ACC proposes hefty levy hikes, as it takes longer and costs more for injured Kiwis to recover

Minister for ACC Matt Doocey says he will ensure any levy increases are "absolutely justified". Photo / File

Home insurance premiums aren’t the only ones continuing to soar while inflation abates.

The country’s state injury insurer, the Accident Compensation Corporation (ACC), is proposing to hike its levies by two or three times that of the inflation rate every year over the next three years.

The agency says it’s taking longer and costing more for injured New Zealanders to recover, so it’s asking for public feedback on a raft of proposals aimed at topping up its coffers.

ACC is proposing to hike the levies it collects from vehicle owners to cover the costs of injuries that involve moving vehicles on public roads by 7.8% in 2025/26 and 7.4% in each of the following two years.

It recognises these increases won’t be spread evenly. For example, it wants motorcyclists to pay proportionately more, because they’re currently heavily subsided by other motorists less likely to injure themselves in an accident.

ACC is also suggesting upping the levies it collects from wage and salary earners to cover injuries suffered by workers outside of the workplace by between 4.3% and 4.8% a year over the next three years.

And, it’s proposing to hike the levies it collects from employers and self-employed people to cover injuries that happen in the workplace by between 4.3% and 4.8% a year over the next three years.

ACC receives almost two million new injury claims a year, and spends about $7 billion annually in medical treatment, rehabilitation support and compensation for loss of income.

“The levies we currently collect are lower than they need to be to cover the forecast cost of claims we expect each year. Any recommendations for levy increases are capped to smooth out the increase,” ACC chief executive Megan Main said.

“Despite our best efforts and in line with international trends, our client rehabilitation performance in the short-term has been declining.”

Members of the public have until October 9 to provide feedback on ACC’s proposals. From there, it will make recommendations to the Government, which will ultimately decide on how levies are changed.

Minister for ACC Matt Doocey said: “The Government’s expectation has been made clear to ACC that it must deliver greater value for the funds it receives.

“I am monitoring this very closely and will be ensuring ACC is improving its financial performance. It is my expectation ACC will look at existing costs within the scheme to ensure that any levy increase is absolutely justified before final decisions are made.

“I have also set clear expectations to ACC around improving rehabilitation performance by the end of the parliamentary term, and it is my expectation ACC will better use injury prevention as a lever to improve its performance.”

The consultation on levy rates is a requirement by law. ACC is also proposing to make other changes to the way the insurance scheme operates.

Jenée Tibshraeny is the Herald’s Wellington Business Editor, based in the parliamentary press gallery. She specialises in government and Reserve Bank policymaking, economics and banking.