Politics
Tuesday December 11, 2018
Thursday, 24 September 2015 08:05

New ACC legislation 'means fairer, more stable levies'

ACC Minister Nikki Kaye says the passing today of the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill will deliver greater transparency around levy-setting, and help ensure that levies are more stable over time and fairer, with businesses paying the true costs of injuries in their industries.

"The Bill amends the Accident Compensation Act 2001 to introduce a more principled, transparent framework for funding decisions, and more stringent reporting requirements on ACC to ensure the public is better informed," says Ms Kaye.

"The Government and ACC have worked hard to improve the scheme’s finances and outcomes for customers, after inheriting ACC’s accounts in a poor state, marked by a $4.8 billion deficit in 2008/09.

"Since then, the scheme’s assets have grown from around $10 billion to around $31 billion.

"This Bill means successive governments will have a range of tools to enable them to make appropriate funding decisions, so that economic volatility can be smoothed over time while maintaining levy stability and the solvency of ACC’s levied accounts.

"The Bill makes two key changes to the ACC scheme. Firstly, the Government rather than ACC will be required to set the funding policy for the levied accounts, and this funding policy must be consistent with newly established principles of financial responsibility.

"Secondly, the Bill allows the removal of residual levies sooner than currently required in legislation, to ensure pre-1999 claims costs aren’t over-collected.

"Removing residual levies will also ensure that businesses pay work levies based on recent injury costs, which means those who generate higher costs pay a fairer share of those costs.

"With the Government setting the funding policy, a more robust governance structure is created, under which the Government sets the policy and ACC, as the responsible Crown agent, implements it.

"This will help ensure a closer match between levies consulted on and recommended by ACC, and the Government’s final decision on levies. Levy payers will also be better informed and have more certainty and confidence about future levy rates and their implications.

"This is a significant time in the history of ACC. All three levied accounts are now fully funded, and the next four months will see major achievements, starting with this Bill passing into law, allowing the new transparent levy setting framework to be established and residual levies to be removed.

"The ACC Board will also complete levy consultation, which is likely to lead to levy reductions worth hundreds of millions of dollars to New Zealanders in 2016/17. If these reductions occur, the Government will be on track to deliver $2 billion of ACC levy reductions.

"On top of this, the Government will now consult on and agree a funding policy, with a target band of 100 and 110 per cent of liabilities and a ten-year funding horizon. This is intended to strike a balance between levy stability and ensuring that the ACC accounts hold sufficient funds across generations.

"In my view, this package of ACC levy reform will help ensure greater public confidence in ACC, and assure New Zealanders with injuries that ACC is well placed to support them, now and in the future."

Voxy

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