Report calls for an end to ACC ‘permissiveness and austerity’ political cycle

Wednesday, 24 June 2026

A decade-long “decline” in ACC has been halted, the right-leaning New Zealand Initiative economic think tank says in a report issued on Wednesday morning, but its author is worried workers are being “exited” before they are rehabilitated.

“The danger is not that the turnaround fails this year, but that it succeeds on paper while failing in substance: costs shifted to households, the health system and the welfare system rather than reduced, injured workers exited rather than recovered,” said author Oliver Hartwich.

The ACC turnaround must be based on rehabilitating injured workers, Hartwich argued in the “Half a Turnaround” report, but in the past year the majority of injured workers being taken off long-term ACC support did not return to their old jobs.

“New Zealand has run this cycle before, swinging between permissiveness and austerity with rehabilitation the casualty at both extremes,” Hartwich said.

ACC, the Accident Compensation Corporation, funds injured New Zealanders’ care and recovery, and Hartwich calls a cornerstone of the New Zealand social contract.

ACC represented a historic compromise, he said. In exchange for guaranteed care and support, New Zealanders gave up the right to sue for personal injury replacing the uncertainty and expense of adversarial litigation with collective responsibility, funded by all.

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After years of injured people waiting longer, more getting stuck on long-term support and liabilities roughly doubling, the government ordered a review, demanded a turnaround and installed a new chair, said Hartwich.

“The long-term claims pool, once growing by nearly 15% a year, stopped growing by April,” he said.

“The government deserves credit for confronting a problem others left alone, and the improvement is genuine,” Hartwich said.

However, he said ACC could not yet show the improvement was rehabilitation-led.

“ACC records a person as returned to work five weeks after payments stop, without checking if they work. Over the past year it declined cover or support almost 173,000 times and suspended weekly payments 80% more often. More than 8700 came off long-term support, a record, yet only 13% returned to their old job,” Hartwich said.

“A measure that treats the end of a payment as a recovery cannot tell rehabilitation from removal,” he said.

He called for reforms to ACC that would “make rehabilitation real”.

This included every injured worker having a rehabilitation plan within 28 days of being referred, and adequate measurement of whether injured people were recovering and getting back to work, rather than just being exited.

“ACC’s Turnaround Plan already promises an expert check-in at 28 days for clients at risk of delayed recovery,” he said. “That promise should become a guarantee with teeth. Every claimant still unable to work at 28 days should receive a clinical and vocational needs assessment, with active rehabilitation beginning immediately where it is indicated, and ACC should publish referral timeliness monthly alongside its other turnaround metrics. The 28 days should run from first certification of incapacity, not from claim acceptance, so that a slow cover decision cannot consume the intervention window.”

The way ACC pays private healthcare businesses for treating its claimants should also change, Hartwich said.

“It means multi-year contracts that give practices the certainty to invest and to serve rural and high-deprivation areas,” he said. “It means outcome bonuses for durable returns to work, risk-adjusted for complexity, based on sustained employment rather than payment cessation, and audited for equity so they do not reward providers for taking only the easier cases. And it means a ‘trust and verify’ compliance model based on audit rather than pre-approval.”

Hartwich said ACC’s external actuary estimates better rehabilitation could release $500 million to $800m within two years.

“The cheap-looking path of cutting people loose is the expensive one,” he said.

“Spending properly on recovery saves money and restores the promise ACC was built on.”