Advertising Standards Authority Complaint 09-734 - their response to my complaint

[riffer]

Okay, scanned now.

Here's what they sent me.

Bastards couldn't even spell my name right inside the document. :mad:

PLEASE NOTE: I have saved this as a .XLS file to get around the 1MB restriction on PDF files.

It's a PDF. Change the extension to .PDF and it will work okay.

[Squiggles]

Could follow up on the 16x claim, noting the wording is 16x more likely to make an ACC claim, not 16x more likely to be injured. Noting that what the ministry has recorded in regards to injury doesnt reflect ACC claim numbers... I think (but may have misread) it was ~12000 injuries for drivers/passengers vs only ~3000 claim for the same group in 2008.

[glegge]

thanks for posting the report.
I think it's worth following up on in the sense that the complaints board just rolled over and said to themselves 'well - its ACC, they know this stuff, what do we know' and took what ACC said as gospel.

they didnt think for themselves, they also said 'ACC has to look at numbers to ensure cover into the future/total life of the injury' when that bill has not even passed yet! (fully funding amongst other changes up in parliament at the moment - 'Dick head's (oh i mean Nick's) Bill')

In other words, the complaints authority just took the ACC numbers and went - oh yeah that looks OK, and said - complaint overturned.
it would be too much work for them (poor guys) to actually look at all the numbers etc and make there own opinion or to at least look at our view etc, and also for them to look at this complaint in the light of ACC is NOT working as a fully funded model YET, so in actual fact they ARE mis-construing the truth given that today still, ACC's calculations are false in that they are using fully funding calculations NOT the old ACC model ones. There news paper add assumes the bill will pass and ACC will go fully funded.
*steam*

[Hanne]

Would be worth following up with an appeal, they have stated that a minority of the board thought the ad was in breach of rules 2 and 3 of the code of ethics. Would be worth writing an appeal based on those points now ACC have responded and we have seen what they are using as justifications....

[pzkpfw]

...and also for them to look at this complaint in the light of ACC is NOT working as a fully funded model YET, so in actual fact they ARE mis-construing the truth given that today still, ACC's calculations are false in that they are using fully funding calculations NOT the old ACC model ones. There news paper add assumes the bill will pass and ACC will go fully funded.


My understanding is that ACC is already running under the fully-funded model; and what is being worked on now is how soon they have to "catch up" to the funding they need for the accidents that occured prior to going fully-funded.

(Which, yes, will affect how much they need us suckers to pay per year 'till that magic date.)

[riffer]

My understanding is that ACC is already running under the fully-funded model; and what is being worked on now is how soon they have to "catch up" to the funding they need for the accidents that occured prior to going fully-funded.

(Which, yes, will affect how much they need us suckers to pay per year 'till that magic date.)

Do you HONESTLY believe they'll lower the levies once we've hit the magic fully funded figure?

[pzkpfw]

Do you HONESTLY believe they'll lower the levies once we've hit the magic fully funded figure?

That's a different question*. I was responding to the "...and ACC will go fully funded" type comments.

(*To which my answer is "maybe".)



((And by saying "fully funded figure" you are still mixing up what it means. We already are running under the fully funded model. The "magic" figure is when the residual account has been filled up.))

[glegge]

Do you HONESTLY believe they'll lower the levies once we've hit the magic fully funded figure?

irrelevant.
fully funded = insurance company = NOT ACC as we know it = crap.

assuming we want to keep ACC as it is that is (I know i do) at least we can work on it once it's restored to it's original self.

if there's no interest in it - fine, the majority wins and we get rid of it/change it drastically
personally, i vote for the first option..hence i'm right there supporting as best i can.

[glegge]

Would be worth following up with an appeal, they have stated that a minority of the board thought the ad was in breach of rules 2 and 3 of the code of ethics. Would be worth writing an appeal based on those points now ACC have responded and we have seen what they are using as justifications....

agree.. lets get the complaints committee working for there money :)

[pzkpfw]

irrelevant.
fully funded = insurance company = NOT ACC as we know it = crap.

I don't think the fully funded model is the enemy. Our protests are not going to change the entire way ACC is funded, and in any case the accidents still have to be paid for.

Our enemy is the "risk based" differential levy setting - this thing where our bike levies are so much higher than car levies.

... and we get stung twice for that, as the higher rates are charged also in the "catch up" for the residual fund. They are back-dating the differential levy; the old pre-fully-funded accidents that they need to catch up for, occured before the differential between cars and bikes was so high.

Personally I think the residual account, regardless of what other things are going on, ought to be paid for from general ACC takings; an equal levy to all those who are levied. It's hardly fair to burden us with the result of what is basically their change of accounting practice.

