ACC Minister Nick Smith says it is inevitable the Accident Compensation Corporation scheme will become less generous as the Government moves to contain costs.
Dr Smith says ACC's costs rose by 12% a year under the previous Labour Government - from $1.4 billion in 2000 to $3.2 billion now.
He says liabilities have jumped more than $2.5 billion to $22 billion in the past six months.
The average New Zealand household could end up paying an extra $2400 a year in ACC levies by 2014 under forecasts released by Dr Smith on Wednesday. He says such increases are not acceptable to the Government.
Significant change is required at ACC and New Zealanders will either have to pay more, or entitlements will have to be contained, he says.
The Government is reviewing a number of entitlements and changes introduced by the Labour-led government, including free physiotherapy and cover for mental injury suffered from workplace trauma.
He has also signalled there will be changes on the board of ACC to bring in more financial expertise.
The Labour Party describes the Government's figures as shonky and says it is trying to pave the way for the privatisation of ACC.
Leader Phil Goff says while medical costs are rising, the current ACC system is sustainable.
"The figures are being blown out for their political purposes as the basis for promoting privatisation.
"The fact is, the current ACC system is the most cost-effective system in the Western world for ensuring people with accidents are properly cared for."
