Government 'cash cow' in excellent finacial health

Panel Chair Paula Rebstock. Photo / Ross Setford

The Accident Compensation Corporation is likely in the strongest financial position in its history, its chair says.

Labour has called for an immediate cut in levies and says ACC is being treated as a "cash cow" by the Government.

And today ACC chair Paula Rebstock outlined the corporations' excellent financial health, which saw a $2.1 billion surplus at the end of the last financial year.

A key factor was that the corporation's investments, now close to $31 billion, had performed better than expected, she said.

"There is no doubt that...also gives us increased ability to see levies reduced in future.

"That investment income is increasingly picking up a large amount of the contribution we need to pay for current and future accidents."

Labour has gone on the attack over ACC levies this week and said its two main accounts, workers account and earners account are oversubscribed by more than a third.

Levies are paid by businesses, motor vehicle owners and employees for injury cover that is funded by ACC.

In 2014, the government rejected a recommendation from ACC that levies for the 2015/16 year be cut by 21 per cent for the work levy on employers, and by 5 per cent for the earners' levy on workers.

Instead the work levy was cut by 5 per cent, and the earners' levy remained the same.

Sue Moroney, Labour's spokeswoman for ACC and attending the select committee in which Ms Rebstock was questioned, pressed for the corporation's view on the Government's position over levies.

"The [Government] has stated publicly that one of the factors that they have taken into account when setting these levies is getting the Crown accounts into surplus.

"Is that, in the corporation's view, a legitimate use of collecting ACC levies?"

Ms Rebstock said the corporation had no view "what so ever".

"That is our responsibility, to make a recommendation [on levies]. It's not our responsibility to form a view on whether the Government has exercised its authority appropriately."

ACC Minister Nikki Kaye has argued that wider economic issues and factors such as discount rates could greatly affect the corporation's finances.

Levy cuts had been made, Ms Kaye said, but a long-term view needed to be taken to give certainty to businesses.

Ms Rebstock told the committee that current uncertainty in the global economy meant it could make sense to "smooth out" levy changes over a longer time period.

"We see these discount rates moving around a lot, and it is affecting our forward liability.

"The question is when [levy cuts are delivered]. This is a timing issue," Ms Rebstock said.

"ACC is in a very strong position. It is the strongest it has probably ever been in the financial [sense].

"However, we are in a very uncertain environment, and I just recently saw our forward liability increase by $4 billion for factors outside our control."

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