[bogan]

as I posted here (http://www.kiwibiker.co.nz/forums/showpost.php?p=1129575457&postcount=172), ACC are effectively now saying bikers cost 95k per claim, and cars cost 100k per claim. From "total to fund estimated lifetime costs", which to me means cost of that years claims for thier lifetime.

Now what I dont understand is how this can be true, as the money that has been paid into the vehicle account for years has been enough, or close to it at least, but thire fact sheet shows cars need to pay an extra $100, and bikes and extra $250-$500 to cover the lifetime claims, begs the question, where do they get the money to fund the lifetime claims from now?

[glegge]

My understanding is that ACC is already running under the fully-funded model; and what is being worked on now is how soon they have to "catch up" to the funding they need for the accidents that occured prior to going fully-funded.

(Which, yes, will affect how much they need us suckers to pay per year 'till that magic date.)

i dont think it is fully funded yet, i could be wrong, but the bill was first read in parliament in october, i cant see that it's been passed yet from my searches, but feel free to prove me wrong..

[davereid]

IMHO they asked ACC, and ACC said, were right, and they just rubber stamped it. Wankers.

[Skyryder]

Would be worth following up with an appeal, they have stated that a minority of the board thought the ad was in breach of rules 2 and 3 of the code of ethics. Would be worth writing an appeal based on those points now ACC have responded and we have seen what they are using as justifications....

You would certainly have grounds based on that the complaint was not upheld on a unaminouse decision. Give the buggers something to do if for no other reason.


Skyryder

[pzkpfw]

i dont think it is fully funded yet, i could be wrong, but the bill was first read in parliament in october, i cant see that it's been passed yet from my searches, but feel free to prove me wrong..

What "fully funded" means:

http://www.acc.co.nz/about-acc/glossary-of-acc-terms/PRD_CTRB103838


A scheme in which premiums are set at a rate that not only covers the cost of claims in the current year for all injured persons, but also covers the estimated total cost of claims which will be paid in future years for those injuries.

When they changed to a "fully funded" model:

http://www.acc.co.nz/about-acc/overview-of-acc/how-were-funded/index.htm


Until 1999, ACC operated under a ‘pay-as-you-go’ basis, collecting only enough levies each year to cover the cost of claims for that particular year. In 1999 the Government decided to change ACC from ‘pay-as-you-go’ to a ‘fully funded’ way of operating. That means we now collect enough money during each levy year to cover the full lifetime costs of every claim that occurs in that year.

...and what the "Residual Claims Account" is:


This Account covers claims for work injuries that happened before 1 July 1999, and non-work injuries prior to 1 July 1992 that are still being managed. This happened because under the original ‘pay-as-you-go’ way of funding, we collected only enough money to cover injury costs in that particular year. Now, to cover ongoing costs of residual claims, part of each levy collected is paid into the Residual Claims Account.

--- ---- ---- ---- ---- ---- ---- ---- ---- ----

The bill currently being looked at is not about whether or not they will be "fully funded". They already are operating that way. It is about setting how long they've got to collect the money needed for the "Residual Claims Account".

http://www.scoop.co.nz/stories/PO0910/S00193.htm


However, the Minister for ACC is introducing amendments to the ACC legislation that will have an impact on the final levy rates set for 2010/11 – in particular extending the date by which the Scheme must be fully funded.

It's confusing because here they use a different meaning for "fully funded". Here they use it to mean getting all that back-dated money they need, for the years they were not operating under the fully funded model.

But either way, the bill currently before parliament is not about whether the scheme is run in a fully funded way (it already is - since 1999). It's about the deadline for the "catch up", for the "residual claims account".



Here's the Bill:

http://www.legislation.govt.nz/bill/government/2009/0090/9.0/DLM2417501.html


The 2014 date was originally set in 1998, but the residual accounts are still some way from being fully funded. Volatility in levy rates is likely to increase as 2014 approaches. There is also a need to deal with over- or under-funding of the residual claims liability that would occur after 2014. The amendments will set a final date for fully funding the residual claims liabilities of 31 March 2019 for the Work and Earners’ Accounts and 30 June 2019 for the Motor Vehicle Account.

Again, it's not about whether the scheme itself runs in a fully funded way. It already does. Nor is it about whether the residual claims account needs to be fully funded. It already has to be and still does. They are just changing when they need to have finished catching up.

(By extending the date, they need less off us each year, but they'll take the money for more years. They still want that money.)

This is what riffer meant by the question in post #6. i.e. When the residual claims fund has "caught up", will they drop the fees since they would no longer need that component? But that's a different issue to what I was addressing in post #5, which was about post #3 saying "in the light of ACC is NOT working as a fully funded model YET".

