ACC

ACC Minister Nikki Kaye today confirmed the Government has agreed to $450 million of ACC levy reductions consulted on and recommended by the ACC Board for the 2016/17 year.

“These levy reductions apply across motor vehicle, work and earners’ levies,” says Ms Kaye.

“There will be a 33 per cent reduction to the average motor vehicle levy, comprising the petrol levy and annual licence levy, from an average of $194.25 currently, to $130.26 per vehicle.

“The average work levy paid by businesses will reduce by 11 per cent to 80 cents per $100 of liable earnings, and the earners’ levy, paid by everyone in the paid workforce, will decrease by four per cent to $1.21 per $100 of liable earnings.

“These reductions are significant as only twice in the last seven years has the Government agreed to implement all of the ACC Board’s recommendations.

“The 33 per cent reduction to the average motor vehicle levy means it is now at a historically low level. I can also confirm that the annual ACC licence fee component for every single petrol car will be less than $90.

“Following public consultation, the ACC Board recommended that the ACC petrol levy we pay at the pump should stay at 6.9 cents per litre, rather than be reduced to 5.7 cents per litre as had been proposed at the start of the consultation process.

“This means instead of reducing the petrol levy by 1.2 cents, the Board recommended an additional reduction to the annual licence levy of $13 per petrol car.

“The Government has agreed to these recommendations, which are aimed at better recognising the increased risk of injury associated with increased distance travelled.

“Many submissions argued that shifting the balance slightly towards the petrol levy would mean that those who don’t use their cars a lot would pay fairer levies.

“Whilst the Government has taken note of this feedback and implemented the ACC Board’s recommendation in this round of levy cuts, I believe we need a clearer policy around how the petrol and annual licence levy are apportioned in the future, and work will be done on this next year.

“The Government agreed to the ACC Board’s recommendation of an 11 per cent reduction to average work levies. A key factor affecting work levies next year is the removal of the residual levy, which I announced in September.

“By itself, removing residual levies would have seen 47 per cent of businesses pay higher work levies, and 53 per cent pay decreased work levies. However, as I said in September, timing the removal of residual levies to coincide with average work levy reductions will mean around 79 per cent of businesses will get a levy reduction, with only around 21 per cent paying increased work levies.

“Removing residual levies, which helped meet the costs of historical claims, means work levies will better reflect more recent industry injury trends. It will also mean a significant saving for accredited employers, who meet the costs of employees’ injuries themselves, but who until now have been required to contribute towards historical ACC claims.

“As well as motorists and businesses, everybody in the paid workforce will pay less in ACC levies through a small reduction to the earners’ levy.

“During this year’s levy consultation, the ACC Board consulted on my behalf on potential changes to the vehicle risk rating system, so that licence levies better reflect the risk of injury associated with different cars.

“The Government has decided there will be enhancements to this system, and ACC will consult from 14 December 2015 on specific levy rates that will apply as a result to particular vehicles. This will give people an opportunity to see and comment on how their own vehicle is rated and why, before final decisions are made.

“The Government accepts the ACC Board’s recommendation that there should be no change to motorcycle levies. There has been no significant reduction to motorcyclists’ injury costs over the past year, and 76 per cent of these costs are already met by other road users.

“However, I can confirm I have consulted on and decided to reduce the motorcycle safety levy, which pays for road safety initiatives benefitting motorcyclists, from $30 to $25 per year. This strikes a balance between investing in safety initiatives that can reduce motorcyclists’ claims, and not collecting too much in levies.

“A range of new motorcyclist safety initiatives will be rolled out next year. I can confirm that I will also be exploring further incentivising of rider training, and possible risk rating approaches for motorcycle levies, such as increasing the number of levy bands and taking into account factors such as power-to-weight ratios or fitted safety features.

“This year’s levy consultation also saw the ACC Board consult on my behalf on a new funding policy, which would see each levied account target a funding band of between 100 and 110 per cent of its liabilities over a 10-year horizon.

“The Government has broadly agreed to adopt the funding policy consulted on, and I expect to work through the implementation of this over coming months.

“I recognise there have been calls for a funding horizon shorter than 10 years, however, this would compromise levy stability over the long term.

“The levy reductions confirmed today are possible because of ACC’s clear focus on financial sustainability, its high-performing investment strategy, and growth of the scheme’s assets from $10 billion in 2008/09, to around $32 billion now.

“The reductions, which are a continuation of significant reductions for three years now, will be welcome news for many as we head into the Christmas season. For some the reductions next year will be significant, and for hard working New Zealanders every little bit helps.

“ACC’s levied accounts are now fully funded, and the scheme is underpinned by a funding policy that increases transparency and ensures levies are fair and sustainable. This is a significant and welcome achievement, and sets the scheme up well to continue to support New Zealanders into the future.”

Note for editors

Levy reductions in 2016/17 by account

Motor Vehicle Account levies - $218 million

Work Account levies - $171 million

Earners’ Account levies - $61 million