ACC sought $158m in Budget 2016, got $26.4m, Treasury papers show

The Accident Compensation Commission requested an extra $158 million in funding for 2016/17 from the government ahead of Budget 2016, but Treasury instead recommended an interim payment of just $26.4 million be funded to tackle demographic changes, papers published by the government show.

ACC wanted the money to fund increases in the estimated costs of providing for injured non-earners since 2014. The injured non-earners fund covers people who aren't in the paid workforce such as students, people on benefits, the retired and children, with the government using general taxation to make a contribution to the ACC non-earners account to cover their treatment.

A Treasury spokesperson confirmed Budget 2016 set aside an extra $26.4 million for ACC.

The commission was also seeking further funding increases in the years ahead. It was seeking an extra $124 million for 2017/18, $79 million for 2018/19 and $128 million for 2019/20.

The Treasury report said it did not back funding the full amount because the request could be halved by using more realistic investment return assumptions and there was a lack of clarity about the underlying drivers of cost growth and how they are being managed. The author also says that external actuaries have noted a lack of urgency in responding to cost increases and that financial incentives for efficiency are limited because the scheme is fully funded with substantial cash reserves.

It argues that non-earners use of the scheme is at historic highs in some areas, with general practitioner claims forecast to be 11 percent higher than five years ago and specialist consultations rising 20-to-40 percent over the previous decade. It says initiatives such as free GP visits for the under 13's have contributed, but do not explain long-term trends.

The report concludes "it is worth getting to the bottom of the drivers of cost growth now, in order to mitigate the risk of pressure to take more drastic action (such as cutting scheme benefits) if costs continue to rise". It states the Treasury plans to refresh its approach to monitoring ACC in the coming year.

(BusinessDesk)