Tuesday, October 13, 2009

Is New Zealand's iconic ACC scheme in jeopardy?

Is the world's first and only comprehensive no-fault state owned and operated fully accident compensation scheme under threat from the conservative John Key-led National Government in New Zealand. This scheme is the envy of the world. In 1974 the government of the day signed a covenant with the people of New Zealand that in return for the full provisions of this scheme, they would give up their right to sue, their employer or the person responsible for their accident and injuries.

The following are some comments made about what increase motorists may pay under the changes.

ACC choice - pay more or get less, says John Key

Cutbacks to ACC will be spelled out tomorrow
Govt to announce ACC changes.

Car owners are to pay more for vehicle licensing and petrol under ACC increases announced by the Government today.

ACC Minister Nick Smith revealed a $32 increase in the motor vehicle levy. This will take the fee for a petrol car up from $136.44 to $168.46.

The ACC petrol levy will rise from 9.34 cents per litre to 9.90 cents per litre.

The changes announced are much less than those proposed by ACC.

Dr Smith said he would cut entitlements rather than introduce the full increases recommended.

He said the proposed increases were too steep and the Government was introducing legislation to halve them.

"These changes are necessary because ACC's claim costs have risen by 57 per cent and its unfunded liabilities have grown from $4 billion to $13b in just four years," Dr Smith said.

The steepest levy hikes are for drivers of large motorcycles.

All motorcycles currently pay $252.69 in levies. Under the changes, while bikes under 125CC face only an increase of a few dollars, larger motorcycles will pay far heftier amounts.

601 plus cc: increases from $252.69 to $745.77.

Mopeds - which currently pay just $59 in ACC charges - will instead be classed with small motorcycles of 125 CC or less and pay $257.58 in license fees and petrol levies.

Dr Smith said motorcyclists were 16 times more likely than car drivers to be involved in accidents yet car owners were currently subsidising their ACC bills by $70 each.

The Government is also considering 'no claims' bonuses, experience rates, and lower levies for those with safer vehicles.

"Our objective is to secure the long-term future of ACC as an efficient and fair 24/7, no-fault insurance scheme for all New Zealanders.

"The changes to the law will not reduce the income compensation payments to any existing claimants but future claimants will receive lesser amounts in some circumstances."

Other key changes included:

* reversing 2008 income compensation extensions covering casuals, part-timers, non-earners and abatements for holiday pay;

* reversing vocational rehabilitation changes;

* introducing a 6 per cent hearing loss threshold;

* reversing entitlements for wilfully self-inflicted injury and suicide;

* further restricting entitlements for criminals;

* allowing incentives for employers and vehicles;

* requiring more open reporting of ACC liabilities;

* And the previously announced decision to extend the date ACC had to be fully funded by from 2014 to 2019.

ACC recommended increases in the work account levy from $1.31 to $1.89 per $100; in the earners account from $1.51 to $2.48 per $100. Also it said the motor vehicle account levy should go up to $417.28 from $287.

What will come next? Will they fundamentally change ACC? The NZ public traded off their right to sue in 1974 for a full 24 hours no-fault accident cover. Will this be under threat in coming months? We will have to wait and see.

Acknowledgements: NZPA, NZ Herald Staff

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