ACC proposes rises in levies to fund future injury costs

• ACC says rising injury numbers and costs need levy increases
• Consulting on rises to to all major levies groups - motorist, employer, worker
• Motor levies average annual 7.5 percent a year for next three years
• Employer levies average annual rise around 4.5 percent
• Worker levies average annual rise 4.5 percent
• Suggested tweaks would increase levies for some classes of motorcycle, and ballet dancers

The Accident Compensation Corporation (ACC) is proposing rises in levies that will cost households and businesses worth hundreds of dollars a year over the next three years.

It has started a one month public consultation on suggested rises of more than seven percent for motorists, and more than four percent for employers and earners.

It says the number of injuries has been rising, as has the cost of treating them and rehabilitation.

Chief executive Megan Main said the proposed changes in levies, and reclassification of some industry and sports activities, were needed to ensure future generations were not carrying the cost of current claims.

"The levies we currently collect are lower than they need to be to cover the forecast cost of claims we expect each year. Any recommendations for levy increases are capped to smooth out the increase."

"Despite our best efforts and in line with international trends, our client rehabilitation performance in the short-term has been declining. Essentially this means it is taking longer and costing more for injured New Zealanders to recover."

Main acknowledged the increases would be difficult for some households and businesses, but said they were necessary to get ACC closer to being able to fully fund future costs.

Deputy chief executive of corporate and finance Stewart McRobie said the ACC was facing a shortfall of somewhere between $1 billion and $2 billion.

Levy rises

The proposed increases would affect all levy groups, with some variations within each group as certain vehicles or activities were seen as more or less risky.

The average work levy rate would increase from the current rate of $0.63 per $100 of payroll to $0.66 in 2025/26; $0.69 in 2026/27; and $0.72 in 2027/28.

The earners' levy would increase from the current rate of $1.39 per $100 wages to $1.45 in 2025/26, $1.52 in 2026/27; and $1.59 in 2027/28.

The motor vehicle rates would increase from $113.94 per vehicle currently to $122.84 in 2025/26; $131.94 in 2026/27; and $141.69 in 2027/28.

In a series of examples ACC said the proposed increases would cost between 17 cents a week extra for a retired couple with one car in the first year, for households with multiple vehicles $1-$2 and $40 more a week, and for medium sized businesses as much as $10 a week.

The proposals also suggested changes for the way motorcycles were levied with a cut for low powered mopeds but increases for more powerful bikes, averaging out at a 33 percent rise in levies, but with discounts for riders taking safety courses.

A current effective subsidy for owners of electric vehicles would also end.

And it has also suggested tweaks to the classification of sports groups with amateur and community sports groups which do not employ sports players paying less, but increases for levies for those involved in the most hazardous sports such as rugby and football.

It has also suggested that artistic groups with ballet dancers should also pay higher levies because they more prone to serious injuries.

Public submissions close on 9 October with final decisions to be made by the government in December.

ACC Minister Matt Doocey said cost of living pressures on households and businesses would be taken into account in setting levies.

"It is my expectation ACC will look at existing costs within the scheme to ensure that any levy increase is absolutely justified before final decisions are made."

"The government's expectation has been made clear to ACC that it must deliver greater value for the funds it receives. I am monitoring this very closely and will be ensuring ACC is improving its financial performance."

Doocey said ACC was also expected to improve its rehabilitation performance as well as better use injury prevention as a lever to improve performance.