The Accident Compensation Corporation is considering contracting out thousands of new claims to external managers by the end of the year in what Labour says is more evidence of the Government's privatisation plans for the scheme.

The proposal, first disclosed in an internal ACC email from chief executive Jan White last week, was confirmed yesterday by ACC Minister Nick Smith.

The corporation in April said it would contract out about 600 long-term claims to third parties in a "benchmarking" exercise to compare its performance with that of the private sector, but the latest proposal will see about 3000 new claims handled by private managers over a two-year period.

With the public becoming grumpy over ACC levy increases, the Government was open-minded about the proposal, which came from the corporation's management as it explored "every opportunity in which it can more efficiently manage claims", Dr Smith said.

"What we're attempting to do is to improve ACC's performance and its case management and if the private sector can play a role in that the Government says good job."

The ACC would continue to fund claims through its normal processes and a final decision to proceed would be made in about two months with the programme beginning shortly after that, an ACC spokesman said.

Should the plan proceed, claimants would have the same review rights in the event a private sector claims manager made decisions they felt were inappropriate.

Labour ACC spokesman David Parker questioned why the corporation was embarking on the exercises, given Dr Smith had just told the committee of "a huge improvement" in its performance.

Dr Smith told Parliament's transport and industrial relations committee the corporation was expected to report about a $2 billion surplus this year, mainly due to a huge turnaround in investment markets, a $35 million reduction in administration costs and, most significantly, a stabilisation in the rate of increase of its long-term liabilities.

Mr Parker believed the new initiative was driven by the Government as part of its privatisation plans.

"We know it's cheaper so what's the case for privatising parts of its functions?"

The Government is conducting a stocktake of the scheme, which includes an investigation of whether the work account should be opened up to private sector insurance companies. Dr Smith said the final stocktake report was due at the end of this month and decisions would follow a couple of months after that.

Hazel Armstrong of the ACC Futures Coalition, an advocacy group for ACC claimants, said experience of private claims managers showed claimants subjected to scrutiny of the tiniest detail, payments being delayed or refused altogether on spurious grounds and injured claimants being forced back to work before they were properly rehabilitated.