ACC levies set to reduce

ACC levies are set to decrease this year, ACC Minister Nick Smith says.

In May, Dr Smith said levy reductions were possible this year, and today said that was firming up.

"We will need to see the final actuary data that is put together for the end of the financial year but my hope is, with households and businesses under quite a lot of financial pressure, before the year's end we can deliver a reduction in levies," he told reporters.

ACC was forecasting a $2.5 billion surplus for the 2010-2011 financial year, $1.5b better than previously estimated. There was a $2.5b surplus the previous financial year, which followed a $4.8b deficit in 2008-2009.

Dr Smith said the turnaround came from improved rehabilitation, reduced claims and better cost management.

"I am particularly pleased that ACC’s overall solvency is the best ever at 72 percent. The Work and Earners’ Accounts are nearing 100 percent 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 percent is improving, but is not yet sufficient to consider lower levies."

Dr Smith said the improvements gave the Government room to move and the board would start deliberations today.

He could not estimate the size of the decrease but it would be; "certainly enough that it makes it a substantive improvement for both businesses and households.

"If ACC is making big fat losses then sadly levies need to go up, when ACC is performing well and is delivering surpluses and we've got accounts that are getting over 100 percent solvency the Government should take the opportunity to take the pressure off businesses and family by reducing levies."

In the past there had been some reductions in different accounts.

"There has not been an overall reduction in the levies paid by workers. There has been some years where there have been reductions in the work levy."

Dr Smith was asked if it would be harder to offer reductions in future once the work account was opened to competition and private insurers were taking premiums.

He said the Government believed the competition would put downward pressure on costs and also see improved safety which would save money.

"It is our long-term objective that there will be ongoing levy reductions."

There was a limit to how much costs could be reduced, he said.

"Those gains are starting to tail off."

A levy consultation document would go out next month with a final decision in October.

In May, when Dr Smith raised the possibility of a decrease, Labour and the Greens said that money was saved by slashing support for accident and abuse victims.