Motorcyclists and ballet companies biggest losers in proposed ACC levy overhaul

Wednesday, 11 September 2024

ACC chief executive Megan Main believes Kiwis still understand the benefit of the no-fault accident insurance scheme.

ACC is proposing steep hikes in its levies on vehicles, employers and workers to plug a funding gap.

Its proposals would see ACC’s total levies rise by the maximum 5% allowed in each of three years starting from July next year, so its levy income rose from about $4b in the year just passed to $4.7b in the year to June 2026.

It estimates the total cost of ACC levies for a family with a household income of $85,000 and two vehicles would rise to $28.48 a week from July, from $27.16 currently, and to $31.48 a week from July 2027.

The state-owned accident insurer is proposing to raise its levy on cars by between 7.4% and 7.8% over each of the three years.

That would take the annual levy from $114 this year to $123 from July, and to $142 by the year ending June 2028, rounded to the nearest dollar.

Some “cross-subsidies” for motorcyclists would be wound back, meaning they would meet a higher proportion of the cost of their claims and face significantly higher levies.

Ideas separately contributed by ACC Minister Matt Doocey would see a sharp increase in levies for professional ballet companies, but a drop for sports clubs that only employed people who were not professional players.

A break on ACC levies for plug-in and fully-electric vehicles would also be removed.

ACC deputy chief executive Stewart McRobie said that mirrored the removal of the exemption EVs previously enjoyed on Road User Charges now that they accounted for more than 2% of cars.

The consultation document indicates the proposed change was Doocey’s suggestion and would see owners of 75,000 fully-electric vehicles face a near $67 increase in their annual rego costs.

ACC is proposing to raise levies on employers and workers by between 4.3% and 4.8% over each of the three years — increases that are still much higher than the forecast rate of inflation.

The effect would be to raise the combined levy on businesses and workers from $2.02 per $100 of liable earnings to $2.31 per $100 by the year ending April 2028.

ACC Minister Matt Doocey says the Kiwi’s struggles with the cost of living will be taken into account by the Government when it makes final decisions in December.

The public have until October 9 to comment on the proposals, after which recommendations will go to Cabinet.

The proposed fee rises come after the Government and the Reserve Bank declared progress tackling the “cost-of-living crisis”.

ACC chief executive Megan Main acknowledged the increases were being proposed at a time when many families and businesses were doing it tough.

But she said ACC was required to consult on levies every three years.

“That's about making sure the scheme does stay stable and sustainable. But it's also a consultation, so this is the time for people to give their feedback.”

ACC had been in existence for 50 years and its goal was to “maintain the scheme as a fully-funded scheme, so it's here for the next 50 years”, she said.

“I think most people understand the value of a no-fault accident insurance scheme.”

McRobie said ACC needed to increase its levy income because its estimates of the cost of meeting future claims had risen.

Between 2021 and this year the number of claims ACC received that required people to take time off had risen by 7%.

McRobie said higher pay in the health sector had also had a big impact on ACC costs.

ACC said the changes to motorcycle and moped levies would see them face an average 33% increase in levies and would mean motorcyclists paid all of the cost of funding claims that arose from single-vehicle motorcycle crashes.

That would be “fairer for owners of other vehicles who subsidise the bulk of injury costs related to motorcycle accidents,” ACC said.

At the moment, motorcyclists only met 28% of the cost of their claims, it said.

ACC is proposing to remove its “no claims discount” on businesses that are levied less than $10,000 a year.

McRobie said that would simplify its fees and cut its administration costs and reflected ACC’s finding that the discount had not in fact had an impact reducing accident rates.

The changes to the way ballet companies were classified would mean they would pay a levy of $2.61 on each $100 of liable earnings, up from the current a levy of 39c.

Doocey said the struggles that Kiwis were having with the cost-of-living would be “factored in” before any final decisions on levy changes were made in December.

It was a fair question whether the overall increases ACC was seeking would be an easy sell to Cabinet, he told The Post.

“It is my expectation ACC will look at existing costs within the scheme to ensure that any levy increase is absolutely justified before final decisions are made.

“My clear expectation with ACC is they need to lift their financial performance. They need to look at how they can increase their rehabilitation rates. They need to do a lot better around injury prevention,” he said.