Hon Dr Nick Smith

Minister for ACC

10 December 2009 Media Statement
Government announces 2010/11 ACC levy rates

ACC levies for workers, employers and motorists will increase next year but less than those recommended by the ACC Board, ACC Minister Nick Smith says.

“Setting these levy rates has been a difficult balance of minimising the cost increases on families and businesses, keeping the pressure on ACC to better manage its costs, and ensuring ACC’s long-term financial viability,” Dr Smith said.

The Government has adopted the following rates:

* The Earners’ Account Levy (paid by all employees and self employed to cover their non-work, non-motor vehicle injuries) will increase from $1.70 to $2.00 (including GST) per $100 of liable earnings from 1 April 2010.

* The average composite employer and self-employed levy will increase from $1.31 to $1.47 per $100 of payroll from 1 April 2010. This levy excludes GST and is an average rate. Individual rates for industry groups may be higher or lower

* The ACC component of the motor vehicle license fee for a petrol car will increase from $16846 to $198.46 from 1 July 2010 while the ACC petrol levy will remain at 9.90 cents per litre.

“These levy increases are necessary because ACC’s claim costs have increased by 57% in the past four years. The Government is pushing out the full funding date for ACC from 2014 to 2019, pulling back on extensions to the scheme by the previous Government, and putting in place a wide range of cost-saving measures.

“Initiatives underway this year covering physiotherapy, high-tech imaging, hearing, self-harm, rehabilitation, criminal disentitlements, and tighter income compensation will save more than $100 million per year and ensure the burden of fixing ACC does not just fall on levy payers.

“The Government has opted for more moderate motorcycle levy increases than ACC recommended. Mopeds 50cc and under will pay $129.24; motorbikes up to 600cc will pay $327.70; and bikes over 600cc will pay $426.92. As part of the motorcycle levy, $30 will now be committed to injury prevention modelled on the successful programme in Victoria, Australia. My message to motorcyclists is the escalating costs of motorcycle accidents cannot be ignored but ACC wants to work with you on improving safety.

“These levy increases are significant in that they will cost a person on the average wage an additional $148.50 per year ($2.86 per week) as well as $30 per car. The Government has rejected larger increases recommended by ACC and the Department of Labour because we are concerned about the broader economic impact on families and businesses at a time when the economy is beginning to recover from recession.

“These levy increases are sufficient to stop any further deterioration in ACC’s overall finances but will be insufficient for ACC to close the gap between its assets and liabilities by 2019. We will be doing additional work in 2010 as part of the stocktake process to address the long term issues facing ACC.

“Other minor changes include removing the exemption for hearses, collecting the ACC levy on biofuels, small changes in Work Account classifications and adjusting maximum and minimum liable earnings in line with the labour cost index and minimum wage increases.

“2009 has been a challenging year for ACC with Board changes, measures to contain costs, legislative reform and significant levy increases. The early signs of improvement in rehabilitation rates, cost management and investment returns give me confidence that progress is being made in securing the future of our unique no-fault 24/7 ACC scheme.”

ENDS

Attached:

* Questions & answers [Questions_and_Answers.pdf]

* For link to 7 December 2009 Cabinet Paper please go to: http://www.dol.govt.nz/initiatives/workplace/acc/index.asp (Note it is Item #8) [cabinetpaperaccleviesandrelatedpolicy.pdf]

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