Tim Hazledine, a professor of economics at the University of Auckland, has a nice piece in the Herald today that lays out just how absurd National’s spin about the ACC “blowout” really is.
Suppose you and your spouse are in charge of a family of, say, three young children. That means you are legally responsible for bringing them up to school leaving age and morally responsible for helping them in further training or education after that.
So how much is this going to cost you? A lot… It all adds up to many hundreds of thousands of dollars of expenditures. And just how are you planning to pay for this?
You need to be able to show unencumbered funds of at least half a million dollars right now to guarantee the future income stream necessary to meet your obligations to your children.
And you haven’t got that, have you? You’ve got about $20,000 in KiwiSaver accounts. You’ve a bit of equity in your house, but, hey, you can’t bring up your children in a tent, can you? Let’s face it. Strictly speaking, you are broke; busted; bankrupt. And so are several hundred thousand other New Zealand families just like you – billions of dollars of unfunded liabilities, in total.
It’s the “biggest loss of any entity, public or private, in New Zealand history”, to slightly paraphrase Dr Nick Smith on the $4.8 billion “loss” recorded last year by the ACC. If you think this is silly, then the ACC fracas is truly dumb.
If ACC’s broke then so is every family in New Zealand. Perhaps we should hand the whole country over to the Australian insurance industry.
The fact is there is no crisis at ACC. Nick Smith and John Judge have tried to convince us there is one by exploiting public ignorance over how full-funding works. It’s the oldest trick in the book – bandy around a few big numbers, call it a ‘blowout’ and then build the case for major reform.
Don’t let them play you for a sucker.