The Government is maintaining current levy rates for the next 2 years, as part of a set of changes to help ease the financial pressures of COVID-19 providing certainty for businesses and New Zealanders, ACC Minister Iain Lees-Galloway says.
"New Zealanders and businesses are facing unprecedented financial pressures as a result of COVID-19. We're taking practical steps to support levy payers throughout these difficult times, while also safeguarding the ACC scheme," Iain Lees-Galloway says.
"We will be maintaining the current levy rates for the next 2 years. The economic outlook is uncertain, so holding levy rates is a prudent decision. It provides some certainty to businesses and other levy payers and gives ACC more time to reliably assess the impact of COVID-19 on its finances.
"The previous Government increased levies during the global financial crisis only to find they were too high in following years. We are taking a cautious approach and ensuring we do not add to pressure on businesses and New Zealanders where it's not necessary.
"ACC is also helping businesses by delaying invoices normally sent in early July. These will be issued in October to give firms more time and flexibility in making their levy payments. Other invoices issued this year will also be on hold for three months.
Iain Lees-Galloway says the Government is changing the funding targets for the Levied Accounts to ensure levies reflect the true costs of accidents and minimise long-term impacts on levy payers.
"ACC's previous funding target of 105% solvency for the Levied Accounts was more suited to a private insurance company. We are lowering this target to 100% solvency, which is appropriate given ACC's unique position as a mandatory, sole provider and Government-supported social insurance scheme.
"As previously announced, Budget 2020 improved ACC's long-term sustainability with an extra $285 million contribution in the taxpayer-funded Non-Earners' Account, which covers injury costs for those who are not earning and paying levies, including children, students and retirees," Iain Lees-Galloway says.
Cost pressures in the Non-Earners Account had not been addressed under previous Governments since 2014. This year's Non-Earner's Account contribution has increased from $1.47 billion to $1.76 billion, and this amount will increase by a maximum of 7.5 percent a year to ensure the account improves over time. Future gaps will be addressed by moving to a forecast adjustment.
Levies will stay the same until 31 March 2022 for work and earners' levies, and 30 June 2022 for motor vehicle levies. There is no indication what will happen after that at this stage.
