Investment gains help the ACC end its year rolling in cash

By PAULA OLIVER


ACC is set to report a bumper surplus to the Government - but its own good fortune could be about to buy it a fight with employer groups.

Chief executive Garry Wilson told the Business Herald yesterday that he expected ACC's full-year surplus to exceed $850 million.

Details of how it got that high were sketchy because ACC has yet to present its annual report to Parliament. It will do so this month.

The surplus puts ACC in the same ballpark as Telecom, profit-wise - although ACC does not consider itself to make a "profit".

Wilson said the surplus came from a rise in revenue and partly from excellent investment returns. ACC's fund managers returned almost $500 million over the year, double what was budgeted for.

The other factor was that the economy was buoyant which meant people earned more and paid higher levies.

Wilson said he had heard that some business groups would argue that the money paid by employers should go back to employers rather than be held by ACC.

He favoured a different approach, saying the ACC should keep the money to absorb cost increases in coming years.

The options will be open to consultation as part of ACC's annual review of levies.

Yesterday, ACC released its proposed levies for the 2005/06 year. After consultation they will be set by the Government.

Generally, it appears there will be little change, with the average composite levy for employers, earners and motorists set to remain the same.

The self-employed are likely to see an increase on average of 3 per cent, due to a continued high accident rate and the fact that fewer people are registering under that category. Many are instead shifting to a company structure for tax reasons.

Some employers will see change - those in sectors with a poor accident record are likely to see a rise, while those in lower risk sectors will see a fall.

At one end of the spectrum, those in the high-risk forestry sector who are not part of special ACC discount programmes could pay as much as $6.32 per $100 of payroll, an increase of 4 per cent on this year.

In comparison, the less accident-prone legal and accounting industry could pay just 7c per $100.

In all employer cases, there is an additional levy to fund the cost of pre-1999 injuries, which happened when ACC was under a pay-as-you-go regime rather than fully-funded.

That means it is now taking the levy, at a rate this year of 30c per $100 of payroll, to build up reserves to cover the liability.

That income is not yet covering expenditure related to those injuries. ACC projects that trend to continue until 2014.

ACC Minister Ruth Dyson will determine the final rates near the end of the year.