Average worker hit with $200 ACC levy hikes

ACC Minister Nick Smith (R)and ACC chairman John Judge. File photo / Mark Mitchell

The Government today announced its ACC levy increases - less than recommended by the Accident Compensation Corporation board but still about $200 a year for an average income worker with a car - and admitted further increases were possible.

ACC's board previously recommended far bigger increases but they did not take into account a bill before Parliament to cut some entitlements and extend the date for full funding for residual claims liabilities from 2014 to 2019.

Labour accused the Government of scaremongering to promote a privatisation agenda.

ACC Minister Nick Smith said today's increases were a balance between what people could afford and keeping the scheme viable.

Rate increases next year included:

* Employee levy to increase by 30 cents to $2 per $100 earnings - an increase of nearly $150 a year for someone on the average income of just under $50,000, taking the total levy for them to $990 a year from April 1.

* Motor vehicle levy to increase by about $30 a year - from $168.46 to $198.46 from July 1. Petrol levy to remain at 9.9 cents.

* Employer and self-employed levy to increase by 16 cents to $1.47 from April 1.

* Motorcycles: Mopeds 50cc and under will pay $129.24 (more than double the current $58.97 levy), motorbikes up to 600cc will pay $327.70 (up from $252.69 now) and bikes over 600cc will pay $426.92 (up from $252.69).

A stocktake of ACC is under way and Dr Smith said even with today's increases and changes expected to save $100 million a year more were needed.

"There will still be further decisions that need to be made around cost savings and broader policy around ACC associated with the stocktake process for us to be able to meet full funding by 2019," Dr Smith said.

Further levy increases were possible, he admitted.

Labour spokesman on ACC David Parker said the Government allowed incorrect initial proposals to go out as part of an agenda towards user-pays and privatisation when it knew extending the date for fully funded residual claims liabilities would reduce increases.

"There's always been a high level of scaremongering here," he said.

Dr Smith said he had not interfered in ACC's board processes and they were required to put out proposed increases based on current legislation.

He said while the stocktake was considering allowing competition that was not a move towards privatisation.

"This government is going to retain ACC in public ownership."

Dr Smith said he understood families would feel the burden of the increases in hard financial times - which had seen the Government postpone tax cuts.

Employees were being pinged with $3 a week instead of the $10 proposed.

"The Government is very concerned about the costs on families and also when the economy is only just starting to recover from the recession, that a larger increase would not be acceptable."

Motorcyclists staged a series of protests about the original proposed levies - as high as $740 for some bikes. "My view is that these levy increases for motorcyclists are still significant," Dr Smith said. "But they are fair."

He understood motorists may resent some of their levy fund - about $5 per car - subsidising motorcyclists.

"It's always going to be relatively arbitrary as to how much you should factor for different classes of vehicle. The increases are such that motorcyclists are being asked to pay bigger increases than any other motor user, that reflects the higher risk but it is true that other motor users are being asked to continue to pay for a portion of motorcycle accidents."

Mr Parker said classifying different types motorcycles was concerning.

"If you are going to continually dice up risk in the ACC scheme then you run up against the community responsibility principle that lies behind it. And the next question you ask is why don't we charge the elderly more because they fall more often in their home? Or why don't we charge people who play rugby?... All those things can be argued for but in the end if you do them you ruin the scheme."

Dr Smith said debate about the motorcycle levy had highlighted safety issues and the $30 per bike - about $3 million a year - ring-fenced money would be used for a scheme like one in Australian state Victoria which had achieved a 20 per cent reduction in accidents.

The money would be used for education, training and to fix black spots.

The Green Party said ACC should be a pay as you go scheme and it was bringing in more money that it was paying out in claims.

Dr Smith said that approach would load future generations with costs; remove price signals to make businesses more safe and allow government ministers to make promises without having to fund them and impact on Crown accounts.

- NZPA