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Nick Smith defends calling ACC insolvent
"Hon DAVID PARKER (Labour) to the Minister for ACC: Does he stand by his statements that "if ACC was an insurance company, it would be insolvent,", and that "we need to get costs back under control."? Hon Dr NICK SMITH (Minister for ACC) : Yes, I do. The dictionary defines insolvency as "liabilities exceeding assets". The Accident Compensation Corporation (ACC) has liabilities of $22 billion and assets of $10 billion. ACC's costs have more than doubled, from $1.5 billion a year in 2000 to $3.2 billion this year.
Hon David Parker: Has the Minister seen reports from Brian Fallow that the Government's "shrill scaremongering and scapegoating is gratuitous", and from Rod Oram that "there is a huge gap between the rhetoric of John Key and Smith and reality", and will he now concede that his exaggerations around ACC were irresponsible? Hon Dr NICK SMITH: I note that there have been other commentators who have been very critical of the financial state of ACC. I simply say to members opposite that if all is well with ACC, why did the Government need to bail it out for $300 million this financial year?" - Parliament TV
Highly worrisome language by Nick
Highly worrisome language by Nick Smith - referring to 'bail out' with respect to ACC - the intention being to capitalise on the common understanding of the AIG situation in the States. This is intended to move the notion/perception of ACC in the eyes of ordinary NZers closer and closer to a private sector insurance model.
It's like saying the government had to 'bail out' the Department of Social Welfare because unemployment benefits had risen, or the government had to 'bail out' the Police because crime had risen.
ACC had a budget shortfall in comparison to its operational costs - it was not 'bailed out'.
Kate I have to disagree
Kate
I have to disagree a little on your analysis, ACC is an insurer and the previous govt changed the terms of that insurance without adequate planning, had the terms of the 'policy' not been changed politically ACC would not have this shortfall, your comparison to the police and winz are inaccurate because you are comparing the effect of and external factor (crime, unemployment) with the effect of an internal policy change
Neven
Good point Neven. I was
Good point Neven. I was unaware that a policy change caused the budget shortfall. What was that policy change?
But, your point illustrates my point even more - ACC is not a business entity - it is a part of our socialised health/welfare service sector and therefore expenditure is subject to policy/political direction.
Therefore, it is unfair of the current Minister to be pointing the finger at its executive/administrators; suggesting if it were a business it would need to be "bailed out". Rather the context of National's argument should be pointing the finger at the previous government for making that costly policy change which you speak of. And indeed, they (National) should move to reverse that policy change.
Kate AKAIK the policy change
Kate
AKAIK the policy change was around physiotherapy and it is ACC's problem because they provided the estimates of cost to the govt.
"ACC is not a business entity" obviously not but it is probably the one that most fits the requirements of being one though it would appear like most monopolies it is run badly.
Dont get me wrong, I'm not in favour of privatised healthcare (ala the US) but a competitor to ACC wuold not be a bad thing
Neven