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National announces ACC privatisation

Written By: - Date published: 5:26 pm, October 22nd, 2009 - 59 comments
Categories: ACC, national/act government, privatisation - Tags:

acc-undermine-200National is going to privatise ACC. As part of the deal for support on its ACC cuts and levy hikes from the Maori Party and ACT, it will be privatising ACC’s Work Account (the part paid by employers for workplace accidents).

First, there will be a perfunctory report provided by the ACC Stocktake Group, a group of handpicked Righties. This report due in June next year, of course, will make all sorts of fabulous claims about the benefits of privatisation without any real evidence to back it up and claim that ACC will collapse or be eaten by wild dogs or something if privatisation doesn’t go ahead.

After the report, the Government will push through privatisation legislation (under urgency, no doubt).

Businesses (except a few big businesses and the ideologues) don’t want this. The cost of finding the appropriate private provider, the risk of the provider collapsing, and the likelihood of higher levies after a period of loss-leading make privatisation a bad deal for small and medium size businesses.

For workers this is bad news too. They will be less likely to get coverage, and more likely to have to fight an insurance company through the courts to get anything. Payouts will be smaller.

The court system will be clogged with insurers fighting claimants, ACC, and each other over who pays.

We know this will happen because that’s the experience overseas in countries not fortunate enough to have ACC.

The only people who win from this are the big Aussie insurers who stand to rip $200 million a year from our economy in profits. Ultimately, that $200 million will come out of your pocket.

[BTW, in the House yesterday, both Nick Smith and Tony Ryall admitted that the supposed ‘savings’ from National’s ACC cuts will be borne by the health budget instead. Like I said, the costs don’t disappear just because they’re cut from ACC. They haven’t even bothered to work out how big the cost to Health will be.]

59 comments on “National announces ACC privatisation ”

  1. Lanthanide 1

    “The cost of finding the appropriate private provider, the risk of the provider collapsing, and the likelihood of higher levies after a period of loss-leading make privatisation a bad deal for small and medium size businesses.”

    Then the small and medium size businesses can stay with ACC, which will still be an option.

    • RedLogix 1.1

      The whole point of privatising the worker accounts is that it guts the profitable part of the business out from ACC and gives it to private companies. Otherwise why would these private insurers do it? It then leaves the rest of the business in an unsustainable loss making position.

      Which National can then kill off at their leisure.

      • Gordon Shumway 1.1.1

        Redlogix – putting aside whether or not privatising ACC is a good idea, you’re looking at the issue from the wrong perspective if all you’re considering is “profitability”.

        It’s also wrong to say the REASON for privatising any part of the ACC is to “give” it to private companies. You might disagree with, or fail to understand, the reasons, but you can at least acknowledge that the Leftwing isn’t the only side trying to serve New Zealand’s best interests.

        In deciding whether government should or shouldn’t be doing something, whether or not it’s profitable isn’t necessarily a major consideration.

        FYI, often private enterprise can do things more efficiently (= profitably) than government because of specialist knowedge (e.g. through international networks), nimbleness, willingness to take risks, etc. That’s one of the reasons why private enterprise can be willing to pick up former government enterprises even if they are not showing a track record of profitability. Will less on its plate, Government can then concentrate resources and attention on other areas, such as education etc.

        • Daveo 1.1.1.1

          But if you read the PwC report you’ll see that it’s cheaper than comparable privately operated systems such as Australia’s. Against every international benchmark ACC comes up tops.

          Because, while the private sector is more efficient at doing some things, there are other areas where it’s better off with the public sector. The actual evidence tells us ACC is the latter.

          • logie97 1.1.1.1.1

            It may be a long bow to be drawing, but is there anything to learned from the “Leaky Buildings” debacle. Is there any possibility, given the trail of history of fraud (e.g.Equiticorp) liquidations and major failings of local investment organisations/pension funds, where some less than scrupulous insurer or employer sees a bad risk coming up and simply changes its trading name and “writes off” its liabilities and starts trading under another name. What risks to its employees then… I smell a rat around here somewhere.

        • Draco T Bastard 1.1.1.2

          but you can at least acknowledge that the Leftwing isn’t the only side trying to serve New Zealand’s best interests.

          Why? When it’s fairly obvious that the political right don’t give two hoots about NZ and care only for themselves.

