Don’t take us all for mugs John

I was initially puzzled by the extent of John Key’s reaction to his discovery of a $297m shortfall in the ACC non-earner account.

Sure, it might have been worthy of a media release – after all $297m is not an insignificant amount of money. But in the context of ACC it is only 6% of the annual budget and 3% of accumulated reserves.

I agree with Key that the previous Government didn’t handle it very well when they first knew about it, but why the urgent press conference, why the Ministerial inquiry, and why the over-the-top rhetoric from Key like “significant and serious hole in the Government accounts” and “very large ticking time bomb”?

Then I read a post by Eddie at The Standard and it all started to make sense.

While the National Government may be popular at the moment, its policy to open the ACC earner’s account to foreign insurance companies is not popular – even the Employers and Manufacturers Association, who have in the past supported privatising ACC, no longer support it.

So what better than to depict ACC as a dysfunctional organisation to weaken the public opposition to their privatisation proposals.

Of course it’s all a beat-up. The shortfall is in the non-earner’s account, which is taxpayer funded, but what National wants to privatise is the earner’s account, which is funded through levies.

The two issues are in reality completely unrelated. Don’t take us all for mugs John – you can’t fool all of the people all of the time.

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5 thoughts on “Don’t take us all for mugs John

  1. Toad your being willfully blind and appear ignorant of public law requirements (The Public Fianance Act in particular).

    ACC new that it had a significant liability in May (letter to Minister). That is enough to trigger requirement that a risk is published in the PREFU, a breach of the Act has occurred if ACC has not informed the Treasury or if the then Minister or Ministers officials (office staff rather than ACC staff) has obsucured the information from the Treasury or placed pressure on the then Minister of Finance or any of his officials to exclude the information from the PREFU.

    $1B is a lot of money – its pays for a kyoto liability, health operations, teachers.

    The big concern is not privatisation of ACC but simply good governance and fiscal management – something you seem to be suggesting is not neccessary. That puts you in the same camp as an Enron executive.

  2. First, I really don’t give a stuff what Hayek would say, because I think his economic theories have been shown to be even less sustainable than those of Karl Marx – both of whom based their theoretical analysis on natural resources being infinite, which they clearly are not.

    I am not suggesting that good governance and fiscal responsibility are unnecessary – you are reading into my words things I did not say. Nor am I defending Labour – I fully agree they stuffed up re this, and possibly deliberately and for electoral purposes. Whether they breached the Public Finance Act or the Fiscal Responsibility Act is open to argument, but there is little point in arguing it now – they lost the election.

    The point I am making is that the election is over, Key leads the Government, and his job now is to show some statesmanship and put right Labour’s mistakes, rather than bleat on as if he were still in Opposition and trying to win an election.

    I would have thought he would have seen that too. I can’t believe that he’s so naive that he’s still in Opposition mode. So there must be another agenda, and that is to neutralise opposition to one of National’s policies that has little public support by discrediting the state agency they propose to carve up for the benefit of the insurance industry.

  3. No Toad – you are trying to shift the issue from one of governance to a debtae on privatisation. In essence your actively advocating that questions of good governance not be asked.

    You may disagree on the value of economics, your entitled to your opinion which tends to look like a philosopher king where you know what is best for everyone based on your moral framework.

    However I should point out your ignorance of basic economics is leading you to making fundamental mistakes. The first being that economics considers infinite resources. A basic tenant of economics is scarcity and we then observe how human behaviour effects the demand for scarce goods either resulting in higher prices or substitution to other resources.

    The point of the argument is that the previous government failed badly in basic fiscal management, this is not about national still being in opposition, its about opening up the books and being horrified that they are worse than the public was told. As resources are scarce this reduces the options available to the government to provide services sought by the public, this means less available for low income support, education, health services or improving the environment.

    Again your lack of knowledge and reliance on being a philospher king results in bad decision making and provides the encouragement (because its all about incentives) to a future government to be equally careless with fiscal management – making us all poorer with worse life outcomes and a damaged environment.

  4. What would Hayek say said: In essence your actively advocating that questions of good governance not be asked.

    No, they have already been asked, and Labour was clearly found wanting – I’m the first to acknowledge that. A Ministerial inquiry dragging the issue on for weeks if not months will add nothing to what everyone already knows.

    It’s time for the Government to move on and adress the issue, rather than engage in a name and blame exercise re what went wrong when everyone knows, and you and I agree, over what went wrong.

    That is why I am suspicious there is another agenda behind this, and that agenda is to discredit ACC in order to neutralise opposition to the earner account privatisation.

  5. Toad – I hope your suspicion about privatisation has been mitigated by repeated statements from the Minister for ACC that the government is only looking at competition on the earners account, not the non-earners which is where this initial blow-out occured.

    We now have more information that ACC accounts are in an even worse state. Again good governance failure of a significant level.

    I wonder if you see too many hidden agendas because that could be a projection of your own thinking.

    Encouraging better governance and openness might help get past your concern of hidden agendas. But continuing to shout “hidden agenda, hidden agenda” like chicken little is not assisting the debate – it results in hardening of positions and eventually a politican view point of, ” well sod this if we are tacking all this flack we may as well have a game of cane toad golf”. i.e your setting yourself up with no options.

    Personally I don’t think National needs to do anything to discredit ACC – ACC seems capable of doing that all by themselves.

    Respectfully WWHS

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