ACC levies structurally unfair

ACC levies structurally unfair

Proposed ACC levy changes highlight structural unfairness, says Business NZ. Chief Executive Simon Carlaw says the proposed average 6% increase in the employer levy includes some groups that will face increases up to 27%, while others will have reductions by as much as 62%. He says the structure that makes these winners and losers is quite arbitrary.

"Many firms hit with an increase of 27% have good safety records, but will be penalised simply because they belong to a particular industry risk group.

"This underscores the unfairness of the industry risk group approach: it fails to recognise good safety management by individual firms - in fact, it punishes good firms that have the misfortune to be in a certain category.

"Workplace safety should be encouraged with the best incentives system possible. Experience rating, where firms are levied according to their individual safety record, provides such incentives - this is the kind of system that would promote improved workplace safety.

"The current system, of industry risk groups plus the partnership programme, is blunt, cumbersome and patchy. The industry risk groups dilute the incentives, while the partnership programme is compliance-ridden and too expensive for all but the biggest of firms.

"Then there is the increased levy itself. Having an average increase of 6% for employers while the employee account bears no increase, sends an unfortunate message - similar to the message contained in the new Health & Safety in Employment Act - that employers but not employees are always to blame for workplace accidents. Common sense tells us this is simply not true. Workplace safety is too important to play scapegoats - responsibility for both workplace conduct and the cost of compensation and rehabilitation should be shared by all concerned.

"ACC blames lower interest rates for the need to increase levies. More fundamental though is the ACC policy that builds a 15% prudential margin into reserves. Prudential margins may be appropriate for insurance companies operating in a competitive market, but ACC is a statutory monopoly which has no need for them.

"Business NZ regards the intended 6% average increase in the employer account as unjustifiable and will make strong submissions against the proposal."

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