3 Dec 2008

Former minister critical of ACC funding inquiry

4:10 pm on 3 December 2008

Former Labour ACC Minister Maryan Street has criticised the Government's intention to hold a ministerial inquiry into what it calls a blow-out in the Accident Compensation Corporation non-earners' account.

The National-led Government has accused Labour of not being open about the issue before the election, held on 8 November.

Officials have told the Government the non-earner account - which covers the cost of accidents to people not in the workforce - needs an extra $1 billion over the next three years.

Prime Minister John Key said officials have told ministers that ACC is seeking $297 million in extra funding for the account in the 2007-08 year, and a similar amount for the two years after that.

Mr Key said on Tuesday that the previous Labour government knew how serious the situation was but did not disclose the information before the election.

Mr Key said Ms Street was told informally in May about the shortfall, and the incoming government should have been warned.

However, Ms Street said on Wednesday that she received her first paper on the issue in August and only got preliminary figures in October.

Just days before the election, Ms Street said she was told that a final paper would not be ready until December.

She said the Government is overreacting to what is simply business as usual at ACC, and National is playing politics to justify its plan to open ACC up to competition from the private sector.

ACC Minister Nick Smith rejected that suggestion on Wednesday.

Briefing papers from ACC officials explain that the information was not included in the pre-election fiscal and economic update, because such forecasts do not include allowances for Cabinet decisions not yet made.

However, Dr Smith said he is not satisfied with that explanation. He said there was a high level of knowledge about it and little choice for an incoming government about whether funding was to be provided or not.

Dr Smith expected to have some information back from the ministerial inquiry by February.