ACC safety work cuts premiums

By VERNON SMALL deputy political editor

Average ACC premiums will fall up to 22 per cent from next April, but the Government admits the drop has not been caused by last year's return to a state monopoly.

"It would be somewhat cheeky of me to claim that the reduction in premiums is the result of what was somewhat loosely called renationalisation," Accident Insurance Minister Michael Cullen said yesterday after announcing the lower rates.

He said the decreases were the product of ACC's efforts over several years to improve safety and rehabilitation.

The average risk-weighted employers' premium will be cut 22.4 per cent for the 2001-02 year.

Premiums on other accounts will fall by smaller amounts.

Employers' average premiums will drop from $1.16 to 90c per $100 of wages and salaries.

ACC recommended a decrease to 85c, and Treasury wanted the premium to be set at 95c.

Dr Cullen said the cabinet had opted for 90c because it wanted a slightly higher prudential margin.

But he was confident of further cuts next year.

The number of accidents reported so far this year under the employers' account is below forecast.

The residual claims levy on the "tail"- the cost of on-going claims incurred before July 1, 1999 - will be lowered from 40c to 35c per $100 of earnings.

ACC has estimated that the scheme will move to "fully funding" by 2014 at its recommended rate of 31c, but Dr Cullen said that with the levy set at 35c this should occur two or three years earlier.

Premiums for the self-employed will drop 17 per cent from $1.64 to $1.35, and the earners' premium falls 15 per cent from $1.30 to $1.10 per $100 of wages and salaries.

There will also be a small drop in the motor vehicle levy from $132.20 to $128.45 from July 1. The 0.2c a litre petrol levy will remain.

"I am very confident that these levels of premiums will be able to be maintained or further reduced despite the introduction of legislation in the near future that will re-establish lump-sum compensation," said Dr Cullen.

But National's ACC spokesman, Gerry Brownlee, said the Government's trumpeting should be taken with a grain of salt.

The 90c rate was similar to that charged a year ago by At-Work, the defunct ACC competitor.

If there was still competition the rates would be even lower, he said.

"There are concerns that the Government's plan to bring back lump-sum compensation will see premiums skyrocket over time," said Mr Brownlee.

The law introducing limited lump-sum payments and other changes to the scheme - the Injury Prevention and Rehabilitation Bill - will be introduced soon and passed next year.

It should take effect from early 2002 and replace the existing disability allowance. The changes are estimated to cost an extra $60 million a year.

Dr Cullen said the new premiums had been calculated on the present scheme.

Employers Federation policy manager John Pask said the premiums were welcome but "fudged" the real cost of a return to lump-sum payments.

"By building up a significant premium buffer now, the Government may well be able to add to the scheme's cost in the future without appearing to do so."