[peasea]

What "fully funded" means:

http://www.acc.co.nz/about-acc/glossary-of-acc-terms/PRD_CTRB103838



When they changed to a "fully funded" model:

http://www.acc.co.nz/about-acc/overview-of-acc/how-were-funded/index.htm



...and what the "Residual Claims Account" is:



--- ---- ---- ---- ---- ---- ---- ---- ---- ----

The bill currently being looked at is not about whether or not they will be "fully funded". They already are operating that way. It is about setting how long they've got to collect the money needed for the "Residual Claims Account".

http://www.scoop.co.nz/stories/PO0910/S00193.htm



It's confusing because here they use a different meaning for "fully funded". Here they use it to mean getting all that back-dated money they need, for the years they were not operating under the fully funded model.

But either way, the bill currently before parliament is not about whether the scheme is run in a fully funded way (it already is - since 1999). It's about the deadline for the "catch up", for the "residual claims account".



Here's the Bill:

http://www.legislation.govt.nz/bill/government/2009/0090/9.0/DLM2417501.html



Again, it's not about whether the scheme itself runs in a fully funded way. It already does. Nor is it about whether the residual claims account needs to be fully funded. It already has to be and still does. They are just changing when they need to have finished catching up.

(By extending the date, they need less off us each year, but they'll take the money for more years. They still want that money.)

This is what riffer meant by the question in post #6. i.e. When the residual claims fund has "caught up", will they drop the fees since they would no longer need that component? But that's a different issue to what I was addressing in post #5, which was about post #3 saying "in the light of ACC is NOT working as a fully funded model YET".

Well, that's a shitload clearer; thanks.

Wot?

[bogan]

so why the huge jump now? If it was future funding before, and the levies were obviously meeting the costs or coming very close to it. Why is it now bikers should be paying over 20x (12.8mil collected, and 310mil needed) what we used to?

With a 5 year time to pay off the residuals would take in over 100x a single years levy, no fucking way thats all used for future funding.

[riffer]

so why the huge jump now? If it was future funding before, and the levies were obviously meeting the costs or coming very close to it. Why is it now bikers should be paying over 20x (12.8mil collected, and 310mil needed) what we used to?

With a 5 year time to pay off the residuals would take in over 100x a single years levy, no fucking way thats all used for future funding.


Sigh.

It's all to do with the type of accounting method used. You see, all of the claims that occurred BEFORE 1999 still need to be paid for, until ALL of the people who are still getting paid out on are dead.

So, we now need to get enough money to ensure that there is enough in the cash reserves to cover ALL of these claims, plus an actuarially-determined amount to cover inflation, potential government interference, and some of it being syphoned off due to recessions in the future.

And also because the baby boomers are due to retire in the next 5-20 years, and the tax take will go well down, so we need to fleece them out of as much as we can before they stop being earners.

So because of the actuarial methodology, this paper expense becomes a liability. You add up the income, subtract the expenses, then the liabilities, and hey-presto! ACC makes a loss.

[bogan]

Sigh.

It's all to do with the type of accounting method used. You see, all of the claims that occurred BEFORE 1999 still need to be paid for, until ALL of the people who are still getting paid out on are dead.

So, we now need to get enough money to ensure that there is enough in the cash reserves to cover ALL of these claims, plus an actuarially-determined amount to cover inflation, potential government interference, and some of it being syphoned off due to recessions in the future.

And also because the baby boomers are due to retire in the next 5-20 years, and the tax take will go well down, so we need to fleece them out of as much as we can before they stop being earners.

So because of the actuarial methodology, this paper expense becomes a liability. You add up the income, subtract the expenses, then the liabilities, and hey-presto! ACC makes a loss.

I get what they are trying to do, back pay the residual claims for their full lifetime. But their figures show increases that don't seem to be attributed to that.

They want the motor vehicle account to take in levies of 808mil for cars, and 320mil for bikes, so 1,128mil all up. Currently we pay 438mil (2,584,509*169) for cars, and 25mil for bikes (100,000*252), so 463mil all up.

So each year 665mil (1,128-463) can be put aside for paying of the residuals right? Over the proposed 5 year that would net 3.3billion.

So 3.3 billion to pay off all the pre 99 claims, and pre 99 basically means permanent disability claims. I don't have any hard data to go from here, but it doesn't sound right. Assume a mean claim lifetime left of 30 years gives 110mil each year, or around a quarter of the yearly cost. So do a quarter of the claims made each year result in permanent disability?

Obviously there are assumptions made and factors left out, but I'm just after a ballpark figure.

And after the residuals are fully funded the levys can in theory drop lower than they are now, as there will be no residual component.

[pete376403]

Levies will never drop. Governments don't do tax cuts, no matter what they promise. I think we had an example of a phantom tax cut this year.

