ACC stocktake details announced
ACC Minister Nick Smith today announced the terms of reference and membership of the steering group for the stocktake of ACC that will look at how the scheme can remain affordable for families, businesses and the Government.
“ACC’s liabilities have ballooned from $9.3 billion in 2004 to $21.9 billion in 2009 – an increase of $12.6 billion and amounting to $7800 per household in just five years. Preliminary figures from the June 2009 actuary assessment indicate the situation has further deteriorated.
“The Government is committed to the Woodhouse Principles and New Zealand’s unique ACC scheme but continuing with the policy of the past five years is unaffordable. If no changes are made, ACC levies will need to more than double.
“The stocktake is about a thorough examination of all ACC accounts covering motor vehicles, earners, employers, non-earners, treatment injury and residual claims. It will investigate drivers of the cost increases, alternative options for service provision and funding, the potential for experience rating, management of risks, and monitoring of ACC. It will also examine the governance and oversight of ACC’s $10 billion investment portfolio.
“Investigating opening up the Work Account to competition is not part of the stocktake and is not a priority of the Government. The scale of ACC’s financial problems that the National Government inherited – including the billion dollar blow-out in the Non-Earners’ Account – means our immediate focus must be on cost containment.”
The stocktake steering group will be chaired by former Labour Cabinet Minister and former ACC Board chairman David Caygill and contains independent advisors Dr Neil Quigley and Gordon Smith. It will also comprise current ACC Board chairman John Judge, and senior officials from Treasury, Department of Labour, and the Department of the Prime Minister and Cabinet.
The steering group will ensure there is opportunity for key stakeholders such as Business New Zealand and the Council of Trade Unions to have input into the stocktake process.
The stocktake was one of the Government's pre-election commitments and $500,000 was announced in this year’s budget to conduct the work.
“The object of the stocktake is to deliver practical recommendations for improving performance and to ensure our accident insurance scheme remains affordable for levy payers and taxpayers," Dr Smith said.
For a copy of the Cabinet paper go to:
http://www.dol.govt.nz/initiatives/workplace/acc/index.asp
Biographies of independent advisors on Stocktake Steering Group
David Caygill
David Caygill has a background in politics and law. He was elected to Parliament in 1978 and from 1984 to 1990 served as a Cabinet Minister, including Minister of Trade and Industry, Minister of Health, and Minister of Finance. On leaving Parliament in 1996 he became a partner in the law firm Buddle Findlay until he was appointed Deputy Chair of the Commerce Commission in 2004. Mr Caygill was also appointed Chair of the ACC in 1997 and served in this role until 2004. He is currently Chair of the Electricity Commission and an Associate Member of the Commerce Commission for electricity-related purposes.
Dr Neil Quigley
Dr Neil Quigley is a Professor of Economics at Victoria University. He is an internationally acclaimed researcher with strategic management and governance experience. He is chair of the board of the New Zealand Tertiary Education Consortium Limited, Victoria Link Limited (Victoria University’s commercialisation company), and iPredict (a technology startup company).
Gordon Smith
Gordon Smith has extensive insurance industry experience and a thorough understanding of the financial aspects of the insurance sector. He also has a very clear understanding of financial reporting, compliance and regulatory requirements, and business risk. He was Chief Executive of Farmers’ Mutual Group from January 2001 to December 2008 and currently serves on the boards of Calliden Group Limited – Australia, and Doubleshot Group Limited.