Herald on ACC blowout

The NZ Herald Editorial:

Nasty surprises for incoming prime ministers were meant to be eliminated by Ruth Richardson’s 1994 Fiscal Responsibility Act. The legislation obliged Governments to throw open the books before an election, exposing the Treasury’s best estimates and forecasts. The praiseworthiness of such transparency was quickly recognised at home and abroad. But, unfortunately, the law’s good intention has not been accompanied by scrupulous observance of its spirit and thrust. The latest transgressor is Labour’s ACC spokesman, David Parker, who insists former Cabinet ministers were not obliged to reveal a $1 billion hole in the Accident Compensation Corporation budget before the election.

And remember Labour also say that the $1 billion blowout is not significant.

Mr Parker, for his part, said Maryan Street denied knowing details of the shortfall until October, when she immediately told the Finance Minister at the time, Michael Cullen, and the Treasury. That happened after the Treasury had prepared its pre-election fiscal update. While this meant no specifics of the ACC’s problem could be included in that document, Mr Parker did not explain why these could not have been revealed to the public once they were known.

This, of course, should have been the case. The spirit of the fiscal responsibility law demands as much. An addendum could have been attached to the pre-election update or a public statement about the ACC budget released. Even before then, a fiscal risk flag could have been placed on the pre-election update, as is customary for unquantified sums in pre-Budget documents.

The Herald nails it in one. They could have still released the info or as a minimum flagged it in PREFU as an unquantified risk.