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Changes needed to contain ACC Costs

Hon Dr Nick Smith
Minister for ACC

4 March 2009

Media Release        

Changes needed to contain ACC Costs

Significant changes are needed to avoid huge increases in ACC costs for families, businesses and Government, says ACC Minister Nick Smith.

Dr Smith today released the latest six monthly Price Waterhouse Coopers valuation of ACC’s liability.

“It is deeply concerning that ACC’s liabilities have increased to $21.875 billion – an increase of $2.581 billion in six months. Deteriorating economic conditions have brought into harsh focus significant cost increases that have occurred over the past decade.

“This latest report translates into ACC levy increases over the next five years of 185% for employees, 71% for employers, 129% for motor vehicle owners as well as increases for the Government through the Non-Earners Account.

“These increases in five years would cost the average employee an additional $27 a week, or $1386 a year as a consequence of the Earners’ levy increasing from 1.4% to 4% and the motor vehicle levy rising from $255 to $585. 

“This scale of cost increase is not acceptable. Changes will need to be made in the governance of ACC, legislation, and administration of the scheme to prevent these soaring costs.

“The Government is determined to get better governance and management of ACC to contain costs. I am reviewing the entitlement extensions introduced but not fully funded by the previous Government. We need to have an open debate about the balance between how far ACC goes and the cost to households and businesses. I am also reviewing the timetable for funding of residual claims that particularly impact negatively on the motor vehicle and employer accounts.

“The Government remains committed to a non-fault 24/7 accident insurance scheme but changes will be needed to ensure it remains affordable.”



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