Hi Philip, I am writing to give you an update from the meetings the AA has held with the Minister for ACC Nick Smith and opposition Labour spokesperson David Parker.
In each case we sought to understand their policies on full funding and risk rating, particularly in relation to the ACC Motor Vehicle Account. We opened our meetings by noting the concern that had been expressed to the AA by our Members, particularly motorcyclists, in relation to the levy increases. We also reported the growing concern and public debate regarding the move away from the original Scheme principles and commented that whilst this had been off the agenda there now appeared to be some public support to debate the ‘Woodhouse Principles’. We noted the AA did not currently have a particular policy on this and that our submissions on the levies had only focussed on the proposed increases and not the policies that led to them as they were not up for review or part of the consultation, but the public response suggested it was timely to establish whether there was an opportunity to debate them.
I can advise that both the Government and Labour party fully support the principle of fully-funding the ACC scheme. While comparisons with pay-as-you-go (paygo) funding for superannuation, health, education etc. have been made by commentators, neither ministers accept these arguments. They said none of these involve avoidable costs (e.g. related to ageing) whereas motor vehicle accidents are avoidable. They were both very concerned about today’s accident costs being imposed on future generations, and that these liabilities will increase over time. There also didn’t seem to be much disagreement about those projected liabilities, with much of the recent increases due to one-off accounting changes or asset devaluations and some changes in the scope of cover (but not in the motor vehicle account).
Labour commented that cost blow-outs and levy spikes had occurred in the past under paygo when reserves were run down and asserted a “proper funding model” avoids this. Labour also holds that the Scheme was originally intended to be fully funded and that it would be “wrong in principle” to move to paygo.
The Governments position is that full funding is needed to send safety messages to levy payers by ensuring those who incur the costs pay for them and that they are not deferred for later generations.
Similarly, both the Government and Labour support an element of ‘risk rating’ between motor vehicle classes (e.g. cars and bikes) to encourage road users to make safer choices, and believe that averaging the motor vehicle levy across all classes would be unfair to car owners. The Government wants motorists to be more focussed on safety by incentivising the uptake of safety equipment via the levy. However, Labour was cautious about this, and was concerned that risk rating according to vehicle technology (ABS, ESC) or driver/rider history could be complex and costly to implement and could disadvantage low income NZers who cannot afford to upgrade to more expensive, safer vehicles.
Regarding the new levies, both the Government and Labour support motorcycle owners paying more than car owners on account of their increased accident and injury risk. It was also mentioned that the motorcycle levy, even at the higher proposed levels, didn’t cover the cost of motorcycle-fault accidents unlike the car levy. However, both were supportive of the new $30 motorcycle safety levy and National want to use that to emulate the success in Victoria to increase rider training and reduce motorcycle accidents. The AA is part of a working group comprising motorcycle user and industry representatives who have met with Transport Minister Steven Joyce to discuss developing a motorcycle safety strategy. But we are concerned at the limited dedicated-rider representation on this (only Ulysses) and would welcome your ideas on how this group can be widened to other credible user groups.
Regarding any future levy increases, based on our meetings with the ACC Minister we do not anticipate that the new differential(s) between car and motorcycle levies (approx. double in the case of >600cc ‘bikes) are likely to be increased further, however it is not certain whether there will be another across-the-board levy increase next year for the motor vehicle account.
So, in summary, there is no major political party support at all for a move from full-funding to paygo for the motor vehicle account, or reverting to an aggregate rate for all motor vehicles irrespective of class risk.
We presented this information to the AA National Council at their March meeting for discussion. They reaffirmed the AA’s policy to support differentiation in motor vehicle levies according to class risk, and agreed that, based on the lack of political support, the AA should not seek a review of the full-funding principle. However, they also agreed that the AA would not support any attempts to raise the differential between cars and motorbikes any further.
Thanks for your input into this analysis, I am happy to keep you informed of any developments regarding the motorcycle working group and safety initiatives if you like.
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Originally Posted by skidmark
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