          • Galeandra 1.1.1.2.1

            The proper noun you require is hooton, isn’t it? As in ” don’t give two hootons about NZ’?

  2. CMR 2

    Great! I was becoming concerned that the present government did not possess the courage to do this. ACC truly is a misconceived, mis-administered welfare agency. I hope the government doesn’t follow Shipley’s government’s duplicity and pin the “tail” of ancient claims on the productive contributors of today.

    • RedLogix 2.1

      I take it that then you would be happy then to restore the right to sue for accidents?

      Are you a lawyer CMR?

    • Daveo 2.2

      Really? That’s not what Price Waterhouse Coopers said. Piss off back to talkback until you get yourself informed.

      • Gordon Shumway 2.2.1

        Daveo – if Price WaterhouseCoopers come up with some suggestions on, for example, reform of the tax system, would you accept those suggestions verbatim? Or would you “piss of back to talkback”, as you so eloquently put it?

        • Daveo 2.2.1.1

          PwC obviously has a commercial bias, so I’d take that into account. That’s why it’s such a big deal when they actually come out in favour of public ownership.

          Face it, the evidence we have is that ACC is as efficient or more efficient than any other comparable system. So how’s it going to squeeze out another $200m in profit for the insurance industry? Simple, up go the levies and down goes the coverage.

  3. bobo 3

    So is the average worker going to get back their right to sue back then.. if this gov is all about choice….

  4. Hemebond 4

    Is there a really good article that explains exactly how well ACC is running and what National have done to convince everyone it’s going bankrupt? I have several work colleagues that believe Nationals changes are fantastic for everyone.

  5. Swimmer 5

    Well we never saw that coming now did we 🙄 I shudder to think how this is going to pan out in the next two years.

    • Ron 5.1

      It’ll pan out the same way as last time.
      Workers will get screwed, businesses will waste resources trying to work out which is the best cover and then find out their workers aren’t covered when they need to be, Labour will get back in and put things back the way they were and we’ll all breath a sigh of relief.

  6. Nick C 6

    Dear Marty G

    Stop lying. National are not ‘privitising’ ACC, they are opening it up to competition. There is a difference.

    http://libertyscott.blogspot.com/2009/10/manipulation-of-language.html

  7. Lindsey 7

    Amazing how Rodney is spinning this as people getting a choice in ACC providers. The choice is for the employer, not the employee!

  8. Rodel 8

    Just another John Key ‘confirm and deny’ policy.

  9. gingercrush 9

    Hmm I agree in principle to opening up the employers account to insurers. I think it can give lower compliance costs for employers and gives far more choice which is important.

    But as the past week has proven for me and my partner. Insurance companies are absolute assholes. That you weren’t the one causing the accident doesn’t matter. Hell they don’t even seem to investigate the actual crash. They merely treat you like a common criminal expecting you to remember when you got your speed fines etc and then find any excuse to refuse paying up.

    If this happened last week I would have said a huge yes to ACC being opened up to competition. I still think its right. But to actually have experienced the wrath of insurers and how they operate. I am very weary.

    • logie97 9.1

      Ginger – so the ideologue in you says toe the party line. But the realist in you says otherwise. Congratulations on admitting your parties’ shortcomings and welcome to the real world.

  10. toad 10

    Yep, Marty. Business lobbyists are severely dividided on this.

    The ideolugues, who believe it will work, versus the pragmatists, who know on the evidence from the experiences of 1999-2000, that it does not work.

  11. BLiP 11

    And, once again, on the very day bad news is announced by National Ltd® where’s that nice Mr Key – he’s off on holiday!

    Gotta protect that brand, eh fellas?

  12. The title of the post is a complete lie, and you know it, like I’ve said here.

    http://libertyscott.blogspot.com/2009/10/manipulation-of-language.html

    Was NZ Post privatised? Because it’s been open to private competition since 1998.

    Was Solid Energy privatised? Because private coal companies can mine in New Zealand.

    Was Genesis, Mighty River Power and Meridian privatised? Because privately owned power generators can freely compete with them.

    Was TVNZ privatised? Because there is an free market to establish television channels.

    etc.

    So why lie blatantly and claim ACC is to be privatised? The press statement talks about competition, there is nothing about selling ACC.

