The outgoing Labour government left behind a $1 billion hole in the ACC budget which will have to be filled, Prime Minister John Key said today.
Briefings from ACC officials said the corporation was seeking $297 million more for the current 2007/2008 year and similar figures for coming years.
Mr Key said he had ordered a ministerial inquiry into how the "significant and serious hole in the Government accounts" had come to be, and why it was not included when the books were opened.
Officials had warned as early as May that the non-earners account - which is funded directly by the Government and not levies - had cost blowouts that led to the "very large ticking time-bomb".
Mr Key said there would be no cuts to spending plans already promised to fill the gap, but conceded the Government would probably have to borrow more.