ACC LEVIES AND RELATED POLICY 2010/11
Recommendations
I recommend that Cabinet:
1. Note that the ACC levy setting process is set out in the Injury Prevention, Rehabilitation, and Compensation Act 2001 (the IPRC Act). ACC makes recommendations on levy rates to me following consultation with levy payers. The Department of Labour also provides me with advice on the proposed levy rates. Each year the Minister for ACC makes decisions on ACC levies so that these can be set in regulations.
2. Note that new levy rates are required to be set by 31 March 2010 for the composite work levy and composite Earners' Account levy, otherwise the 2009/10 levy rates will remain in place from 1 April 2010, and ACC would become significantly underfunded. If new levy rates are to be charged on 1 April 2010, the Inland Revenue Department processes would require the approved composite Earners' Account levy rates by 17 December 2009.
3. Note that the composite Motor Vehicle Account levy year runs from 1 July 2010 to 30 June 2011. The New Zealand Transport Agency and New Zealand Customs Services require any changes in classifications (for example, for motorcycles) prior to the new year.
4. Note ACC's unfunded liabilities have grown significantly from $4.2 billion to $12.7 billion over the past four years as a consequence of levies being insufficient to meet the growth in liabilities. The Motor Vehicle and Earners' Accounts have the lowest levels of solvency of the levied Accounts.
5. Note that ACC and the Department of Labour made the following proposals for the composite work levy, composite Earners' Account levy and composite Motor Vehicle Account levy:
Composite average work levy[14] Average levy per $100 of liable earnings [15] |
Composite Earners' Account levy[16] Levy per $100 of liable earnings |
Composite Average Motor Vehicle Account levy[17] average levy per vehicle |
|
|---|---|---|---|
| Current Rate (2009/10) | $1.31 | $1.70 | $287.00 |
| ACC public consultation rate for 2010/11 | $1.89 | $2.80 | $417.28 |
| Reduced rate* from information in consultation documents | $1.47 | $2.45 | $317.00 |
| ACC recommended rate | $1.89 | $2.80 | $394.95 |
| ACC/DoL proposal | $1.57 | $2.70 | $352.19 |
| Minimum to avoid solvency deterioration | $1.47 | $2.40 | $291.96 |
*This rate is from information included in ACC's consultation documents that was based on possible changes to management practices, regulations and legislation.
6. Agree to the following rates for ACC levies in 2010/11:
Composite average work levy[18] Average levy per $100 of liable earnings [19] |
Composite Earners' Account levy[20] Levy per $100 of liable earnings |
|---|---|
| $1.47 | $2.50 |
7. Note that increasing the composite Earners' Account levy over a four or even three year period would mean a deterioration in the Earners' Account solvency through to 2011/12 and would mean pushing costs out to future years' levy payers.
8. Agree that the maximum liable earnings for:
- self-employed people under the Work, Residual Claims and Earners' Accounts increase from $102,922 to $106,473 for 2010/11;
- employees, private domestic workers, and earners under the Work and Earners' Accounts increase from $106,473 to $110,018 for 2010/11; and
- employees and private domestic workers under the Residual Claims Account increase from $102,922 to $106,473 for 2010/11.
9. Agree that the minimum liable earnings for self-employed increase from $23,400 to $26,000 for 2010/11.
10. Agree to change the following two classification units in the Work Account to provide a suitable classification for existing levy payers that do not fit well within the current definitions as consulted on:
- Replace the words "Electricity Line System Operation (excluding maintenance and operation)" with the words "Energy and Services Utilities Operation (excluding construction, maintenance and plant operation)" for classification unit 36103
- Replace the words "Taxi Organisations (excluding those that provide taxi services)" with the words "Taxi and Other Vehicle Scheduling Operations" for classification unit 61231
11. Agree to increase the maximum liable earnings entry criteria for the Workplace Safety Discount Programme from $450,000 to $495,000 in line with the quarterly Employment Survey to reflect average earnings.
12. EITHER
- Agree to the recommended average composite Motor Vehicle Account levy rate of $334.52 per vehicle for 2010/11 with no increase to the motor spirit levy of 9.90 cents per litre.
or
- Agree to ACC and the Department's proposed average composite Motor Vehicle Account levy rate of $352.19 per vehicle for 2010/11 and increase the motor spirit levy from 9.90 cents per litre to 10.90 cents per litre.
13. Note that the Transport Accident Commission in Victoria, Australia introduced a motorcycle safety levy of $49.50 for every registered motorcycle 125cc and over to create separate funding to improve motorcycle safety. Trends in motorcycle fatalities have been encouraging with an average 20% reduction in Victoria compared to a 31% increase in fatalities for the rest of Australia since the motorcycle safety levy was introduced in 2002.
14. Agree to reclassify mopeds to their own subclassification and that mopeds have a licence fee set at a relativity of 50% of the licence fee of cars plus an additional $30 to be used for moped and motorcycle safety programmes.
15. Agree to divide the motorcycle classification by engine size and that the relativities for the licence fee of these two classes be set at 150% of cars for up to 600cc motorcycles and 200% for 601cc and over, plus an additional $30 to be used for moped and motorcycle safety programmes.
