3 Mar 2009

Treasury apologises over ACC shortfall disclosure

6:13 pm on 3 March 2009

The Treasury has apologised to Finance Minister Bill English for the failure to include an ACC funding shortfall in the pre-election opening of the Government's books.

An independent report has found that a $1.5 billion hole in the Accident Compensation Corporation's Non-Earner Account over the next four years should have been disclosed the Pre-Election Fiscal and Economic Update issued last October.

The update is meant to contain the latest information on the state of the Government's books.

Because the exact size of the ACC shortfall was still being finalised at the time and no decisions had been taken on how to address it, the Treasury decided not to include it.

The secretary of the Treasury, John Whitehead, says it now accepts that it got it wrong.

Mr Whitehead has apologised to Mr English and says he will act speedily on the inquiry's recommendations.

The Treasury will change the rules it uses to identify fiscal risks, so a similar shortfall would be disclosed in future.

Mr Whitehead says although the Public Finance Act was breached, he can not envisage anyone being charged.

Mr English says Labour Party ministers knew about the funding shortfall in April 2008 and the information should have been made public.

However, former ACC minister Maryan Street says both she and former finance minister Michael Cullen have been exonerated by the independent report.

Ms Street says the Government is intent on misleading the public to help create a case for the privatisation of ACC.

The independent inquiry was conducted by consulting firm Martin Jenkins and Associates.