Pay-as-you-go way to go for ACC

ACC should be funded on a year-by-year basis to stop massive levy increases and cuts to ACC services, said the Green Party today.

“ACC is bringing in more money than it is spending – the Government’s whole charade that ACC is in crisis is based on the flawed full-funding model,” said Green Party ACC Spokesperson Kevin Hague.

“Going back to the pay-as-you-go model where funding is designed to meet annual costs would remove any justification for the proposed levy increases and cuts to ACC.”

The full-funding model assumes that ACC must have cash reserves to cover the entire lifetime cost of an accident at the time it happens. This model is not used in provision for social services such as health and education.

This year ACC’s revenues were $4.5 billion, which is $1.5 billion more than it spent on claims.

“ACC has been designed to provide support to accident victims regardless of the cause of their accident – it is a scheme designed to look after the whole community as such it should not be funded like an insurance scheme which is, what fully funding does.

“The Government, and Labour, for that matter, need to start listening to the range of experts such as Susan St John and Michael Littlewood who are calling for a return to pay-as you-go, with some cash reserves."

The only potential problem with a pay-as-you-go model was that there could be significant annual fluctuations in claim costs and therefore levies. This could be easily managed by using cash reserves to smooth out any levy increases and the $10 billion dollars that ACC already holds would be more than enough for this purpose, said Mr Hague.

The Government Transport and Industrial Relations Select Committee is hearing submissions on ACC today from 12pm to 1pm, and 3.30pm from 5.30. Susan St John and Michael Littlewood will provide a submission at approximately 12.40pm.

For further information

Why does the Accident Compensation Corporation have a fund ?, Michael Littlewood, 2009 - see http://www.greens.org.nz/sites/default/files/PC2009-1-WhyShouldTheACCbePre-fundedFinal.pdf

The rationale for pre-funding ACC, Susan St John, 2009 - see http://www.greens.org.nz/sites/default/files/PC%202009-2%20The%20rationale%20for%20pre-funding%20ACC%20revised%20final.pdf