Hon Dr Nick Smith

Minister for ACC

14 October 2009

Media Statement

Law changes needed to make ACC affordable

Changes in ACC are needed to make the scheme affordable, sustainable and fair, ACC Minister Nick Smith says.

“The levy increases proposed by ACC’s Board under the current law are too much for New Zealanders to pay, Dr Smith said. “That is why the Government will be introducing law changes that more than halve the increases while securing ACC’s long-term future.”

Key changes include:

• Extending full funding date from 2014 to 2019

• Reversing 2008 income compensation extensions covering casuals, part-timers, non-earners and abatements for holiday pay

• Reversing vocational rehabilitation changes

• Introducing 6% hearing loss threshold

• Reversing entitlements for wilfully self-inflicted injury and suicide

• Strengthening disentitlements for criminals

• Enabling safety incentives for employers and vehicles

• Requiring far more open reporting on ACC’s liabilities

“The legislative changes are part of a wider reform of ACC that began with changes to the Board in March, the stocktake announced in August, and other regulatory and operational changes. Our objective is to reduce ACC’s liabilities by $2 billion.

“The changes to the law will not reduce the income compensation payments to any existing claimants but future claimants will receive lesser amounts in some circumstances.

“The changes will provide stronger incentives for existing and future claimants to return to work so as to reverse declining rehabilitation rates over the past five years.

“These changes are necessary because ACC’s claim costs have risen by 57% and its unfunded liabilities have grown from $4 billion to $13 billion in just four years.

“The Government will carefully consider submissions of these legislative changes and on the levies. Reform of ACC requires a difficult balancing of the rights of levy payers with that of claimants.

“Our objective is to secure the long-term future of ACC as an efficient and fair 24/7, no-fault insurance scheme for all New Zealanders.”

ENDS

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