Loss of ACC incentive causes concern
The cost of car registrations will go up by $28 a year from July for many people, while a smaller number of car owners will pay more than $34 less, according to figures supplied by ACC.
ACC Minister Iain LeesGalloway announced on Monday that the Government had decided to scrap an arrangement under which people who own safer cars are rewarded with lower ACC levies than those paid by owners of less safe cars, which also tend to be older vehicles.
Overall, the total amount of money vehicle owners pay ACC through motor vehicle levies – which includes the annual licence levy and a levy on petrol – will remain unchanged at $113.94 per vehicle, the Government has said.
But the scrapping of ACC’s ‘‘vehicle risk rating’’ (VRR) scheme – which was brought in by the National government in 2015 – means a $28.02 levy rise for the owners of more than 1.2 million safer petrol cars, and a $34.60 saving for the owners of 490,000 petrol cars that are deemed less safe, according to ACC’s figures.
The owners of another 1.2 million petrol cars will see smaller changes, with either a $8.82 levy rise or a $7.49 levy cut, according to data supplied by the insurer.
The figures supplied by ACC indicate the total amount people will pay in rego levies will rise, but it is understood it expects that will be offset by a reduction in the contribution from petrol levies as people switch to more fuelefficient vehicles.
Lees-Galloway said on Monday that the VRR scheme burdened people on low incomes who could not afford more modern safer cars, and there was no evidence it had encouraged them to switch to safer vehicles.
But Motor Trade Association spokesman Greig Epps said his organisation disagreed with the decision to average-out the ACC car rego levy.
‘‘The big thing for us is VRR was the only proactive indication to car owners about the safety rating of their vehicle,’’ he said.
‘‘The way VRR was calculated was very good because it was based on ‘real world’ [safety] information.
‘‘The question is: What will the Government being putting in its place to . . . encourage people into safer vehicles?’’
The Government on Monday also confirmed a cut to the ACC work levy, which will save employers $100 million a year.
But it rejected ACC’s proposal to offset that cut with increases to motor vehicle levies and to the earners’ levy, which is paid by employers and the self-employed.
The knock-back means ACC will be worse off than it would have been if its proposed overall package of levy changes had been accepted by the Government.
The forgone revenues will effectively reduce the pool of funds ACC has available to meet the future cost of accident claims.
BusinessNZ chief executive Kirk Hope welcomed the reduction in the work levy, which will drop from an average charge of 0.72 per cent on employees’ earnings to a new rate of 0.67 per cent. He said it was ‘‘a testament to the positive state of health and safety management in New Zealand businesses’’.
Owners of non-petrol light vehicles will also see changes to their rego costs. About 60,000 will get a $44.49 cut and another 50,000 will get a $17.38 cut, while 150,000 face a $18.15 levy rise.