    Isn’t it just because you find it easier to gain public traction by claiming it is privatisation (‘a bad thing’ to many people) rather than opening up a monopoly to competition (‘a good thing’ to many people)?

    Come on be honest, you’re just spinning this because there is likely to be more public sympathy for the government if you told the truth.

    • BLiP 12.1

      What part of the word “privatisation” do you not understand?

      • Libertyscott 12.1.1

        Oh dear.

        Privatisation = sale of government owned enterprise or organisation.

        Which part of that definition do you not understand? Is it too simple for you?

        Let me continue.

        Air NZ had its entire domestic business opened up to competition in 1983, under the Muldoon government, but was it privatised then? No.

        Telecom’s statutory monopoly was abolished in 1989, but was it privatised then? No.

        Opening up a market that a government entity has a total monopoly on, to other providers is not privatising that entity, it is called introducing competition.

        How hard is that to grasp? That is why I don’t believe the use of the term is accidental – it is deliberate, for propaganda purposes.

        • Daveo 12.1.1.1

          From Wikipedia:

          Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector (government) to the private sector (business).

          In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement.

          (http://en.wikipedia.org/wiki/Privatization)

          Sounds like you need to work on your definitions.

          • Libertyscott 12.1.1.1.1

            Wikipedia is not a recognised source of dictionary definitions, and I don’t think the Wiki source – “Chowdhury, F. L. ‘’Corrupt Bureaucracy and Privatisation of Tax Enforcement”, 2006: Pathak Samabesh, Dhaka” – is likely to be an appropriate source for a definition applied in the New Zealand context.

            New Zealanders know privatisation as a “sell off”, you know that. You’re just trying to excuse the use of a “negative” term to describe something typically seen as “positive” (regardless of the merits of it).

            • Daveo 12.1.1.1.1.1

              That’s the best you’ve got? That ‘New Zealanders’, by which you mean yourself, don’t traditionally understand it like that.

              Well I’m sorry, but the left’s technically correct on this one. It’s privatisation, we’re going to keep calling it that, and we’re right.

              I’m just amazed you don’t see the propaganda aspect of National referring to it religiously as ‘competition’ rather than ‘privatisation’. You don’t think they’ve paid thousands of dollars and spent hours in focus grouping to agree on that wording?

            • BLiP 12.1.1.1.1.2

              Spin, spin little spinner that you are. Don’t like wikipedia? Here’s three more, direct from capitalist web sites.

              Privatisation
              Involves a private enterprise or syndicate purchasing a government asset or service.

              Privatisation
              A procedure to pursue a free-market economy for state-owned companies, and make them available for new investments by inviting private businesses to assume part or full ownership and management.

              Privatisation
              When sector cannot be specified. Including general state enterprise restructuring or demonopolisation programmes; planning, programming, advice.

    • Daveo 12.2

      It’s really simple. Those are all examples of SOEs acting like private companies and facing competition.

      When you take a public service like the ACC work account that used to be operated by the state, and you now have the private sector provide it, that is privatisation. The asset may not be sold, but the scheme has become privatised.

      Even Merrill Lynch understands that, and referred to it as privatisation in their report that said the insurance industry stands to make $200m a year out of it.

      When Labour ended competition of ACC it was called re-nationalisation. What’s the opposite of nationalisation? Oh yeah, that’s right, privatisation.

      Just think about it for a second scott. And then ask yourself why National have tried so hard to get the media calling it ‘competition’ rather than ‘privatisation’.

    • Armchair Critic 12.3

      “…you’re just spinning this…”
      Takes one to know one. Pot, kettle etc.
      “…there is likely to be more public sympathy for the government if you told the truth”
      And there is likely to be less public sympathy for the government if they told the truth. Actually, I would just like to see them stop lying about there being a crisis in ACC. If they were to tell the truth they would have to say that what they are doing will increase costs and decrease cover/service. Hardly a good way to sell policy – better to stick with lies.
      And you can stick with semantics – call it whatever you want, and I will do the same. The essence of it is that we get less for more. Thanks Notional government, I’m (not) loving it.

    • Armchair Critic 12.4

      And the plural of “was” is “were”. Use “was” when discussing one thing. Use “were” when discussing two or more things. If you don’t understand this, I doubt you can grasp much about privatisation, either.

