ACC levy increases too high

ACC levy increases too high for some tourism operators

Proposed increases in ACC levies will threaten the viability of some tourism businesses, with some facing 100% increases over two years, the Tourism Industry Association New Zealand (TIA) says.

TIA is also concerned that ACC levies for some tourism businesses do not reflect the actual level of accident risk that staff members face.

With strong support from a range of tourism organisations and businesses, the Association has asked ACC to review its proposed tourism sector levies for 2011-12.

“While the levy increases proposed for 2011-12 are not as high as this year, the accumulation of increases over the last two years is really hitting tourism businesses hard. They come at a time when operators are struggling through a difficult trading period and a recessionary environment,” TIA Policy and Research Manager Simon Wallace says.

“As with other sectors, the overall cost of doing business for tourism operators has escalated dramatically in a short period. The introduction of the emissions trading scheme and the increase in GST are placing additional pressure on operators.”

The accommodation sector and some activity operators are particularly hard hit by the ACC levy increases, Mr Wallace says.

“We’ve heard from some TIA members who have seen 100% increases over two years. Whether it is a large hotel, a small motel or a niche bed and breakfast operator, increases of this nature hit the bottom line and can be the difference between investing in new development or renovations, training staff or recruiting new employees.”

Because tourism businesses set their rates up to two years in advance, it is difficult for operators to pass on unexpected increases in compliance costs, he adds.

TIA looks forward to the introduction of experience rating for smaller businesses, where tourism operators will be offered incentives to improve their workplace safety practices. Basing each company’s levies on its claims history will ensure levies are fairer, Mr Wallace says.

To read TIA’s submission to ACC, go to www.tianz.org.nz/main/policy-issues

Comments on the issue from TIA members are below.

Tim Stephens, Ballina Motel, Napier and Branch President, Napier Motel Association:
We have been concerned for some years at the magnitude of the rates which have been applied to the accommodation sector as we see this employment sector as much lower injury risk when compared to other employment sectors. The majority of hours operating this business are spent on clerical, marketing and reception functions, not on cleaning which from discussions we have had with ACC is what the accommodation rate is based on. There is no option to be able to elect or apply split rates reflecting the various different functions within the business. One rate applies to the whole operations of a business.

We also note that other sectors with similar risk (clerical/office duties) are charged levies significantly lower than that which applies to the accommodation sector, around half the rate we are required to pay. In the nearly six years that we have been operating this business we have not had one work related injury requiring a claim to be made against ACC, reflecting the low industry risk of this sector.

Hotels:
1. Our levies from 1 April 2009 to 31 March 2010 were $37,929.95 and the estimate for 2010-11 is $54,480, before discount.
2. Our ACC levies have gone from $45,000 to $55,000, or from 59c to 99c per $100.

Miles Davidson, Executive Director, Ski Areas Association of New Zealand (SAANZ):
All members last year faced a 100% increase in their ACC employers levy as recommended at the start of the consultation period. After consultation the increase ended up at 80%. For some employers in our sector the amount payable into the employer fund was substantial, in some cases an extra $250,000 had to be found. We note that the recommended employers’ levy for 2011-2012 for our risk group is not increasing which is a welcome relief to our members although they still have to find 80% more compared to the amount payable in 2009/2010. We do not believe claims increased by anywhere near 80% for the employee claims in our sector.

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