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Levy results

We consult levy payers on proposed levy rates and other levy related proposals. We consider all feedback received and present our recommendations to the Minister for ACC. Here are the results from the latest levy consultation.

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    2021 levy consultation results

    ACC consulted on proposed levy rates and other levy related proposals for the 2022/23 – 2024/25 levy period.

    Levy consultation was open from 1 September – 5 October 2021 and we received 1,273 submissions during the period. This included 397 structured submissions providing detailed feedback on individual proposals, and 33 significant, long-form submissions received by email.

    The Funding Policy Statement for ACC, set by the Government, determines how ACC calculates the aggregate, or “average”, levy rates for each of the levied Accounts. This means we cannot recommend a different aggregate rate or funding path to the Minister for ACC. 

    The Ministry of Business, Innovation & Employment (MBIE), as lead advisors to the Government on ACC Scheme design, have the role of presenting alternative funding paths to the Minister. ACC reviews all public submissions and reports on the consultation feedback to the Minister and to MBIE.

    2021 levy proposals

    Levy Rate proposals

    Each year we’re required to collect enough money to support the total costs of new injuries. Injury costs are grouped into three different accounts:

    • Motor Vehicle account for road injuries
    • Work account for workplace injuries
    • Earners’ account for injuries outside of work for those employed.

    Last year, ACC collected $3.24 billion through levies, but the total costs of the year’s injuries are expected to be $4.63 billion. Continuing to collect levies below the cost of injuries is not sustainable over the long-term. 

    We must take a long-term focus in setting levies and aim to collect the right amount over time, to ensure consistency and stability in the short-term.

    Looking at the expected costs of injuries and the amount of surplus funds in each account, our recommendations to levy payers include:

    • lowering levy rates for the Work Account, which has a sufficient surplus of funds to allow for a further levy decrease
    • increasing levy rates for the Motor Vehicle and Earners’ Accounts, as neither have enough surplus of funds to allow levies to decrease further.

    ACC’s strong investment performance allows us to slow the growth of the levy rates but isn’t enough to keep levies at the current level.  We need to start closing this funding gap to avoid future generations having to pick up the bill for today’s injuries.

    Although ACC is recommending small adjustments to levy rates over the next three years, the proposed levy increases would still be 43% below the cost of supporting injuries each year.

    Levy rate change recommendations

    On 29 October 2021, we recommended the following average levy rate changes to the Minister for ACC.

     Levy type Current average levy rate Proposed rate for 2022-2023 Proposed rate for 2023-2024 Proposed rate for 2024-2025
    Earners - levy rate for workers $1.21 per $100 wages

    $1.27

    (5.0% increase)

    $1.33

    (4.7% increase)

    $1.39

    (4.5% increase)

    Work – average levy rate for businesses $0.67 per $100 of payroll

    $0.63

    (6.0% decrease)

    $0.65

    (3.2% increase)

    $0.67

    (3.1% increase)

    Motor vehicle – average levy rate for vehicle owners $113.94 per vehicle

    $120.20

    (5.5% increase)

    $128.83

    (7.2% increase)

    $138.08

    (7.2% increase)

    2021 Shape your ACC levy consultation

    2021 levy rate proposals

    The levy setting process

    Experience Rating proposals

    Experience rating works by adjusting employers’ Work levies according to their recent claims history. The system was introduced to the Accident Compensation Scheme in April 2011 to:

    • improve levy equity across employers 
    • reduce the number and severity of workplace injuries
    • reduce the time it takes for injured people to return to work. 

    ACC consulted on two proposals to:

    • raise the maximum adjustment to levy increases from 75% to 100% for businesses in the Experience Rating Programme 
    • increase the impact of workplace fatalities on levies for businesses in the Experience Rating Programme.

    2021 Shape your ACC Experience Rating proposals

    2021 Experience Rating proposals

    Minister for ACC’s levy-related proposals

    The Minister for ACC consulted on levy-related proposals about:

    • how retail and wholesale trade businesses are classified
    • how professional and community cricket is classified
    • how prime contractors are classified
    • the amount of credit interest payable.

    ACC has passed levy payers’ feedback to MBIE.

    2021 Shape your ACC Minister for ACC's levy-related proposals

    2021 Minister for ACC's levy-related proposals

    2021 feedback from levy payers

    Of the 1,273 submissions received during the consultation period, many disagreed with the proposed levy increases, but supported the recommended decreases.

