Fully Funded ACC Outrage

Requiring full funding of ACC is an outrage.

Full funding is when ACC holds enough funds now to satisfy the lifetime cost of claims. So for example, if someone has an accident that will require 30 years of ACC help, ACC will need to hold enough money in its reserves right now, to cover the full 30 years of costs, not just the costs for this year. If we all had to live like this, life would be impossible – you would for example have to earn enough money this year to cover your lifetime costs of living. Obviously, this is ridiculous. In the case of a powerful Corporation, it is not only ridiculous, it is dangerous.

The fully funded mentality contributes to the harshness with which claimants are handled and it is unnecessary. We believe that ACC needs to hold funds now for its projected costs for this year plus about 6 months in reserve, in case of a major disaster like an earthquake. But there is no justification for it to hold enough funds now to cover decades of future claims.

In 2009 Nick Smith used the fully funded excuse as justification to cut claimants’ entitlements and increase levies. The huge funds retained by ACC were also a useful tool to cover up the shortfall in the government’s accounts from the tax cuts granted to higher income earners in 2008. In other words, the richest part of society has benefited at the expense of the broken and the poor.

Evidence that ACC has lost its way can be seen from its own admission that it is one of the largest investors in NZ companies through its nearly $2 billion in reserves. ACC is supposed to provide rehabilitation, not to be focused on the financial markets.

Refocusing the Corporation is long overdue, but what hope is there of any convincing change when so much money is at stake?