Further cuts to the ACC levy across the board will be announced in the 2015 Budget.
ACC minister Nikki Kaye says the forthcoming budget will signal further ACC levy cuts of around $375 million in 2016/17 and $120 million in 2017/18.
“These indicative levy cuts of $500 million will be spread across the motor vehicle, work and earners accounts,” says Kaye.
“There will also be further significant reductions to work levies, and the earners levy will also come down.
“The cuts are based on current financial projections and a funding direction which sees each of these accounts heading towards a solvency band of between 100 and 110%.
“This year the average ACC motor vehicle levy, including the annual licence levy and petrol levy, will fall from around $330 to $195 a year.
“On current projections, this is likely to fall further to around $120 next year, making the average motor vehicle levy around one third of what it is right now.
“These levy cuts are possible because of ACC’s sound financial performance under the current government, it now has enough money invested to meet the future costs of all current claims.
“This is a far cry from six years ago, when we inherited a scheme that saw the gap between its assets and liabilities grow by $4.8 billion in one year alone.”
Kaye is also introducing legislation, developed over the past year, to put in place a new ACC levy-setting framework, which will take effect in 2016/17.
“The new levy setting process will enable people to see the delicate balance between ensuring there’s a sufficient buffer in each account to withstand volatilities, while demonstrating that we’re not over-collecting money that could be in people’s pockets.
“ACC will also be required to report publicly on the long-term implications of the government’s levy decisions.
“The new legislation will also enable the residual levy, which funds ongoing costs of claims lodged before 1999, to be discontinued when these costs have actually been fully funded. Existing legislation requires that the residual levy be collected until 2019.”
