Key Points:

Prime Minister Helen Clark has condemned National's ACC policy but the business sector is supporting the party's commitment to open it up to competition from private insurers.

Party leader John Key announced the policy yesterday, saying a National-led government would improve the scheme and make workplaces safer.

He said opening the Workers Account to competition would be "investigated" and decisions would only be made after careful evaluation of the benefits offered, but a background paper issued with the policy left little doubt about National's intentions.

"The National Party is committed to the principles of competition and choice as the appropriate means of ensuring efficiency of ACC provision, and increasing incentives for improved workplace safety and better rehabilitation of accident victims," the paper said.

"Because there is no choice or competition, there is no real transparency around the operation of the scheme."

Helen Clark said opening up the Workers Account, which handles compensation for employees and self-employed people, would have a devastating impact on the scheme.

"It works on the basis of being a large social insurance scheme," she said.

"You kick the guts out of it if you take workers' compensation out.

"With private insurers, over time our people will pay more and get much less."

Business New Zealand chief executive Phil O'Reilly said the sector supported National's policy.

"We would like to see employers reimbursed for the $800 million of business levies held unused in ACC reserves, and to see an end to the over-charging that caused it," he said.

The previous National government opened ACC to competition and Labour re-nationalised it when it won the 1999 election.

The New Zealand Society of Physiotherapists warned today if ACC was reopened privatisation many accident victims would suffer through their injuries or have to pay for their own rehabilitation.

"We saw it last time ACC was privatised," society president Jonathan Warren said.

A survey commissioned by the Department of Labour in 2000 showed the number of injury claimants dropped off by up to 40 per cent during the time of privatisation.

Patients were so confused about how to claim coverage for their accidents that they sometimes just gave up in frustration, which resulted in chronic conditions, he said.

Some employers reportedly deterred workers from making claims in case premiums increased, and the same fear put off the self-employed.

And some employers reportedly pressured workers to say their injuries were not work-related. More claims were declined, as insurance companies denied responsibility, Mr Warren said.

"Patients were caught in the middle of a bureaucratic nightmare as physios and other providers struggled to see what company covered them."

- NZPA