ACC levy-setting still poses risks

ACC levy-setting still poses risks

BusinessNZ has applauded the proposed drop in ACC levies and increased clarity provided by the new Accident Compensation (Financial Responsibility and Transparency) Act.

In its submission on ACC levies for 2016/17 today BusinessNZ said the new Act was a major breakthrough in minimising the risks associated with government intervention in the levy-setting process.

But BusinessNZ Chief Executive Phil O’Reilly said ACC’s proposal to smooth levies over a 10-year timeframe - to ensure ACC funds remained within 100-110% of full funding – raised new risks.

“Levy stability is desirable, but it should not take precedence over important price signals that levy payers should receive about the true costs of accidents,” Mr O’Reilly said.

“Ten years is too long. Any levy-smoothing policy should be restricted to a 2- or 3-year timeframe.

“If ACC’s accounts were over-funded (fully funded plus a substantial margin), there might be a temptation for the government of the day to expand the scheme knowing the costs of expansion would be hidden at least for the first few years.

“This would contravene the principle of a fully-funded model where changes to policies that impact on levies are felt almost immediately by levy-payers.”

BusinessNZ also voiced concern about the ACC Motor Vehicle Account which continues to heavily subsidise motor cyclists at the expense of all other motor vehicle owners.

BusinessNZ submission to the Accident Compensation Corporation on the Levy Consultation 2016/17 is here on www.businessnz.org.nz

ENDS

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