ACC Should give up its Billions -Copeland

The Kiwi Party

Press Release

20 October, 2009

Former MP & Kiwi Party Finance spokesperson, Gordon Copeland, today expressed the view that ACC should utilise the billions of dollars held in its Investment Fund to fund current cost increases or surrender those funds to the Government.
"I have always questioned the logic of building up multi-billion dollar reserves in the ACC to pre-fund the tail of present compensation claims," said Mr Copeland.

"The ACC was never intended to be an insurance company but a ‘collective,’ if I can use that term, which would, on behalf of all New Zealanders, pay compensation to accident victims. It was a 'social contract' which brought to an end the old workers compensation arrangements. Kiwis agreed to trade their former right to sue for compensation, in exchange for a comprehensive cover to all accident victims, funded by way of levies on employers, employees, motorists, etc.

"It was a simple 'pay as you go' system which adjusted the levy impost year by year to cover compensation payments & administration costs. All pretty simple really but ground breaking at the time.

"I have no idea why the system was changed sometime during the 1990's to empower it to levy enormous amounts on today’s taxpayers to pre-fund payments which don't have to be made until years into the future. My simple philosophy is, 'If it ain't broke, don't fix it!'

"It is not too late to revert to the original arrangements & simply have the people of New Zealand fund compensation payments on a year by year basis.

"I know that Government could find a more useful way of utilising the billions which would be freed up for other purposes in these stringent economic times!

"The ACC held $10.6 billion in its Investment Fund at 30 June 2009.

"Purists might argue that the Funds should by drawn down only to offset levies, but I think that, in the current economic climate, people would be happy to see the Government utilise those funds to reduce borrowings. The country is effectively now borrowing to fund future accident compensation payments and that needs to be questioned. It is the reason that John Key & Bill English gave for suspending contributions to the Super Fund. If for future Super why not for future compensation? In fact the economic case for pre-funding super is actually much stronger than that for pre-funding compensation.

"Certainly there is no economic case, as we struggle to come out of recession, to raise ACC levies massively whilst the Corporation sits on investments of about $11 billion, & that should not be allowed to continue. It's time for some common sense & the Government should act forthwith."

Ends

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