The Independent on National’s ACC agenda

Written By: - Date published: 11:26 am, October 15th, 2009 - 5 comments
Categories: ACC, articles, Media, privatisation - Tags:

Very good editorial on ACC in The Independent today. The article’s offline, but it’s quite clear about why the Government is trying to manufacture a crisis over the financial position of ACC:

ACC currently collects sufficient levies to meet each year’s claims – it has levy revenue of $4.1b in the 2009 June year, compared with claims of $3b. It invests the surplus to help build up some reserves. These investments have suffered in the global recession, exacerbating the funding gap.

Surely the unfunded liability only really matters if ACC was suddenly closed down and had to pay all the claims. If that isn’t going to happen, why worry so much about the unfunded liability? We don’t have the same concern about Social Welfare’s unfunded liability.

On the other hand, it would matter if one was planning, say, to break up ACC’s monopoly and open some of it up to private competition.

Insurers would want the tail of unfunded liabilities covered. And so you come back to the issue of whether the Government might be thinking about partial privatisation at some time in the future.

As Marty pointed out yesterday, to get a real assessment of what’s happening with ACC you need to read the business commentators – people who actually understand how to read financial statements. All the political journos will give you is the latest line of Government spin.

5 comments on “The Independent on National’s ACC agenda ”

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  1. Rich 1
    15 October 2009 at 12:52 pm

    That’s absolutely on the nail. It’s simply that most journalists and commentators in this field are innumerate and need their ideas pre-chewed. The Nats seem to be the only ones offering a supply of baby food in this area.

  2. sk 2
    15 October 2009 at 1:36 pm

    John Key was quoted as saying the investment returns by ACC were poor. In fact, they are probably the best in NZ over the last 17 years. For instance, David Swensen who manages the Yale Uni endowment has returned similar numbers over the same long time horizon (in his case 25 years) and he was lauded as an investment guru in the Financial Times weekend edition a couple of weeks ago. So the only problem is political. We can assured that $1bn excess this year will be invested well in the future, so it is not clear what the PM is talking about.

    Maybe a journalist should ask him how his holdings of Merrill Lynch and high end Hawaiian property have done over the last 18 months. You can bet the ACC investment managers have done a better job.

  3. Sam 3
    15 October 2009 at 6:52 pm

    Have you got a link to the original article? I searched stuff.co.nz with not much luck 🙁