ACC: Just plain negligence
Why weren’t New Zealanders told, before the election, that there was a billion dollar plus hole in the Accident Compensation scheme?
And shouldn’t someone be held to account for it?
Today’s report answers some questions on the $1.5 billion blowouts in the ACC scheme but it leaves many unanswered.
In short, New Zealand wasn't told because Labour ministers didn’t want to tell; the Treasury came up with an extremely shonky formula to justify not telling us; and no-one’s going to be held account for it because National ministers don’t want to have to fire Treasury officials.
Too cynical? Not really.
Look at what happened.
Back in December 2007 a cabinet paper indicated possible problems emerging in the ACC’s non earners account – the account which provides accident cover for children and beneficiaries and which is the only ACC account not funded by a levy but which is topped up each year by the taxpayer.
At the time though ministers also decided not to fund the account in line with risk margins recommended by a Pricewaterhouse Coopers report.
On New Year’s Eve an ACC report to ministers noted a surge in claims in the non-earners account – 10% in the number of claims and 17% in serious injury claims.
The same report also pointed to increased costs per claim, including care and rehabilitation costs, along with declining rehabilitation rates (meaning longer and more expensive time spent in care).
Follow up reports were made to ministers in February and April.
Indeed, ACC board chairman Ross Wilson met Finance Minister Michael Cullen on April 14 specifically to discuss the surge in costs in the non-earners account.
There were further reports not only on that account but also on the losses being made by ACC’s $10 billion investment fund and that treatment costs were surging past targets, along with continued decline in rehabilitation rates.
The inquiry report, put together by former Department of Labour policy head Michael Mills, lists other reports to ministers throughout 2008.
The formula which was come up with to leave any mention of the looming crisis out of the pre-election economic and fiscal update worked like this: it was known there was a hole but it was not known how big that hole was.
Nor were ministers “actively considering” doing anything to fill that hole. Reports were being prepared, but they would take too long to include in the pre-election update.
Which just isn’t good enough.
New Zealand has that pre-election economic and fiscal update for good reasons. Too many governments have lied.
The Treasury is the guardian of the public purse and is also supposed to be ministers’ consciences on these matters. It failed.
At least, though, it has admitted it was at fault. Secretary of the Treasury John Whitehead today issued what amounts to a mea culpa on behalf of his department.
Former Labour ministers have failed to admit any fault: instead raising the privatisation bogey.
Which is balderdash. The shortfall is in part of the ACC scheme which even in normal times the insurance industry would not be interested in – the ”non earners” account, which covers children and beneficiaries.
And just at the moment the last thing the insurance industry needs is buying into a part of the market guaranteed to make a loss.
But return to the words of the inquiry.
“It is the inquiry’s conclusion, however, that the Public Finance Act requirements for the disclosure of fiscal risks in economic and fiscal updates are clear and that the risk to the Crown of the funding shortfall should have been included in the PREFU, because:
• the amount in question was material (over $10 million)
• the factors giving rise to the risk resulted from statutory requirements to provide specific entitlements to eligible non-earners and for the Crown to fund the costs of providing these entitlements, and
• existing policy decisions related to the funding of the Non-earners’ Account, the funding of the Treatment Injury Account and the ACC’s purchase and management of treatment and rehabilitative services to non-earners
• it was reasonable to expect that decisions would be taken to increase appropriations
In short, not good enough. New Zealand deserves better – from politicians andpublic servants.
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Comments and questions24
As usual there will be no-one that is held to account for what is at best negligence and at worst wifully misleading the public (and breaking the law).
Why should we be surprised when systematically the standards expected of those in public office have been degraded and here we have one of the cuplprits of the decline in standards also caught red handed misleading the public in a cynical manner. Will he be held accountable - no, will he feel any shame - no. Sadly for NZ, Clarke and Cullen will be remembered for a total lack of integrity and acting in their own self interests.
Just goes to show that not even National can beat the power of our former leaders. Or maybe they are too scared of losing the expertise they so desperately need.
Looks like National is catching a severe dose of Obama-itis; the inability to punish a previous administration for their crimes.
The Fiscal Responsbility Act.
This really is about as clear cut as it gets. The whole point of that act was to stop governments from dropping their successors in the crap.
http://www.treasury.govt.nz/glossary/fiscalresponsibilityact
No stop talking National and get out your bloody handcuffs out and arrest somebody.
Labour ministers didn’t want to tell us but time will reveal the truth. I do hope all public enterprises will let all NZers know any other secrets just before the election, otherwise they themselves may be held accountable for being part of any wrongdoings.
This just confirms, once again, that the Socialist MArxist labour politicians should never ever again be given control of this country.,
Obvious now that Cullen, Clark and the rest of that Labour rabble were a total bunch of incompetents and liars. Clark's 'paintergate' scam and the "I didn't realise we were travelling 160km" or "I didn't know that Winston had lied" etc etc are just a few examples. Now all is being revealed and we can see the total mess that Labour have left for National. Thank goodness that the majority of us saw sense and got rid of those idiots!! Can anyone tell me what policies Labour introduced to grow/stimulate the economy (no, handouts and begrudging tax cuts don't count...) in the whole years they were in power? National have done more in 100 days than Labour could ever dream off. Unfortunately much of it is cleaning up after Labour's total mess - and No, we can't blame the 'recession'!! Cullen et al squandered the good times!
