Media Release - 12 March 2010
ACC privatisation laid bare
The government’s dogmatic determination to privatise ACC is now completely transparent, says ACC Futures Coalition spokesperson Hazel Armstrong.
Speaking after Chairman John Judge’s appearance yesterday at the select committee considering the Insurance (Prudential Supervision) Bill, Armstrong said: “John Judge’s line before the select committee reflects the obsession with full funding and emphasises the intention to treat ACC like an insurer. It is not. We do not have insurance benefits derived from individual premiums, we have a set of entitlements (set by legislation) funded by collective levies, which are a form of taxation.
“In the end ACC enables us as a community to provide social and economic protection to those among who engage in risky activity for the benefit of all. ACC operates alongside of and is complementary to our health and social services systems.
“The commitment to full funding of ACC was introduced by the last National government with the precise intention of selling it off to private insurance. Full funding only makes sense in order to bring ACC’s accounts parallel to those of private insurers who need assets to cover the cost of liabilities that accrue as a result of this and past years’ activities. Private insurers might go out of business and they need to ensure that today’s premium payers are likely to meet the full cost of the liabilities. The provider therefore collects more money today than it needs to meet today’s cost.
“None of the reasons that drive a private provider to build up ‘reserves’ applies to a government-owned entity, particularly a provider like the ACC. The ultimate owner - the government -will never disappear. It has the power to tax to meet future liabilities, expected or unexpected. Neither does the government need to undertake the actuarial calculations to establish whether or not it has a liability now or in the future, nor what the size of that might be.
“The government has similar continuing liabilities in respect of education or the health service, but it would be considered insanity to fund those future liabilities out of current reserves. Why do it for ACC? Only so that it can be sold for the benefit of private business, not for the benefit of ordinary New Zealanders. We will all be the losers in this.”
12:00AM Friday, 12 March, 2010
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