Farmers’ levies reflect high cost of injuries

The high cost of injuries to self-employed farmers, a decline in the pool of liable earnings for livestock farming, and falling long-term interest rates are behind the increase in ACC levies for this group for 2005/2006, ACC Minister Ruth Dyson said today.

“ACC levies are calculated on an industry basis, based on the cost of injuries and total pool of earnings for that industry. Although farmers have been working with ACC to improve farm safety, their injury rate is nearly double the average for all industries combined.

“At the same time, the pool of liable earnings for livestock farming has decreased since 2002 from $2 billion to $1.5 billion, reflecting a fall in farmers’ incomes and a declining number of farmers in the self-employed category.”

Ruth Dyson said the new levies had also been influenced by less favourable long-term interest rates, on which ACC's long-term liability and expectations of future investment earnings were based.

“Long–term interest rates declined from 6.5 per cent to 6.2 per cent between March and September 2004, leading to a difference between the self-employed levy rates on which ACC consulted, and the final rates.”

Ruth Dyson said the levy for farmers who came under ACC’s employers’ (rather than self-employed) account would remain stable next year.

“National separated employers and self-employed into separate accounts for the purpose of calculating ACC levies, with the intention of privatising the scheme. However, the significant gap in levies between people who are doing the same job but who have a different business structure is not sustainable. I have initiated policy work in this area and welcome the views of the farming community.”

Ruth Dyson said ACC’s farmer levies compared favourably with those overseas.

“In Australia, where a private market has operated, levy rates for farmers - as for most occupations - are around twice that of New Zealand’s, according to the Australian government’s annual report comparing the two markets.”

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