Warren Forster: ACC lawyer and researcher on ACC's accounting change

Don’t expect lower levies as a result of ACC’s “accounting change”. 

The Government has approved a change that reduces the amount of money the insurer would need to pay out in claims by $7 billion. 

It would see the risk margin reduced from 12.7% to zero, shaving down the outstanding claims liability, which is used to calculate how much it may have to pay out in the years to come.  

ACC lawyer and researcher Warren Forster told Mike Hosking in effect, there will be no real change to how it operates in peoples’ lives. 

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Episode Transcript

Speaker 1 (00:00):
We have an accounting change that reduces ACC's estimated liability
by seven billion. Essentially, they're dropping the risk margin from
twelve percent down to zero, which makes the books look better.
So what does that actually mean, warrenforced, It is, ay
an ACC lawyer and researcher, and as well, there's Warren morning,
good morning. This is just protection stuff.

Speaker 2 (00:16):
And is it?

Speaker 1 (00:16):
I mean it's stuff that may or may not happen,
and you adjust some numbers around it. I mean nothing's
actually happened apart from attitude. Is that correct?

Speaker 2 (00:24):
That's pretty much that. Like in the late nineties, Labor
and National GOP together and said, look, we're going to
fully fund ACC. How much money do we need? And
each year the amount of money that they think they
needed went up, and just behind that, the amount of
money that they had went up. So we've been growing
these a SC funds for twenty five years and in
twenty twenty three, ACC had forty seven billion in the bank.

(00:46):
It says it needed fifty one billion to fully fund it,
so it's about ten percent apart. That's kind of what
we see. But in twenty twenty four they did it
and they said, look, we've only got forty eight billion
in the bank, we need sixty billion. We got a problem.
So they just effectively recalculated what they need. But in
the meantime they sent the message out that ACC's broke.
Levies have gone up, people are being started to be

(01:07):
thrown off the scheme. But now they've recalculated, they say, okay,
well we need seven billion less, so back in the
same territory of sort of ten cent apart. But in
the meantime all the levees have gone up and people
have been picked off and that sort of you know,
now we're seeing the message we don't need that much
money anymore. But in effect there's been no real change.

(01:28):
It doesn't change how it operates in people's lives. But
from a political point of view, they all sort of
had each other on the back and say, haven't with nothing.

Speaker 1 (01:35):
Great exactly, that's very well explained. Congratulations on that. Does
this include the sexual abusis court case stuff where they
don't seem to know what the number may or may
not be. We're guessing that that one as well.

Speaker 2 (01:45):
Yeah, so that was part of the thing last year
and again going back acc used to pay those claims
in the late nineties are like oh, we'll save a
whole lot of money by not paying those people. And
then last year they said, oh, we've got to pay
them again, so that they increase what they said was
a liability there by three point five billion. But basically

(02:06):
what's happened is very few of those people have got
any help. Asus has only paid out something like fifty
million or one hundred million of that number, and that's
because the process is so slow. But you've got to know,
if you put aside the politics and you think of
the impact of people when all these things change backwards
and forwards. People who are paying levies and their businesses

(02:28):
or on fuel, people who are injured are at home.
Now the government's saying, oh, well we're going to cut
there's twenty thousand people here and it looks like nothing's
wrong with them, and we're going to rehabilitate them. But
actually what they're doing is they're going through one person
by person and they say, well, you've only got a sprain,
you should be back at work, and they're ignoring the
actual injuries that the people have. So it's the same

(02:48):
for sexual abuse, it's the same for people who are
injured by accident. It's the same for work injuries. We
need a mature approach from our political parties so that
we can actually do this stuff sensibly and long trim
without these sort of lurching for one way to another
which we.

Speaker 1 (03:04):
See constant tinkering. Appreciate it, Warren Well, explained Warren Forster,
who's an ACC lawyer and researcher. And of course you've
got to remember that the return to surplus, this is
Nicola willis the return to surplus, which may or may
not happen in twenty eight twenty nine, is predicated on
the idea that the ACC numbers aren't in there because
she just decided that well, she decided that if they

(03:24):
were in there, she wouldn't be returning to surplus. So
that's how we're being mucked around with. For more from
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