Minister for ACC Matt Doocey is launching a review into the state injury insurer over concerns around increasing costs and declining rehabilitation rates as the scheme's levies increase.
Doocey announced on Thursday the Accident Compensation Corporation’s earners and business levy will be increased by up to 5% annually for three years to meet the rising costs of the scheme, starting from mid-2025.
“ACC provides critical support to New Zealanders in times of need, but I am concerned that ACC’s performance has been declining for a decade. Rehabilitation rates are down, weekly compensation costs are up and average costs per claim are up,” he said.
For somebody on the median full-time wage of about $70,000 a year, this means the ACC levy increase will add an additional 80 cents per week, or $42 for the 25/26 financial year. By the end of the three-year period, it’ll be a $140 increase to the annual levy.
The current yearly ACC levy amount someone on a $70,000 salary per year pays is $973. Next year it’ll be $1,015. More examples of what the increased levy rate will look like for people on lower and higher salaries can be found here.
Motor vehicle levies are also being raised 5% for vehicle owners and will have an “inflation adjustment” per year for three years, Doocey said.
In the current 2024/2025 year, the motor vehicle levy rate is $42.09. It will go up to $49.38 next year. In three year’s time the annual levy rate will be up to $64.26.
Owners of electric cars (EVs) are seeing a much larger levy increase in comparison, with the levies on EV owners set to jump over 159% next year.
The levy rate for EV owners for the 2024/2025 year is $42.09. Next year, the levy rate will go up to $109.05. In three year’s time, the annual levy for EV owners will be $122.24.
ACC Chief Executive Megan Main said the levies and funding of the ACC scheme haven’t kept pace with the increases in compensation that injured people are receiving from ACC.
The scheme spends around $2 billion more than it collects each year, and the Crown entity spends $7 billion on health care and weekly compensation to support the two million injury claims the no-fault scheme receives each year.
“The decision by Cabinet to increase levies will go some way to alleviating the pressure and ensuring the scheme is sustainable for future generations. However, improving rehabilitation performance is a priority for ACC,” she said.
“We support the Government’s review to ensure what we are doing will help injured people get better faster.”
The review into ACC will have a “particular focus” on claims management, according to Doocey.
“It will look at whether ACC has the right interventions and settings in place to support accident claimants to return to independence as quickly as possible,” he said.
“Alongside the review, I am working with the ACC Board and the Ministry of Business Innovation and Employment to strengthen performance monitoring and achieve more targeted and cost-effective social rehabilitation services.”
The state insurer revealed a $7.23 billion deficit in the June-2024 financial year, driven by a 16% increase in injury services and compensation. ACC said the deficit had “exceeded” its budget expectations.
During the June-year, two million injured people were paid out over $4 billion for treatment and rehabilitation services, and almost $3 billion of compensation payments.
15 Comments
These lot are just as bad as the previous.
How about we means test the $30billion in welfare we are giving to over 65's in this country. They are literally sucking us dry.
No wonder 55,000 kiwis got up and left in the last year. Ordinary middle class workers have no future in this country. It's road user charge increase here, ACC there, council rates over there. Deferred spending by the most entilted generation who have now pulled the ladder up behind them and want the next generations to pay for their cushy retirement. Incredible.
Good rant there stjohn but let's get back onto the topic of ACC costs blowing out. That generation you hate on never got an expensive helicopter ride with paramedics and modern drugs after an accident. It was a suck on nitrous and a bouncy ride in the meat wagon driven mostly by volunteers.
They do now. I can't find data on ACC claims by age, but the injury stats show that more than half of injuries are suffered by people who are 60+, and growing fast.
https://explore.data.stats.govt.nz/vis?tm=injury&pg=0&snb=26&df[ds]=ds-…
I suspect that translates to the majority of ACC spending being on the elderly, but I'd love to be able to find those stats.
The country has been doing "expensive" helicopter rides since the 1950s.
See the chart (Figure 2 - Age distribution by medical or accident related transport) on page 29 for age distribution in the following 2018 Christchurch Air Retrieval Services report:
However, the number of CARS’ transports of children under one year of age was still notably high, and they represent the fifth highest individual age group, only exceeded by ages 65, 66, 68 and 70.
https://www.otago.ac.nz/__data/assets/pdf_file/0021/330852/louise-jacob…
Waiheke Island makes up third of Auckland Rescue Helicopter Trust missions
Rescues to the island were more likely to be for medical emergencies rather than accidents, and the patients were generally several years older than the average rescue patient age - 54.
https://www.nzherald.co.nz/nz/waiheke-island-makes-up-third-of-auckland…
This doesn't make sense to me:
The state insurer revealed a $7.23 billion deficit in the June-2024 financial year, driven by a 16% increase in injury services and compensation. ACC said the deficit had “exceeded” its budget expectations.
During the June-year, two million injured people were paid out over $4 billion for treatment and rehabilitation services, and almost $3 billion of compensation payments.
Both sentences add up to $7 billion. So how can you have a $7 billion deficit as a result of paying out $7 billion in claims/treatment?
...increasing costs and declining rehabilitation rates...
Why? With better technology and medicines the cost per capita of healthcare should actually be falling on an age adjusted basis while rehabilitation rates should be increasing. We can't just keep throwing money at poorly performing services.
ACC is a scam outfit. Take your money but if you injure yourself they say it's degenerative. Such a bunch of rip offs. Worst organization in NZ. I have to pay 50k for my partners surgery as ACC first accepted then declined. (Up to 3 year wait in the public system) ACC are the worst bunch of people with nill empathy.
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