Post-cabinet presser: ACC levy cuts announced

Post-cabinet presser: ACC levy cuts announced

In a press conference this afternoon in Wellington, ACC Minister Nikki Kaye proposed $500 million worth of ACC levy cuts.

The proposed cuts will benefit businesses, workers and motor vehicle owners across New Zealand.

$375m of levies will be cut in 2016/17, followed by $120m in 2017/18.

The motor vehicle levy reductions announced today are an indication of what could come into effect on 1 July 2016, and initial work and earners levy reductions could come into effect on 1 April 2016.

Kaye said the ACC board will take public consultations before making a recommendation to Cabinet.

Exact reductions in each account will not be known until after public consultation.

After public consultation, Kaye will introduce legislation for a new ACC levy setting framework which is expected to take effect in 2016/17.

In 2014, ACC recommended a 21% reduction to average work levy, a 5% reduction to earners’ levy, and a 40% reduction to combined average motor vehicle levies.

The proposed motor vehicle levy reduction is in line with the 2014 ACC recommendation.

John Key said, “This year the average ACC motor vehicle levy will fall from about $330 to $195. On current projections, this is likely to fall further to about $120 from 2016. That’s an overall saving of around $210 for motorists compared to current levy rates.”

Kaye said, “This change is about making the levy setting process clearer and more transparent. It’s also about making sure levy payers have much more stable levies over the longer term. We are committing to at least $500m in levy reductions based on a funding direction that will see ACC’s three levy accounts heading towards a solvency band of 100-110%. This is the first year where all three levy accounts are now finally solvent.

“We have progressively reduced levies each year since 2012, these indicative levies take the total saving to around $2 billion. The new legislation will help us achieve a more sustainable and transparent ACC scheme for all New Zealanders.”

The cuts will not affect Budget surplus this year, but Key said they would “make the surplus smaller over time.”

“The government has taken a prudent approach to ensure that levy reductions are sustainable and that they are balanced against the government’s other fiscal priorities.”

Key also discussed refugee quota increases and Auckland housing and transport :

When questioned on New Zealand’s refugee quota, he said, “We take 750 people, and we work really hard on those people to make sure they’re settled properly. We’re a small country, we have to work our way through how we do a really good job for those people. So I’ve always been focused on the quality of service we provide for people when they come.”

On Auckland housing, Key said, “You need infrastructure to support the special housing areas. We are responsible for some of that infrastructure, but I guess our main point is that we are not responsible for all of it. Both the council and government have a responsibility to do the right thing for Aucklanders who want to buy a home.”

He also discussed the government’s commitment to spending “a lot in Auckland around transport. We spend about $1 b a year there, and that won’t stop.”

Full audio here:

Video Part 1:

Video Part 2:

ENDS

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