ACC reforms

Simon Collins reports in the Herald:

The proposal follows a law change this year giving ACC the power to vary levies on employers in line with their accident records.

This system, known as “experience rating”, will take effect for employers next April.

The ACC’s consultation document suggests extending the same principle to levies on motorists and income-tax payers or “earners”.

An employee on the average income of about $50,000 a year will pay more than $1300 in ACC levies this financial year.

That is 2.6% or gross income or around 3.5% of after tax income, which is a huge cost.

The ACC document suggests that motorists’ levies, paid through vehicle licence fees to compensate road accident victims, could be increased for people who get many traffic tickets and for younger drivers, and reduced for people such as pensioners with good safety records.

Yes, absolutely. That retains the insurance component of the scheme, but provides incentives for safer drivers. Why should a 65 year old with a 45 year perfect driving record pay the same as a new driver who has already been involved in an accident and has several speeding tickets.

For earners, who now pay a 2 per cent income tax surcharge to compensate working people injured outside workplaces and roads, the corporation suggests a no-claims discount for people with no injury claims in the past five years, offset by higher levies for those with more injuries, such as many sports players.

Please. I don’t think I have had an ACC claim for well over 20 years.  Of course my employee levy is modest compared to the employer levy.

It also suggests an option to pay a lower levy in exchange for reduced benefits, and poses three questions:

“Would you prefer to pay lower ACC levies in return for a 10 per cent drop in compensation for lost income after a less serious injury, such as a sprained ankle?”

Yes.

“Would you prefer to pay lower ACC levies in return for a longer wait period. For example, extending the period without lost income compensation from a week to a longer period, such as three weeks?”

Yes.

“Would you prefer us to lower the earners’ levy in return for earners paying more of their accident-related treatment costs?”

Depends on the details of the trade off, but certainly keen to at least have the option so people can choose for themselves what best suits them.

Dr Smith said there would be problems in adopting ACC’s proposals for motorists and sports players.

Young drivers could register their cars in their grandparents’ names, and he did not want to harm the “broader social benefits” of sport.

I’m not sure the level of avoidance would be great. Agree you do not want to put people off sport, but I think the cost of ACC is not a major factor in decisions on sport.