5 AUGUST 2004
NEW ZEALAND GAZETTE, No. 95
2365

From August – early September
The ACC Board invites the public to make submissions on levy rate proposals and options

September
The ACC Board considers the submissions.

October
The ACC Board makes recommendations to Government, via the Minister for ACC, about any changes to the levy rates for the following levy year.

1 April
The regulations and new levy rates come into effect (except the motor vehicle levy).

1 July
The regulations and new motor vehicle levy rate come into effect.

Why do levies change?

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.

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 claimants’ rehabilitation or compensation, and economic factors such as inflation and interest rates. Rising interest rates increase the future earnings expected from ACC’s investments and decrease ACC’s liability for past injuries and, as a result, reduce the levy rates. The opposite is true when interest rates reduce.

Proposals for each group of levy payers

Employers

Employers pay a composite levy that includes both a work levy and a pre-1999 claims levy.

The work levy meets the costs of workplace injuries to employees that occur after 1 April 2000, and not covered by private insurance.

The pre-1999 claims levy pays for work injury claims before 1 July 1999 plus non-work injury claims before 1 July 1992.

Employer levies are based on the payroll of their employees.

ACC proposes to:

• maintain the 2005/2006 average composite employer levy at the current rate of $1.21 for every $100.00 of payroll, consisting of:
  • the average work levy decreasing from $0.91 to $0.88; and
  • the average pre-1999 claims levy increasing from $0.30 to $0.33.
• maintain the current 129 risk groups (or pricing pools) for the work levy and also maintain the current 41 risk groups for the pre-1999 claims levy.
• amend the Framework for the Accredited Employers Programme to improve the description of how the discount is calculated. Two options are presented. Option 1 is to revise the detailed description in the framework. Option 2 is to remove the detailed description, but maintain the general approach to calculating the discount.
• change three individual classifications to match recent claims experience.
• re-name one individual classification to clarify coverage.

Self-employed

Self-employed pay a composite levy that includes a work levy, a non-work levy and a pre-1999 claims levy.

The work levy meets the costs of workplace injuries to self-employed that occur after 1 July 1999, and not covered by private insurance.

The non-work levy is to cover the cost of their non-work injuries.

The pre-1999 claims levy pays for work injury claims before 1 July 1999 plus non-work injury claims before 1 July 1992.

Self-employed levies are based on their earnings.

ACC proposes to:

• increase the 2005/2006 average composite self-employed levy by 2.9% from $3.10 to $3.19 for every $100.00 of earnings, consisting of:
  • the average work levy increasing from $1.73 to $1.79;
  • the non-work levy remaining at the current rate of $1.07; and
  • the average pre-1999 claims levy increasing from $0.30 to $0.33.
• maintain the current 129 risk groups (or pricing pools) for the work levy and also maintain the current 41 risk groups for the pre-1999 claims levy.
• change three individual classifications to match changing market conditions.
• rename one individual classification to clarify coverage.

Earners

The non-work levy covers the cost of non-work injuries to earners and self-employed people.

ACC proposes to:

• maintain the 2005/2006 non-work levy at the current rate of $1.07 for every $100.00 of earnings.

Motorists

The motor vehicle levy covers the cost of all injuries involving motor vehicles on public roads.

Motorists pay for motor vehicle injuries through an average motor vehicle levy made up of an annual vehicle licensing fee levy and a petrol levy.