PM confirms ACC board sackings

ACC Minister Nick Smith. Photo / Richard Robinson

ACC board members who no longer have their minister's confidence have been told they will be sacked, Prime Minister John Key said this morning.

Speaking on Newstalk ZB, Mr Key said "ACC was a mess" and affected board members had been told of ACC Minister Nick Smith's decision.

"It's my expectation that some of the members of the board will be going from ACC and that is because the minister no longer has confidence in them that they can resolve what are the quite considerable issues facing ACC."

Asked if members had been told, Mr Key said they had.

"It's in the minister's prerogative to do that, and he's required if he wants to make changes to communicate that, and that's happened."

Dr Smith wrote to board members last week saying he was not happy with its performance and he intended to make changes.

He has the power under the law to replace them at any time.

Dr Smith indicated last week he wanted a "fresh start" with the board which is currently chaired by the former head of the Council of Trade Unions, Ross Wilson.

NZPA understands that all eight members of the board will be stood down though some will be reappointed.

It is also understood that the Government is not holding senior management responsible for the situation at ACC and believes they have the ability to improve performance at the corporation.

Last week, Dr Smith said ACC entitlements would have to be cut in response to a blow-out in treatment costs and growing liabilities.

The alternative of large increases in levies for workers, employers and motorists was not acceptable.

Under Labour, ACC had stopped acting as an insurer and become a welfare agency, said Dr Smith.

Labour attacked Dr Smith, saying he was manufacturing a crisis to win a mandate for cuts to ACC's coverage and the introduction of part charges.

ACC has liabilities for claims from before 1999 which means some of today's levies pay for those liabilities and also the full cost of treatment in the future from current accidents.

Dr Smith said it was wrong to portray the delay of full funding as an answer to ACC's problems, but there is widespread agreement among MPs that this will happen

The Government has to soon set the motor vehicle levy and Labour ACC spokesman David Parker has urged Dr Smith to introduce the law now to keep the rate rise to $30.

Dr Smith has said he would not increase the levy by the recommended $120 to $376, but a law change was needed.

The legislation would be passed before the next levy rate is considered at the end of this year.

The Government has pointed to areas such as free physiotherapy as targets for cuts and Dr Smith said he would be talking to that sector before changes were made.

The growth in liabilities is more difficult to contain as it largely tied to the collapse in international equities and volatile assessments of the actual liability.

Council of Trade Unions secretary Peter Conway said government spokespeople had been undermining ACC, leaking incorrect allegations to media about ACC investment performance and accusing ACC's board of failing to get the last government to include a hole in ACC funding in the pre-election fiscal update (Prefu).

Mr Wilson said ACC's investment performance was better than any other fund manager and a report last week found Treasury was to blame for the omission in the Prefu.

"It is vital that a worker/union perspective remains on the board and that board members are able to publicly discuss the challenges facing ACC and provide the correct facts on why costs etc are increasing," Mr Conway said.

"We urge the Government to take extreme care in its deliberations on ACC. This scheme has been built up over decades and we do not want it disestablished."

- NZPA