Jenee Tibshraeny: NZ Herald Wellington business editor on the Accident Compensation Corporation reporting a $7.2 billion deficit

The Accident Compensation Corporation concedes there’s room for it to tighten its processes, as it proposes increasing the levies it charges to help pay for rising claims costs.

ACC said, in its just-released annual report, that “lower-than-expected rehabilitation performance” contributed towards it reporting a wider-than-expected $7.2 billion deficit in the year to June.

In the previous year, it reported a $911 million surplus.

NZ Herald Wellington business editor Jenee Tibshraeny unpacked the factors behind the deficit - and examined how the insurer could turn things around.

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Episode Transcript

Speaker 1 (00:00):
Donative trainee is The Herald's Wellington Business editor with us. Now,
how do you know, hey, you know how has ACC
gone from a nearly billion dollar surplus last year to
a seven billion dollar deficit this year? War happened?

Speaker 2 (00:11):
Good question. Now, a number of things contributed towards this.
One of the things that ACC pointed out was the
fact that it's taking people who get injured longer to
get rehabilitated, to get their injury sorted and to get
back to back to work. Now, I thought, well, well
that's interesting. You know what, what's what's changed? And one

(00:34):
of the things that pointed to was the problems in
the health sector, the staff shortages. It means it's taking
people longer to be seen by a health professional, and
then it's also the gap between consultations with a health
professional is also increasing. So all of that means we
are staying injured, unproductive for longer and that's weighing on
ACC's books. Another thing that it pointed to was a

(00:59):
particular court case that wrapped up that increased the number
of people entitled to ACC cover. Now this is quite
a curly court ruling, but it relates to people who
were sexually assaulted as children, and it relates to their
ability to get ACC cover for the mental injury that

(01:19):
they suffer as an adult due to that childhood use
that they suffered.

Speaker 1 (01:24):
Is it the mental injury? I gause. First of all,
obviously the people that are being covered here are new,
but the injury, the mental injury, is that new as well.

Speaker 2 (01:34):
It's basically the coverage. So there's a complicated thing around
when ACC recognizes when you receive the injury. There's a
technical thing that's changing around the recognition of that. But
this is actually really really significant. So this particular court
ruling means that ACC will pay an extra about three
point five billion dollars to people who are currently injured

(01:58):
due to past trauma, past injuries into the future. So
you know that that is a really significant thing. Now.
I sat down today here with the CEO and the
DPCO at ACC for about a half an hour and nothing.

Speaker 1 (02:11):
One of this out.

Speaker 2 (02:13):
And the thing is that there are laws which ACC
operates under. But then, like everything, thing's got to court
and that tests the law, and this particular ruling really
seriously expands the scope of who could be eligible for
ACC cover. Now. It's so this particular thing around the
sexual offending is so major that ACC is actually still

(02:34):
working through the details of exactly how it's going to
deal with it and pay out billions of dollars more
to a whole bunch of people who weren't previously eligible.

Speaker 1 (02:44):
So what can they do about it? I mean, I've
obviously got to if these people are now eligible, they're
going to have to cover the people. What can they
do to actually try to get the books back into
the black.

Speaker 2 (02:52):
Well, this is where it gets rather nai for the government.
ACC has been proposing quite significant levy hikes, So that's
you know, levees that we all need to pay to
keep the system going. You know, that's to pay for
all the things we've just covered, also just general inflation.
The government, ACC's made recommendations, it's consulted on those levy hikes.

(03:13):
The difficult thing for the government is that, you know,
they're a government of low taxes, so it might be
a hard sale for the government to come to all
of us and say, hey, we're putting the ACC levees up.
But the other tricky thing for the government is that
it's also committed to reducing its deficit. So last week
we learned that the government's books are about twelve billion

(03:35):
dollars in deficit. Now ACC's deficit has contributed four billion
dollars to that deficit. So the worst ACC does, the
worse the government's books. Does you know in the government
saying we're going to get the books back in surplus.
A way to solve that is to increase these levees.
But the government has also that's also going to be
hard sale the population to the populace. So to me,

(03:57):
this really comes largely down to a number of things.
But you know, these issues in the health sector that
we're struggling with that are affecting sick people, injured people,
and now actually affecting the government's books as well.

Speaker 1 (04:08):
Yeah, fascinating. Hey Jine, thanks for talking. Story to really
appreciate it is genetd trainee. The Heralds Wellington Business Edit
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