11 Jul 2011

ACC levies to drop for workers and employers

9:01 pm on 11 July 2011

Accident Compensation Corporation levies look likely to drop for employees, businesses and the self-employed from April next year.

ACC Minister Nick Smith says prudent management of the corporation's finances has made the reductions affordable.

Under draft levy rates released on Monday, levies for employees will drop from $2.04 to $1.70 for every $100 earned. Employers and the self-employed will pay $1.15, down from $1.47.

The Government says the 17% drop in the employees' levy will save households $340 million a year, while a 22% drop for employers will save businesses $247 million a year.

Dr Smith says the corporation's annual claims cost have been cut by 15%, with improved rehabilitation the biggest contributor.

The minister denies a suggestion that people in need are just being declined by ACC, saying that when costs blew out under the previous Labour government the number of claims grew disproportionately to the number of actual accidents.

However, Labour says the financial blowout at ACC, as claimed by National when it first took office in 2008, was a crisis created to justify its plans for privatisation.

ACC spokesperson Christopher Hipkins says National increased levies higher than they needed to be so it could reduce them again and there has been a flow-on effect for claimants.

"What we've seen is some claimants being pushed off ACC before they have been fully rehabilitated. Over the last few years, New Zealanders have ended up paying more in order to get less cover because the Government's voted to manufacture the crisis in ACC that didn't exist."