Media release on behalf of ACC Futures Coalition – 6 December 2011

National/ACT deal adds unnecessary costs to ACC

Yesterday’s confidence and supply agreement announced by the ACT and National parties will just add an unnecessary layer of costs and increase levies in the work account of ACC, according to the ACC Futures Coalition.

“The government’s consultation on the privatization of the work account of ACC has been on the basis that ACC would remain in the market”, said Hazel Armstrong, convenor of the ACC Futures Coalition. “But now that the election is over the National/ACT deal states that:

National acknowledges ACT's concern about the participation of private insurers and the fairness of the competitive process if ACC remains a competitor for Work Account business, and agrees to implement policy to manage and minimise this risk.

“We have already pointed out that private insurers have to earn a margin to generate a return on capital after having paid tax” said Ms. Armstrong. “Officials estimate this margin to be around 25 percent over the rate ACC charges because as a Crown entity ACC does not have to pay tax or dividends”.

“There are only two options for the government to enable them to meet this policy obligation to ACT: either they remove ACC from the market like they did in the 1990s or they turn ACC into a state-owned enterprise with the obligation to pay tax and return a dividend to the government. As the sole shareholder of the SOE they can then set the level of return they expect so high as to render ACC uncompetitive.”

“Firstly this will add a whole layer of cost to what is one of the most administratively efficient accident compensation schemes in the world”, said Ms. Armstrong. “Secondly the policy makes clear that the main reason for the change is to be fair to private insurers, not the needs of injured workers or the levies paid by employers.”

“This is a neat trick that enables National to pose as the voice of moderation while they are campaigning, then after the election create the impression that they have had their hands forced by the more extremist ACT. The policy that National took to the electorate said it would ensure that ACC remains a sustainable 24/7 accident insurance scheme and it would save levy payers money. Their agreement with ACT does not commit the Government to keeping levies low, nor does it mean that ACC will be able to be sustainable and allow it to focus on better rehabilitation rates,” said Ms. Armstrong.

ENDS

The ACC Futures Coalition consists of community groups, academics, organisations representing people who need support from ACC, health treatment providers and unions who have come together around the following aim:

To build cross-party support for retaining the status of ACC as a publicly-owned single provider committed to the ‘Woodhouse Principles’, with a view to maintaining and improving the provision of injury prevention, treatment, rehabilitation and ‘no fault’ compensation social insurance system for all New Zealanders.

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