The headline looks like a turnaround
The government intervened in ACC’s long-running performance crisis, ordered a review, installed a new chair and mandated monthly public reporting. By April 2026, the growth in the long-term claims pool, which had been running at nearly 15% a year, had stopped. In the year to June, a record of more than 8,700 people came off long-term support. On paper, that is exactly what a turnaround is supposed to look like.
NZ Initiative executive director Oliver Hartwich, writing in the NZ Herald on 24 June 2026, gives the government genuine credit for halting the slide. Then he asks the question that should worry every employer paying levies. What do the numbers underneath the headline actually show?
What ACC is really counting
The answer is uncomfortable. ACC’s official definition of a person who has returned to work is the cessation of payments. If ACC stops paying someone and they do not appeal within five weeks, the case is closed and they are counted as recovered. No call to the employer. No check that there is a job to go back to. No follow-up. On ACC’s books, the day the money stops is the day recovery is declared.
The consequences show up in the data. In the year to September 2025, ACC cut or declined support nearly 173,000 times, up 13.6% on the prior year on Treasury figures, and suspended weekly payments 80% more often. Of the record exits from long-term support, only 13 in every 100 went back to the job they had before. For roughly half of all exits, ACC could not say why the person left at all. Official Information Act figures reported by Insurance Business corroborate the picture, with 13% returning to pre-injury employment and nearly half of exits with no determinable reason.
Hartwich names the mechanism directly. It is Goodhart’s Law. Once a measure becomes the target everyone is judged by, it stops reflecting reality. The metric here is the size of the long-term pool, and you can shrink that pool by ending more payments. That is close to what has happened.
The bill lands on employers
This is not a technical quibble. Employers fund the scheme through levies, and the economics are deteriorating. ACC’s own Turnaround Plan from February 2026 shows only 37% of clients return to work or independence within 28 days against a 2030 target of 41%, with social rehabilitation costs reaching $1.5 billion in 2025. The 2023/24 annual report put the Outstanding Claims Liability at $7.2 billion, with average days to return to work for claims under a year drifting up to 72.8 days. The whole turnaround was driven partly by the need to avoid a projected $26 billion deficit by 2030.
BusinessNZ quantified the wider drag in an April 2025 briefing paper. The average time on weekly compensation rose from 10 weeks to 22 weeks between 2018 and 2024, long-term claimants climbed from around 13,300 to about 22,600, and the total productive capacity loss was estimated at $12.2 billion for 2023-24. The paper put it bluntly, warning of an avoidable loss of productive capacity in the economy and of injured people enduring more pain and loss of income than necessary.
The maddening part is that the volume of injuries is falling. Stats NZ recorded 209,400 work-related claims in 2024, down 16,600 on the prior year, at the lowest incidence rate since 2002. Fewer people are getting hurt, yet the ones who do are stuck longer. That makes the persistence of the long-term cohort hard to explain as a simple volume problem.
A worker cut off is not a worker restored
The hidden cost is shifting. An injured worker taken off ACC but not genuinely recovered does not float back to their employer. They may move onto other welfare, leave the workforce, or return diminished. The apparent saving on levies is offset by cost dumped onto Work and Income, the health system and households. As Hartwich argued in his October 2025 column, declining rehabilitation is a structural impediment to growth for a country already wrestling with weak productivity.
To be fair to ACC, the Turnaround Plan does treat genuine recovery as a priority, tracks return-to-work rates at multiple points and has reintroduced individual case managers while hiring more claims staff. The progress in halting the pool’s growth is real. The problem is the scoreboard. The headline metric can be moved by closing claims, and ACC has not adopted confirmed return to work, verified with the employer, as its primary measure of success.
Until it does, employers paying into a $7 billion scheme have no honest way to know whether their levies are buying rehabilitation or just paperwork. Measuring exits tells you the money stopped. It tells you nothing about whether anyone got better.
Sources
- NZ Herald: ACC measuring wrong figure when it comes to getting people back to work – Oliver Hartwich (2026-06-24)
- ACC Turnaround Plan Monthly Report – February 2026 (2026-02)
- ACC Annual Report 2024 (2024)
- BusinessNZ: A broken workers’ rehabilitation system and its wider negative impacts (2025-04-10)
- Stats NZ: Injury statistics – work-related claims 2024 (2025-10-22)
- Insurance Business: Coalition challenges ACC over unclear long-term claim exits
- Oliver Hartwich: When sacred cows become too holy to slaughter (2025-10-23)