, I looked at a forestry company for example. If its wage bill was $3.2 million per year, its levy would be more than $100k. A 20 percent discount from Tertiary WSMP would be a $20k saving.  However, this would also be similar in the saving that a food manufacturer, employing 250 people in a less dangerous industry, would also make.  

In the meantime, the prudent thing most companies can do for both their staff’s welfare, and for its bottom line, is to get an effective, inclusive and easy-to-use health and safety system in place that clearly provides the data and trends at the fingertips of both management and board directors.  

Not only will this keep fear of policy monsters at bay, it will also provide information to potentially improve safety and productivity while saving money on future levies.  

Hamish Howard is managing director of Assura Software.