ACC on track to be self-funding in six years

Accident Compensation Corp, whose board and executives were purged last year in the fallout of major privacy breaches, is on track to fully fund its accident coverage, paving the way for significant and long-term cuts in future levies.

Chairwoman Paula Rebstock told parliament's transport and industrial relations committee the state-owned insurer is "very much on track" to full funding in six years, which could give ACC room to deliver cheaper levies.

"That sets us up really for an overall situation where going forward we could see significant reductions at some point in levies," she says. "We think those significantly reduced levies could be sustained on our projections for very long periods of time."

The turnaround in the corporation's fortunes comes just three years after former chairman John Judge warned of a $12.8 billion shortfall between future liabilities and ACC's net assets, prompting a cost-cutting programme that delivered a surplus the following year.

The cost of those forward liabilities increased as interest rates were slashed during the global financial crisis, meaning expected returns on investments would be lower. As interest rates increase, those forward liabilities reduce.

Ms Rebstock says ACC's earners account is already fully funded, while the work account is "very close" and the motor vehicle account is on track to "reach the targets that have been set for us".

ACC is still working to improve on its privacy breaches, which prompted a boardroom and executive clean-out last year, and Ms Rebstock says the corporation is looking at a "major transformation programme" to invest in infrastructure to move from a paper-based system to a digital one.

ACC can improve on its injury prevention programmes to help reduce future costs by taking a different approach when reviewing the return on investment, she says.

"The corporation has tended to take too short a view on payback period. If you take a slightly longer view I think you'll find there are very effective injury prevention measures the corporation could and should be using." 

(BusinessDesk)

This article is tagged with the following keywords. Find out more about My Tags

Post Comment

5 Comments & Questions

Commenter icon key: Subscriber Verified

I'll reserve judgement until the 6 years is up.

Yet to see a govt. department that doesn't manage to waste future "surpluses" before the future arrives.

Reply
Share

Yet to see full commitment from private enterprise to a genuine triple bottom line

Reply
Share

Now we have to ask ourselves what will result in the best use of those funds. ACC investments or leaving that money in the hands of the businesses it was stolen from.

Reply
Share

And to think Andrew little wanted to raid taxpayers funds and spend on labour projects...no asset sales or should we say no asset raids

Reply
Share

If the earners and workers accounts" are there or nearly there", then why did the Government ignore the recommendtaions to reduce levies in these area?
This was an opportunity to reduce direct costs to employers and the self employed that was ignored( so we could get the books back in balance...)

Reply
Share

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7850 0.0000 0.00%
AUD 0.8924 0.0000 0.00%
EUR 0.6196 0.0000 0.00%
GBP 0.4880 0.0000 0.00%
HKD 6.0917 0.0000 0.00%
JPY 84.8970 0.0000 0.00%

Commods

Commodity Price Change Time
Gold Index 1231.3 -0.710 2014-10-24T00:
Oil Brent 86.1 -0.510 2014-10-24T00:
Oil Nymex 81.0 -1.020 2014-10-24T00:
Silver Index 17.1 0.024 2014-10-24T00:

Indices

Symbol Open High Last %
NZX 50 5292.8 5344.4 5341.7 -0.15%
NASDAQ 4459.5 4486.3 4452.8 0.69%
DAX 9008.6 9044.9 9047.3 -0.66%
DJI 16677.0 16811.7 16677.9 0.76%
FTSE 6419.1 6419.1 6419.1 -0.47%
HKSE 23311.9 23352.6 23333.2 -0.13%
NI225 15354.4 15377.0 15139.0 1.01%