Kiwis one step closer to lower ACC levies
Hon Judith Collins
Minister for ACC
17 September 2013 – Media Statement
Kiwis one step closer to lower ACC levies
ACC Minister Judith Collins is welcoming the announcement that the Accident Compensation Corporation (ACC) is looking into dropping its average levy rates.
Today ACC starts its public consultation on levy rates for levies in the upcoming 2014/15 year.
Earlier this year, Ms Collins signalled $300 million worth of levy cuts for taxpayers for 2014/15.
“These levy cuts reflect positive gains made by the corporation across all its activities,” Ms Collins says.
“ACC’s role is to reduce injuries and to help the injured back to independence after their injury as this is best for them, their families and their communities. The Corporation’s investment team has been in place for 17 years and has a long record of returns above benchmarks.
“Earners, employers and motorists may pay less in levies in 2014/15 as a result of ACC’s solid performance.
“ACC also protects New Zealanders by placing a greater focus on evidence based injury prevention.
“When teamed with progress in client services, the possibility of lower levies shows excellent improvement in the balance between the quality of services and the price New Zealanders pay for it.”
New Zealanders have until 15 October to have their say on ACC’s proposed levy rates by visiting ACC’s website: http://www.acc.co.nz/about-acc/consultation/levy-consultation/index.htm.
This feedback will be incorporated into ACC’s recommendations to the Government for consideration later this year.
Levy consultation FAQs
What
levy changes is ACC proposing?
• 17%
reduction in the combined average Work levy from $1.15 for
every $100 of ‘liable earnings’ to $0.95 for every $100
of liable earnings (excluding GST) although some
individual industries may see rises.
• 15%
reduction in the combined average Motor Vehicle levy from
$330.68 to $280 (excluding GST) although some individual
vehicle classification may not change.
• 15%
reduction in the Earners’ levy from $1.48 for every $100
of ‘liable earnings’ to $1.26 (excluding GST). including
GST, the new Earners’ levy would be $1.45 per $100
What does ACC consider when setting levies?
ACC calculates proposed levy rates that take
into account:
• projected claim costs for the coming
levy year
• returns from ACC investments
•
projected earnings on which levies are assessed
•
the funding policy
• the number of registered motor
vehicles and the amount of petrol consumed (for the Motor
Vehicle Account).
Why do rates differ for levy payers and how does this fit with the principle of no-fault for the Scheme?
Where it is practical and
appropriate, levies are set to fairly reflect the risk of
the levy payer to the scheme. For example, riskier employers
(professional rugby) pay more than less risky ones
(accounting).
No-fault is a different concept about
cover and entitlement and means you can be covered even if
you were to blame, irrespective of how much you pay in
levies.
What is the residual levy?
The residual levy exists because we are still
paying off the ongoing costs of injuries that occurred
before 1999. These costs need to be funded by 2019. 2
Levies for injuries that occurred after 1999 have been
set on a full-funding basis, which means that the ongoing
costs of injuries that incurred after 1999 have already been
collected, not just the costs that were incurred in each
year
Which classification units will have levy
increases?
ACC is proposing increases for eight
classification units (out of 539):
Netball, because
claims in that of this group are getting worse
Seven
others – these were increased in previous years but the
change was capped in the previous year to smooth the impacts
on the employer, so the proposed increases in 2014/15 are
consequential to previous years’ decisions.
What will the petrol levy for 2014/15 be?
ACC is proposing that the petrol levy for
2014/15 will remain at 9.90 cents per litre.
Why do
non-petrol driven vehicles pay less in annual vehicle
licensing (rego) than petrol-driven vehicles?
This is
because petrol-driven vehicles also contribute to ACC costs
through the petrol levy. In general, the rego and petrol
levies are set so that the average paid is the same for
petrol and non-petrol vehicles.
What will the
motor vehicle licence fee levy rates for each class of motor
vehicle for 2014/15 be?
ACC is proposing for
levies for most vehicle classes to go down with the average
motor vehicle levy rate except for motor cycles and trucks.
The injury frequency and claim cost experience of riders
of motorcycles and mopeds are increasing compared to that of
the reference group - passenger vehicles. This relatively
poorer performance is the reason ACC is recommending that
the levies charged to these vehicle owners remain the same
as for 2013/14 levy year.
Similarly, heavy goods service
vehicles (trucks) are currently paying less than what they
would if their levies were based on claims costs. It is
therefore fair for their levies to stay as they are while
other rates are reduced, so that their levies better reflect
the costs they incur.
ENDS