Govt overcharging businesses for ACC levies by $373m a year, Little says

Who's right? Economics editor Rob Hosking will have analysis on Little vs Kaye on NBR ONLINE (read Little is right) and NBR Radio later today.

See also: Little is right about ACC over-charging – but he needs to go further

The ACC Work Account levy will drop from 95c cents per $100 of earnings to 90c from April 1.

Labour says it should drop more, following a report the party commissioned from Infometrics that finds the rate should be around 69c.

"I’ve commissioned an independent report now on the levies that ACC charges. That report shows that businesses and workers in New Zealand are being overcharged each year to the extent of $350 million [sic], which is just outrageous," leader Andrew Little said on Q+A yesterday.

"The government has introduced some cuts that will take effect this April. It’s about $115 million worth. But that is about a third of the level that they ought to be cut to."

ACC's work account and the earner's account hold reserves worth $3.9 billion more than their claims liabilities, the Labour-commissioned report says.

It states: "In the current year, the two funds are forecast to take in $373 million in levies more than needed to cover their costs, which will be added to the already over-funded reserves," it states.

ACC Minister Nikki Kaye hit back on social media last night, playing the man, and the ball.

"The more I see of Andrew Little, the more I worry. His comments today show he is great at getting a headline but has little substance. His data is old and he has failed to learn from Labour's past," Ms Kaye said.

"Labour left us a $5 billion dollar hole ACC. This was caused by a range of things but what was clear is it expanded entitlements without understanding costs and it didn't understand the wider economic issues and the effects of things like discount rates. These fluctuations can be large. We have announced levy reductions of $1.5 billion and I am sure there will be more to come as we confirmed in our 2014 election policy.

"However, what is needed is a long-term funding policy and framework that can withstand these shocks. That will give certainty for businesses so levies aren't constantly shifting up and down. It will also give certainty to some of our most vulnerable Kiwis, some of whose lives depend on us being able to ensure we can support them for the long term."

ckeall@nbr.co.nz

Follow @ChrisKeall