ACC rises necessary, says minister

Stephen Dodge, president of the Auckland University Motorcycle Club, with his 650cc Suzuki. Motorcycle owners are to be hit with massive fee increases. Photo / Sarah Ivey

Accident compensation levies are likely to rise by nearly $350 a year for a family on the average wage who own one car, under changes the Government is pitching as a rescue package.

ACC Minister Nick Smith and corporation chairman John Judge yesterday outlined the increases in levies and cuts to entitlements which they said were necessary to put the state-owned insurer, which is struggling with rapidly rising claim numbers and treatment costs, on to a financially sustainable pathway.

Dr Smith said the proposed changes to ACC law and regulations would return the corporation to being an insurer, ending its drift under Labour into social welfare.

The ACC board has proposed big increases in levies, but Dr Smith said the entitlement cuts being considered - and the deferral by five years of the requirement to levy all the money needed to pay the estimated future costs of all existing claims - meant the actual increases were less than half of what was proposed.

Someone earning $45,000 a year - the average wage is $48,308 - will pay a $1260 earner levy to ACC next year, or $1080 if the cuts are adopted and "full funding" is extended to 2019. This year they will pay $765.

Dr Smith said they would also pay an extra $30 to ACC when they registered one car next July.

Under his proposals, the employer and self-employed levies would rise from $1.31 per $100 of liable earnings now, excluding GST, to $1.47; the earner levy from $1.51, to $2.18; and the average motor vehicle levy from $287 to $317. But because crashes caused by motorcyclists cost ACC at least five times more than it collects in levies on motorcycle owners, they are being singled out, depending on the size of their bikes, for massive increases.

On the incentive side, Dr Smith has proposed reintroducing a controversial scheme to reduce employers' levies for those with fewer workplace injuries. And he has floated the idea of levy discounts for those who own newer cars, which have better safety features.

Mr Judge said not fully funding the future cost of today's claims would leave ACC vulnerable to closure by politicians if costs blew out too far.

But Auckland University superannuation expert Michael Littlewood said fully funding was not necessary for ACC as it was backed by the tax-gathering power of the state.

PLANS INCLUDE
* The introduction of $12-$27 co-payments for physiotherapy patients.
* End of non-treatment-related compensation for self-inflicted injuries and the families of those who commit suicide.
* A threshold of 6 per cent hearing loss for hearing-loss claims.
* Weaken the income-related compensation entitlements for casual and part-time workers.
* Deem claimants "vocationally rehabilitated" if they can work for 30 hours a week, rather than 35 hours.