The Coalition Government has become acutely aware of public anger over hiking fuel prices, allayed recently by a drop in the oil price.
The National opposition last month raised the issue of the Accident Compensation Corporation (ACC) planning to lift motor vehicle levies by 12.1% but the business website Interest said this week the Government has now vetoed this proposal.
The website said this means the average levy, which includes a vehicle registration fee and a 6 cent per litre fee paid at the petrol pump, will remain at $113.94.
ACC in September said that since the last levy adjustment in 2016, the number of claims for injuries had grown by 6.4%, with more people than ever before needing ACC support.
It recognised it was over-funded with its projected solvency rate for 2019-20 at 111%. But, it said it aimed to drop this back to the target 105% by charging those who got injured less than it needed to, reported Interest.
At a post-Cabinet press conference on Monday, Prime Minister Jacinda Ardern said Cabinet made the decision not to hike motor vehicle levies based on the “wider public interest.” She noted the high cost of living and “pain” motorists had experienced at the petrol pump.
Ardern also pointed out both the Ministry of Business, Innovation and Employment (MBIE) and Treasury believed ACC’s books were in good shape.
The Government also said that in line with ACC’s recommendations, it will reduce average work levies paid by employers and self-employed people from 72¢ to 67¢ per $100 of liable earnings. This equates to a 7% reduction.
That change will come into effect on April 1, next year. Interest said this will save businesses $100 M over two years.
The Minster for ACC Iain Lees-Galloway said it was challenging for MBIE to administer the vehicle risk rating programme and there was a lack of evidence that it is was contributing to a safer vehicle fleet.
“It also loads more of the burden onto low-income people and families, as they are generally less able to buy cars with the best safety ratings,” he said.
The vehicle risk rating will no longer apply from July 1, next year.