1.1 This submission to the Accident Compensation Corporation (ACC) on the 2024 ACC Levy Consultation is made by The New Zealand Initiative (The Initiative), a Wellington-based think tank supported primarily by major New Zealand businesses. In combination, our members employ more than 150,000 people.

1.2 The Initiative undertakes research that contributes to the development of sound public policies in New Zealand. We advocate for the creation of a competitive, open and dynamic economy and a free, prosperous, fair and cohesive society.

1.3 The Initiative’s members span the breadth of the New Zealand economy. An efficient and effective system for accident compensation and rehabilitation is important to them. Most will be participants in the Accredited Employer Programme (AEP). The views expressed in this submission are those of the author rather than The Initiative’s members.

1.4 The Initiative is concerned about the rising costs of ACC and that these rising costs are driving higher ACC levies. Higher ACC levies will add further pressure on businesses, workers, and motor vehicle owners during challenging economic times and cost-of-living pressures. The government is responding by seeking to restrain core Crown operating spending and it has called on local government to focus on ‘doing the basics brilliantly’. ACC should do likewise.

1.5 ACC should strive to be more efficient and effective. It should work to contain the rising costs of claims; maximise returns from its investments; ensure its accounts are fully funded; and minimise cross-subsidisation within its accounts.

1.6 ACC is a monopoly provider, so it does not face competitive pressure to be more efficient and effective. The government should therefore consider reintroducing competition in the provision of accident insurance. 1.7 In summary, we submit:

(a) The government should reintroduce competition in the provision of accident insurance.

(b) ACC should work to contain the rising cost of claims.

(c) ACC should seek to maximise risk-adjusted returns from its investments.

(d) ACC should ensure that its accounts are fully funded.

(e) ACC should cease the smoothing of levies and the capping of levy rate increases.

(f) ACC should reduce cross-subsidisation within its accounts.

(g) The concurrent review into Work Health and Safety should consider the role of ACC in the health and safety system.