Jenee Tibshraeny: NZ Herald Wellington business editor on the Government's planned reviews into the ACC

The Government is running the ruler over the way the Accident Compensation Corporation manages its $50 billion investment portfolio.

The newly appointed minister responsible for the state injury insurer, Andrew Bayly, has commissioned consultants at Willis Towers Watson to review the performance of the Accident Compensation Corporation’s investments, its governance, and the approach it takes to managing its investments.

 NZ Herald Wellington business editor Jenee Tibshraeny explains further.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
And the government's announced not just one, but two reviews
into the running of ACC, and consultants will look into
the ACC's operational performance and its investments. Now. Jennet Hipshreni
is The Herald's Wellington Business editor and joins me in studio. Hello,
Jane good A, Andrew, all right, why is there reason
to believe that the Accident Compensation Corporation's investment decisions are

(00:23):
not the right ones?

Speaker 2 (00:24):
Well, that is a good question. ACC has actually been
reporting pretty good returns in the past year at its
returns worth seven point twenty six percent. Since nineteen ninety two,
on average, its returns have been just over nine percent,
so it's been beating its benchmark over the years. Those
are pretty good returns. But Commas and Consumer affairsman are
stand Also the Minister for ACC, Andrew Bailey, he is

(00:48):
wary of the fact that ACC basically doesn't have enough
money to meet all of its claims liabilities. Now. ACC
is seven billion dollars in deficit at the moment. You know,
that is really big and that is weighing on the
government's books substantively. Listeners might recall that Nicola Willis, the
Finance Minister, was so wary of this that she got

(01:09):
the Treasury to introduce a new way of reporting the
government's surplus or deficit called ober gal X to exclude
ACC because ACC's deficit was weighing so heavily on the
government's books. You know, it makes the government look bad.
So Andrew Bailey is trying to do what he can
to figure out, well, you know, what are the issues
and what can be improved. Now one of the things

(01:31):
is the investments he wants to He's getting these consultants
and to look to see are they using the right approach,
what's the governance like, so on and so on? Are
they focusing too much on investing in clean things? That
was something he suggested to me. You know, carbon emissions.
Are they too fixated on that? So it'll be interesting
to see what comes of that now, you suggested as well.

(01:53):
The other thing they're looking at is the way ACC operates,
you know, the claims management. Are they letting people stay
in ACC for two long right?

Speaker 1 (02:00):
Okay? So what are the consultants expected to do?

Speaker 2 (02:04):
Well, there's a long list of things they need to do.
Andrew Bailey said that he ultimately whatever came of this,
he's not going to tell ACC this is how you
need to invest the money. It's fifty billion dollars of money, right,
that's the size of the portfolio. It's a lot of money.
But I guess if there are any constraints he's used
the word constraints preventing ACC from maximizing returns, he wants

(02:28):
to remove those. My opinion is that the bigger issue
here is actually around claims management. It's the fact that
people are staying on ACC for longer, they are taking
longer to get rehabilitated to get back to work. You know,
that might bring up some bigger questions around the health system.
Is it taking people too long to be seen?

Speaker 1 (02:45):
And court decisions in seeing that ACC has expanded responsibilities
and my abilities totally.

Speaker 2 (02:53):
So that is a huge factor. There've been a number
of court rulings, one of which relates to people who
can't work because of injuries suffered when they were children.
This court ruling means that ACC reckons about an additional
one hundred thousand people might become eligible for ACC cover
for compensation due to this court ruling. Now, that should

(03:15):
bring ACC's claims liability up by about three point five
billion dollars that's just the one court ruling. So so
you know, Andrew Baty said to me that actually looking
at what ACC covers, the scope of its coverage is
not something the reviews are going to cover.

Speaker 1 (03:33):
It's a huge, huge story and you're covering it so well.
And I thank you so much, Janatim trying you. Thank
you for more from Hither Duplessy Allen Drive.

Speaker 2 (03:41):
Listen live to news talks it'd be from four pm weekdays,
or follow the podcast on iHeartRadio.