Private companies may be given an opportunity to compete for some ACC business in the future as the Government looks to rein in cost blowouts within the sector.

ACC Minister Nick Smith yesterday announced he was replacing chairman Ross Wilson with former Ernst & Young chief executive John Judge.

He also said the board would be reconfigured and some members may not keep their jobs.

The Labour Party responded by saying the move to dismiss Mr Wilson, a trade unionist, was politically motivated and has suggested National is softening ACC up for privatisation.

But Prime Minister John Key said today that was not the case.

"What we've got is a situation where there has been a very significant blowout in the liabilities for ACC, they're now sitting at about $22 billion," he told TV3's Sunrise show.

Mr Key said either premiums had to go up significantly, or ACC had to get on top of the problems.

"Part of that is making sure there is not this unfunded creep of entitlements, but the second thing is having a competent board that can actually run ACC in the way we want it to be run."

He said if Mr Wilson had been competent - and had the confidence of Mr Smith - he would have been kept on.

"It's just that the minister needs to have confidence that the board can get on top of what we see as an explosion of costs."

Mr Key said it was not a case of creating a new board heavy on business acumen and light on worker representation.

He said ACC would not be privatised, but private companies may have the opportunity to get involved.

"We campaigned on the ability to look at introducing competition to the workers' account.

"ACC would remain and possibly some private sector companies would have the opportunity to compete for business in that account."

- NZPA