Advocacy Report Reader

John Pask

Published: August 16, 2021

Submitting To: Accident Compensation Corporation (ACC)

Issue for Business: ACC Levy Review for the Work, Earners and Motor Vehicle Accounts for 2022-2024 impacts on levy payers.

Action: ACC will be consulting on their proposed levy rate changes for the Work, Earners and Motor Vehicle Accounts in early September this year. While BusinessNZ has not received a pre-consultation briefing on the proposed levies, it is likely that there is the potential for significant levy rises across the 3 accounts, for two fundamental reasons. Firstly, most of the accounts were in a position of being significantly above the “full-funding” requirements under the ACC Act at the time of the last review (2018), hence levies were generally set below the level required to provide for full-funding in order to reduce the significant surpluses which had built up within each account. Second, with interest rates having dropped significantly over the last 2-3 years for a variety of reasons (including as a response by Government to try and reduce the impact of Covid on the economy), it has meant that discount rates that ACC and other insurance schemes use to assess liabilities and/or assets over time are also affected. Given the impact of annual levies on employers (around $800 million per annum), it is important that BusinessNZ monitors proposed levy decisions from ACC and ultimately the Minister for ACC to ensure transparency in the schemes funding and to minimise any issues which may arise in respect to cross-subsidisation between levy payers within each account.

Outcome: BusinessNZ has submitted on the ACC Levy Consultation Papers 2022-24 (Oct 21). Awaiting finalised positon on ACC levies to be made public by ACC (likely late Nov) before final levy announcements are made by the Minister of ACC (likely mid-Dec). Recently (mid-Dec) the Minister for ACC made an announcement on the ACC levies which will apply from next year.

John Pask

Published: August 16, 2021

Submitting To: Department of Internal Affairs (DIA)

Issue for Business: The way in which fire services are funded has changed significantly over recent times with the establishment of a universal fire service under the banner of Fire and Emergency NZ (FENZ). The key issue for the business community is that the costs are currently unfairly apportioned with those having high levels of insurance are paying a disproportionate share of the cost of running the fire service, particularly given that many users of fire services do not have fire insurance and the scope of the fire service has increased significantly over the years away from traditional firefighting activity to a whole lot of other emergency work (e.g. floods and medical events etc).

Action: After significant lobbying from a range of business organisations, the Government has set up a Fire and Emergency NZ funding review reference group, which includes BusinessNZ, and some other large business organisations and insurers. BusinessNZ has consistently pushed for a “risk-based approach” to the funding of Fire and Emergency (i.e costs should in general be reasonably commensurate with the likely risk/cost imposed on the fire service over time through similar risk groupings – a bit like how the ACC scheme works in respect to workplace accidents. (see submission below) The Government has made the decision that a risk-based approach to levies is too difficult to implement and is therefore more inclined to look at possibly retaining the status quo or some variation of it – i.e. levy on insurance contacts for fire damage. While no firm decisions have been made, BusinessNZ is still pushing to ensure that any system finally agreed upon is transparent and reflects relative risks to the extent possible within the constraints of the current government policy decisions already made.

Outcome: Cabinet has approved two key changes to FENZ's funding regime: 1. The FENZ levy will be charged on insurance policies for fire damage instead of policies for any material damage, for example, flood or earthquake; and 2. the levy will be calculated on the 'sum insured' rather than the ''amount insured' in a contract, to align better with how insurance policies are written in NZ.

Stephen Summers

Published: April 27, 2021

Issue for Business: BusinessNZ has previously submitted to the Government on this issue in 2016/17 when they undertook a review of retail payment systems in New Zealand. Our current submission takes a similar line to the recommendations made previously. While we believe there is scope for changes to merchant service fees, we want the Government to ensure they are taking the appropriate regulatory steps that do not lead to regulatory overreach, particularly in light of technological innovation in this space.

Action: BusinessNZ submitted on the discussion paper and will be meeting with officials around next steps.

Outcome: Further consultation is expected in the first half of 2021