ACC recommends cutting work levy by average 17%, earners levy by 15% and vehicle levy by 5%

The state-owned Accident Compensation Corporation (ACC) has proposed big cuts to most of its levies next year after a major improvement in its financial position.

Chairwoman Paula Rebstock said ACC would recommend the Government cut the average Work levy by 17%, cut the Earners' levy by 15% and that there be an across-the-board reduction of 5% in the Motor Vehicle levy.

The major change from its draft proposal is around the Motor Vehicle Levy. ACC originally proposed any cuts only be linked to safety standards, rather than being across the board. 

“Under our ‘risk rating’ model, we originally proposed levy discounts for owners of cars that meet certain safety standards, because safer cars can potentially reduce the number, severity and cost of injuries," Rebstock said.

“But people told us it shouldn’t just be owners of safer cars who benefit from the improved financial position of ACC’s Motor Vehicle account. So that’s why, as well as risk rating, we’re recommending the broader levy cut,” Rebstock said.

However, motorcycle levies are not being cut.

“Many motorcycle owners would like us to recommend lower motorcycle levies. But these levies are already heavily subsidised by car owners, who contribute 72 per cent of the cost of supporting injured motorcyclists. If we charged motorcycle owners the full cost of motorcyclists’ injuries, it would make owning and riding a bike unaffordable," she said.

"This is because motorcyclists are much more likely to get injured or suffer severe injuries in a crash, because of their lower level of protection. And these injuries can result in very high, long-term costs for ACC.”

Wellywood changes

ACC said workers in the digital effects industry had pointed out they were more likely to work indoors at a computer, rather than outdoors on a more dangerous set. ACC had decided to recommend a review of how the industry is classified so levies more accurately reflected levels of risk.

Rebstock said the scheme was on track to be fully funded by 2019.

"Although we achieved a surplus last year, the Scheme’s liabilities still exceed its assets by $2.3 billion. But we’re confident our recommended levy cuts are sustainable,” she said. 

ACC will now make its recommendations on 2014/15 levies to the Minister for ACC Judith Collins. She is expected to announce a decision by cabinet some time in December.

Political reaction

Labour ACC spokesperson Iain Lees-Galloway said ACC levies had been unacceptably high since the National-led Government had "created a phony crisis and imposed massive hikes."

Lees-Galloway said National appeared now to have backed away from an agenda to privatise ACC and there was no need to keep levies artificially high.

“National has also driven a programme of cost cutting by denying treatment, cutting back on rehabilitation and home support and reducing access to compensation. While there is room for levies to come down, ACC should also be focussed on making sure claimants get fair treatment," he said.

Labour was also concerned about people on low incomes with older and less safe cars being penalised by the new system of risk-related levies.

"The way to improve the safety of our vehicle fleet is to make sure people have enough money to buy safe cars, not by penalising them for being poor."

(Updated with Labour reaction, decision timing)