Motorists with newer, safer cars may see their annual licence costs slashed by as much as $163 a year, but owners of older, less safe vehicles may see a reduction of just $73, the Accident Compensation Corporation says.

Last week's Budget featured an announcement from the Government that it planned to slash ACC levies by $480 million from next year, with motorists to get a cut of $130 a year on average.

But the ACC released its recommendations for public consultation yesterday proposing deeper overall cuts. It says based on its funding requirements, businesses, workers and motorists should see cuts of up to $650 million next year.

Detailing its proposal for motor vehicle levies, ACC wants to charge them in four bands according to how vehicles are rated on a "Total Secondary Safety Index" developed by Australia's Monash University. The index considers the safety of occupants and that of other people involved in accidents including pedestrians and occupants of other vehicles.


Band 1 in which 20 per cent of private petrol-powered cars will fall will see the smallest cut under ACC recommendations of $73.20 a year. Band 4 which includes the safest vehicles and makes up 35 per cent of the private car fleet will see reductions of $163 a year.

However, these figures may be affected if the Government chooses to take up ACC's recommendation of changing the proportion of ACC's motor vehicle levies raised via a per litre charge on petrol which stands at 9.9c/l. ACC wants that changed to 5.9c/l with an accompanying increase in the vehicle levy.

While that should decrease the cost of petrol, it would also offset much of the proposed vehicle levy cuts resulting in an overall decrease of just $24.82 for band 1 vehicles and $114.82 for band 4 vehicles.

ACC chairwoman Paula Rebstock said the proposal would cut the levies, which are paid when relicensing a vehicle and at the pump, by about 40 per cent overall.

"Motor vehicle levies already reflect the different risk and cost of injury associated with different classes of vehicle. Risk rating would enable a more sophisticated classification of risk, based on real life crash data, within the 'light passenger' classes, which essentially comprise cars," she said.

"While owners of the safest cars may receive the largest levy cut, I'd like to emphasise that all car owners will pay lower levies under our proposed changes."

ACC was not proposing levy reductions for motorcycles. "This is because motorcycle-related injuries continue to generate disproportionately high costs for the scheme, and motorcycle levies are already heavily subsidised by owners of other types of motor vehicle," Ms Rebstock said.

Ms Rebstock said the ACC's proposed cuts elsewhere represented an average 21 per cent cut to work levies, and a 5 per cent cut to the earners' levy in 2015.


The Automobile Association said the ACC's proposal was well overdue. AA regulations principal adviser Mark Stockdale said it would encourage car owners to buy safer vehicles.