Good Clean Fun: So simple even a child can use it. Now you too can enjoy channel-six entertainment every night in stunning 32-bit technicolor.
ACC is Fine - Seeing Through the Spin
In October 2009 the Accident Compensation Corporation posted a $4.8 billion dollar loss, which was referred to in the media as "the biggest corporate loss in New Zealand's history". There was of course a lot of wailing and gnashing of teeth and many ideas were mooted as ways to deal with this loss, including introducing an excess, reduced coverage, substantial levies rises, privatisation and the opening up to small or all of ACC's services to competition.
This has caused the inevitable protests and letters to the editors as certain user groups rally against the proposed changes that will affect them directly. Unfortunately this has also caused rifts and finger pointing as user groups who feel themselves unfairly targeted (like motorcyclists) question why other user groups (such as cyclists) have "escaped" the proposed changes.
While at some point there does need to be discussion of what ACC should cover, how it should be paid for and the pros and cons of privatisation/ competition this needs to happen outside of the discussion of the "$4.8 billion loss" because if you dig a bit deeper it turns out there may not be a loss at all.
The 2009 ACC Annual Report states that in the last financial year ACC received $4.1 billion dollars in levies and has $23.8 billion dollars in claims liability which sounds pretty dire. If you consider that this equates to over $5,500 per New Zealander in claims liability it all raises the question of what "claims liability" actually means.
It turns out that "claims liability" isn't just about covering claims over the past financial year; it means covering future claims in a "pre-funded" model. Dr Michael Cullen introduced this during the previous Labour Government with the legislated target of 2014 for ACC to become a fully pre-funded entity when the global economy was booming and we as a nation could afford such things.
With the current economic climate the 2014 target for full funding is not looking good - hence the announcement of the $4.8 billion "loss". To be fully funded right now ACC would need reserves of around $24 billion, at the moment reserves are around the $11 billion dollar mark.
To put this all into perspective if you dig through the ACC Annual Report you'll find (on page 85) that in 2009 ACC received $4.1 billion in levies (with a total cash income of $4.6 billion) and paid out $3.4 billion* in claims - a surplus of $700 million between levies and claims.
So, what we have is a corporation that has $11 billion in reserves and makes an operating surplus around the billion dollar mark which apparently in "crisis" and in need of major increases to cost, decreases to service - and possible privatisation/ opening to competition for it to survive?
Give us all a break.
To make the whole matter even more galling payments to another Cullen pre-funding initiative the "Cullen Fund" for superannuation were suspended in the 2009 Budget. So the National government already has a prudent way for dealing with issues like this during the Recession - put them on hold.
In the plainest English possible: postponing the pre-funding requirement for ACC until better economic times would solve the problem with ACC balance sheets (if a problem exists).
My concern is that if we as a country buy into the spin of an "ACC blowout" that is being fed to us and respond accordingly we run the risk of making decisions which will put in jeopardy the core concept of ACC - almost total cover in exchanging for losing the "right" to sue. As a keen mountain biker and outdoors enthusiast I would hate for us to move into a culture of lawsuits and blame that exists in countries such as the U.S.A.
For more indepth reading on the financial nitty gritty from mainstream media:
Brian Fallow - NZ Herald Economics Editor: http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10561167&pnum=0
October 24th-30th 2009 - Listener Editorial: http://www.listener.co.nz/issue/3624/columnists/14242/future_shock.html
* Often quoted as $3.1 billion in the mainstream media which suggests I might be missing something
