7 AUGUST

NEW ZEALAND GAZETTE

2467

Why do levies change?

There are a number of factors that affect levy rates. These include the forecast trends in injury and death rates, the duration and cost of their rehabilitation or compensation, and economic factors such as inflation and interest rates.

ACC meets the ongoing cost of claims from:

1. the levies it collects each year; and
2. the interest it earns by investing any unspent levies or reserves.

Had interest rates not decreased, ACC would have been able to hold levy rates stable or reduce them. However, falling interest rates reduce the future earnings expected from ACC’s investments and increase ACC’s liability for past accidents. In most cases, improving effective rehabilitation and injury prevention activities have let ACC absorb the impact of the fall in interest rates. However, some levies have to change.

Proposals for each account

Earners’ Account

Earners and self-employed people pay a composite earners’ levy made up of the Earners’ Account levy and the Earners’ Account residual levy.

The composite earners’ levy covers the cost of non-work injuries and is based on their earnings.

ACC proposes:

• that the current 2003/2004 composite earners’ levy rate of $1.07 per $100.00 of earnings (or $1.20, G.S.T. inclusive) be maintained for the 2004/2005 levy year.

Motor Vehicle Account

Motorists pay for motor vehicle injuries through a composite motor vehicle levy made up of the Motor Vehicle Account levy, the Motor Vehicle Account petrol levy, and the Motor Vehicle Account Residual levy. ACC uses a vehicle classification system based mostly on vehicle type. Motor vehicle owners pay a levy based on the type of vehicle owned.

The ACC Motor Vehicle Account covers the cost of all injuries involving motor vehicles on public roads.

ACC proposes:

• that the composite average levy rate for motorists decreases by 3.3% from $211.96 to $205.04 per vehicle.
• that the current 9 classifications and their rates be retained for 2004/2005.
• the levy for non-petrol powered goods vans/truck/utility vehicles increases in its relativity to standard non-petrol powered vehicles, from 116% to 121%. This to reflect the increasing distances travelled by these vehicles.
• to consult on a number of options for petrol-powered vehicles and how the average composite levy is split between the Motor Vehicle Account levy and the Motor Vehicle Account petrol levy.

Residual Claims Account

Employers and self-employed people fund the Residual Claims Account.

The Residual Claims Account pays for all work injury claims before 1 July 1999 plus non-work injury claims before 1 July 1992.

ACC proposes:

• that the current 2003/2004 average residual claims levy of $0.31 per $100.00 of payroll or self-employed income be maintained for the 2004/2005 levy year.
• that the current 41 risk groups (or pricing pools) be retained for 2004/2005.

Employers’ Account

Employers fund the Employers’ Account.

The Employers’ Account meets the costs of workplace injuries to employees that occur after 1 April 1999, and not covered by private insurance.

ACC proposes:

• that the average Employers’ Account levy (after Workplace Safety Management Practices discounts) be increased from $0.90 to $0.95 per $100.00 of payroll.
• two risk grouping options as the basis for setting levies for individual classifications – the current 130 sub-industry groupings and the 56 industry groupings.
• some changes to 14 individual classifications to match recent claims experience.
• renaming one individual classification to clarify coverage.

Self-Employed Work Account

Self-employed people fund the Self-Employed Work Account.

The Self-Employed Work Account meets the costs of workplace injuries to self-employed that occur after 1 July 1999.

ACC proposes:

• that the average Self-Employed Work Account levy be increased from $1.79 to $1.83 per $100.00 of earnings.
• two risk grouping options as the basis for setting levies for individual classifications – the current 130 sub-industry groupings and the 56 industry groupings.
• some changes to 14 individual classifications to match changing market conditions.
• renaming one individual classification to clarify coverage.

Looking ahead

The Minister for ACC has asked that ACC reviews a number of options relating to the coverage and funding of its accounts. These options do not form part of the 2004/2005 levy proposals, but could affect future levy years.

ACC is presenting these options now so that levy payers have the opportunity to give preliminary comments on the issues and possible solutions. Three specific issues are being considered: