KEY POINTS:
Higher ACC levies are to be revealed today, says Prime Minister John Key.
National said on taking office that it had been presented with large holes in the various ACC accounts which would have to be met with taxpayer funding, law changes and higher levies.
ACC Minister Nick
Smith has said there would be future levy shortfalls across the earners and motor vehicle account of $1.33 billion over three years.
The earners account is funded through a levy of 1.4c in the dollar on salaries and wages.
Dr Smith said Labour Department officials had advised him to lift that levy to 2c next year, rising to 2.2c over the next three years.
That would mean someone on the average wage would pay $5.40 a week extra next year - almost a third of their $16 to $18 April 1 tax cut - rising to $7.23 in 2011.
Someone on $80,000 would pay an extra $9.23 next year - almost half of their $20-a-week tax cut - rising to $12.30 in 2011.
Mr Key said yesterday that the Cabinet had made decisions on the "difficult position" National had been left in.
"We have tried to, as much as we possibly can and practically are able to within the law, ease the pain of increases on consumers as they pay that through their levies," Mr Key said.
"There's limited room to move but we've done our best because we perceive that 2009 will be a difficult economic year and I don't think we want to add to that unduly."
Mr Key said the decisions were to be unveiled yesterday but officials said they would be announced today.
ACC is facing pressure from increased medical costs, extended provisions for things such as medical misadventure, as well as a fall in 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.
Before 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 the Cabinet has already approved meeting a $297 million shortfall in the non-earners account for the current year.
The non-earners account provides accident insurance for people who do not work, such as beneficiaries and children.
- NZPA