Clark, Cullen and co.... bow your heads in shame.
Quick - Warn the UN what to expect if they hire Hellen as she too is responsible for this deliberate multi-million dollar 'fraud'
Not only the we know best REDUNDANT LABOUR PARTY ,the whole country will pay a big price for the financial sins of smuggy CULLEN .Seems to me the rabbits were in charge of the lettuce.
If National does not push for the prosecution of the individuals responsible in Treasury and in the previous Govt, they are telling NZ they have the same low standards.
And ......New Zealand is the least corrupt country in the world?? Oh Yeah! What Cullen and his cohorts have done is totally contemptible!
New Zealand Parliament website says:
"This is where our elected representatives make laws, debate important issues and keep a watch on Government activity."
It has the "Power to punish for contempt"
"Sometimes people use the term ‘breach of privilege’ when they actually mean ‘contempt of the House’. The link between contempt and parliamentary privilege is that one of the privileges of the House is the power to punish for contempt. An example of contempt might be the failure of a person to attend, having received a summons (see above). Others might be the deliberate misleading of the House or a committee, or obstructing a witness appearing before a committee. These are not breaches of privilege because they do not breach any particular privilege established in law. Nevertheless, they impede and obstruct the House in carrying out its functions and can be punished accordingly, in much the same way as contempt of court."
"While the House has the ability to imprison, this has not been exercised in New Zealand. Punishments today can be expected to take account of the New Zealand Bill of Rights Act 1990 and are more likely to involve a fine, a censure, a requirement to apologise, or perhaps restrictions on access to the parliamentary precincts. In the case of members of Parliament being found in contempt, punishment could be as severe as suspension or even expulsion from the House. The latter has not occurred in New Zealand to date."
John Key, please get on with it. Enough is enough.
The $297 million under funding in ACC cover for non-earners (beneficiaries, chidlren, people having accidents when not at work) was caused by lower earnings on investments, extra coverage the government courts insisted on, and higher charges made by service providers. The real question is - how is this managed, if the cash is simply not to be provisioned by the Government? Either earnings have to rise or costs have to be cut. For earnings to rise, interest on ACC investments have to rise. The investments have been managed much better than most private sector funds and the Cullen Fund. But unless the Government can wave a wand and increase interest rates, this the focus will need to be on cutting services.
The real political battle will shape up over the next few months when the honeymoon is long over for National, and elderly folk and parents are paying extra for mediccal and other costs resulting from accidents. The scheme will be hacked back. it has to be. or taxpayers need to stump up to cover the gap, as they have done in the past. Meantime, the Government looks like giving major greenhouse has emitting companies about $1.8 billion in subsidies to cover their emissions bills during the next four years. Where would you rather the cash went?
Someone needs to look at the quality of their investment portfolio and who is managing these investments.
Purchasing a large non performing Nelson retail development in October last year is questionable at best in the current climate.
Well what do you expect! if they buy high country stations such as St James, for $40M that the govt already ownes!and then gives it back to the origional owners using a different formilular that appears to be very like the origional lease!
I understand that others high country stations that could have simular backgrounds.
All of these properties are retired from earning oversease funds from wool--crops--venison, valvet and meat etc not to mention the work opportunities for very good people who love the country & are prepared to put up with the hardships to live work in these areas and who really care about these properties. What we have now is, that these wonderful properties are now a liability to the natio0n--the taxpayer--, and are now growing noxdious weeds (that have cost millions of $ to eliminate) and these noxious weeds are right through much of the South Island
Also how about a public enquiry into the stacking of the public service centre,s with additional staff over tha last few years that costs the people of NZ billions of $ per year to keep these people employed and to give them a area's to work at, not to mention all of the cars, perks such as long term finance for your pad or home plus special supperanuation etc.
These are the very things that we all in society desire--(but that is socialisum--communisam) that we lesser mortals do not have even though we have earned oversease exchange for this nation or put up with the hazzards if economic strife that puts our families not to mention work opportunities at risk!
I have been informed thaT the rate of thE SOCIAL SECTOR employment has increase by some 35% compound over the last few years and they produce NOTHING for the country!
Perhaps if these additional people are allocated to areas that produced external income or the police force we just migh have less crime!? and we just might benefit from them as they would really service the nation--Just a thought--
Ps: what has happened to investigative reporting who dig out the likes of Nixon's etc do we still have these reporters? that keep the people informed and keep our servents the govt honest, as it does not appear on the TV news or headlines in the news in the papers!!!
Well what do you expect! if they buy high country stations such as St James, for $40M that the govt already ownes!and then gives it back to the origional owners using a different formilular that appears to be very like the origional lease!
I understand that others high country stations that could have simular backgrounds.
