ACC levy reductions of more than half a billion dollars a year for workers and businesses have been approved with ACC declaring a healthy surplus for the last year of $3.5 billion.
“These levy reductions will save households $340 million a year and businesses $247 million a year. This is money that will go back into the pockets of hard working New Zealanders and will assist with our economic recovery,” ACC Minister Nick Smith said.
“The levy on wage and salary earners is reduced by 17% – or $170 a year for someone on the average wage. The levy on employers and the self-employed is reduced by 22% – a saving of $1120 a year for the average small business with seven employees.
“These levy reductions are possible because of the huge improvements in ACC finances from the deficits of $2.4 billion in 2007/08 and $4.8 billion in 2008/09, to surpluses in 2009/10 of $2.5 billion and today’s announcement of a $3.5 billion surplus in 2010/11.
“This financial turnaround and levy reductions has been achieved by major improvements in rehabilitation rates and better management of costs. Rehabilitation rates steadily declined from 2005 to 2008, but have consistently improved since with 20% fewer people on long-term compensation. ACC’s claim costs rose 58% from $1.93 billion in 2005 to $3.06 billion in 2008, but have since been trimmed back by 15% to $2.58 billion in 2010/11.”
The Earners’ Account Levy (paid by wage and salary earners) will decrease from $2.04 to $1.70 (including GST) and the average Work Account Levy (paid by employers and the self employed) will decrease from $1.47 to $1.15 (excluding GST) per $100 of liable earnings from 1 April 2012. Work levies for individual companies depend on their industry classification and experience rating.
“The motor vehicle levies on vehicles and petrol are to remain the same. The solvency in the Motor Vehicle Account is significantly behind the Work and Earners’ accounts. Levy reductions will be possible in the next term of Government for motorists if the ongoing performance improvements in ACC are maintained,” Dr Smith said.
“ACC’s Board and staff need to be commended for their hard work in turning around ACC’s finances. These significant levy reductions are good news for New Zealand workers as it increases their take home pay by keeping money in their pockets. It is equally good news for businesses by improving their cash flow.”