Further ACC levy reductions of $126m a year

  • Nathan Guy

Acting ACC Minister Nathan Guy today confirmed the ACC levy rates for the 2017/18 and 2018/19 years.

“There will be reductions totalling $126.2 million per annum to work and motor vehicle levies, while the earners’ levy will remain unchanged,” says Mr Guy.

“These reductions follow over $2 billion of ACC levy cuts made under this Government since 2012.

“The cuts have been made possible by the improved financial management of ACC under our watch, which has seen significant improvement in the funding position of all the levied accounts.”

Today’s announcement means that:

  • the average work levy paid by employers and self-employed people will reduce from 80 cents to 72 cents per $100 of liable earnings, a reduction of 10 per cent
  • the average motor vehicle levy, which includes the annual licence levy and petrol levy, will reduce from $130.26 to $113.94, a reduction of 12.5 per cent
  • the petrol levy will reduce from 6.9 cents to 6 cents per litre, a reduction of 13 per cent.

“The Government has decided not to implement ACC’s recommended four cent increase to the earners’ levy, paid by everyone in the paid workforce to cover out-of-work injuries,” says Mr Guy.

“This is because the earners’ account’s current funds are sufficient to meet its liabilities at this point in time.

“Keeping the earners’ levy at the current rate for a further two years means it would not be necessary to reset levy collection systems for what would be a very small increase. This decision is consistent with the principles of financial responsibility set out in the Accident Compensation Act 2001, which require ACC’s accounts to meet lifetime claims costs whilst avoiding large changes in levies.”

Other changes confirmed today include updates to vehicle risk ratings which determine licence levies, based on recent crash data, and a reduction to the annual licence levy for electric vehicles.

“The change to the electric vehicle levy is an interim measure which supports the Government’s programme encouraging people to make the switch to electric vehicles, and allows further work to be done on how the ACC levy system accommodates new vehicle technologies,” says Mr Guy.

Annual licence levies for motorcycles will remain at current levels, but motorcyclists will benefit from the reduced petrol level. The motorcycle safety levy will also remain unchanged.

Under the new biennial approach to levy setting, levy rates announced today will apply for a two year period, with reduced work levies taking effect from 1 April 2017, and reduced motor vehicle levies from 1 July 2017.

“These cuts are further evidence that the ACC scheme is in good financial health, and well placed to meet the ongoing injury-related needs of New Zealanders,” says Mr Guy.

Levy reductions by account

Work Account levies - $69.6 million

Motor Vehicle Account levies - $56.6 million

View Cabinet Paper 2017-18 and 2018-19 ACC Levies here

View Cabinet Minute 2017-18 and 2018-19 ACC Levies here

View Regulatory Impact Statement ACC levies for 2017/18 and 2018/19 here