ACC levies may climb again

08:42, Feb 19 2012

The Government is considering raising Accident Compensation Corporation levies just months after it decreased them, Cabinet papers released to a claimants lobby group show.

Last October the Government announced the levy on the average full-time worker would drop by 17 per cent, or $170 a year, and the levy on the average business would fall by 22 per cent, or $1120.

The reductions followed ACC making a $3.5 billion surplus in the 2010/11 year, two years after the Government claimed the corporation was insolvent.

The Government plans to open ACC's work account to competition from private insurers from October.

ACC Futures Coalition spokeswoman Hazel Armstrong said today papers obtained under the Official Information Act showed former ACC minister Nick Smith was looking at making the corporation charge a ''top up'' on its premiums so private insurers could compete on a level playing field.

ACC levies were cheap because the corporation did not have to make a profit or return a dividend, she said.


''They do not pay tax because it is a statutory levy but if it is the private sector offering a service, they will pay a tax on it.''

The papers showed ACC ''would be subject to regulatory safeguards to ensure it sets prices responsibly'' and proposed legislation would require ACC to ''price prudently by incorporating a surplus margin into prices''.

ACC would also be required to pay built up reserves to the Government to ''avoid a build-up of excess reserves that could reduce financial disciplines or be used by ACC to reduce its prices (which would make it difficult for insurers to compete)''.

Armstrong said the Government was planning to force up levies by regulation at a time when many employers were struggling.

''You hike up the levies and then you drop them again. What are you doing? You could have just them as they were and you would be in the same place.

''It's erratic.''

New Zealanders wanted a scheme that was there for them when they or their family had an injury.

''The Government is turning ACC into a political football.''

Current ACC Minister Judith Collins today said she had received a lot of advice on possible changes.

"I am still considering how choice in the ACC work account will look. There are a lot of recommendations in the consultation document which may not necessarily be accepted."

Collins said she would be taking her proposals to Cabinet shortly.

Labour says the paper, prepared before the election, proposes introducing new four levies on insurers to meet the additional costs on ACC when it is opened to competition.

Its ACC spokesman Andrew Little said privatisation would create a huge new bureaucracy and was likely to increase costs to employers and workers.

"There is nothing efficient in this plan."

Injured workers would be caught in disputes between competing insurers because employers would choose which insurer they used.

"In the sort of labour market we have now, where people are changing jobs many times in their working life, adding a whole lot more complexity so that no one knows which workplace accident insurer is responsible for which injury will create confusion and uncertainty.

"If injuries manifest years after the date of an accident, employees will be required to chase past insurers to manage the claims and receive the right entitlements."

Recommendations were expected to go to Cabinet on February 29, Little said.

"It is time for New Zealanders to speak out against National's plans to destroy what has been our world-leading system of universal, no-fault, 24/7 cover for accidental injury."