ACC levy cuts coming after $3.545b surplus revealed

Nick Smith. File photo / Mark Mitchell

ACC levies for workers and bosses will be cut from next April, saving the average wage earner about $170 a year, says ACC Minister Nick Smith.

Dr Smith also said the Government may widen its plan to allow private insurers to compete with the ACC by opening up the market for motor vehicle and non work-related injury cover.

Accident Compensation Corporation levy cuts for workers and bosses were proposed in July this year as Dr Smith said the state-owned workplace insurer's finances were being better managed and rehabilitation rates had improved.

Yesterday he said that a turnaround was on track. ACC figures showed a surplus of $3.545 billion for the 2010-2011 year.

The proposed levy cuts had been approved and will reduce the earners' account levy paid by wage and salary earners from $2.04 per $100 of taxable income to $1.70, saving a worker on $50,000 about $170 annually.

The average work account levy paid by employers and the self-employed will fall from $1.47 per $100 of income to $1.15.

That would save a typical small business employing seven people on $50,000 each about $1120 a year.

A self-employed person earning $80,000 a year who pays both levies stands to save about $528 a year.

The Government has already said it will allow private insurers to offer cover to employers in competition with the ACC's Work Account, and Dr Smith said yesterday the earners and motor vehicle accounts may be next.

"Over the last three years we had a policy commitment to explore competition in the work account. We've done that hard work, we've made a decision, we're going to proceed.

"If we're privileged to be in government over the next three years we would get that up and running in the work account and would do further work on what choice could be provided in the earners' and motor vehicle accounts."

Any policy to introduce competition in those areas would be campaigned on in the 2014 election, Dr Smith said.

Labour ACC spokesman Chris Hipkins said householders and businesses would welcome the relief lower ACC levies would bring, but "they never should have been paying such high levies in the first place".

"ACC was never in crisis. Nick Smith and the National Party manufactured a crisis in order to justify hiking levies and in order to prepare ACC for privatisation," he said.

Mr Hipkins said National's plan for competition was doomed to fail.