    We observed that engagement in levy consultation was heavily influenced by perception of scheme value, and the fairness and equity of levy collection. Three key themes emerged from the consultation:

    • improve the fairness and equity in how ACC collects its levies
    • poor timing of proposed increases, with many households struggling financially
    • levies as a mechanism, not only for harm reduction but also to support wider outcomes for New Zealand such as our aspirations for the climate or wellbeing.

    On 29 October 2021, we provided the Minister for ACC with detailed analysis of all feedback received and will use this as the basis of improving the levy system's future strategy and work programme.

    The Government will make the final decision on any levy changes. 

    2021 Analysis of submissions

    ACC recommendations to the Minister for ACC

    The Funding Policy Statement for ACC, set by the Government, determines how we calculate the aggregate, or “average”, levy rates for each of the levied accounts. This means that we cannot recommend a different average rate or funding path to the Minister for ACC.

    Along with the levy rate change recommendations, and based on feedback from the public, we recommend:

    • detailed rates for the Motor Vehicle Account are updated to reflect changing claims profile, as consulted on, with the exception of the class 2a motor vehicle levy for light electric vehicles.
    • detailed rates for the Work Account, including CPX rates and the fees and discounts associated with the Accredited Employers Programme, are updated to reflect changing claims profile, as consulted on

    We consulted on the continuation of a rate that maintained a lower levy than required for electric vehicles. This is a proposed reduction of 57% in 2022/23. The current levy rate was set to support uptake of electric vehicles rather than a reflection of a lower risk of injury in these vehicles.

    We received 27 submissions discussing whether this levy rate was fair, given electric vehicles are still involved in accidents.

    With the introduction of improved incentives to encourage uptake of electric vehicles there is no longer a strong rationale to set aside consideration of the normal risk parameters when setting vehicle class levies in favour of providing a weak incentive for uptake.

    ACC therefore recommends the following change to the detailed rates for the class 2a motor vehicle levy to align to the levy payable by other non-petrol powered passenger vehicles. This change does not impact other recommended class rates.

    Levy rates for each levy year Current 2021/22 2022-2023 2023-2024 2024-2025
    Class 2a - light electric vehicles $46.04 $71.54 $97.04 $122.54

    ACC also recommends the following changes to the minimum and maximum liable earnings.

    Liable earnings Current amount Proposed for 2022-2023 Proposed for 2023-2024 Proposed for 2024-2025
    Maximum for everyone $130,911 $136,544 $139,384 $142,283
    Minimum for everyone $36,816 $42,465 $43,349 $44,250

    Along with recommending to: 

    • raise the maximum adjustment to levy increases from 75% to 100% for businesses in the Experience Rating Programme
    • increase the impact of workplace fatalities on levies for businesses in the Experience Rating Programme. A fatal claim within the last two experience rating years would trigger a final adjustment to that employer’s levy of a 20% increase in the first year and 10% increase in the second year.

    Detailed Work Account levy rates table

    Cabinet decision

    The Minister for ACC will review ACC’s recommendations, alongside independent advice from the Ministry of Business, Innovation & Employment before making recommendations to Cabinet.

    In late 2021 Cabinet will be asked to confirm levy rates for the 2022/23, 2023/24, and 2024/25 levy years. Approved changes to the Work and Earners’ Accounts would take effect from 1 April 2022. Changes to the Motor Vehicle Account would take effect from 1 July 2022.

    We will update the Government’s announcement when final decisions are made.

    Previous consultations

    2018 levy consultation

    ACC’s previous consultation was held in late 2018, which set the levy rates for 2019/20 and 2020/21.

    The 2020 levy consultation was cancelled due to COVID-19. Cabinet rolled over the 2020/21 levy rates to apply for the 2021/22 levy year, allowing time to better understand the impact of COVID-19 on the Scheme.

    The results of the 2018 consultation are linked below.

    2018 Levy consultation

    2018 Minister for ACC consultation proposals

    2018 ACC proposals for Future Work

    2018 Levy consultation submission analysis

    ACC levies 2019/20 and 2020/21 Cabinet paper

    Minute of Decision for 2019 ACC Regulations Work Account Levies, the Earners' Levies and Experience Rating 

     

    Last published: 3 November 2021