Photo courtesy: ACC
ACC Reports $7.2 Billion Financial Shift
The Accident Compensation Corporation (ACC) has reported a $7.2 billion deficit for the fiscal year, a significant shift from the previous year’s surplus of $911 million.
This downturn is primarily attributed to an $8.7 billion increase in its Outstanding Claims Liability (OCL), which now totals $60.2 billion.
The OCL reflects the anticipated future costs of injury claims, and ACC has cited recent court decisions as a major factor in expanding its obligations, alongside rising claim volumes and declining rehabilitation performance.
Financial Implications
Despite this substantial deficit, chief executive Megan Main said the ACC’s ability to provide necessary services remains unaffected. However, the increasing OCL indicates that costs are rising more rapidly than previously expected, potentially leading to higher expenses for future generations.
Budget Overruns
ACC’s claim costs exceeded budget projections by $176 million, largely due to escalating weekly compensation expenses. In response, ACC has proposed increasing levies to manage these rising costs, as both the incidence of injuries and the expenses related to their treatment have surged.
Revenue and Investments
Aside from levies, ACC also gains revenue using its investment fund. The said investment fund has seen growth, reaching $51.6 billion, up from $47.4 billion last year, thanks to a 7.6% return on investments.
Future Outlook
Main highlighted that while external factors like court decisions and economic conditions are beyond ACC’s control, there is a concerted effort to enhance rehabilitation performance and manage costs effectively. The organisation is implementing a three-year investment plan aimed at both immediate improvements and long-term systemic changes in rehabilitation practices.
While a $7.2 billion deficit sounds alarming at first glance, it is essential to contextualise this figure. It is primarily a reflection of projected future costs rather than an indication of immediate financial distress for ACC. The organisation is adjusting its financial outlook based on evolving legal frameworks and anticipated trends in claims.