Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


Government accounts show ACC not in crisis

CTU media release
4 December 2009

Government accounts show ACC not in crisis, corporate profits falling

ACC’s financial position continues to improve according to the government accounts for October, directly contradicting ACC Minister Nick Smith’s claims of crisis for the corporation, said the CTU today.

“ACC’s reserves are now above forecast by $739 million (5.4 percent), a further improvement over last month,” said CTU Economist and Policy Director Bill Rosenberg. “The strong performance of ACC’s investment portfolio shows that the Government’s claims of blowouts and financial mismanagement are completely inaccurate.”

ACC’s claim liabilities, above forecast largely because of changes in the assumed interest rate used to estimate it, are now just 0.6 percent ($166m), more than forecast, again an improvement over last month. These numbers are driven largely by constantly changing market valuations and by actuarial assumptions. “The main problem is the full funding of future claim payments which means ACC accounts will always be susceptible to large apparent variations which in reality may have little practical consequences for the ACC scheme,” said Rosenberg. “A pay as you go scheme with a prudent level of reserves could be much more stable.”

Corporate tax receipts continue their slide, almost 40 percent below forecast in the four months to October. Treasury now concludes that this trend is not a timing issue but is likely to lead to lower corporate tax revenue for the year. Bill Rosenberg said: “It raises concern about the health of businesses at a time when many commentators are talking of them coming out of the recession.”

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

At the same time, personal income tax revenue is slightly ($202 million or 3 percent) higher than forecast, which Treasury says is “consistent with the labour market not deteriorating to the degree expected”. But social assistance and benefit payments are also $172 million higher than forecast, though Treasury says about a third of this is due to timing issues. Other causes include significantly more student allowance recipients than forecast.

The operating balance before gains and losses is $1.2 billion below forecast largely because of the fall in tax revenue, but the operating balance is on target, assisted by the gains in the ACC investments and NZ Superannuation Fund.

Net debt, the Government’s main debt indicator, is on target at $21.5 billion or 11.9 percent of GDP. Compare the UK’s government debt in March at 55.5 percent of GDP and rising. Gross debt is $48.2 billion (26.8 percent of GDP).


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Perils Of Joining AUKUS Pillar Two

The lure for New Zealand to join the AUKUS military alliance is that membership of only its “second pillar” will still (supposedly) give us access to state of the art military technologies. As top US official Kurt Campbell said during his visit to Wellington a year ago:
...We've been gratified by how many countries want to join with us to work with cutting-edge technologies like in the cyber arena, hypersonics, you can go down a long list and it's great to hear that New Zealand is interested...


Government: Backs Police To Crackdown On Gangs
The coalition Government is restoring law and order by providing police new tools to crack down on criminal gangs, says Justice Minister Paul Goldsmith and Police Minister Mark Mitchell. “Over the last five years gangs have recruited more than 3000 members, a 51 per cent increase... More

Government: Retiring Chief Of Navy Thanked For His Service

Defence Minister Judith Collins has thanked the Chief of Navy, Rear Admiral David Proctor, for his service as he retires from the Royal New Zealand Navy after 37 years. Rear Admiral Proctor will retire on 16 May to take up an employment opportunity in Australia... More

Government: Humanitarian Support For Gaza & West Bank

Winston Peters has announced NZ is providing a further $5M to respond to the extreme humanitarian need in Gaza and the West Bank. “The impact of the Israel-Hamas conflict on civilians is absolutely appalling," he said... More

Government: New High Court Judge Appointed

Judith Collins has announced the appointment of Wellington Barrister Jason Scott McHerron as a High Court Judge. Justice McHerron graduated from the University of Otago with a BA in English Literature in 1994 and an LLB in 1996... More




InfoPages News Channels


Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.