Hon Dr Nick Smith ACC Minister
04 December 2008
Big blow-out in another ACC account
Officials are recommending an increase in earners levies of $1.337 billion over the next three years to cover
significant increased costs of the ACC Earners' Account that funds non-work accidents involving employees.
"Department of Labour officials have advised the Government to increase the current ACC Earners Levy of $1.40 per $100
of earnings to $2.00 in 2009/10, $2.10 in 2010/11 and $2.20 in 2011/12 to cover the increased costs of the Earners'
Account.
"The cost increases identified by officials is being blamed on increases in the number of claims, lesser rates of
rehabilitation resulting in increased duration of costs, increased medical and treatment costs, expansion of the schemes
entitlements, and increases in treatment injury cover.
"This $1.337 billion is additional to the $1.253 billion required for the Non-Earners Account. The key differences are
that the Earners' Account is paid for by employee levies rather than the Government from general taxation, and the
account does not require a cash injection in the current financial year.
"These are very significant cost increases for workers. A person on the average wage of $47,000 per year would pay an
additional $282 in the next tax year or $5.40 per week, $329 in 10/11 or $6.33 per week, and $376 in 11/12 or $7.23 per
week.
"The new Government is very concerned about the scale of these recommended increases.
"I certainly do not wish to impose these sorts of increased costs on households, but also must take a prudent approach
to ensuring ACC's ongoing viability.
"The immediate decision the Government needs to take by Christmas is the levy rate for 2009/10 and I am continuing to
work with officials on how these cost increases might be constrained.
"I am also seeking further information on the motor vehicle account which is also facing significant cost increases. The
decision on motor vehicle levies does not need to be made until March and there are legislative options of extending the
full funding date beyond 2014 to alleviate these increases.
"The new Government is committed to a full stock-take of all the components of the ACC scheme."
Dr Smith has also released ACC's Briefing to the Incoming Minister. It can be viewed at:
"I am concerned that ACC's briefing does not adequately address the major issues of the very significant cost increases.
A change in culture is required at ACC so it is better placed to appreciate the impacts of cost shocks on families and
businesses."
ENDS