New Zealand has joined the ranks of countries uncovering a dark chapter in its history, with more than 200,000 people found to have been victimized in state and faith-based care over decades. The government is preparing to issue a formal apology and potentially pay billions of dollars in compensation to those affected, despite facing a significant budget deficit. The findings from the New Zealand Royal Commission of Inquiry shed light on the extent of abuse, with an estimated 655,000 individuals passing through care institutions from 1950 to 2019, of which 17 to 39 percent experienced abuse and/or neglect. The report, spanning 3,000 pages, heard from over 2,000 survivors who shared their harrowing experiences, revealing a troubling pattern of abuse across different decades and care settings. The Commission has called for widespread law reform and an urgent overhaul of the care system to address this national disgrace and prevent further injustices from occurring. Prime Minister Christopher Luxon has acknowledged the need for accountability and action, recognizing the unimaginable suffering that has taken place in these institutions.
I understand that this acknowledgment may seem insincere without the acknowledgment that comes with compensation.
âI apologize that we are unable to provide that to you today, but it is a priority for the government in the near future.â
Challenges in Providing Redress
Minister Erica Stanford, who is spearheading the government’s response to the inquiry, stated that decisions on compensation for the survivors are a top priority.
âI can assure them that we will review the Royal Commission’s report and recommendations diligently, and provide more clarity by November,â she informed Parliament.
Granting compensation to numerous victims will pose a complex challenge for the government.
In New Zealand, civil lawsuits for personal injury are prohibited, and individuals typically receive fixed compensation from the Accident Compensation Corporation (ACC) scheme, funded by contributions from employers and employees.
However, obtaining ACC compensation for mental distress is notoriously difficult, and in past cases of widespread harmâsuch as the Christchurch mosque attackâthe government had to enact very limited exceptions to that restriction.
The Commission’s report highlighted that survivors have historically received minimal to no financial compensation from the ACC scheme and recommended legal changes to allow them to pursue redress through the legal system.
Currently, survivors of abuse and neglect in care can receive up to $25,000 (US$14,700) from the government, based on the duration of their time in care. This calculation is predicated on the Ministry of Social Development’s belief that individuals who spent more time in state care are more likely to have suffered repeated harm.
However, the Commission identified significant flaws in this formula, stating, âThere is a risk that survivors who have spent a long time in care and experienced lower-level abuse will receive more (even substantially) than survivors who have spent a short time in care yet suffered higher-level abuse (such as multiple rapes).â
In Australia, the Australian Royal Commission into Institutional Responses to Child Sexual Abuse led to legal reforms enabling survivors to file civil claims and receive substantial compensation.
In 2023, Australian juries awarded abuse survivors $5.9 million and $3.3 million in compensation. In 2021 and 2022, survivors received payouts of $2.6 million, $1.5 million, and $1.9 million.
If we assume that the level of abuse was consistent across state and private institutions, with an estimated 150,000 people abused in state care, compensation awards averaging around $2 million could result in the government facing approximately $300 billion in claims unless an alternative solution acceptable to survivors, their families, and the public is found.
