Media release

15 May 2013

Budget gets it wrong on ACC levies

The ACC Futures Coalition has described as “farcical” that the government is relying on likely cuts to ACC levies as one of the main contributions to “building a productive and competitive economy” in its 2013 budget.

“The government artificially raised ACC levies a few years ago after Dr Smith said that if ACC was a commercial insurer it would be insolvent,” said ACC Futures Coalition spokesperson Hazel Armstrong. “That was a beat up then and there was no need for the steep increases imposed at the time. This was shown by the sharp reductions in levies in 2011 and the recommendation from ACC that levies be reduced again in the most recent review of levy levels.”

“It was the government that refused to accept that recommendation and continued to keep levies unnecessarily high in order to assist them achieve their goal of balancing their books by 2014,” said Ms Armstrong. “They manufactured the situation back then and are now claiming that by cutting unnecessarily high levies that they are contributing to economic development. If that is true then their increases back in 2009 probably held economic development back.”

“However, we do want to acknowledge that the cuts will be significant and the extent of them should demonstrate once and for all that ACC is an inherently cost effective model that private insurers cannot compete against without undermining the scheme,” said Ms Armstrong. “ I also understand that in the budget lock-up today Bill English said that the scheme would not be opened up for competition because the insurance industry had enough on its hands at the moment. Even if Christchurch and other events were not creating challenges for insurers they would not be able to compete effectively against the proposed ACC levies. We think that this is an opportunity for a conversation to begin between political parties so that the threat of privatising any of the scheme accounts is lifted forever.”

ENDS

02:00PM Wednesday, 15 May, 2013