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ACC levy hikes of more than 10% a year and possibly up to 50% have been signalled by chairman John Judge.
ACC's annual report to June 2009 last Friday recorded that its liability had ballooned by $4.8 billion driven by increased claims, declining rehabilitation and an increase in the assessments of costs.
Judge said levies would need to rise as the scheme's claim liability - the future cost of existing claims - was $23.8 billion.
Current net assets, which ACC uses to cover future costs, were $11 billion, leaving a $12.8 billion gap.
Judge said previously the focus had been on current costs rather than long-term.
"The gap between ACC's assets and liabilities of $12.8 billion is the equivalent of 3.6 times our annual levy income. Five years ago, the gap was only one year's levy income.
He said that on a "simplistic" level levies would have to double over the next few years to meet those costs, though ACC's recommendations to the Government next week would not necessarily be that high.
Judge said the Government could spread the increases over a longer period, but ACC will recommend taking action over the next five years.
Asked if he would be recommending increases of 10% a year over 10 years, Judge said he would be recommending a substantial increase. "I would not describe 10% as a substantial amount".
The recommended levy increases are due to be announced next Wednesday.
The Sunday Star-Times said on Sunday it understood that the wage earners levy could rise from 1.7% to 2.5%.
This would mean someone earning $38,000 would pay $950 a year to ACC, an increase of $304.
The newspaper also believed that the ACC component of car registration fees could increase from $168 to $220 or $275, depending on whether or not ACC's petrol levy went up from 9 cents a litre to 13 cents.
Judge said the future of the scheme was at risk.
"We have got to a point where the continued existence of the scheme is under threat. We must act now to protect it for the sake of all New Zealanders."
The risk was not immediate, with ongoing longer-term costs the key issue.
"The problem is of such a magnitude that I believe the programme of actions will take about 10 years to recover the situation."
ACC was making changes to reduce external costs and improve rehabilitation.
Measures included negotiating better deals with health professionals, better claims management, tighter periods for support, limiting support to legal minimums, and reducing administration.
ACC was targeting savings of over $2 billion.
Judge said the savings were necessary but nowhere near enough to close the liability gap.
"In addition to all of these measures, substantial levy increases are also required, particularly for motor vehicle owners, and earners (ie those in the paid workforce)."
Engineering, Printing and Manufacturing Union national secretary Andrew Little said ACC was scaremongering and using accounting trickery to undermine the scheme.
"This is a softening up exercise to try and slash ACC and at the same time increase levies," Little said.
The figures were a misleading exercise to justify paying for all future costs in a single year and this had never been the practice of ACC.
"This is akin to saying that a person's mortgage should be paid out of single year's income."
Judge said ACC had "taken its eye off the ball" when it came to managing its liabilities and he rejected suggestions he was shroud waving in order to cut entitlements and raise levies.
"My job is to give an honest assessment of the situation and I have done that," Judge said.
