Who should bear the risk?

A few weeks ago, the Penguin family had a very enjoyable time at Rocket Car Day, in inner-city Sydney. Our car, the Silver Surfer, won its heat, and was a respectable third place in its repechage final (also in the SMH here). The day was very enjoyable. It was entirely frequented by inner-west geeks (or those who were inner-west geeks at heart, like us). Each new rocket car that was unveiled was admired by the spectators, particularly those (like the R2D2 car) which had clearly had some decorative effort put in, or some careful design effort.

The organisers had put on a barbecue, in best Australian tradition, and the lightheartedness of the event was summed up by the visual joke of the trigger mechanism

Also at the event, all of us, wearing sandals, were about two metres away from the person who had a one centimetre diameter hole burnt in her foot by one of the more streamlined entries. She was wearing an enclosed shoe.

The organiser was quoted in the SMH:

‘Last year we drew some blood, there’s a variety of things that go wrong.”

But despite the dangers of stray projectiles, tempered by the rule ”too light, won’t race”, lots of children are apparently part of the elated crowd.

”I’ve always tried to keep the spirit of it very community-based … and very relaxed,” Mook said.

I imagine that this event will be quite different in a few years time. Despite the very strong disclaimers at the beginning (you are watching at your own risk, please stay out of the path of the cars), someone is bound to sue for injuries after a while. And then there will be fences, an entry fee, compulsory enclosed shoes, and the wonderful community spirit will be diminished.

Here in Australia, we have a mixture of ways of compensating for accidents that cause injury. They start from the legal view that if the accident was someone’s fault other than your own, you should be compensated by the person at fault. But they’ve changed a lot over the years, as that view became too expensive, in some cases.

If there is clearly no-one at fault but yourself – bad luck – no compensation. But that group of injuries is getting smaller and smaller. At rocket car day, I imagine the woman with the hole burnt in her foot would have a reasonable case against the person who made the rocket car that hit her, or against the organisers, despite the disclaimers.

And then there are a variety of possible organisations or persons who could be at fault:

• your employer – in which case there are very defined limits as to how much you get per injury
• the person driving the car that hits you – again very defined limits per injury
• someone who can be sued for negligence (for example a council), which relies on the courts deciding how much you get per injury)
• the doctor who caused your injury (which also relies on the courts)
• Nobody (which is what the organisers were hoping in this case)

And, of course, if your injury comes from illness, then there is no-one to sue.

But in New Zealand, they have an Accident Compensation Commission, which gives you the same amount per permanent injury regardless of who was at fault (even no-one, or yourself). The key to this, is that nobody can be sued for causing personal injury. The laws in New Zealand have been changed to stop that.

This approach does seem to genuinely lead to a different attitude to risk. The ACC is funded through employment, car insurance, and general taxation. Which means that community organisations, councils and other people organising events do not have any financial consequences in the event of an accident.

Here in Australia, some laws (notably workers compensation and motor accident laws) have been changed (in different ways in different states), to take away that right to sue. But not for all injuries.The Productivity Commission has recently set up an inquiry into a national disability care and support scheme. This is looking at, among other things, whether there should be a social insurance scheme for all disabilities. On the face of it, that seems like a great idea – the long term disabled in this country mostly get a raw deal, but a very variable one, depending on whether there is anyone to sue. But substantial legal reform would be needed to make that work – providing the funding to make disability compensation a more level playing field by type of injury.

We do get a benefit in this country from the risk avoidance that comes from people being scared of being sued. But we also get a cost in that many moderately risky activities just don’t happen. That rocket car day was probably very close to that boundary, and may not stay on the do-able side for long. I’d rather not lose it. But that is much easier to say if you’ve never suffered one of those catastrophic, possibly preventable injuries that our legal system tries to stop.

I hope the productivity commission comes up with something more like NZ. But I doubt if it will happen. It seems too old-fashioned some how.