Car fee rise tipped to help pay for crashes

By Andrew Laxon

Motorists face a big rise in annual car registration fees as a result of measures expected in tomorrow's Budget.

The New Zealand Herald understands the Budget will formally approve plans to make drivers pay for the cost of road accidents through ACC.

It is understood the Government has shied away from increasing petrol tax by up to 3c a litre but will put up motor vehicle registration fees instead.

If the full fee increase recommended by ACC is introduced immediately, it will push up the annual cost of owning a car by a third - from $157 to $210.

For a two-car family, the $52.50 rise would virtually wipe out the benefits of the Government's well-telegraphed plan to drop the $110-a-year broadcasting fee.

Abolition of the broadcasting fee, the Budget's worst-kept secret, was virtually confirmed in Parliament yesterday by the Minister for State Owned Enterprises, Tony Ryall.

Mr Ryall strongly agreed with Act suggestions that the tax was too expensive and difficult to collect but refused to say what the Government would do about it.

The Government's plan to make motorists pay for the full cost of road accidents through ACC's motor vehicle account was floated in March by the Minister for Accident Compensation, Murray McCully.

ACC then outlined four options, ranging from a $52.50 annual registration fee increase with no extra petrol tax to a $13.50 increase and a 3c-a-litre increase in petrol tax.

It is understood the Government has rejected petrol tax increases to finance ACC because its roading reforms could already cost an extra 8c a litre.

Motorists pay now for some of the ACC motor vehicle account through a $90 levy, which makes up part of the annual registration fee.

But the Government needs more money from motorists to make the account pay its own way, if it is to create a competitive market for injuries from road accidents.

Under ACC reforms so far, workplace insurance will be exposed to competition from July 1. The Government has signalled since last year that it sees the motor vehicle account as the next likely candidate.

Last month the Automobile Association condemned the Government's handling of the issue as a shambles.

The AA's public affairs director George Fairbairn said the ACC motor vehicle account had $260 million of reserves and a former ACC minister, Jenny Shipley, had suggested in 1997 that premiums could fall by 10 per cent.

"In our view this appears to be a clear intention by the Government to ready the Motor Vehicle Account for privatisation, thereby enabling it to grab the funds it has reaped from motorists for other purposes."