17 Dec 2008

ACC rise underlines need for stocktake - Smith

8:31 am on 17 December 2008

ACC Minister Nick Smith says projected increases in ACC costs give renewed urgency to the Government's stocktake of all the corporation's accounts.

The Government says the increase in the levy for the earner's account is between $1.40 and $1.70 per $100 earned.

That is expected to mean a rise of about $3 a week for people on the average wage of $47,000.

Dr Smith said there was also a recommendation to increase motor vehicle registration by $50 - but a decision on that will not be made until March.

He said the rise reflects projected cost and claim increases and inflation rising faster than earnings.

Dr Smith said a fall in ACC's investment earnings has not been taken into account when calculating the levies, but the corporation has been losing $100 million a month in the current economic downturn.

He said says the increase is needed to cover a funding shortfall of $4 billion, and the levy rise falls far short of Labour Department recommendations.

Council of Trade Unions chief economist, Peter Conway said Dr Smith's statement ignores the fact that increase is exactly the same as that recommended by ACC on 8 October.

"To say he's rejected the recommendation of Labour Department officials, but fail to reveal that this was what the ACC recommended, is a poor show," Mr Conway said.

Prime Minister John Key said the charge to the earner's account will be increased by the smallest amount allowed under the law.

Mr Key said the increase was inevitable because the Government was left with a $2.3 billion hole across the six accounts.

Labour leader Phil Goff said it was inevitable some costs for the ACC scheme will rise as medical costs rise.

Labour's ACC spokesperson Maryann Street said Dr Smith could have reduced some levies and left others at present levels.

But she said National is instead seeking to demonise ACC in preparation for privatising the state owned enterprise.