11 Dec 2009

Government denies scaremongering over ACC levies

9:21 am on 11 December 2009

The Government is denying it has scaremongered over increases to Accident Compensation Corporation levies, saying due process has been followed.

The final levies for 2010 were released on Thursday, with a worker on the average wage of $49,500 facing a rise of $2.86 a week, or $150 a year.

Car registration fees will rise by $30 a year, instead of $104. The Government has confirmed it will not proceed with significant increases proposed for motorbike levies.

The cost of registering a motorcycle 600cc and over will rise from $252.69 to $426.92 - well below the ACC's recommended level of nearly $750.

Bikes of up to 600cc will cost $327 instead of more than $511. Mopeds will cost just under $130 a year to license instead of nearly $260.

The Labour and Green parties say the Government has talked up excessive increases to make the actual hikes appear less drastic.

Labour says the backdown in levy increases shows they were overblown from the start. ACC spokesperson David Parker says the Government has scaremongered over the increases - but motorcyclists also lobbied well for changes.

Green Party ACC spokesperson Kevin Hague says levies would not need to rise if the Government abandoned the aim of fully funding the lifetime cost of claims.

The aim of fully funding ACC was only introduced to make it easier to open it up to competition from the private sector, he says.

However, ACC Minister Nick Smith says the increases are necessary because ACC's claim costs have increased by 57% in the past four years.

Dr Smith denies the Government has scaremongered over the levy increases and says due process has been followed. He says the corporation's board was merely conducting public consultation, as required by law.

"The board has a legal requirement to go out an consult on its levies and on its proposals; I have not interfered in that process.

"They are quite entitled to go out, given the difficult financial position ACC is (in) with those sorts of proposals, albeit the Government makes the final call."

Workers the real losers - CTU

Council of Trade Unions president Helen Kelly says workers are the real losers under the ACC levy increases and told Morning Report they will be tough for people to absorb.

"They're going to be hard on pay packets, along with the increases in motor vehicles. All of those things will dramatically affect working people and how much money they will take home each week.

"And at the same time, their entitlements ... the sort of services they receive from ACC are going to be cut, so that when they have to go and get treatment more and more cost will be shifted to them."

The union believes the increases could be smaller if the Government funded the Accident Compensation Corporation on the same basis as health and education.

CTU economist Bill Rosenberg says the requirement for reserves to fund all current and future costs of claims is excessive.

He says that is not how it is done with health and education expenditure or superannuation, where costs are paid out of any given year's taxes.

Reserves covering about two years' worth of claims would give ACC a big enough financial buffer, Mr Rosenberg believes.

Employers predict difficult time

The Employers and Manufacturers Association says increases to ACC levies will put businesses in a difficult position. The employer premium paid to ACC is to rise by about 12%.

The association's manager for advisory services, David Lowe, told Morning Report it will not be easy for employers to absorb the increase.

"It's gonna be tough ... things have been tough enough for the last year or so, without any cost increase like this.

"Any sort of price increase - and certainly a 12 percent increase - is going to be difficult. But what are the alternatives? That's the rock and the hard place that we find ourselves in."

Motorcyclists still concerned

Motorcyclists say though they may have escaped big ACC levies for now, they are still concerned about future increases.

The President of the Auckland branch of the Bikers Rights Organisation, Les Mason, says the increases are not as bad as they could have been.

But he says there will still be an annual review of the levies and is worried that motorcyclists will remain in the sights of ACC.