21 December

Reform of ACC is needed to improve incentives for workplace safety, improve services for claimants and keep levies affordable both now and in the future, ACC Minister Nick Smith announced today.

"This Government's initial work on ACC was about stopping ACC haemorrhaging after $7.2 billion in losses. These next steps outline our long-term plan for ACC," Dr Smith said in releasing the Stocktake and Financial Condition Reports.

Key decisions announced today include:

• No increase in workplace, motor vehicle or earner levies for 2011

• Introduction of experience rating in the Work Account

• Extension of the Accredited Employers' Programme (AEP)

• Greater independence of the Disputes Resolution Service

• Decision in principle for introduction of choice in the Work Account

"We have declined ACC's recommendations for further levy increases next year," Dr Smith said. "We do not wish to add to the financial pressures on households and businesses while a fragile economic recovery is under way. We are also encouraged by the huge improvement in ACC's finances and want to keep maximum pressure on the Corporation to continue to improve its performance rather than just passing additional costs onto levy payers.

"The direction of these reforms is towards greater choice and contestability, but we are advancing these in a pragmatic and considered way. Employers will be able to choose their workplace insurer but ACC will still be a provider. We will be consulting on the important policy detail next year and final decisions will occur after the 2011 election.

"These next steps on ACC are carefully timed and interconnected. ACC needs to move to experience rating and to provide risk sharing options like the AEP for it to be able to compete in a more open workplace insurance market. The system of disputes resolution also needs to be made more independent with provision for other insurance providers. The avoidance of levy increases is connected to the decisions on choice that will increase the pressure on ACC to contain costs.

"National is proud of its heritage in creating the original ACC scheme with its underlying principles of universal and no-fault cover. These next steps are consistent with National's 2008 election commitments to a stocktake, investigation of competition in the Work Account and increased independence in dispute resolution.

"These reforms provide a fair and balanced way forward where accident claimants get proper care, rehabilitation and compensation, while minimising the costs to levy payers and fiscal risks for the Government."

Documents:

1. Stocktake of ACC Accounts www.dol.govt.nz/initiatives/workplace/acc/stocktake/index.asp

2. Financial Condition Report on ACC http://www.acc.co.nz/about-acc/reports-and-strategy/index.htm#P30_1994

3. Review of Employer-managed Workplace Injury Claims: Final Report (MartinJenkins / Melville Jessup Weaver) www.dol.govt.nz/initiatives/workplace/acc/stocktake/index.asp

4. Next Steps on ACC (Cabinet paper) www.dol.govt.nz/initiatives/workplace/acc/stocktake/index.asp

5. 2011/12 ACC Levies and experience rating (Cabinet paper) www.dol.govt.nz/initiatives/workplace/acc/levies/index.asp