    • Ag 12.5

      The difference is that the examples you give are quite different from the provision of universal public insurance.

      It’s a moot point whether a number of postal services are cheaper than one. In some countries, postal services might be a natural monopoly, which means either public ownership or regulation is likely required.

      But if private competition with ACC would eventually cripple the public option by having all the lesser risks go private, then the public option may well become insolvent and we will probably have to reintroduce the right to sue. That’s great for the lawyers, but it will end up costing New Zealand more than a publicly run ACC, and the cost to insure companies against lawsuits will likely rise (because someone has to pay the lawyers).

      ACC is a good deal for both workers and employers, because it keeps settlements reasonable and protects both from the predations of the legal community.

      Captcha: public (!)

  13. Daveo: So they ARE all state owned – but facing competition. Not privatised.

    Like ACC will be, for only ONE part of its business.

    Nobody is saying the ACC work account will be privatised, just others will be able to provide a parallel service and employers can choose those providers. Many may not.

    It is still competition. Is it privatised when ACC has 90% of the business, 60% of the business, 40% of the business?

    Are you saying ACC is that bad, that many employers will leave it en masse?

    Besides which, much of ACC wont face competition. Non-work accidents remain with the state owned monopoly.

    National have called it competition because, it is. The “renationalisation” was the re-regulation, I’m not approving of that terminology either. Merrill Lynch is hardly known for it’s expertise in public policy, so if it makes a mistake, so be it.

    You can privatise ACC and retain a monopoly, you can privatise ACC and open it up to competition, or you can retain ACC and open it up the competition.

    The third is happening.

    That’s where the debate should lie, but calling it privatisation is fiction. Every privatisation in New Zealand’s history has involved a sale – there is no sale here.

    • Daveo 13.1

      You just don’t get it. It’s a public service whose functions are being farmed out to the private sector. Workers will now no longer have their accident insurance provided by the state, it will be provided by a private insurer making a profit.

      That fits the commonly accepted definition of privatisation, and it’s the definition used by John Key’s old employer, Merrill Lynch. It’s also the definition used by everyone who refers to Labour re-nationalising ACC.

      Let’s spell it out for you simply. ACC the bricks and mortar institution is not being privatised, but the ACC scheme is. That’s what we’re talking about when we say ACC is being privatised.

      I actually think the problem here is you’ve just taken a very narrow and inadequate definition of the term ‘privatisation’.

  14. Daveo: You are wrong. A private insurer may NOT necessarily provide accident insurance for an employer and by extension a worker. It will have a choice.

    You have at least admitted ACC is NOT being privatised.

    However, you are wrong. The scheme is only being opened to competition, for one account. It is entirely plausible that if ACC was an excellent performer levying employers according to risk and operating at very low margins, that it could face no competition, or that competition may only win a small fraction of the business.

    In NZ the postal service was once a “public service” until 1987, was it privatised since then? No.

    Same applied to NZ Railways until 1983 when it ceased to be a government department, was it privatised in 1977 when trucks were allowed to haul freight in competition with it for distances beyond 40 miles (but not beyond 150km)?

    • Daveo 14.1

      You really don’t seem to get it do you? The ACC scheme is being privatised, first the work account but possibly others according to Key.

      Merrill Lynch understands it, the insurance industry understands it, why can’t you?

      I realise there’s going to be a “public option” with the work account, but that’s within a privatised system where workers will have no choice over who their provider is. I remember well having my employer tell me who my accident compensation provider was back in 1999.The fact there was a public provider within the privatised market made no difference to me.

      Your comments about how ACC will compete and show its worth are absurd. You don’t understand that it’s not that ACC the corporation is great at competing in a private market, it’s that the ACC scheme performs efficiently as a government monopoly. Remove the government monopoly and you remove the source of the efficiency.

      I fail to understand why you keep banging on about SOEs and comparing them to core public services like ACC. Frankly I’m bored of your semantics. I’ve shown you that what’s happening to ACC’s work account fits the definition of privatisation. End of argument.

  15. Daveo:

    “I’m just amazed you don’t see the propaganda aspect of National referring to it religiously as ‘competition’ rather than ‘privatisation’. You don’t think they’ve paid thousands of dollars and spent hours in focus grouping to agree on that wording?”

