KEY POINTS:
Poor old ACC, damned if it does, and damned if it doesn't.
If the Government accepts the ACC board's recommendations, the composite levy employers will pay in the 2007/08 year will be unchanged at $1.21 for every $100 of payroll.
The board, it seems, puts a lot of weight on avoiding volatility in levies.
So instead, it is beset by calls to "pay the money back" - the money being the hundreds of millions of dollars by which the employers account is over-funded.
But if next year's levies were slashed, the year after they would most likely jump again and employer groups' rhetoric would be about runaway costs, cross-subsidising the self-employed and the urgent need to privatise.
The annual report for the year to June puts the net value of the employers scheme's liabilities at just under $1 billion, and its share of ACC's $8 billion of invested reserves at close to $1.4 billion.
It was over-funded the year before, too, but by a more modest $150 million.
ACC general manager Keith McLea says most of the increase in over-funding is a result of exceptionally good returns from ACC's investments, which overall contributed about $1 billion of its $4 billion income last year.
Employers will get their money back, by way of future levies being lower than they would otherwise be, he said.
ACC's policy is to smooth out over- and under-funding over a five-year horizon, to reduce volatility in levies.
Another notable change in the accounts is an increase of about $300 million to $2.8 billion in the value of the liabilities of the residual claims account.
That is the account which covers the ongoing cost of injuries which occurred before 1999. It exists because ACC is still in transition from a pay-as-you-go scheme to a fully funded one.
Levies in each of the main accounts - earners, motor vehicle and employers - will fully cover the lifetime costs of this year's injuries, and the residual claims pays for the backlog from the pay-as-you-go years.
It should be diminishing; it is supposed to disappear by 2014.
But the residual claims account's liabilities were swollen by about $500 million last year after a law change relating to gradual process occupational diseases such as hearing loss.
The amendment changed the time when such injuries are regarded as having occurred from when someone first receives medical treatment for it or is incapacitated by it to when exposure to the relevant substance or environmental conditions occurred.
ACC Minister Ruth Dyson explains: "Rather than the liable [ACC] account being the one that fits when you first have treatment, the act relates liability to the account that applied when you had your injury."
So if someone has hearing loss as a result of a pre-1999 working environment but it is not diagnosed until he or she is retired and covered by the taxpayer-funded non-earners account, the liability will now fall on the residual claims account.
One group that looks upon this change without joy is accredited employers.
About a quarter of the workforce is covered by the accredited employers programme, under which employers in effect self-insure for current claims, but are liable for the residual claims levy.
While the composite employers' levy will remain unchanged (if the Government accepts ACC's recommendation) that is the net effect of the employers account levy falling from 86c per $100 in the current year to 78c next year, offset by a rise in the residual claims levy from 35c to 43c.
Viewed in isolation, as an accredited employer might, the rise in the residual claims levy is a 23 per cent increase, though it is still better than the 19c or 54 per cent increase ACC management had proposed.
National's ACC spokesman Paul Hutchison says it is perverse to make the accredited employers scheme less attractive by increasing the residual claims levy when third-party administrators such as Aon manage claims on behalf of accredited empowers much more cheaply than ACC and also get people back to work weeks earlier on average.
This argument overlooks that all employers, and the self-employed too, face the higher residual claims levy, so its increase hardly erodes the relative attractiveness of accredited employer option.
But there is another concern - that the number of claims relating to gradual process diseases or infection will balloon as a result of an expansion of Schedule II, which is the list of complaints which the claimant does not have to prove were occupational or caused in the workplace.
Dyson says the object of the exercise is to spare people who are going to be covered by ACC anyway the long, slow and frustrating process of proving that their problem is workplace-related.
"If you have a disease the cause of which is almost always going to be in the workplace - and all the social partners agree that it is - then it is sensible that those diseases be put in schedule so people don't have to go through the long process of proving a causal link."
Hutchison objects to this, saying it is liable to pre-empt a diagnosis that should always be based on the evidence of the specific case.
"This results in the great danger of mis-diagnosing the real cause of injury ... and makes it impossible for ACC to prove where serious issues like hearing loss, substance abuse and even asthma occurred."
Because of the financial benefits of being on ACC rather than merely sick, the incentives would be to err on the side of classifying people as falling within the expanded Schedule II, and the costs of the scheme would balloon.
He sees it as a stealthy step towards the original Woodhouse vision, under which entitlements would be the same whether a person's misfortune arose from injury or sickness.
But Dyson said, "That's not the way I do politics. If I was proposing ACC cover illness as well as injury that's what I would be saying. I would not be doing it through any back-door method or pretending to do something else."
Employers also worry that the plan to recombine the employers and self-employed accounts will result in their cross-subsidising an inherently riskier group.
In the latest year there were 11.6 new claims per 100 self-employed compared with 9.8 per 100 covered by the employers account.
Dyson says there is no evidence in the claims data that the self-employed have a higher number of claims overall. "In some industries they do, in others they are significantly lower."
Self-employed work levies are on average significantly higher, currently $2.03 compared with 86c for the employers account.
But these are per $100 of leviable - essentially taxable - income, and the self-employed have more options in structuring their affairs so as to limit their taxable income.
