Budget 2015: $2 billion worth of savings on the cards
Does paying one third of what you currently pay in ACC levies on your car sound like a good idea to you? The Government thinks so too.
The average ACC motor vehicle levy (including the annual licence levy and petrol levy) is expected to drop to around $120 from 2016, saving New Zealand families a wad of cash. This is on top of the already confirmed reduction, from around $330 currently, to $195 kicking in from 1 July this year.
Since 2012, ACC levy reductions have saved New Zealanders around $1.5 billion – and we’ve just announced another $500 million of indicative reductions as part of the upcoming Budget. That’s $2 billion in total for New Zealand businesses, workers, and motor vehicle owners to keep in their pockets.
On top of the cuts to motor vehicle levies, we are looking at a 20 cent reduction in the average Work Account Levy, and 6 cents in the Earners Account Levy. We are committed to at least half a billion dollars in reductions, but final decisions will be made after public consultation.
These are real savings for New Zealand families. But they are also prudent and balanced measures made possible by ACC’s sound financial performance. It’s the right time to do this, after we’ve overseen a dramatic turnaround in ACC’s finances.
While ACC is in a good position now, this has not always been the case. Before our reforms which brought about the conditions needed for levy cuts, ACC was in dire straits. The scheme we inherited had a $4.8 billion shortfall in one year alone.
The sound financial performance we are currently seeing means ACC is now essentially fully funded. There is enough money invested to meet the future costs of all current claims. ACC is important to New Zealand and we are committed to ensuring it is sustainable into the future.
People want levy cuts but they also need stability. The Government recognises this and is introducing a new levy-setting framework for 2016/17 which will bring about greater transparency about the levy-setting process, and more stable levies going forward.
The Government is committed to setting ACC levies in a way that is fair to both levy payers and claimants and maintains ACC’s ability to the meet the needs of New Zealanders in the future.