ACC levies to hold through 2011, more choice available

The government has confirmed ACC levies on employers, vehicle owners and earners won’t increase next year.

It will also restore employers' ability to choose their workplace insurer.

Announcing the government’s long-term plan for ACC, Minister Nick Smith says the next steps are to improve incentives for workplace safety and improve services.

Other key decisions announced today as part of the release of the ACC Stocktake and Financial Condition Reports are:

• Introduction of experience rating in the Work Account (from April 2011);

• Extension of the Accredited Employers’ Programme;

• Greater independence of the Disputes Resolution Service; and

• Decision in principle for introduction of choice in the Work Account (to come after the next election).

“We have declined ACC’s recommendations for further levy increases next year,” Dr Smith said. “We do not wish to add to the financial pressures on households and businesses while a fragile economic recovery is under way.

“We are also encouraged by the huge improvement in ACC’s finances and want to keep maximum pressure on the corporation to continue to improve its performance rather than just passing additional costs onto levy payers.

“The direction of these reforms is towards greater choice and contestability, but we are advancing these in a pragmatic and considered way. Employers will be able to choose their workplace insurer but ACC will still be a provider.

"We will be consulting on the important policy detail next year and final decisions will occur after the 2011 election.”

Changes in detail
Elaborating on the changes, Dr Smith said final decisions and legislation on introducing a choice would occur after the 2011 general election and will be subject to a mandate from the public.

Officials would work on the feasibility of choice in the other parts of ACC, like the motor vehicle and earners accounts, but they were more complicated and if any changes were made they were a long way down the track.

Dr Smith said an experience rating scheme would start on April 1 next year which would provide strong incentives for workplace safety. Companies with 30 or more employees would receive loadings or discounts of up to 50% based on their claims history.

That meant a company with a poor record could have its levies increased by up to 50%, while a company with a good record could have its levies reduced by up to 50%.

Smaller employers would be eligible for a no-claim bonus of 10% or a 10% loading, depending on their claims record. Dr Smith said it was expected that 240,000 small businesses would receive the 10% no claim bonus and 7000 would have to pay 10% more.

The Accredited Employers Programme (AEP) would be extended, allowing more companies to join it. Companies in the AEP programme manage and fund their own claims.

Dr Smith said there would be public consultation next year on steps to reduce the barriers to entering the scheme, allowing high-cost claims cover from private insurers and reducing compliance costs.

Greater independence to the Disputes Resolution Service, an ACC subsidiary, would address concerns about its dual role of judge and jury. Dr Smith said detailed work was being done so the service could become an independent, separate entity next year.