Dowie Sarah: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeDowie Sarah: Oral Questions — Questions to Ministers[Sitting date: 19 May 2015. Volume:705;Page:3362. Text is incorporated into the Bound Volume.]5.SARAH DOWIE (National—Invercargill) to the Minister for ACC: What indicative reductions to ACC levies are signalled in Budget 2015?Hon NIKKI KAYE (Minister for ACC): Budget 2015 will signal that ACC is on track to provide further levy cuts of around $375 million in 2016-17 and $120 million in 2017-18. These indicative levy cuts represent a total saving for New Zealanders of around $500 million and will be spread across the motor vehicle work and earners accounts. The indicative reductions if confirmed will take total levy cuts since 2012 to around $2 billion benefiting all New Zealanders. These cuts are possible only because of good financial management. This is great news for New Zealanders.Sarah Dowie: What factors could see these indicative levy reductions change?Hon NIKKI KAYE: Although there could be some change to the total amount into the per year amounts the Government is committed to reductions of at least $500 million across the three accounts. Before the Government makes final decisions on levy reductions this year ACC will consult under existing legislation with levy payers and make a recommendation. The final decision will take into account other factors like claim numbers and discount rates. It is important to understand that the exact amounts for each year may vary depending on the consultation. However I can confirm reductions of at least $500 million—and that is $2 billion since 2012.Sarah Dowie: What recent announcements has the Government made about improving the transparency of the levy-setting process?Hon NIKKI KAYE: Last week I introduced the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill to the House. The bill will make a number of amendments to the Act to improve the levy-setting framework. The bill will also amend the Act to allow the collection of residual levies to be discontinued earlier. New principles will be introduced into the legislation to ensure greater levy stability and solvency over the long term. The Government will be required to publish a funding policy and the long-term implications of levy decisions. This will ensure there is maximum transparency around ensuring enough money is available to pay the lifetime cost of people’s injuries. It is also my hope that levy payers can see levies are as low as possible while ensuring our most vulnerable have greater security for the long term.Sarah Dowie: What reports has she seen on alternative approaches to setting ACC levies?Hon NIKKI KAYE: I have seen a report about people suggesting going back to a pay-as-you-go approach. The advice I have had is that this would lead to higher costs for claims and increasing levy rates over the long term. It would also be a big step backwards for some of our most vulnerable New Zealanders whose quality of life depends on long-term rehabilitation. It would also mean less certainty and stability for New Zealand businesses. These reports come from Andrew Little at the same time that Labour has removed its ACC policy from its website. He needs to front up to New Zealand and actually tell people whether Labour’s plan is to raid the ACC coffers.Sue Moroney: Why will she not cut levies immediately as recommended by the Ministry of Business Innovation and Employment by Treasury and by ACC itself; and what possible excuse does she have for overcharging ACC levies now that the Government will not even get to its promised surplus?Hon NIKKI KAYE: We are cutting ACC levies now. There is $480 million worth of cuts this year. There are several reasons why we have put a 2-year $500 million policy in. The first reason is that there is still volatility in the accounts. The second reason that—[Interruption] You need to listen to this Labour members. If you go down too far in terms of levy reductions the overall levy path over the years means that you can have increases in the out-years. The members are going to have to understand this. The facts are: $2 billion since 2012 compared with a $480 million hole under members on that side of the House.