ACC could offload responsibility for sexual abuse claims, new minister suggests

Friday, 16 May 2025

ACC may need to play a smaller role compensating people for some ills, to get its finances under control, new ACC Minister Scott Simpson has warned.

“Most of us probably think ACC is trucking along all right. Actually, it isn't,” he said.

Among other issues, Simpson is questioning whether ACC is the right vehicle to support people who have experienced mental health issues.

In comments that come in the wake of the Government’s curtailment of pay equity claims last week, he indicated the state-owned insurer could offload some responsibilities for supporting people who had their lives affected by sexual abuse, to a different agency.

The Court of Appeal ruled in a landmark judgment in 2023 that victims of sexual abuse were entitled to compensation for loss of potential earnings from the time they were abused, regardless of when they came forward for treatment.

ACC advised ministers in February that the “TN” court case — named after one victim who brought legal action in her 50s after being abused from the age of 2 — was forecast to increase its liabilities by $3.6 billion.

The bulk of that cost has already been reflected in a huge $7.2b funding deficit, the insurer reported as at June 30.

But Simpson told The Post that it was a “live and current” question whether the Government might make changes that meant claims that arose from the Court of Appeal ruling weren’t funded through ACC.

“When the scheme was originally set up, the foundational setting-up of ACC I don't think contemplated an outcome of the sort that is reflected by the judicial outcome in the TN case,” he said.

Simpson said he was “not suggesting for one minute that people with mental health issues shouldn't have care, support and assistance”.

“What I'm saying is perhaps we need to have a conversation as a nation about what is the best vehicle to provide that care, support and assistance, and whether it is ACC.”

Simpson said he didn’t have a pre-determined view and didn’t want to pre-empt any decisions, which would involve consulting with other ministers.

“I've asked the board and the chief executive to start doing some work on several things. Some of it is about getting the finances back — for want of a better term — under control.”

His message to abuse victims was that the ACC scheme was “there to support New Zealanders who have a need for the care and support that ACC can provide”.

Asked whether ACC should drop paying compensation to people who injured themselves playing rugby ahead of sexual abuse victims, if choices had to be made about the scheme’s scope, Simpson said that was like asking a parent to name their favourite child.

“It’s fraught with difficulty.”

Labour Party ACC spokesperson Camilla Belich said the group of people subject to the precedent in the TN court case had terrible experiences and had to fight for their right to have ACC compensation.

“It's very concerning to think that the Government is considering looking at ways to not meet those obligations.

“I appreciate that the minister has said there may be other ways that they can be supported, but I am not aware of another agency or way that people can receive the type of comprehensive support that they would receive through ACC,” she said.

Simpson is the third minister to hold the ACC portfolio since the coalition government came to power 18 months ago.

Former minister Andrew Bayly resigned in February after placing his hand on the arm of a staffer during what is understood to have been a passionate debate over the pace of reforms at ACC, having picked up the role a month earlier from fellow minister Matt Doocey in a reshuffle.

The incident followed a surprise claim by Bayly that about half of the 24,000 people in ACC’s long-term claims pool should be back at work.

ACC was on Prime Minister Christopher Luxon’s “turnaround list of government agencies and entities”, along with Kairangi Ora and Health NZ, at least in part because of its financial challenges, Simpson said.

While the TN court case has contributed greatly to a $5.6b shortfall in ACC’s so-called “non-earners’ account”, which is directly funded from taxation rather than levies, Simpson said its issues had progressively built up over about a decade.

Those issues included the fact that healthcare costs tended to rise at a much faster pace than general inflation.

The role of ACC when it was established in 1967 was quite narrow and made no mention of mental health, he said.

Since then that role had “expanded and expanded”, often for justifiable reasons, to the point where ACC was being asked to do “a significantly broader job for New Zealanders than was originally contemplated”, he said.

“There are there some really core issues at ACC that need addressing.

“One is the ‘rehabilitative tail’. One is the financing. One is the cost of providing services and care. And those are all issues that I want the board, the chief executive and her senior management team to be focused on.”

Simpson said neither he, New Zealanders, nor the Government wanted ACC to fall over.

“ACC is so important that we can't just ignore it. The ‘do nothing’ option doesn't exist”.

“It's been a progression over a decade or more, but it's now at a point where we have to have a very serious look at ACC funding, ACC service provisions, how they're servicing, what they're servicing, how are they rehabilitating, so all that stuff is in play.”

There is a currently a 5% cap on the amount by which governments can increase ACC levies each year, and a 7.5% cap on any increases in direct government funding to fund the non-earners’ account, which pays compensation and healthcare costs for people not previously in work.

Simpson said he hadn’t discussed raising those caps with fellow ministers.

He noted it was early days in his tenure, but also that there was “no magic money tree that just prints $20 bills that don't exist”.

“Ultimately, ACC has to be paid for somehow.”