A second ACC blowout could hit wage earners in the pocket and put a serious dent in the pocket of taxpayers.
ACC Minister Nick Smith yesterday revealed government officials wanted to increase levies on workers to cover an estimated $1.33 billion hole in the earners' account over the next three years.
Every worker pays a levy to cover the account.
If Dr Smith follows the officials' advice, the average worker on $47,000 could end up paying an extra $282 over the next tax year, rising to $329 and $376 in the years after that.
The increase would take effect on April 1 next year - the same day as the National Government's tax cuts.
If it goes ahead, average workers will pay $5.40 a week extra next year - negating much of their $16-$18 tax cut.
The blowout in the earners' account follows the billion-dollar hole over three years in the non-earners' account revealed earlier in the week.
The non-earners' account is not covered by a levy but is still funded by taxpayers.
There are also similar problems with the ACC motor vehicle account, with officials proposing a $32.37 hike in the levy to cover a shortfall.
Dr Smith said he did not want to impose these "very significant cost increases" costs on workers but had to act responsibly.
He said he had until Christmas to decide on the levy increases.
The alternative was to fund shortfalls out of the Government budget, which would require borrowing.
Officials said the hikes were needed because of growing numbers of claims, lesser rates of rehabilitation resulting in longer duration of costs, increased medical and treatment costs and expansions in entitlements.
Dr Smith said officials had not adequately addressed the impact of the cost increases and "a change in culture is required in ACC so it is better placed to appreciate the impacts of costs shocks on families and businesses".
The earners' account is funded through a levy of 1.4c in the dollar on salaries and wages.
Dr Smith said Department of Labour Officials wanted to lift that to 2c next year, then 2.1c and finally 2.2c the year after.
For the average worker this would mean a rise of $5.40 per week, then $6.33 and finally $7.23.
The earners' account funds non-work accidents involving employees.
Dr Smith said as it was funded by a levy, the shortfall did not need to be included in the pre-election "opening of the books", unlike the hole in the non-earners' account, which National is accusing Labour of deliberately trying to hide to make the government accounts look better than is the case.
The non-earners' account covers accident claims from children, students, beneficiaries and the elderly.
The non-earners' account needed an immediate cash injection, while the earners could be covered by the levy, Dr Smith said.
He also signalled that things could get worse as investments held by ACC were performing poorly because of the global credit crisis, with none of the losses having been realised in the current shortfalls.
Labour leader Phil Goff said the Government was making the problem look worse than it was to soften the public up for the privatisation of ACC.
The hike in the motorists' levy - paid through petrol sales and through vehicle licensing fees - is being recommended by the ACC board to ACC Minister Nick Smith.
ACC is blaming increases in expected claim costs and costs associated with seriously injured clients.
The ACC will collect two lots of levies - one for claims made in 2009-10 and the other for injury claims before July 1999 that were only partly paid for by motorists at the time.
Presently, the average of the two levies combined is $254.63, but the recommendation is for a rise to $287.
In previous years, the levy has been $204.78 and $190.
