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.