The Accident Compensation Minister says a proposal to open up workplace insurance to private providers is a pragmatic move that will give employers choice.
Last year, the Cabinet decided in principle to introduce competition into workplace insurance coverage, which is worth almost $750 million a year in levies.
The Government released consultation documents on the proposal on Wednesday, and its final plan will form part of National's election manifesto and be implemented if the party wins on 26 November.
ACC Minister Nick Smith outlined more details of the Government's plans for the corporation at a meeting in Auckland on Wednesday.
Some 30 protesters were outside the meeting, carrying banners bearing slogans with messages such as "small nicks become nasty cuts".
The changes proposed would allow an employer to get their workplace insurance cover from providers other than ACC from October 2012.
The private insurance companies would need to provide at least the existing minimum work cover and entitlements provided by ACC, and they would be covered by the same regulations for resolving disputes.
ACC Minister Nick Smith says the reforms will allow the corporation to become more resilient and efficient.
Dr Smith told Morning Report that ACC has repeatedly been in periods of crisis during its 37-year history and needs "the constant pressure of choice and competition to make sure that it stays on its toes, that it stays efficient".
The corporation would maintain its existing role in the motor vehicle and earners' accounts. The Government says it is committed to 24/7 no-fault cover and ensuring worker entitlements are not compromised.
Dr Smith said employers will have to play a bigger part in reducing accidents and fatalities.
A levy would be put on all workplace insurers, including ACC, to meet the costs of covering claims if an insurance company collapses.
Labour, Greens vow to reverse changes
Opposition parties Labour and the Greens say the proposal signals the beginning of the privatisation of ACC and they are vowing to reverse changes in any future government they are part of.
They say private insurance companies - mainly from Australia - will profit at the expense of New Zealanders because they will reduce the number of claims accepted and raise costs.
Both parties are warning the insurance sector that they will be entering into workplace insurance at their own risk, as Labour and the Greens will work together to reverse the proposed changes.
Labour's ACC spokesperson, Chris Hipkins, says the corporation is already very efficient and New Zealanders will be worse off with private insurers. "The only way the private insurance companies will be able to make any money out of it is either by reducing the number of claims that are approved or by increasing costs," he says.
The Greens say ACC will only become more efficient if it tries to match what the party says is the under-provision of insurance cover by private companies.
Its ACC spokesperson, Kevin Hague, says it is possible that the ACC could reduce its costs - but not with a good outcome. He says they could mirror the under-provision seen in the private sector and it would be a race to the bottom.
More litigation 'likely'
A lawyer with a group advocating to keep ACC fully owned by the public says a proposal to open it up to competition will result in a lot more litigation.
Hazel Armstrong, from ACC Futures, who is also an employment and ACC lawyer, says it is already a super-efficient system.
Ms Armstrong says injured New Zealanders will find they have to argue with their employers about whether they were hurt on the job and there will be much more litigation. New Zealanders want insurance cover and treatment without a hassle, she says.