Room for levy reductions after ACC improvements

There is room to reduce levies for wage earners and businesses due to ongoing improvements in ACC’s finances, ACC Minister Nick Smith told the Transport and Industrial Relations Committee at Parliament today.

“ACC is expecting a surplus for the 2010/11 year of $2.5 billion – $1.5 billion greater than ACC’s budget projection. This follows a surplus of $2.5 billion in 2009/10, and losses of $4.8 billion in 2008/09 and $2.4 billion in 2007/08,” Dr Smith said.

“This turnaround in ACC’s finances results is from improved rehabilitation, reduced claim numbers and better management of costs for which the Board and staff deserve credit. The stellar investment returns have been offset by increased liabilities from lower interest rates but are also welcomed.

“I am particularly pleased that ACC’s overall solvency is the best ever at 72%. The Work and Earners’ Accounts are nearing 100% solvency giving us the opportunity to consider levy reductions for both employers and employees later this year. The Motor Vehicle Account’s solvency of 62% is improving but is not yet sufficient to consider lower levies.

“The Government appreciates that households and businesses are under a lot of financial pressure at this time. My hope is to be able to pass on the benefits of ACC’s improved financial performance with levy reductions for both employees and employers.

“The ACC Board will be starting the process for levy setting at its meeting today and its proposed levies will go to Cabinet next month. ACC’s proposed levies will then be released for consultation in July.”