Accident Compensation Corporation (ACC) Minister, Matt Doocey, has today announced an independent review of ACC due to concerns about declining rehabilitation rates and increasing costs.
“ACC provides critical support to New Zealanders in times of need, but I am concerned that ACC’s performance has been declining for a decade. Rehabilitation rates are down, weekly compensation costs are up and average costs per claim are up,” Mr Doocey (pictured) said in a statement.
“This imposes significant costs on households. Today I am announcing that the earners and business levy is having to be increased by up to 5% a year for three years to meet the rising costs of the scheme.
“For somebody on the median full-time wage of about $70,000 a year this equates to an additional $42 for the 25/26 financial year, or 80c a week, and an increase of $140 in three years’ time from this year’s levy rate.”
The levies paid by motor vehicle owners are also being increased by 5% plus an inflation adjustment per year for three years, the Minister said.
“This review will have a particular focus on claims management. It will look at whether ACC has the right interventions and settings in place to support accident claimants to return to independence as quickly as possible.”
“Alongside the review, I am working with the ACC Board and the Ministry of Business Innovation and Employment to strengthen performance monitoring and achieve more targeted and cost-effective social rehabilitation services.
“My priority is getting Kiwis rehabilitated and back to work and independence quickly. To achieve this, we must ensure ACC is set up to reduce long-term dependency and improve health outcomes, building on its 50 years of delivering injury prevention and no-fault personal injury coverage for New Zealanders.
“I know that many Kiwis are doing it tough. The staging of the increase in ACC levies reflects this.”
ACC Chief Executive, Megan Main, has welcomed today’s announcement by Minister Doocey.
“We welcome the independent perspective of a government review to ensure we have the right work in place to tackle the cost and performance challenges ACC currently faces,” said Ms Main.
“Each year ACC spends $7 billion on health care and weekly compensation to support the two million injury claims we receive.”
Ms Main said more people are receiving weekly compensation and remaining on the scheme for a longer period with non-serious injuries, while the cost of the rehabilitation and care services ACC buys has risen significantly.
She said levies and funding of the scheme have not kept pace with these increases, meaning ACC spends around $2 billion more than ACC collects each year.
“Rehabilitation performance – how quickly people recover from an injury and get back to
independence – has also declined.”
“The scope, cover and cost of the ACC scheme also continues to grow due to recent court
cases and policy decisions, and we are also required to account for the lifetime costs of
injuries that have already occurred. Health and social insurance schemes internationally are
facing similar challenges in balancing scheme boundaries, rising healthcare costs and
funding.”
She said the decision by Cabinet to increase levies will go some way to alleviating the pressure and ensuring the scheme is sustainable for future generations.
“We have intensified our efforts on the things we can do to improve client rehabilitation
performance in the short term and are seeing positive green shoots from this work – but the impact of this will take time.”
“We support the Government’s review to ensure what we are doing will help injured people get better faster. We hope any findings will further help us improve our rehabilitation performance and assist us in ensuring the long-term sustainability of the ACC scheme,” said Ms Main.
More information on new rates can be found here.
