KEY POINTS:
ACC levies will be raised by the minimum amount possible under the law, Prime Minister John Key says.
Mr Key said National had inherited a $2.3 billion hole across ACC's six accounts and had to take action.
The biggest blowout - $1.33 billion over three years - is
in the earners account, which is paid for through a 1.4c levy on every dollar earned.
Labour Department officials have advised the Government to lift that levy to 2c next year, rising to 2.2c over the next three years.
That would see someone on the average wage pay $5.40 a week extra next year - almost a third of their $16-$18 April 1 tax cut - rising to $7.23 in 2011.
The exact amount of the levy hikes will be revealed later today.
But Mr Key said they would be below that being recommended by the Labour Department, which oversees ACC.
"The increase in levies has been as modest as is legally possible for the new Government," he told reporters.
He said he had asked ACC Minister Nick Smith to look at how ACC could be run more efficiently in the future.
As well as larger levies National has said it intends to meet the funding shortfalls through additional debt and law changes.
ACC is facing pressure from increased medical costs, extended provisions for things such as medical misadventure, as well as a fall from revenue from its investments which have been hit by the international economic meltdown.
On top of this, Labour's ACC minister Maryan Street said during the election campaign legislation would be required to smooth out large increases in levies.
Prior to 1999 only enough levies were collected each year to cover the cost of new claims expected to be made the following year.
This created a shortfall, as it failed to account the cost of ongoing claims.
Labour had supported full funding through levies by 2014, but it had since decided it would put too high a burden on the public.
It instead proposed extending the date to 2019, smoothing the increases.
In addition to this Cabinet has already approved meeting a $297 million shortfall in the non-earners account for this year.
The non-earners account provides accident insurance for people who do not work, such as beneficiaries and children.
Ministers had also approved an ongoing provision for $300 million a year to pay for cost increases for non-earners, but this was less than the $375 million asked for by ACC.
- NZPA
