ACC choice - pay more or get less, says Key

ACC chairman John Judge. Photo / Mark Mitchell.

There needs to be a balance between cutting ACC entitlements and increasing levies, Prime Minister John Key says.

ACC's annual report to June 2009 last Friday recorded that its liability had ballooned by $4.8 billion, driven by increased claims, declining rehabilitation and an increase in the assessments of costs.

ACC chairman John Judge said levies would need to rise as the scheme's claim liability - the future cost of existing claims - was $23.8b.

Current net assets, which ACC uses to cover future costs, were $11b, leaving a $12.8b gap.

Judge said the future of the scheme was at risk.

Key said the public needed to tell the Government how much they wanted to pay in increased levies, compared to an extension of the scheme.

"There will unquestionably be an increase but the sort of increase that's been floated over the weekend of 40-50 per cent is ridiculous and unacceptable," he told TV One's Breakfast show.

Cabinet will decide in February next year when the levy will go up and by how much, he said.

"Hopefully we'll get that balance right."

Physiotherapy co-payments were one area of pre-announced reduction in entitlements, and the Government was considering "about 20 other areas", said Key.

The previous Labour government used ACC as "an extension of the welfare state", he said.

There were anomalies and unfairness in what was funded under ACC, he said.

A bill to be introduced on Wednesday will push out the full-funding date from 2014 to 2019.

The Labour government extended the scheme on an "unfunded basis", Key told NewstalkZB.

Rehabilitation had not worked as well as expected so there were more people on ACC and ACC's investment portfolio had not been working well, he said.

-NZPA