Cheaper ACC - but there's a catch

ACC Minister Nick Smith. Photo / Mark Mitchell

Taxpayers may be offered discounts on their accident insurance levies in return for accepting lower compensation, longer waits and higher medical fees after an accident.

The Accident Compensation Corporation has asked for reactions to the idea in a consultation document on next year's levies.

ACC Minister Nick Smith says he is "open-minded" about it, but plans to move cautiously, meaning it is unlikely to be adopted quickly.

The proposal follows a law change this year giving ACC the power to vary levies on employers in line with their accident records.

This system, known as "experience rating", will take effect for employers next April.

The ACC's consultation document suggests extending the same principle to levies on motorists and income-tax payers or "earners".

An employee on the average income of about $50,000 a year will pay more than $1300 in ACC levies this financial year.

This is made up of more than $990 in the earners' levy, $198.46 if they own a car and an average $118 in the petrol levy.

The ACC document suggests that motorists' levies, paid through vehicle licence fees to compensate road accident victims, could be increased for people who get many traffic tickets and for younger drivers, and reduced for people such as pensioners with good safety records.

For earners, who now pay a 2 per cent income tax surcharge to compensate working people injured outside workplaces and roads, the corporation suggests a no-claims discount for people with no injury claims in the past five years, offset by higher levies for those with more injuries, such as many sports players.

It also suggests an option to pay a lower levy in exchange for reduced benefits, and poses three questions:

"Would you prefer to pay lower ACC levies in return for a 10 per cent drop in compensation for lost income after a less serious injury, such as a sprained ankle?"

"Would you prefer to pay lower ACC levies in return for a longer wait period. For example, extending the period without lost income compensation from a week to a longer period, such as three weeks?"

"Would you prefer us to lower the earners' levy in return for earners paying more of their accident-related treatment costs?"

Dr Smith said there would be problems in adopting ACC's proposals for motorists and sports players.

Young drivers could register their cars in their grandparents' names, and he did not want to harm the "broader social benefits" of sport.

But the idea of giving taxpayers an option of paying lower levies for reduced service - or higher levies for better service - was in line with an existing "Cover-Plus" scheme for the self-employed, who can pay levies based on a nominated income, even if their incomes fluctuate wildly.

That ensures they are compensated after an accident at 80 per cent of the income they chose.

"Giving people more choice about the social insurance they take for non-work accidents could improve the service and the choices," Dr Smith said.

But he poured cold water on speculation that workplace accident insurance might be opened up to full competition from private insurers after an ACC "stocktake" completed in June by a group led by former Labour Party Finance Minister DavidCaygill. Its report has not been made public.

Dr Smith said opening the business to competition would be "a very major decision and, consistent with the John Key pragmatism and cautiousness, we are not in any hurry".

He expected to announce the Government's decision and issue the Caygill report by Christmas.

Would you pay lower ACC levies in exchange for reduced benefits such as:

* A 10 per cent drop in compensation for lost income after minor injuries?

* Extending the period without lost-income compensation?

* Paying more of accident-related treatment costs?

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