    Yes, you both play propaganda. You know you’re doing it on this, by refusing to mention the words monopoly and competition, and stretching privatisation to mean “NOT selling a government asset” but allowing private providers to compete with it.

    The games continue whichever side is in power, playing with language, but unable to call a spade a spade.

    I think calling it competition and greater private sector involvement in the ACC sector is rather balanced and honest, and I’m no Nat.

    • Daveo 15.1

      No, you’re a guy with a personal political interest in privatisation, but you realise the public won’t go for it. So you call it competition. Don’t pretend you’re neutral here.

      Anyway, I’m bored of your semantics. I’ve shown it’s privatisation, that’s the end of the argument. Others can make up their own minds.

      • Libertyscott 15.1.1

        You can’t accusing me of hiding what I support, I DO support all ACC accounts being open to competition and then privatisation of ACC, and return of the right to sue.

        I’m not concerned about whether the public “goes for it” or not at the moment, I’d just like an honest debate.

        • BLiP 15.1.1.1

          You’re not interested in an honest debate. You are seeking to supplement your ill informed, half-literate and deceitful post on your own weird little site. I suggest that you accept you have made a twat of yourself both here and on your site and quietly go away with your tail tucked firmly between your hind legs. Perhaps its too much to expect that you have learned your lesson on this occasion but I am sure there will be plenty more opportunities to come.

          • Libertyscott 15.1.1.1.1

            “Learned my lesson”? Oh yes, how dare I challenge the intellectual giants of the left on The Standard, I’m not worthy.

            I’m not the only one to say this, and wasn’t the first on this thread to challenge you on it.

            Most of your examples to support your case do quite the opposite, blatantly. The evasiveness is astonishing. If you can find examples where NO private ownership is introduced into a government owned entity is called partial privatisation, I’ll reconsider my position. There are none in New Zealand. Just because the Nats called it “renationalisation” didn’t mean it was right.

            However, you’ve now degraded to name-calling, insults and a veiled threat. That speaks volumes.

            • BLiP 15.1.1.1.1.1

              Your constant shifting of the goal posts on your definitions speaks larger volumes.

        • Skyler_ak 15.1.1.2

          “You can’t accusing me of hiding what I support, I DO support all ACC accounts being open to competition and then privatisation of ACC, and return of the right to sue.”

          Why on earth do you want to do that? Have you not seen the documentary Sicko? Be careful what you wish for…. it just might happen.

  16. Oh and if you use your Wiki definition you’ll find none of that remaining article supports your definition. The types of privatisation talk of issuing shares, sale or vouchers (free shares).

    Can you identify another case in New Zealand (or another country) where this sort of introduction of competition is called privatisation?

  17. What entities are you talking about that were “privatised” but remained government owned?

    You gave no examples.

  18. Yes, let’s examine all of them to see if they answer my question:

    1. “USA” example said “Most privatization programs begin with a period of partial privatization in which only non-controlling shares of firms are sold on the stock market” so it is about a sale. Fail.

    2. “India” example said “Privatization in India is mostly limited to the diffuse sale of minority stakes in firms” so it is about a sale. Fail.

    3. “Bangladesh” example in the text talks about the Jute industry and starts with “In 1982 the military regime in Bangladesh privatized 31 of the 62 mills in the jute industry, while retaining the remainder in the public sector” which was about returning ownership of jute mills nationalised (by force) previously to their original private owners. Fail.

    4. “China” example is about introducing partial and full private ownership of state owned enterprises. Fail.

    5. “Australia” example is about Telstra, which was a partial sale. Fail.

    6. “Chile” is about part sale of Sipetrol, so introducing a private owner into the company. Fail.

    7. “Peru” not a reliable source, being a US Democratic Party forum quoting what others say about Peruvian retirement. Needs more information.

    8. “Russia” not enough information, article requires payment.

    So at best, 6 out of 8 examples you give back up my definition that privatisation is about ownership, not about competition. However, I would like more information about whether the Peruvian and Russian examples are about a transfer of ownership or leaving the state involved as it, and letting competition in and calling it part privatisation.

    All references to privatisation I find support it being about sale, introducing private capital or distributing shares to the public.

