Vehicle licensing fee to rise by nearly a quarter

The ACC fiscal blowout will have a direct impact on drivers from July 1 this year. Photo / Kenny Rodger

An increase of $32 to the motor vehicle levy was announced today by ACC Minister Nick Smith.

The increase will come into effect from July 1, meaning a licence fee for a petrol car will increase from $136.44 to $168.46, and the ACC petrol levy will rise from 9.34 cents per litre to 9.90 cents per litre.

"I know it's a significant increase when families can least afford it, and it illustrates why we need to make wider change within ACC," Dr Smith said.

The increase was the "bare minimum" needed to fund the cost of motor vehicle accidents while maintaining an acceptable level of solvency in the motor vehicle account.

He said an increase to $376.48 was what would be required to fully fund the account based on the latest report liabilities, the existing law, and funding policy.

"While the Government is committed to helping the injured, ongoing large increases in ACC are not affordable," Dr Smith said.

A programme to contain costs, push out the funding date and get greater flexibility in funding mechanisms for the motor vehicle account was being enacted.

"I am committed to a package of reform that will ensure that we don't get these increases in years ahead, but this is the cost that's flowing from the increased liabilities and care costs from accidents in the motor vehicle account."

Dr Smith announced yesterday he was replacing ACC chairman Ross Wilson with former Ernst & Young chief executive John Judge, and the rest of the board might not keep their jobs either.

He said some could be re-appointed as the board was "reconfigured" to tackle financial problems faced by ACC.

- NZPA