ACC Minister Nick Smith sacked the chairperson of the Accident Compensation Corporation's board on Monday, but says the move is not part of plans to privatise it.
Ross Wilson is to be replaced by John Judge, a former chief executive of accounting firm Ernst and Young.
Mr Wilson, a former president of the Council of Trade Unions, was appointed by the previous Labour-led government in July 2007 and was little more than half-way through his three-year term.
Dr Smith says he believes the board has allowed costs at ACC to get out of control and last week refused to express confidence in Mr Wilson.
The minister says ACC needs a fresh start and Mr Judge brings a strong background in financial management and governance.
Dr Smith says he is not satisfied that the current eight-person board has the right skills to navigate ACC out of financial trouble and there will be further changes.
He is consulting with Mr Judge about a new board, to be in place by the end of March.
Some of the current board members may be reappointed. Mr Wilson remains a member of the board - at least for the time being.
Dr Smith told Checkpoint the changes are about returning ACC to tip-top condition so it can fulfill its role of providing accident cover for New Zealand.
Sacking a witch-hunt, says Labour
The Labour Party described Mr Wilson's sacking as part of a witch-hunt by the Government.
Lavour leader Phil Goff says there is a clear pattern from the National-led government of removing people for their perceived political affiliations.
"There is not a company in the world that hasn't lost money on investments in the past 12 to 18 months. This is a political witch-hunt - it's quite inappropriate to sack competent and efficient people because you don't like their party politics."
But Prime Minister John Key says the fact that Mr Wilson was a trade unionist has nothing to do with the decision to sack him.
"It rests on the view that the minister just doesn't have confidence in the board and the existing structure ... of that board that they are able to provide satisfactory leadership and resolution to the issues that ACC is facing."
Mr Key says the ACC faces a $22 billion liability and needs strong financial leadership.
However, Council of Trade Unions secretary Peter Conway says the board cannot be blamed for the challenges ACC faces today.
Mr Conway says ACC consulted widely on levies in October and all the cost increases about which the Government is now expressing surprise were made public at the time.
Listen to Checkpoint interview with Peter Conway