[Hanne]

Levies will never drop. Governments don't do tax cuts

No. Not true. They do and this is part of the reason for ACC's woes...
This is part of the reason both major parties want to keep full funding.
It has happened 2 or 3 times before that people go 'hey, we got a surplus, let's have a cut!'and the Nats have bowed to industry pressure and doen this before, which is why the reserves have been all over the place (22 months, 3 months, 9 months of funding in reserve etc)

Susan St John's paper on this (http://www.greens.org.nz/sites/default/files/PC%202009-2%20The%20rationale%20for%20pre-funding%20ACC%20revised%20final.pdf)

Pages 4 and 5, 'Funding and the 1980s' and Figure 1

[Skyryder]

What "fully funded" means:

http://www.acc.co.nz/about-acc/glossary-of-acc-terms/PRD_CTRB103838


Fully funded is just another name for BULK FUNDING. The term was first used in the Shiply Govt in an attempt to soften the hostility to the BULK FUNDING of schools.


HIGH QUALITY EDUCATION.

We will continue to actively promote the choice that the Fully Funded Direct Resourcing Option provides for schools. We are very pleased with the number of schools taking up this option to date.

From http://executive.govt.nz/96-99/minister/shipley/parliament99/pms160299.htm


ACC/ Govt. is using the term FULLY FUNDED in place of BULK FUNDING for exactly the same reasons. The government is in effect compelling the taxpayer to BULK FUND ACC.

Skyryder

[pzkpfw]

Apart from being named the same, how is the Fully Funded model for ACC the same as "Fully Funded" as used for bulk funding of schools?

The stuff I've googled up isn't very detailed (e.g. http://executive.govt.nz/96-99/budget98/news/educat3.htm).

[p.dath]

Apart from being named the same, how is the Fully Funded model for ACC the same as "Fully Funded" as used for bulk funding of schools?

The stuff I've googled up isn't very detailed (e.g. http://executive.govt.nz/96-99/budget98/news/educat3.htm).

Bulk funding for schools is simply where the school gets given all its money for a year in one hit. It's no big deal if the school can keep to a budget, and not blow all the money straight away.

ACC pre-funding is where ACC have to collect enough money in a year to fund all costs for the rest of time (often up to 30 years later) for the injuries that occurred in that year. For example, if someone is badly injured they may have income compensation for the rest of their life.
At the moment, it is particularly bad, because pre-funding was not used previously, so we are having to pay for all the prior years of injuries.

We don't pre-fund anything else. In the year you retire you don't have to front up with the cash to pay for your whole retirement.

Education is not pre-funded. In the first year of your schooling you don't have to pay for your entire education.


One of the problems with pre-funding is that it is hard to know what your expenses may be 30 years from now. So many things change - especially technology. Cures get invented. Better drugs come onto the market. Jobs come into existence that never existed before (imagine a blacksmith looking at the first guy selling car tyres).

All of Government is based around "pay as you go" - except ACC. ACC was originally pay as you go, but got changed about three Governments ago by National.

ACC should return to its founding principle - that it is a community expense for the benefit of the community. Everyone contributes equally.

[pzkpfw]

Yep. So they are different.

[Skyryder]

Yep. So they are different.

No they are not. The principle behind bulk funding 'is' no different with ACC as it was with the few schools who opted for bulk funding (fully funded) under Shiply.

The bulk funding of schools is where they are given enough money in one year to operate their budget for that ‘one single’ year. This is based on a cost per student for that single year. There is no reason why this student cost could not be funded in one year for the entire period that the student is at the school. The difference being not in the method but in the period of time the funding is granted i.e. student for twelve months as against the entire period of time the student is enrolled at the school, two as with Intermediates, four, five or six years etc. In other words the school receives its entire funding for students at the time the student begins classes until they leave the school. Bulk funding is not restricted to time frames for distribution but for collection.
An important point that many over look.

Smith has applied the twelve month period for ACC. He has bulk funded for accidents. Moneys are to be collected, for each and every accident in that one year to cover the costs of the entire treatment that may or may not continue into the following year(s).

Where recovery is doubtful and treatment is ongoing through out the patients life these costs are to be fully funded (bulk funded) in the year of the accident.

The difference is not in the method of funding but the time frames involved.

With schools the expenditure is based on the twelve month (time frame) period. ACC expenditure is based on the recovery time (time frame) or the ongoing treatment and costs involved for this.


Skyryder

[pzkpfw]

Geez, Scott watson would be free if his lawyers could use words like that. "Scott is a person", they'd say, "and all these people were in a bar in West Auckland when the alleged murders occured, so he coudn't have done it".

[Skyryder]

Geez, Scott watson would be free if his lawyers could use words like that. "Scott is a person", they'd say, "and all these people were in a bar in West Auckland when the alleged murders occured, so he coudn't have done it".

Dunno about Auckland bars but Watson was not where Pope said he was on New Years Day.


Skyryder