Hi Toad.

As a motorcyclist I am feeling the pain of ACC’s change in policy. Not only is it costing me more to run the bike I currently own, but the cost of registration has made my hobby of riding and renovating bikes too expensive (I used to have up to three bikes of different types in my garage at once). However, while I agree with the Greens about a return to the Woodhouse principle of funding only a medium term contingency for the ACC scheme, the issue you raise is slightly different from that raised by Kevyn.

Whether or not govt chooses to partially or fully-fund, it still makes sense for ACC to calculate both annual costs and ongoing liabilities. In other areas of government, a focus on annual costs alone tends to mean there is too little focus on prevention, early intervention, and long term cost-effectiveness (see the health and welfare systems).

Having said that, if you calculate liabilities and list them on the government’s books, then you get Treasury chasing you for full-funding in order to show that the liability is covered. This is partly because of accounting practice standards, but also because it affects the credit rating of NZ Inc if we are transparent about unfunded liabilities. Thus the beancounters and the credit risk assessors (the same ones that gave good credit ratings to Ireland and the major investment banks over previous years) are having a major influence on ACC’s funding policy even though that policy now runs counter to the social intent of the ACC scheme in the first place. One can only feel sorry for Sir Owen having to watch this unfold after all the work he put in.

The fact that full-funding would also support privatisation of the scheme is, I’m sure, irrelevant to the current Government’s decision process.

Like or Dislike: 0  0 (0)

Kevyn – the Greens are arguing that ACC should revert to PAYG, or at least be only partially, rather than fully, pre-funded.

On that basis, I think the video has a valid and accurate message, which is why I presume frog posted it.

Like or Dislike: 0  0 (0)

The maths in that video is seriously flawed as it assumes that ACC is still a pay/go scheme. Since that isn’t the case they need to include the future cost of the new claims made each year.

This easily worked out, assuming that none of the permanently disabled motorcyclists die or move on nat super.

Subtract the number new claims in 5 years ago from the number of new claims last year, then subtract the number of active claims 5 years ago from the number active claims last year. Subtracting the first number from the second number gives the number of long-term compensation claims each year. Calculate that as a pecrentage of all active claims then apply that percentage to the $62 million paid out and you arrive at an annual cost of $1 million dollars per year for new lifetime compensation claims. Assuming an average remaining working life of 35 years that means motorcyclists should be funding current costs of $62m plus $35m future costs for this years crashes plus $30m-$45m of previously unfunded future costs of permanent disabilities that occurred in crashes up to 35 years ago. In fact, at the very least, half of the $62m paid out last year was for compensation paid to victims of crashes that occurred more than 20 years ago. Much the same is true for the remaining $280m paid out from the motorvehicle account. But the fact that future liabilities are being funded from a fuel levy means that motorcyclists contributions from this source will never be sufficient, even when half those future costs are properly allocated to car owners, who are responsible for half the motorcycle injury toll.

As at least half the longterm payouts are for motorcyclists injured prior to 1990 when we 150,000 registered motorcycles it is unfair to burden the current 75,000 motorcyclists with those historic obligations, but that is precisely what ACC is attempting to do.

Like or Dislike: 0  0 (0)

Hey, let’s back Kevin’s call for submissions on this pernicious Bill.

This is the thin end of the wedge for privatisation – set it up so both levy payers and claimants think they have a grievance, and then shaft them all.

That is NACT’S agenda – create the circumstances to eventually move ACC to being nothing more than an investment opportunity for the insurance industry.

And who will lose from that? Well, everyone but the insurance industry, actually.

Like or Dislike: 0  0 (0)