Struggling workers and businesses could have benefited from
almost half a billion dollars in ACC levy cuts this year if
the Government hadn't disregarded Ministry of Business
Innovation and Employment advice, it has emerged.
Policy advice from the ministry released this week shows it
recommended cutting the workers' and earners' levies by 17
per cent for the 2013-2014 year.
Labour says the Government's decision to disregard that
advice and ACC's own recommendation to cut levies by 12 per
cent was driven by its political goal of returning to surplus
Late last year ACC Minister Judith Collins announced the
Government would not cut ACC levies for workers and
businesses as recommended by the ACC board. ACC's 12 per cent
cuts would have reduced levy income by about $330 million a
year thereby undermining the Government's goal of returning
But Ms Collins said it was decided not to cut levies because
the Government was mindful of economic uncertainty and it
wanted to have confidence that levy reductions were stable
However, Ministry of Business Innovation and Employment
(Mbie) advice on ACC levies, released this week, recommended
even deeper 17 per cent cuts that would have saved workers
and businesses $477 million a year.
Mbie said even with ACC's proposed cut of 12 per cent, the
corporation's funding position would be $5.5 billion higher
than needed to cover claims.
"This would represent a significant opportunity cost and
revenue transfer from levy payers. Higher levies required by
this option are likely to negatively impact on the
Government's priorities for economic growth and reducing
costs for businesses."
Labour's ACC spokesman Andrew Little said the Government's
decision not to cut levies was driven by "its desperate bid
to achieve its much-hyped 2015 budget surplus".
Mbie's reduction would have meant an extra $125 year in the
hands of someone on the average wage "and goodness knows how
much for businesses", said Mr Little.
Higher than necessary ACC levies would have little effect on
a real Government surplus, "because they can only be spent on
accidents and injury prevention", he said.
- Adam Bennett of NZ Herald