Nick Smith - Nelson MP, Minister National Government

Experience Rating to Improve Workplace Safety

Since becoming ACC Minister 21 months ago, my focus has been on cost containment and preserving the future of our 24/7 no-fault insurance scheme.

There are strong signs ACC’s financial performance has turned a corner with the corporation forecasting a much improved result after losses of $2.4 billion in 2008 and $4.8 billion in 2009. Improvements in rehabilitation performance, ACC’s investments, lower costs, as well as an increase in levies and a reduction in claims, have all led to this turnaround.

ACC has made savings in its own costs over the last year of $35 million or 7%. This includes savings of 53% in domestic travel, 45% in international travel and savings in the corporate office. In contrast ACC’s administration costs under Labour for the previous four years blew out from $302 million to $494 million – around $50 million extra each year.

The good work that has happened in addressing ACC’s costs means the Government can now look at implementing promises from the 2008 election. One of these is rewarding employers with good workplaces and penalising those with poor safety records. From 1 April next year businesses, including farms, will receive discounts and loadings on their ACC workplace levies to provide stronger incentives to improve workplace safety and to make ACC's levies fairer.

New Zealand's workplace safety does not compare well internationally with more than one worker killed and another 600 injured each week. The averaged levy system means farms with good workplace safety are carrying the cost of others that are less safe. This detracts from the incentives for improving safety. The new system of accident experience rating will reward those businesses that have safer work and return to work practices.

Accident experience rating was provided for in the Accident Compensation Act from 1972 until it was repealed in 2000 by the previous Government. We reinstated the statutory provision in February and officials are now fast at work on the detailed regulations and consultations to implement the new system on 1 April 2011.

The proposal is that employers paying more than $10,000 a year in ACC workplace levies will be subject to a discount or loading of up to 50% based on their claims history. This approach will apply to the approximately 5000 employers who employ more than 30 people and involves approximately 690,000 employees or more than 30% of the workforce.

Experience rating is more difficult for smaller employers so a simple system of no-claims bonuses and high-claim loadings will apply. The proposal is that if no weekly compensation claim has been lodged in the preceding three years, the employer will receive a 10% no-claim bonus on their ACC levies. Penalties will apply where there has been more than four weekly compensation claims in the last three years. An expected 220,000 small businesses will receive a discount under the proposed policy and approximately 1000 will pay a high-claim loading.

Feedback from Business New Zealand and Federated Farmers to the experience rating proposal has been positive with them both saying it would be a major step towards fairness and safer workplaces.

ACC will be consulting with employer and employee groups over the coming months on the details of the proposal. The Government's ambition with these changes is to reward excellence in workplace safety and achieve a stronger focus on reducing injuries at work. My message to farmers and businesses is that from 1 April next year good safety will be good business.