16. Note that the relativity of goods service vehicles has been increased in line with their costs to the ACC scheme.
17. Agree to increase the annual licence fee levies for 2010/11 for each vehicle classification as follows:
|
Classification Number |
Description of motor vehicle |
Recommended levy for 2010/11 |
|---|---|---|
| 1 |
Exempt vehicles: Ambulances Fire brigade vehicles Exempted vehicles Trailers Holders of trade licences for trailers/caravans |
$Nil (a) |
| 2 |
Petrol driven: Motor cars Self-propelled caravans Mobile cranes Passenger service vehicles Hearses All petrol driven motor vehicles not classified elsewhere Holders of trade licences for vehicles not classified elsewhere |
$198.46 (a) |
| 3 |
Petrol driven: Tractors Veteran motor vehicles Vintage motor vehicles Non-registered vehicles |
$69.46 (a) |
| 4a |
Petrol driven: Mopeds Holders of trade licences for: Mopeds and motorcycles up to and including 60cc |
$129.24 (a) |
| 4b |
Petrol driven: Motorcycles up to 600cc |
$327.70 (a) |
| 4c |
Petrol driven: Motorcycles 601cc and over Holders of trade licences for: Motorcycles 61cc and over |
$426.92 (a) |
| 5 |
Petrol driven: Goods-service vehicle |
$238.15 (a) |
| 6 |
Non-petrol driven: Motor cars Self-propelled caravans Mobile cranes Passenger service vehicles Hearses All non-petrol driven motor vehicles not elsewhere classified |
$311.38 |
| 7 |
Non-petrol driven: Tractors Veteran motor vehicles Vintage motor vehicles Non-registered vehicles |
$108.98 |
| 8a |
Non-petrol driven: Mopeds |
$163.12 |
| 8b |
Non-petrol driven: Motorcycles up to 600cc |
$361.58 |
| 8c |
Non-petrol driven: Motorcycles 601cc and over |
$460.08 |
| 9 |
Non-petrol driven: Goods-service vehicle |
$467.08 |
(a) plus motor spirit levy of 9.90 cents per litre
AGREE / DO NOT AGREE
18. Agree to reclassify hearses from exempt vehicles to passenger service vehicles, meaning they will be charged the full passenger vehicle rate from 2010/11.
19. Agree to allow motor spirits levy to be collected on all forms of motor spirit as currently defined under the Customs and Excise Act 1996.
20. Note that the above decisions will be subject to any necessary modifications resulting from the Injury Prevention, Rehabilitation, and Compensation Amendment Bill if the Bill is enacted before the beginning of the 2010-11 levy year
21. Invite the Minister for ACC to issue drafting instructions to Parliamentary Counsel to draft the proposed regulations required to set levies consistent with decisions in the recommendations above.
Hon Dr Nick Smith
Minister for ACC
...... / ...... / ......
[13] Levy rates quoted are GST exclusive for the Work and Motor Vehicle Accounts unless indicated otherwise, and GST inclusive for the Earners’ Account. The rate shown for the Earners’ Account composite levy is the rate that earners will see coming out of their pay.
[14] Including (1) the levy or portion of a levy payable to fund the Work Account to achieve the purpose of fully funding all entitlements provided under the Act by the Corporation to employees, private domestic workers, and self-employed persons for work-related personal injuries, other than as described in (2); and (2) the levy or portion of a levy payable for the purpose of fully funding the total value of the outstanding claims liability for the Residual Claims Account as at 30 June 1999 as recognised by the Corporation.
[15] Including Workplace Safety Management Practices (WSMP) loading.
[16] Including (1) the levy or portion of a levy payable to achieve the purpose of fully funding the outstanding claims liability of the Composite Earner’s Account as at 30 June 1999 as recognised by the Corporation and; (2) the levy or portion of a levy payable under section 219 to fund the Earners’ Account to achieve the purpose of fully funding the cost of all other claims under the Earners’ Account.
[17] Including (1) levy or portion of a levy payable to achieve the purpose of fully funding the outstanding claims liability of the Motor Vehicle Account as at 30 June 1999 as recognised by the Corporation; and (2) the levy or portion of a levy payable to fund the Motor Vehicle Account to achieve the purpose of funding the costs of all other claims under the Account.
[18] Including (1) the levy or portion of a levy payable to fund the Work Account to achieve the purpose of fully funding all entitlements provided under the Act by the Corporation to employees, private domestic workers, and self-employed persons for work-related personal injuries, other than as described in (2); and (2) the levy or portion of a levy payable for the purpose of fully funding the total value of the outstanding claims liability for the Residual Claims Account as at 30 June 1999 as recognised by the Corporation.
[19] Including Workplace Safety Management Practices (WSMP) loading.
[20] Including (1) the levy or portion of a levy payable to achieve the purpose of fully funding the outstanding claims liability of the Composite Earner’s Account as at 30 June 1999 as recognised by the Corporation and; (2) the levy or portion of a levy payable under section 219 to fund the Earners’ Account to achieve the purpose of fully funding the cost of all other claims under the Earners’ Account.