Changes are needed to secure the future of ACC
Changes are needed to our country's ACC system to make the scheme affordable, sustainable and fair.
ACC's annual report was last week tabled in Parliament, showing a $4.8 billion loss over the past financial year - the biggest government departmental loss in New Zealand's history.
This comes on the back of another loss of $2.4 billion in the previous year, showing that the current ACC scheme is financially unsustainable.
In order to ensure a sustainable future for ACC, it is crucial that changes are put in place that will cut back on the cost being passed onto New Zealand taxpayers.
Under the current law, the ACC Board has been forced to propose significant levy increases in order to fund the scheme. However, the proposed increases are way too high and New Zealanders should not be expected to pay such high fees for the ACC scheme.
That is why the Government is introducing law changes that will more than halve the levy increases while securing ACC's future.
Key legislative changes will include strengthening disentitlement laws for criminals and those who hurt themselves while committing a crime, reversing entitlements for wilfully self-inflicted injuries and suicide, pushing back the full funding date from 2014 to 2019 and enforcing a requirement for there to be a more open and transparent reporting system for ACC's liabilities.
The financial problems facing ACC have come about largely because of the mismanagement of the scheme by the previous Labour government.
Nine years of failing to keep tabs on spending has caused an underlying problem in the scheme that has seen ACC drift from being a state insurer into a welfare provider.
The reality is that ACC cannot sustain the huge ongoing increases in claim costs arising from greater claim numbers, deteriorating rehabilitation rates, and unfunded scheme extensions.
The changes to the law will not reduce the income compensation payments to any existing claimants but future claimants will receive lesser amounts in some circumstances.
The law changes will provide stronger incentives for existing and future claimants to return to work so as to reverse declining rehabilitation rates over the past five years.
The legislative changes are part of a wider reform of ACC that began with changes to the Board in March, the stock take announced in August, and other regulatory and operational changes.
This Government's major concern is the growing gap between ACC's assets and liabilities, with ACC's investment returns being lower through the recession.
While we expect these to recover, the reality is that ACC's claim costs have risen by 57 percent and its unfunded liabilities have grown from $4 billion to $13 billion in just four years.
Figures show that ACC's liabilities have grown to an extent where the scheme is effectively $3000 in debt for every New Zealander, which means that it is running at a rate that is simply not sustainable.
Our objective is to reduce ACC's liabilities by $2 billion and to secure the long-term future of ACC as an efficient and fair 24/7, no-fault insurance scheme for all New Zealanders.
