The escalating number of crashes on New Zealand roads and the drive towards pay equity for carers of victims of these accidents are the main reasons for the proposed hike in petrol and car registration prices.
ACC expects around 200 more serious injury cases up to June 2021, a rise of about eight per cent.
Emma Powell, ACC's chief customer officer, says these claims can need lifetime treatment and round-the-clock care: "These costs can be more than $20m for each individual, particularly if the claims relates to someone injured early in their life," she says.
"Experience tells us that during times of economic growth, such as we have had over the last few years, people tend to lead more active lives, exposing themselves to greater risk.
"New Zealand's population is also growing and ageing – and they're driving longer distances," Powell says.
"More serious injuries are occurring than ever before, while the road toll has been significantly higher in recent years."
She says this is borne out by Ministry of Transport figures which show the road toll has climbed steadily in the last five years rising from 253 in 2013 to 378 last year. So far this year (to September 25) 275 road deaths have occurred, just two fewer than at the same time last year.
Costs of care and rehabilitation are also increasing. Powell says the government's commitment to address pay inequity for care and support workers is one of the major drivers behind escalating costs for the treatment of people with serious injuries.
Increasing medical costs and the impact of lower interest rates on ACC investments will also have a significant influence on future costs.
To meet rising costs ACC is calling for a 12 per cent increase in the average motor levy – a move which is proposed to add 1.9 cents per litre to the price of petrol at the pump and push up car registration fees.
Powell says the new pay scale for workers, some of whom care for accident victims often for their lifetime, took effect in July 2017. Under the deal 55,000 workers across New Zealand received pay rises of between 15 and 50 per cent.
Although the levy will increase, the rate is more than $200 less than what road users were paying in 2013 and 2014 when the average motor vehicle levy peaked at $333, she says.
The proposal to push up the levy is one part of a suite of changes the ACC is proposing in its funding over the next two years. In other measures it is calling for a 2.5 per cent increase in the levy on wages to cover accidents from everyday activities, but a 6.9 per cent reduction in the levy on business owners.
Powell says it is important people realise these are only proposals at this stage: "We would like people to have a think about what they will mean to them and tell us what they think. From this we will make final recommendations to the government later in the year."
ACC is asking for public feedback on the proposals between now and October 25. People can go to www.shapeyouracc.co.nz to express their views or the levy consultation booth which will be part of a national roadshow – Ask the Nation Station – to nine cities and towns in coming weeks.
To help fund these claims, the corporation is proposing to lift the average levy it collects from road users from $113.94 to $127.68, or 12 per cent. More than half of this – 55 per cent – comes from petrol and 45 per cent from car registration for petrol powered vehicles.
"Paying part of your motor vehicle levy at the pump is one way we try to make it fairer for everyone on the road," Powell says. "The more you drive, the more you are exposed to the risk of an accident, so the more you pay.
"We're proposing a lift in petrol because vehicle owners have told us in the past to put more emphasis on how much people drive and less on the type of vehicle – that's why we're proposing to keep the proportion of the levy collected on petrol at 55 per cent and increase the cost of petrol by 1.9 cents."
Powell says owners of non-petrol vehicles such as diesel pay the levy entirely through their registration fees while ACC is also looking at options to recognize distance travelled across more vehicles over the next couple of year. Find out more here.
The Ask the Nation Station roadshow began in Wellington and is visiting a number of other centres including Palmerston North, Hamilton, Auckland, Rotorua, Timaru, Dunedin and Christchurch. For dates and venues go to our website.
#This is the third in a series of articles on the ACC proposals. The first gave an overview, the second dealt with the impact on business owners, while the fourth is to look at the implications for motorcylists.