ACC bill blowout hits 100,000 in pocket

By VERNON SMALL deputy political editor

ACC laws are under attack on two fronts after revelations that 100,000 self-employed people have been overcharged and up to $100 million in business premiums may be challenged in court.

Finance Minister Michael Cullen yesterday confirmed that about 30 per cent of the 300,000 New Zealanders who are listed as self-employed had been overcharged.

The overcharging in most cases is likely to range between $200 and $1500. Some self-employed people whose income dropped dramatically from one year to the next have paid more in premiums than their total income for the year.

Others have found they do not receive the cover they paid for, and some people who were overcharged small amounts are unlikely to get any refund.

But relief may be on the way, through a refund or a credit, for those worst-affected.

Dr Cullen has called for reports from the Labour Department and ACC to resolve the unfair treatment revealed by the Herald last month.

"We are looking at ways where perhaps if people have suffered an excess payment over a certain amount that we can see whether there is some way in which that can be refunded," he told the Herald yesterday.

The problem arose because self-employed people were charged premiums for 1999-2000 based on their previous year's earnings.

ACC has refused to negotiate, saying that it applied the law correctly.

Dr Cullen has asked officials to calculate the cost of refunding or crediting overpayments of more than $100, $150 or $200.

He said it was impossible to refund all those who had been overcharged.

ACC continues to pursue the premiums, threatening clients with court action or a bad credit report.

Ironically, under the unfair regime up to 200,000 self-employed people may have paid too little in premiums. Dr Cullen did not intend to recoup money from those people.

Officials are also working on plans to stop the problem recurring, either by aligning ACC payments with provisional tax, or through an end-of-year "wash-up" once earnings are filed with Inland Revenue.

Any changes would probably be included in the ACC Bill now before Parliament.

But while the Government is moving to fix the anomaly for the self-employed, it is less enthusiastic about intervening to resolve a dispute over double-dip premiums charged to some businesses.

ACC estimates the double charging has put up to $100 million of premiums in dispute, although Federated Farmers puts the total as high as $200 million.

Dr Cullen said the previous National Government's ACC changes caused the problem, which occurred during the switch from paying premiums in arrears to advance.

Companies that altered their nature, through a change of business or structure, between March 1980 and June 1999 were given three months to register the change. If they did not they were effectively billed twice for the same year.

This scheme has already been tested in court with mixed success.

Dr Cullen said those who felt they were being unfairly treated "are in a position to take action."