Govt accused of manufactured ACC crisis

The Government is being accused of overcharging businesses and workers for their ACC cover.

The ACC minister has signalled half a billion dollars worth of levy cuts could be in the pipeline.

The cuts of about $375 million in 2016/17 and $120 million in 2017/18 will be outlined in next week's budget.

If confirmed, it would mean the average motor vehicle registration could fall to about $120.

ACC Minister Nikki Kaye said businesses would also benefit.

"So the example I would give is a business where there's earnings of about a million [dollars], they'll pay about $10,000 [worth of] ACC levies now.

"Within two years that could go to $8,000," she said.

Labour leader Andrew Little said the Government should actually cut ACC levies right now, because they had been overcharging businesses and workers and still were.

"If you go back to the beginning of this Government they engineered this crisis about ACC and that they had to put the levies up.

"They didn't need to do that at all.

"Now they've got an embarrassment of riches where ACC generates huge surpluses, way beyond what they need to meet their full funding requirements," he said.

"Treasury, ACC and MBIE have been advising the Government to cut ACC levies, but they've never cut them to the extend that the advice has told them to do - they've held on to the cash."

Mr Little told Morning Report he would consider changing ACC to a pay as you go scheme if his party led the government.

At present ACC has a fully funded model, meaning it projects future costs and charges levies accordingly.

"We had the pay as you go model for the first twenty-five years of the scheme so you can actually do it," said Mr Little.

"The full funding model applies in a private insurance situation. This is not a private competitive insurance situation, this is the socially backed ACC scheme - it's operated perfectly well. It's a good idea that ACC has good health reserves - they've got that."

Green Party ACC spokesperson Kevin Hague said part of the reason the Government would not cut levies now was because it wanted to keep the money to try to make its promised surplus.

"I've always been suspicious that the Government has wanted to run the massive reserve that it has for ACC and also the operating surplus of several million dollars every year because of its overall financial situation rather than for reasons relating the accident compensation."

But Ms Kaye rejected suggestions the Government could pass on further levy cuts immediately.

She said there was volatility in ACC's accounts every year and levies had to be cut in a sustainable way.

That allowed the organisation to manage risks such as medical costs and the number of claims, she said.

The Government yesterday also introduced legislation that would change the way ACC levies were calculated.

The new ACC levy-setting framework, set up once the legislation passes, would take effect in 2016.