ACC Minister Nikki Kaye says the corporation is removing residual levies from ACC’s Work, Earners’ and Motor Vehicle Accounts next year, but some businesses will get a levy increase.
Kaye says the removal of residual levies will be fairer to all industries, and comes because the 206/2017 levy year is the first equitable opportunity to do so.
“We will now have fairer work levies based on industries with the greatest injury costs paying their true share of those costs. The price signal is resulting from these levy changes will help encourage safer workplaces,” says Kaye.
“Residual levies were introduced in 1999 when ACC moved to a fully funded model. Under this model, the scheme is required to build up sufficient funds to meet the anticipated lifetime costs of all pre-existing claims,” says Kaye.
“My decision is the result of the latest evaluation of residual liabilities I’ve received, which shows the first equitable opportunity to remove the levies is the 2016/17 levy year,” she says.
“Removing these will have a redistributive effect, which will see an increase in work levies for businesses in some industries, and a decrease for others,” says Kaye.
“This is because 100% of the levy will now reflect recent injury costs.
“On its own, the redistributive effect of removing residual levies would see around 47% of businesses receive a work levy increase, and around 53% receive a levy decrease,” she says.
“However, if the removal of residual levies coincides with levy reductions in 2016/17, the extent of levy increases can be lessened,” says Kaye.
“The ACC Board has advised me they intend to propose significant average levy reductions next year, which could mean only 25% of businesses get a work levy increase,” she says.
“Around 75% of businesses would see their work levy reduced, with the reduction being very significant for some. They will effectively get a reduction through both the residual levy being removed, as well as potential reductions to the work levy,” says Kaye.
“While there will be a redistributive impact of removing the residual levy, the proposed total Work Account levies collected in 2016/17 would be significantly reduced,” she says.
“The removal of residual levies for accredited employers, which include some of New Zealand’s largest companies and organisations is welcome news,” says Kaye.
“These businesses meet their workplace injury costs, in return for paying little or no ACC work levies. However, they’ve still been required to help pay for pre-1999 ACC claims, so today’s announcement will mean a significant cost-saving for them,” she says.
