By Brian Fallow
WELLINGTON - About half of New Zealand's businesses will be able to spread their last year's ACC premiums over three years - at a price.
ACC stops providing workplace insurance for employers from July 1. At that stage 89 per cent of employers, representing about 70 per cent of
premium income, will owe ACC for cover for the year to March 31 1999, and all businesses will owe three months' worth of premium for the transitional period to June 30. They will also start paying their new insurers for cover in advance.
ACC Minister Murray McCully yesterday announced a spreading regime, designed to mitigate the cash flow impacts of that double whammy, little changed from that foreshadowed in a consultation document in April.
The 89 per cent of employers who have been paying in arrears will not receive their final bill until late this year, about six months later than normal.
If it is less than $250 they are expected to pay at once. The rest have until June 30 next year to pay either all of it, if it is less than $2000, or a third of it if it is more, interest-free.
But those who pay within 30 days will get a discount. How much has yet to be announced, but it is expected to be in the 3 to 5 per cent range. Those above the $2000 threshold will be able to spread payments over a further two years, but incur an annual interest rate of 10 per cent, calculated monthly.
"This interest rate is less than charged by Inland Revenue for taxes owed, but more than commercial banks would charge, so that businesses do not use the Government as a bank," Mr McCully said.
The penalties for non-payment, borrowed from the tax regime, are draconian: an initial 5 per cent, then 2 per cent a month. Both employers and self-employed people would be able to take advantage of the spreading option, Mr McCully said.
Manufacturers Federation chief executive Simon Carlaw described the regime as grudging. "Given that this debt arises from Government reforms, why couldn't it at least have been at commercial interest rates."
