TE: I was wondering. Well as you know, the public finances systems are archaic. They remind me of pre-1986 business accounting in NZ with lousy reporting systems. Frankly I’m surprised that it has taken them this short a time to figure out exactly where they’re bleeding red ink.

Actually LP the PFA is considered to be world-leading. As of 1 January 2007, all New Zealand public entities have adopted the NZ-IFRS reporting standard, the same used by private sector organisations, making reporting standards in the public sector sector-neutral. There are a number of issues around applying the IFRS to the New Zealand public sector environment (and the Auditor-General has expressed significant concerns about the appropriateness of the IFRS in a New Zealand public sector environment, particularly with regard to the significantly increased costs to public entities and the need to get external audit advice), but the IFRS standards can hardly be viewed as “archaic” or backward.

My thoughts on it are 1) is ACC actually being well managed? and 2) were Labour actually trying to keep this quiet to stop themselves looking bad?

BTW: the reason I did an MBA was because I couldn’t understand accountants (coming from an operations side). I learnt that side quite well (and seem to spend excessive amounts of time looking at other peoples accounts). The course gave me a  chance to retrain. Since it was a bit boring I spent most of my time playing with PC’s and subsequently developed a career in it…. Kind of puts you off training when each time you do, you decide not to follow that career…

a. What is the current Asset position of ACC as a whole?

b. What is the current liability position of ACC a a whole?

Answers:

a. $13.2 billion

b. $21.2 billion

Page 91, 2008 ACC Annual Report

The outstanding claims liability ($18 billion) is $5 billion bigger than assets. And investment returns to 2008 is not really the issue – I think ACC reported a loss of 0.8% or so which is really rather a very good performance in the wider context. The real issue is systemic underfunding, mispricing of risk and willy nilly extension of the originally intended WORKERS COMPENSATION scheme into social areas it was never intended to cover.

Solvent? World Class? Best of breed?

Sounds like you are desperate to beat up a non issue.  This would be consistent with your continual attacks on Labour (including at least one known irrational lie) over the last few months.

I know we all came to expect great things from the last Labour government, but even they were bound by the laws of physics.  Michael Culllen couldn’t travel backwards in time.  Oct 22nd comes after Oct 6th.

Either that or doesn’t understand accounting, esp the interesting govt variants – as XYZ alluded to.

I was an audit partner in one of the Big 4 firms for eight years before moving to where I am presently running internal audit with a major retail bank. I do have some understanding of accounting. While I defer to your expertise in software development matters, LP, I think I know my way reasonably around the Public Finance Act.

Not really – in essence TE is trying to make a mountain out of a molehill. Unfortunately I don’t have much time during the day as TE.

The accounting timeline is the issue (very well covered in NRT), and TE simply doesn’t want to look at anything quite so prosaic.

Either that or doesn’t understand accounting, esp the interesting govt variants – as XYZ alluded to. I’ve only seen them personally once in the late 80′s while on a contract. But friends of mine have incredously cringed about them.

Guess whether it is rational depends on what outcome you want Tim.

If you want to see employer levies drop because people who are injured are wrongly denied cover by the insurer, receive no weekly compensation, end up on a sickness benefit, have to pay for their own rehabilitation, and have to engage legal representation to challenge the insurer’s decision, then it has to be the way to go I suppose.

That was my frequent experience working as an ACC claimant advocate in the 1999-2000 period when private insurers were involved in administering work accident insurance. [I have to say that I didn't make a lot of money out of representing such claimants - I only charged what they could afford, which in many cases was nothing so I was working on a contingency no win - no fee basis]

The easiest way for private insurers to reduce levies to gain market share is to wrongly deny claims.

This occurred particularly with gradual process injuries such as occupational overuse injuries (OOS), where the legal tests are complex and put an onus on the claimant to show that the work environment or work tasks have a property or characteristic that causes or contributes to the cause of the personal injury; that property or characteristic is not found to any material extent in the non-employment activities or environment of the claimant; and that the personal injury is not related to non-physical stress.

The private inurers denied the claims in the knowledge that most claimants would not have sufficient understanding of the law to personally challenge them and could not afford the thousands of dollars that legal representation would cost them.

The difficulty is that (apart from the self-employed) the choice of insurer is the employer’s – the injured employee has no choice and gets whatever insurer the employer has chosen. Those who give the best deal to employers in terms of levies are likely to be those that give the worst deal to claimants in terms of entitlements.

In 1999-2000 the private insurers took all the low risk business while the ACC subsidiary @work insurance ended up lumbered with the high risk high levy industries.

And what happens if a private personal injury insurer goes belly-up?

I suppose we get an AIG-style taxpayer funded bailout. Or do all the claimants on their books just lose their entitlements?

All Labour seem to be guilty of here is following official’s advice and not inventing a time machine.

Sounds like “All Taito was guilty of was being helpful to his constituents”.

The Ministerial Inquiry will show what Ministers knew, what officials advised them, when they advised them and when they knew, what advice should have been given, which interpretation was correct, and if all procedures were correctly followed, whether changes should be made in future to ensure that major items of expenditure like this are properly flagged before the election.

But nice of you to prejudge the outcome of the inquiry r0b.

Guess all you like Tim.  But according to The Herald “officials had originally advised that it should not have been disclosed because they were not certain of the cost”.  Hence it was an internal matter until Street brought it to Cullen’s attention on 22nd Oct, 16 days after PREFU was released.  All Labour seem to be guilty of here is following official’s advice and not inventing a time machine.

Yes I agree that it probably should have been noted, but in the scheme of things, this is small money. Should the Defense Force have noted in it’s briefing to the incoming Minister that it had 2 planes out of the country at the same time for maintenance and therefore couldn’t cope with an emergency?

I didn’t read the Defence Force’s briefing to the incoming minister, but that is not a requirement of the public finance act. The PFA does state that a government must specify its fiscal risks. $1 billion over three years is not “small money”. It is a major fiscal risk. The Government only has an $800 million provision for unallocated expenditure priorities. Take three hundred million out of that provision, by not specifying a $300 million risk in the non-earners’ account, and you have dramatically affected the government’s ability to introduce new spending initiatives.