Labour hypocrisy over ACC levy increases

It is a bit rich for Labour to today be protesting increases in ACC levies given it was its financial mismanagement that created the problem, ACC Minister Nick Smith says.

"ACC lost $2.4 billion last year and another $4.8 billion this year. Its unfunded liabilities have soared from $4 billion to $13 billion as claim costs have risen 57% in the last four years. If Labour had left ACC in good shape these levy increases would not be required.

"It was totally reckless that Labour, even after the reported $2.4 billion loss to the year ending 30 June 2008, further extended the ACC scheme right before the election for self harm and suicide, seasonal workers, and superannuitants.

"The choices are putting up levies or cutting back on entitlements and the Government's approach is balanced mix of both. The Government's ACC Reform Bill will enable it to avoid the scale of levy increases for vehicle owners, including motorcyclists, proposed by the ACC Board.

"The hypocrisy is on Tuesday Labour opposes the Bill that pulls back on entitlement extensions but today protests at levy increases. Labour cannot go on pretending that ACC can be extended to cover all manner of things but nobody has to pay."

Information on Motorcycles & Proposed ACC Levy Increases

1. Why has there been no consultation?

That is happening now. The ACC Board has proposed levy rates and classifications and is seeking public submissions. Submissions close 5pm, 10 November and can be sent by emailing consultation@acc.co.nz or sent by post to Levy Consultation, ACC, PO Box 242, Wellington 6140.

2. Who makes the final decisions?

Once public submissions have been considered, ACC makes final recommendations to the Minister for ACC Nick Smith and he will consider ACC's proposed rates alongside independent advice from the Department of Labour. Cabinet will make the final decision.

3. Why is ACC proposing to increase motorcycle levies?

Last year, ACC paid more than $62 million to care for people injured while on their motorcycles, but collected only $12.3 million from motorcyclists

If we charged motorcycle owners for the true cost of injuries, levies for motorcycles would be between $1200(bikes under 125cc) and $3700 (bikes more than 600cc)

Even in accidents where the motorcyclist is clearly at fault, levies would need to range from $754 (bikes under 125cc) to $2200 (bikes more than 600cc)

Even with these proposed changes, most other motor vehicle owners will still be paying $77 to cross-subsidies motorcyclists

In 2008 there were 1446 motorcycle casualties - more than double the total in 2000.

4. Why are just motorcycles facing an increase?

This is not correct. Increases in other areas include:

Petrol cars: current levy $168.46; proposed 2010/11 levy $237.37

Diesel trucks: current levy $302.32; proposed 2010/11 levy $585.84

Earners' Account: current levy $1.70 per $100 of liable earnings; proposed 2010/11 levy $2.80

Employers Account: current levy $1.31 per of $100 liable earnings; proposed 2010/11 levy $1.89

5. Why are levy increases necessary?

ACC lost $4.8 billion in 2008/09 on top of $2.4 billion in 2007/08. Unfunded liabilities have grown from $9 billion to $24 billion in just four years due to scheme extensions, increases in claim numbers, increases in claim costs and poor investment returns.

6. What is the Government doing about the levy increases?

The Government considers the proposed ACC levy increases to be too large and has introduced legislative changes to push out the full funding date to 2019 and to pull back on entitlements so as to make savings. The Government is aiming to reduce future liabilities by $2 billion. The changes are aimed at halving the levy increases and securing the future of ACC for New Zealanders.