Surplus may allow ACC to fulfil election pledge

By RICHARD BRADDELL

Government coffers are in for $306 million boost after ACC reported a $817 million surplus for the end of this financial year.

The result improves on Treasury's revised $511 million forecast and is three times ACC's own forecast of $268 million.

This is the first year ACC's surplus will be included in the Government's operating balance.

Last year the change in its valuation was taken straight through to the Crown's balance sheet.

But the surplus could pave the way for the Government to meet its pre-election promise of improved benefits such as lump sums while still leaving room for lower premiums.

It could also be put towards further rapid reduction in ACC's unfunded liability.

That has gone from $8 billion four years ago to $3.56 billion at the end of the June year following a $519 million reduction this year.

The Government will make its decision on premium rates and the rate at which ACC will move to full funding following recommendations from the insurer later this year.

But it has already indicated it wants to reduce the unfunded liability and convert ACC to full funding over 15 years, making it unlikely the scheme will continue to allow surpluses of the level of last year's that could be offset against the funding overhang.

Chief executive Garry Wilson attributed the surprisingly strong performance to another year of reduced accidents, improved rehabilitation and the ongoing reduction in long-term claimants.

Booze buses and fewer sports injuries - particularly by better injury prevention practices among rugby and league players - are among factors resulting in fewer long-term claimants, or those who have been receiving benefits for longer than a year.

Once numbering more than 30,000, long-term claimants now stand at about 19,000.

In the last year, 3000 more people left the so-called tail than entered it.

The figure for long-term claimants will fall again sharply in the current year because there will be none coming from workplace injuries due to the previous Government's privatisation of workers' compensation.

Finance Minister Michael Cullen pounced on the result as vindication of the Government's move to restore ACC's monopoly over workplace accident insurance.

Better injury prevention and rehabilitation programmes were the predominant reasons for its strong performance, he said.

"The best news is that the number of accidents continues to fall, by 6 per cent during the year.

"ACC is in good heart and I am confident that we will be able to afford further improvements to the scheme next year without increasing premiums."