    • BLiP 18.1

      Perhaps you might like to do your own research before simply mouthing the Crosby/Textor spin lines. But, carry on if you wish, there’s something satisfying in watching you continue to make a complete twat of yourself.

      You asked for examples where privatisation occurred but the government kept a controlling interest. The fact that you cannot see that those example provided show exactly that is indicative of your confusion on this matter – confusion driven by the fact that you now know you are on very shakey ground with a tremulous definition of what privatisation is. You are further confused if you think, as you seem to, that this is anything other than the commencement of the full take over by the private sector of ACC.

      Where on Earth do you get the idea that privatisation must always involve the creation of shares? As the definitions provided to you above, privatisation is defined by private sector business groups as involving the take-over of some or all or the functions previously provided by the state. It might, perhaps, lessen the impact on New Zealanders if National Ltd® were to get some cash for the ACC functions being privatised but John Key is simply giving them away to his mates. This makes the privatisation of ACC even more galling.

      Why don’t you pop down to the book shop and purchase a fourth form economics textbook and do some reading. You could even write a practise essay on the benefits the privatisation of the blood testing services in Auckland has had on locals. You’ll then be able to sit back and watch the same impact on efficiency and delivery of service as ACC falls into the hands of foreign owned multinationals.

      • luva 18.1.1

        Why do you have to resort to personal insinuations and comments about someones intelligence to prove you are right. I do find that quite juvenile and petty. I also see you have changed again from calling the government National Inc to National Ltd. Not quite sure what you are proving there.

        Economics is not and never will be a science. What you think is an economic benefit is not necessarily what your neighbour thinks is an economic benefit.

        Back to privatising I see Labour has now proposed selling quite a few state assets as it is not in the public interest to own them. They have recognised that in these dire economic times when debt is spiralling it is best to concentrate on core services and get rid of things that are not really performing. I see they all so talking about cuts to funding as this is now absolutley necessary to balance the books.

        Unfortunatley it is the Labour government in the UK that is proposing these measures. Not our 27% opposition. They, unlike our Labour party, have some intellectual honesty and are at least trying to make the difficult decisions needed to get debt under control.

        If only our Labour party could recognise the same and come up with some solutions to fill the huge holes that are appearing in all the goverment accounts.

  19. Rodel 19

    Douglas and Prebble managed to worm their way into the Labour caucus by deception and then reveal their true right wing colours and it took a while before Lange and the left put a stop to it.
    The same thing has happened with National. Key, with his multinational string pullers is actually the real ACT leader and the gullible nats haven’t yet realised it.
    Hide, the tail and Key, the dog are all of the same animal.
    Do we have to wait till NZ is destroyed before the nats who really care about our country – and there are some- put a stop to these idiots.

  20. Ixion 20

    Support the motorcyclists. They’re fighting your fight.

    Parliament grounds . Nov 17th , high noon.

  21. David Kerstens 21

    Privatization of things such as POWER…HOSPITALS…PRISONS…ACC… is aways a bad idea.

    NATIONAL is going to privatize ACC… sell it off for a ****load of money to someone interested in making money therefore ACC will be giving less compensation payouts to poor working class New Zealanders because its not owned by a government that cares about poor people having expensive accidents. I have noticed ACC has been charging more already since NATIONAL took power. NATIONAL doesn’t care about helping poor people having expensive accidents… NATIONAL CARES about MONEY.

    NATIONAL privatized our New Zealand owned Dams a while ago. Now we have Contact Energy and Trustpower, two privately owned power companies. Have any of you National/Act voters noticed that power costs more than it did when it was publicly owned under Labour. Either you don’t care because you earn alot and like the better tax rates the rich get from National/Act and you don’t care about the majority of working class with expensive power bills and people with disabilities getting lesser sickness benefits OR you’re to stupid to realise anything that matters and you get bored of whoever’s in Power and think “DUHHH TIME FOR A CHANGE IM GONNA VOTE NATIONAL”

    NATIONAL will not hesitate in trying to privatize prisons and our entire health system. Look at the cost of healthcare in America… You really don’t have to be Einstien to get it. Imagine handing prison inmates to a Private institution intested in MONEY…. alot of people in prison are not guilty because the majority of people are stupid and the jury is made of random people and it’s very likely that these people in prison will be colder and hungrier and more vulnerable because warmth and food and prison guards cost MONEY

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