ACC shortfall should have been disclosed

The Government has published the report by Michael Mills into the non disclosure of the $1.5 billion ACC funding shortfall in the statutory Pre-Election Fiscal Update.

The report finds that the shortfall should have been disclosed, so in effect the requirements of the Public Finance Act were not met by the then Government.

The report finds that back on 4 August 2008 the ACC Board determined it would need more Crown funding, and that this was communicated to the Minister of 14 August 2008. They specifically advised of their intention to seek $1.559 billion over the next five years including $306 million in the *current* year.

Treasury advised Michael Cullen of this on 1 September 2008.

The inquiry also found that the “limited powers” regime in the leadup to the election was not a constraint on the Government’s ability to consider the appropriation increase prior to the election.

The bottom line is that Treasury was wrong not to include the $1.5 billion shortfall just because Cabinet had not formally approved it. The report says any material risk over $10 million should be included if there is a reasonable expectation that the good or service beeding funding will have to be provided. Treasury has agreed to abide by this in future.