Hon Dr Nick Smith
Minister for ACC

9 October 2009
Media Statement
ACC’s $4.8 billion loss unsustainable

ACC has become financially unsustainable and reform is required to ensure its future for New Zealanders, ACC Minister Nick Smith says.

ACC’s 2008/09 Annual Report was today tabled in Parliament showing a loss of $48 billion.

“This $4.8 billion loss for the 2008/09 year comes on top of a $2.4 billion loss for the year before and shows the ACC scheme is financially unsustainable,” Dr Smith says.

“The Government’s major concern is the growing gap between ACC’s assets and liabilities. It comes as no surprise that ACC’s investment returns have been lower through the recession and we are quite confident these will recover. The grave concern is the huge growth in the outstanding claims liabilities from $9.4 billion to $23.8 billion in just four years.

“ACC cannot sustain the huge ongoing increases in claim costs arising from greater claim numbers, deteriorating rehabilitation rates, and unfunded scheme extensions. The underlying problem is that ACC has drifted from being a state insurer to a welfare provider.

“The Government made significant changes to the ACC Board in March to bring in top-flight financial skills and in August established a substantive review of the scheme through a stocktake. However, some difficult choices will be needed in the near future on levies and scheme entitlements. We will need to carefully balance the interests of claimants with those of levy payers who cannot sustain the sort of hikes that will be needed if costs are left unchecked.

“Significant changes are going to be required to secure for New Zealand a financially sustainable 24/7, no-fault accident insurance scheme.”

ENDS