Govt to announce ACC changes

ACC Minister Nick Smith will explain today the extent of entitlement cuts. File photo / Mark Mitchell

The Government will today announce details of the way it intends reducing ACC entitlements so levy increases can be kept within reasonable limits.

ACC Minister Nick Smith told Parliament yesterday the corporation's fundamental problem was a huge increase in the cost of claims which were not being met by levies at current levels.

He will explain today the extent of entitlement cuts while ACC will release proposed levy increases.

Dr Smith has promised the public will be consulted "openly and honestly" about the difficult balance that has to be struck between entitlements and levy costs.

He said in Parliament the previous government made numerous extensions to entitlements but did not fund the extra cost of them.

"Our levies are not meeting the cost of claims," he said.

"What has happened over the last four years is that claim costs have gone up at five times the rate of inflation and if any member thinks that is sustainable without levy increases, they really are financially illiterate."

Dr Smith said the Government was toughening up on access to ACC for people who committed criminal offences.

"We are proposing a new law that will automatically disentitle claimants who injured themselves while committing a serious crime."

Earlier yesterday he told reporters it was possible that those who lost their ACC entitlements would move over to the benefit system.

"We are not a country that leaves people starving, but ACC tends to be a lot more generous in its financial support," he said.

ACC chairman John Judge has said levies have to rise because the scheme's claim liability -- the future cost of existing claims -- is $23.8 billion.

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

- NZPA