The Accident Compensation Corporation (ACC), which funds injured New Zealanders’ care and recovery, has halted a decade of decline. But a New Zealand Initiative report warns its recovery rests on tighter decisions and exits, not proven rehabilitation.

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. The long-term claims pool, once growing by nearly 15 percent a year, stopped growing by April.

“The government deserves credit for confronting a problem others left alone, and the improvement is genuine,” says report author Dr Oliver Hartwich. “The question is what is driving it.”

Half a Turnaround argues ACC cannot yet show the improvement is 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 percent more often. More than 8,700 came off long-term support, a record, yet only 13 percent returned to their old job.

“A measure that treats the end of a payment as a recovery cannot tell rehabilitation from removal,” says Hartwich. “Treasury credits the gains mainly to a quieter, earlier change, when ACC restored one-to-one case management.”

Finishing the job would pay for itself. ACC’s external actuary estimates better rehabilitation could release 500 to 800 million dollars within two years. The report urges three steps: a 28-day rehabilitation guarantee, provider funding linked to recovery, and publication of the data behind those decisions.

“The cheap-looking path of cutting people loose is the expensive one,” says Hartwich. “Spending properly on recovery saves money and restores the promise ACC was built on.”