11 Aug 2011

Government rejected advice on ACC savings

12:00 pm on 11 August 2011

The Government ignored warnings from the Department of Labour before the Budget that Treasury figures on proposed savings from Accident Compensation Corporation (ACC) were too optimistic, official papers show.

Papers released under the Official Information Act reveal a disagreement over the figures between the Department of Labour and the Treasury.

Figures put up by the department suggested ACC would make savings of about $400 million over the next three years in its non-earners' account.

The Treasury, however, said the savings would be $580 million over that period, a recommendation accepted by the Government.

The papers show the Department of Labour warned there was no actuarial or economic basis to the Treasury's projections.

Labour's ACC spokesperson, Chris Hipkins, says it's pretty clear the Government has been manipulating ACC figures to suit its political ends.

However ACC Minister Nick Smith says he is comfortable with the Treasury position and believes by banking a bigger saving from ACC it puts the corporation under more pressure to perform.