Accident compo levy increase ‘inevitable’

Press, 30 July 1986, Page 1

Accident compo levy increase ‘inevitable’

Wellington reporter

Significant increases in accident compensation levies are inevitable next year, according to the corporation’s annual report tabled in Parliament yesterday.

The A.C.C. was put on a "pay as you go” system in the early 1980 s, the thinking being that the income in any particular year should be sufficient to meet the claims lodged in that year. The change was introduced essentially because the corporation was building up sizeable reserves in funds so that levy rates were allowed to drop over subsequent years while these were used up. They are now, however, all but depleted — a process accelerated by burgeoning costs and by the fact that levy rates in recent times have been significantly lower than

considered necessary to support the scheme. For example, the amount of compensation paid out increased 32 per cent between 1985 and 1986 while the corporation’s income rose only 14 per cent. Three items are highlighted in the report as accounting for the increased spending. These are earnings-related compensation which was up 26 per cent, lump sum payments which were up 55 per cent, and medical treatment costs, up 39 per cent. The Minister in charge of accident compensation,

Mr Rodger, said yesterday there was little the corporation could do to control such increases as benefit levels were set by legislation. However, he said they would be addressed as part of an officials’ review now being prepared and due to be reported to the Government this year. Present rates are 77c per $lOO leviable earnings for employers and $1 per $lOO for the self-em-ployed. They can expect to be advised of the increased rates for the 1987-1988 year when the new calculations are done towards the end of this year.