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ACC recommends levy reductions of up to 6.8%

Media Release
23 October, 2003

ACC recommends levy reductions of up to 6.8 percent

ACC's Board has recommended no change in key average levy rates and reductions of 6.8 percent for Motor Vehicle Account for the 2004/05 year.

ACC Chief Executive Garry Wilson said the Corporation's ability to again absorb cost increases related to its strong investment performance and to a recent upward trend in interest rates.

Under the recommendations, the average total levy for motor vehicles (licensing fee and petrol excise tax) would fall 6.8 percent and the Self-Employed levy would fall 2.2 percent. The Employers and the Earners levies would remain unchanged from current rates.

ACC has also recommended that for employers and the self-employed the 130 levy risk groups be retained after submissions came out 10 to one against reducing the number to 56.

The recommendations are not binding on the Government which will obtain further independent advice before finalising 2004/05 levy rates. The Minister for ACC, the Hon Ruth Dyson, will announce the final rates later this year.

The recommendations to the Minister for ACC reverse some proposed increases in rates when ACC released its consultation documents for public consideration on 7 August.

Recent interest rate rises had a positive impact on the returns ACC expects to get from investments and thus on the final levy rates recommended to the Minister.

The rates proposed in August were struck on a 5.5 percent discount rate, down from 6.5 percent used to set the current levy rates. ACC's recommendations to the Minister are based on a 6 percent discount rate.

In making its recommendations, ACC took into account submissions received in the public consultation, the latest claims experience and the recent cost trends.

Mr Wilson said ACC received 247 submissions to this year's consultation which closed on 18 September.

"I would like to thank those who took time to comment on the original proposals," he said.

"The quality of these submissions far exceeded those in previous years and may reflect the extra effort ACC went to in this year's consultation to explain the levies and policy issues that the public were asked to give their views on."

Policy proposals this year were:
- whether the Self-Employed Work Account should be re-amalgamated with the Employers’ Account;
- whether work-related motor vehicle injuries should be allocated to the Employers’ Account and Self-Employed Work Account (the work accounts), rather than to the Motor Vehicle Account as currently happens; and
- whether ACC should consider using the Road User Charges system as a mechanism for funding the ACC levy for diesel and other non-petrol powered vehicles.

Summary of recommended average levy rates for 2004/05
For every $100 of payroll or for every $100 earned (except Motor Vehicle). Excludes GST.

Who pays Levy component Current 2003/04 average Recom-mended 2004/05 rate % change from 2003/04
Employers Employer work a/c $0.90 $0.91
Residual claims a/c $0.31 $0.30
TOTAL $1.21 $1.21 0.00%
Self-employed people Self-employed work a/c $1.79 $1.73
Residual claims a/c $0.31 $0.30
Earners a/c $1.07 $1.07
TOTAL $3.17 $3.10 -2.20%
Earners - through Inland Revenue Earner a/c $1.0467 $1.0646
Residual Earner a/c $0.0200 $0.0021
TOTAL $1.0667 $1.0667 0.00%

Motorists – through annual vehicle registration fee & excise tax on petrol Motor Vehicle a/c levy & petrol levy (average per vehicle) $135.78 $109.96
Residual Motor Vehicle account levy (average per vehicle) $76.18 $87.54
TOTAL $211.96 $197.50 -6.80%

The submissions generally favoured retaining the status quo on these matters, but strong arguments were also lodged in favour of change.

"It was only natural that submissions tended to advance the interests of those groups that responded to the consultation. But they provided useful insights that will be valuable in determining these issues now and in future years," Mr Wilson said.

ENDS

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