Axe ready to fall on ACC board

Nick Smith has the power to replace the ACC board at any time. Photo / Supplied

The Government is preparing to lower the axe on the ACC board, possibly as early as tomorrow.

- NZPA understands that ACC Minister Nick Smith will consider tomorrow a response to his "please explain" letter sent to the board about the corporation's deteriorating financial position and rising costs.

Dr Smith indicated last week he wanted a "fresh start" with the board which is currently chaired by the former head of the Council of Trade Unions, Ross Wilson.

- NZPA understands that all eight members of the board will be stood down though some will be reappointed.

Dr Smith wrote to board members last week saying he was not happy with its performance and intended to make changes.

He has the power under the law to replace them at any time.

- NZPA understands that the Government is not holding senior management responsible for the situation at ACC and believes they have the ability to improve performance at the corporation.

Last week, Dr Smith said ACC entitlements would have to be cut in response to a blow-out in treatment costs and growing liabilities.

The alternative of large increases in levies for workers, employers and motorists were not acceptable.

Under Labour, ACC had stopped acting as an insurer and become a welfare agency, said Dr Smith.

Labour attacked Dr Smith, saying he was manufacturing a crisis to win a mandate for cuts to ACC's coverage and the introduction of part charges.

ACC has liabilities for claims from before 1999 which means some of today's levies pay for those liabilities and also the full cost of treatment in the future from current accidents.

Dr Smith said it was wrong to portray the delay of full funding as an answer to ACC's problems, but there is widespread agreement among MPs that this will happen

The Government has to soon set the motor vehicle levy and Labour ACC spokesman David Parker has urged Dr Smith to introduce the law now to keep the rate rise to $30.

Dr Smith has said he would not increase the levy by the recommended $120 to $376, but a law change was needed.

The legislation would be passed before the next levy rate is considered at the end of this year.

The Government has pointed to areas such as free physiotherapy as targets for cuts and Dr Smith said he would be talking to that sector before changes were made.

The growth in liabilities is more difficult to contain as it largely tied to the collapse in international equities and volatile assessments of the actual liability.

- NZPA