The Accident Compensation Corp is looking to increase some levies to meet higher costs as lower interest rates crimp its investment income.
It proposes increasing the levy on petrol by 1.9 cents a litre and has suggested raising the average annual levy on car registrations from $113.94 to $127.68 – a 12.1 percent increase.
The corporation is consulting on the planned increases during the coming month. If approved, they will apply from July next year and will add to the pain at the pump for motorists who are already facing record high fuel prices and who are about to pay an additional 3.5 cents per litre when petrol excise duty rises on Oct. 1.
Earlier today the central bank kept interest rates on hold at 1.75 percent and continued to signal no change on the immediate horizon. However, it did acknowledge that higher fuel prices are likely to boost inflation in the near term.
ACC is also planning to increase levies paid by workers by 2.5 percent, lifting the existing rate of $1.21 for every $100 of liable earnings to a new rate of $1.24. Levies on employers, however, would decrease, from 72 cents to.67 cents for every $100 of liable earnings.
“Since we last adjusted levies in 2016, the number of claims for injuries have grown by 6.4 percent, with more people than ever needing our support,” ACC chair Paula Rebstock said.
“Pressures on costs include increasing medical costs; increased costs for care and support workers resulting from the pay equity settlement agreed by government; the introduction of free doctor visits for under-14s, and increases in weekly compensation claims,” she said.
Rebstock also said lower interest rates on ACC’s investments will reduce income, while higher inflation will have a significant influence on future costs.
“These factors need to be reflected in the levy rates now to ensure that we can support our clients’ needs throughout their lifetime,” she said.
ACC’s investment portfolio grew to $36.63 billion as at June 30, 2017 from $34.67 billion a year earlier. That generated revenue of $2.05 billion in the 12-month period, ACC said in its annual report from last year. At the time, however, ACC said its returns may fall behind increasing claims.
ACC will now take the consultation process to nine towns and cities during the next four weeks regarding the proposed changes. Members of the public can also provide their feedback on the consultation website.