All of these properties are retired from earning oversease funds from wool--crops--venison, valvet and meat etc not to mention the work opportunities for very good people who love the country & are prepared to put up with the hardships to live work in these areas and who really care about these properties. What we have now is, that these wonderful properties are now a liability to the natio0n--the taxpayer--, and are now growing noxdious weeds (that have cost millions of $ to eliminate) and these noxious weeds are right through much of the South Island
Also how about a public enquiry into the stacking of the public service centre,s with additional staff over tha last few years that costs the people of NZ billions of $ per year to keep these people employed and to give them a area's to work at, not to mention all of the cars, perks such as long term finance for your pad or home plus special supperanuation etc.
These are the very things that we all in society desire--(but that is socialisum--communisam) that we lesser mortals do not have even though we have earned oversease exchange for this nation or put up with the hazzards if economic strife that puts our families not to mention work opportunities at risk!
I have been informed thaT the rate of thE SOCIAL SECTOR employment has increase by some 35% compound over the last few years and they produce NOTHING for the country!
Perhaps if these additional people are allocated to areas that produced external income or the police force we just migh have less crime!? and we just might benefit from them as they would really service the nation--Just a thought--
Ps: what has happened to investigative reporting who dig out the likes of Nixon's etc do we still have these reporters? that keep the people informed and keep our servents the govt honest, as it does not appear on the TV news or headlines in the news in the papers!!!
Well what do you expect! if they buy high country stations such as St James, for $40M that the govt already ownes!and then gives it back to the origional owners using a different formilular that appears to be very like the origional lease!
I understand that others high country stations that could have simular backgrounds.
All of these properties are retired from earning oversease funds from wool--crops--venison, valvet and meat etc not to mention the work opportunities for very good people who love the country & are prepared to put up with the hardships to live work in these areas and who really care about these properties. What we have now is, that these wonderful properties are now a liability to the natio0n--the taxpayer--, and are now growing noxdious weeds (that have cost millions of $ to eliminate) and these noxious weeds are right through much of the South Island
Also how about a public enquiry into the stacking of the public service centre,s with additional staff over tha last few years that costs the people of NZ billions of $ per year to keep these people employed and to give them a area's to work at, not to mention all of the cars, perks such as long term finance for your pad or home plus special supperanuation etc.
These are the very things that we all in society desire--(but that is socialisum--communisam) that we lesser mortals do not have even though we have earned oversease exchange for this nation or put up with the hazzards if economic strife that puts our families not to mention work opportunities at risk!
I have been informed thaT the rate of thE SOCIAL SECTOR employment has increase by some 35% compound over the last few years and they produce NOTHING for the country!
Perhaps if these additional people are allocated to areas that produced external income or the police force we just migh have less crime!? and we just might benefit from them as they would really service the nation--Just a thought--
Ps: what has happened to investigative reporting who dig out the likes of Nixon's etc do we still have these reporters? that keep the people informed and keep our servents the govt honest, as it does not appear on the TV news or headlines in the news in the papers!!!
Sorry if i am semi elliterate however we cannot all be geniouses!
DLH
COME ON JOHN AND BILL-YOU CANNOT EXPECT WE ORDINARY PEOPLE TO KEEP ON OBEYING THE LAW IF YOU ALLOW THESE 2 CROOKED ACADEMIICS WHO HAVE COMMITTED TREASON JUST GET AWAY WITH IT. AND WHAT WILL THE U.N. THINK OF US FOR ENDORSING HELL-IN FOR THE POITION THERE.SHE DOESN'T KNOW,OR CARE,ABOUT ACCOUNTABILITY.ARREST THEM-GET ON WITH IT PLEASE.
Get rid of ACC CEO, stop changing the forms, stop paying for taxi's,stpo building people with sore backs new bathrooms and cars, stop giving the ACC buldgers annual pay rises,get rid of the board and start letting ACC do what the law says, instead of what the public wants. ACC is not WINZ if people need more than a year off for a simple injury then at 1 year and 1 day they should be on an invalids benefit.
As a former Insurance Company Ceo I would have been fired had I run a company continuing from time back to show trends and results as ACC. Its a can of worms due to political expediency (votes).
A full detailed policy review should be first priority after firing the Board and Ceo and probably some of the senior executives need to be retrenched. ACC is still a good scheme away from political interference, but pollicy must be compatible with the shareholders intentions - the people.
Must be very close to criminal negligence with all the consequences of that for Cullen and Street as well as those in charge at ACC
Well now! NZ requires additional EXPORT income! so why do we allow foreign fishing fleets to pillage our fisheries as they see fit that benefits NZ very little. How about the Government financing new fishing fleets (they have lots of dosh for the environmental groups who produce nothing but wing & want more.So investing in new fishing industry would give new real work opportunities to Kiwis & earn the NZ economy possibly several billion dollars a year & NZ gets to control our vast rich fishing resources for future NZ generations.
What about an engine that uses 1/20 or MUCH LESS of the fuel for the equivalent amount of power produced!! A physicist in the USA stated to a collection of business & university lectures, that this technology would be the greatest benefit to the international society since the industrial revolution & Stephens rocket became a reality!! an other physicist from the European area, stated this technology is 246 times more efficient that present crankshaft engines now used! When challenged by me as it seemed a little optimistic!! The Dr informed me! Sir I make my calculations on the 1&1 only =2:
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