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A work safety scheme first recommended following the Pike River mine tragedy is being canned after failing to achieve its goals.
Official papers show ACC knew the long-awaited injury prevention programme, a joint initiative with WorkSafe, was falling short but has struggled to extricate itself, until now.
"ACC could be perceived to be withdrawing funding from the workplace health and safety system," an internal briefing said.
It has been giving WorkSafe up to $15m a year since 2018 to pass on to industry groups that run safety programmes, such as in forestry.
WorkSafe was meant to show a return of $1.10 in savings on ACC claims from every dollar spent - instead it managed just 20 cents. More than $60m was spent.
The negative returns had threatened to carve a $40m hole in ACC's Work Account and put "increased pressure on levies payable by employers and the self-employed in future levy setting rounds", OIA papers since 2020 show.
The scheme helped fund about 60 jobs in various safety programmes last year, including at least 10 Māori industry advisers.
But it impeded and distorted cooperation between the country's two most important work safety agencies, ACC said in its internal briefings.
The final funding would be given out in July, lasting through to March 2025.
The scheme
The failure of the scheme first came to light after the Forestry Industry Safety Council contacted RNZ early this year, alarmed it [https://www.rnz.co.nz/news/national/510548/forestry-industry-hit-as-worksafe-cuts-funding-safety-programmes
faced losing more than a third] of its funding and having to cut three jobs in what it said was a successful programme in Te Tai Tokerau and Tairāwhiti.
The government set up the ACC-WorkSafe scheme in 2018, based on a work safety taskforce recommendation from five years earlier, following the Pike River mine tragedy.
"New Zealand's sub-par health and safety performance continues to harm workers," said ACC's decision document on axing the scheme in December.
"New Zealand's workplace health and safety system underperforms compared to our international peers. There have been modest downward trends in most key indicators of acute harm, but progress has slowed."
WorkSafe wanted more freedom to invest long term
"It distorts the relationship by encouraging WorkSafe to view ACC as a funder not a partner, while ACC tends to only engage with WorkSafe teams who spend the funding," said ACC briefings last year.
"The funding mechanism therefore does not enable each agency to use their complementary strengths to improve outcomes, and it impedes their efforts to work as genuine partners," said a joint briefing to the Workplace and ACC Ministers in April 2022.
The agencies began asking back then for a budget bid for new harm prevention and system capability funding, to replace the scheme.
A core problem was that the corporation had to, by law, insist on a return on investment, but this shoe-horned WorkSafe into pursuing short-term wins with safety programmes, instead of a long-term sector lead, ACC said.
Two years after it began, in November 2020 , WorkSafe was estimating it would deliver a 58-cent return on each dollar - ACC checked the maths, and came up with just 18 cents.
WorkSafe had been "over-estimating" the benefits, said its report at the time.
Improvements tried in 2021 did not work.
"ACC, WorkSafe and MBIE share the view that the ACC-WorkSafe funding mechanism is not compatible with the longer-term and system-wide actions that agencies consider essential to sustainable injury prevention," they told the ministers two years ago.
"Both agencies agree that the current funding arrangement is not working."
There were also concerns about duplication between the agencies.
'Reputational risk' and job losses
The money makes up 10-15 percent of WorkSafe's entire budget.
"A swift exit could damage our relationship with WorkSafe," said ACC as it discussed options last year.
"There are reputational and political risks ... this risk is exacerbated as WorkSafe argues it has funding pressures."
Now, having agreed to end it, ACC would keep the money, and was working on a new approach, as well as trying to build on a couple of years of improving cooperation with WorkSafe.
"Evidence suggests [the] system requires ACC and WorkSafe to collaborate differently.
"There may be better approaches."
WorkSafe has just launched a new 20-page worksafe strategy, focused on operations to "enforce, engage, permit".
It's also restructured and cut jobs in the last year, not as part of the public sector savings, but in the face of a big deficit and tepid outcomes.
ACC wrote in December that it needed to talk to WorkSafe about "the potential disestablishment of 170 positions, and the impact it will have on our relationship".