ACC levy cut plan benefits drivers

Last updated 14:48 24/07/2014

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Motorists who drive less and those with safer, and therefore usually more modern and more expensive vehicles, will benefit most from tweaks to proposed ACC levy cuts.

The commission is sticking by an earlier recommendation that the total levies it raises on petrol and vehicle licences should fall by 40 per cent from next July. Those cuts would leave motorists $427 million better off annually.

But its final recommendation to the Government is that its levy on petrol would fall by only 2 cents, or 20 per cent, to 7.9 cents a litre, rather than to 5.9c as it had previously proposed.

ACC would in return make deeper cuts to its vehicle licensing levies, more than halving the average levy on a petrol-driven car from $198.65 a year to $97.02.

ACC said it had taken on board public feedback that that was a fairer way of apportioning the lower levies. The change would benefit motorists who travelled little.

Commission chairwoman Paula Rebstock said it also wanted to skew savings towards people who drove safer vehicles and who were therefore less likely to be injured if involved in a crash.

Under its proposed "risk rating" regime, ACC would apply lower vehicle-licence levies to safer vehicles. Levies on cars that were less safe would still fall, but not by as much.

Spokesman Glenn Donovan said there was "no denying" that newer and more expensive cars tended to be safer. They were more likely to be owned by wealthier people, so risk rating would benefit the better-off.

But the aim of ACC's levies was to "recognise risk". Every car-owner would pay less than today and it was not universally true that older, cheaper cars were less safe, he said.

ACC estimated 80 per cent of second-hand vehicles costing between $5000 and $10,000 would fall into its two least-risky bands, he said.

Levies on motorcycles and petrol-driven mopeds wouldn't be cut, as ACC said their owners were already being "cross-subsidised" by other road users.

ACC has stuck by a proposed 21 per cent cut to the average work levy and a 5 per cent reduction in the earners' levy from April.

In total, ACC levies would fall by $658m from next year under the commission's proposals.

Rebstock said the cuts, which were outlined in broad terms by the Government in the Budget, were made possible because ACC had sufficient financial assets to meet the lifetime costs of all existing claims and was in a "good financial position".

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