$1300 for each of us - what ACC will cost

Photo / Hawkes Bay Today

Steep rises in levies mean a person on the average wage with one car will pay $1300 to ACC each year - $180 more than they do now.

The increases, approved by the Government yesterday, are well below the Accident Compensation Corporation's initial proposed rises.

But everyone will be affected by them. Car registration costs will increase $30 a year, and workers on the average wage of $49,500 will pay about $150 a year more than they do now.

ACC Minister Nick Smith said the Government decided on lower rises than those the corporation proposed because it wanted to show some mercy to households and businesses struggling in difficult times.

But he said he could not rule out further increases, as those announced yesterday would halt the deterioration in ACC's books but were not enough to completely rectify its cost woes.

Dr Smith said the increases were significant but fair, and asked the public to show some understanding.

"If we want to preserve ACC, they are the sort of levies needed."

Levies for workers will rise by 30c cents for every $100 earned, so someone on $49,500 a year will pay $990 a year to ACC, up from $841.50.

The average levy on employers will rise by 16c to $1.47 per $100 of payroll.

The Employers and Manufacturers Association (Northern) said this equated to a 12.2 per cent increase in overheads and would hurt at a time when business was difficult, although it was lower than the proposed increase of 58c.

About the only good news for motorists was that the petrol levy will remain at 9.9c a litre.

Dr Smith said this was because of the price increases motorists already faced as a result of the emissions trading scheme.

There was some relief for motorcyclists, for whom ACC had proposed increases of up to $500 a year on their current fee of $253.

They still face the largest increases of any group, but will pay $427 a year - far less than the $745 ACC suggested.

Bikers' Rights Organisation president Les Mason said the change was not ideal, and he remained wary of more increases.

"We are not happy about the extra $200 a year, but we are pleased the minister has seen the original proposal was quite ridiculous. So we've downgraded from being outraged to just being unhappy."

Dr Smith said car drivers would still be subsidising the accident costs of motorcycle riders.

The levy increases have prompted renewed calls from the Green Party and the Council of Trade Unions for ACC to raise only enough through levies to pay its costs each year, rather than fully funding all the long-term costs of accident treatment and compensation in the year they happen.

Dr Smith said that would be a cop-out, as it would load the long-term burden on future generations and tempt governments into offering new entitlements, knowing they would not have to pay out for several years.

Labour's spokesman on accident compensation, David Parker, said it was clear some increases were needed, but the government had "scaremongered" with the initial high increases proposed by ACC, which were based on plans to fully fund the scheme by 2014 instead of 2019.

Dr Smith said the levies would begin to close the gap in ACC's books, but were not enough for it to be fully funded by 2019.

But the Government did not intend to put the entire burden of that on levy payers. The corporation was doing its own cost-cutting, and the Government was trimming many entitlements.

GOING UP ...
ACC annual costs for an average wage-earner with one car:

NOW
Car registration - $168.46
Petrol levy - $118.46
Wages - $841.50
TOTAL - $1128.42

FROM APRIL
Car registration - $198.46
Petrol levy - $118.46
Wages - $990.00
TOTAL - $1306.92