A significant rise in the amounts workers pay for ACC is likely from April 1 next year, Finance Minister Bill English says.
ACC Minister Nick Smith said a blowout in the ACC earners account could see average wage earners lose almost a third of the value of next year's tax cut if the incoming Government follows the advice of officials.
More claims, increased medical costs, a relaxing of criteria, a dive in returns from investments held by ACC and a move to full funding through levies by 2014 have all been cited as factors behind the funding shortfalls.
Prime Minister John Key has ordered a ministerial inquiry into why the liabilities were not disclosed.
Mr English said in an interview in Dunedin that the four-year ACC shortfall of $1.25 billion in the corporation's "non-earners" had to be paid. He did not expect more surprises of that magnitude but there were two other areas the Government would be checking.
They were Treaty of Waitangi settlements and funding for rail.
The "big burst" of treaty settlements in the past six months appeared to be based on bigger offers than originally signalled and there did not seem to be the money to fulfil big rail funding promises, Mr English said.
The reason for the ACC inquiry was to see whether the Labour-led government and ACC had broken the rules and if they had not, how the rules could be changed.
"There are some technicalities that have got in the way of the purpose of the pre-election fiscal update," Mr English said.
Dr Smith said the Government would try to constrain the recommended rise which would take $5.40 a week extra out of the average earners' wage packet next year, rising to $7.23 by 2011.
However, Mr English said that would prove difficult and large rises looked unavoidable.
The non-earners account pays for accident treatment for the elderly, students, children and the unemployed. The earners account pays for the non-work injuries of workers. The earners account is funded through a 1.4c in the dollar levy on salaries and wages.
Dr Smith said Labour Department officials had advised him to lift that levy to 2c next year, rising to 2.2c over the next three years.
A decision on next year's rate would have to be taken by Christmas.
