Media release 

19 June 2012

Time to abandon full funding

The ACC Futures Coalition today welcomed the news that the two major political parties are thinking about the future of the full funding regime at ACC.

“Full funding is a necessary mechanism for private insurers to ensure that they have enough money to cover the cost of current liabilities,” said ACC Futures Coalition spokesperson Hazel Armstrong. “ It has never been appropriate for a public agency such as ACC which also has a welfare focus.”

“The full funding regime has been used as a stick to beat up ACC and create a false sense of financial crisis. The previous Minister claimed that the scheme was practically insolvent, because it was behind in meeting the targets for full funding. This was largely due to the scheme’s funds taking a hit in global financial crisis, but even then the scheme was delivering a surplus.”

“The ACC Futures Coalition supports a shift away from full funding to a pay-as-you-go scheme supported by reserves sufficient to withstand a crisis, “said Ms. Armstrong. “We think it will take more work to refine the model but it will be an important step if the politicians can accept that principle needs to change.”

“A move to pay-as-you-go should also reduce the pressure on levies. We would not like to speculate as to what that might mean in practice, but there is no doubt that the artificial targets created by the full funding regime has contributed to the fluctuating levies of recent years,” concluded Ms. Armstrong.

 

 ENDS

02:09PM Tuesday, 19 June, 2012