Our recommendations to the Minister
What we asked
We asked you about our proposal for the 2019 to 2021 levy period to:
- increase the average Motor Vehicle Levy from $113.94 to $127.68 per vehicle, maintaining the current funding split across petrol charges (45%) and registration fees (55%)
- increase Motor Vehicle levies for motorcycles in proportion to the average vehicle levy increases for 2019/21.
What you told us
- Most submitters disagreed with the proposed increase to the average Motor Vehicle levy. They said that the cost of petrol and rego is already too expensive, particularly in light of rising petrol and living costs
- A small number of submitters supported the proposal. They thought that the proposed increase was fair
- Many submitters are opposed to an increase in the petrol rate due to current fuel prices. Some have suggested collecting the levy increase through rego costs only
- Several submitters commented that motorcycle levies should be increased further than we proposed, as they felt motorcycles are responsible for a large portion of accidents
- Other submitters believe that motorcyclists pay an unfair proportion of motor vehicle levies, especially when compared to other vehicles such as sports and turbo-charged cars.
The ACC Board recommends:
- increasing the ‘average Motor Vehicle Levy’ from $113.94 to $127.68 per vehicle
- holding the petrol charge at 6 cents per litre, and shifting the increased cost to the registration component of the levy. This shifts the split from 45% petrol and 55% registration (consultation proposal) to 34% petrol and 66% registration (Board recommendation)
- limiting the increase to Motor Vehicle levies for motorcycles in proportion to the average vehicle levy increases for 2019/21
We acknowledge the feedback received about the affordability of the levy increase, however, we're required to recommend levy rates that are consistent with the Government's funding policy. To address long-term cost pressures in the scheme, and avoid large levy increases in the future, we need to increase levy rates to maintain a fully funded scheme.
We consulted on increasing the average levy to $127.68 per vehicle and maintaining the current funding split across petrol charges (45%) and registration fees (55%).
We're recommending to hold the petrol levy at its current rate of 6c per litre and shift the increased cost to the registration component of the levy. This is in response to feedback received on the high cost of petrol, and some submitters' preference to increase the registration fee while holding the current petrol rate.
The recommended option is consistent with the funding policy requirements. The average Motor Vehicle levy amount collected is the same as per the consultation proposal but the allocation differs. In moving the percentages between registration fees and petrol charges we're responding to the feedback and views of many New Zealanders.
Motor Vehicle levies for motorcycles
We're recommending that Motor Vehicle levies for motorcycles increase in line with the average Motor Vehicle increase for the 2019 to 2021 levy period, to avoid further increasing cross-subsidisation between motorcycles and other motor vehicles.
We'll have a decision from the Government on our recommendations in December.
Our original proposal
As a vehicle owner, you pay a Motor Vehicle levy to cover the cost of accidents on public roads involving moving vehicles.
Injuries from road accidents are generally more severe, more complex and cost much more to treat than other types of accidents.
Most of the money collected from the Motor Vehicle levy pays for rehabilitation and weekly compensation for serious injuries.
The rest is spent on services such as elective surgery, medical, and rehabilitation for non-serious injuries, and preventing injuries.
Our proposed approach to collecting these increased costs
We propose that vehicle classes are charged the full cost of the risk they pose apart from motorcycles and heavy goods vehicles.
How can we reduce the number of road accidents?
Injuries from road accidents are generally more severe, more complex and cost much more to treat than other types of accidents. Accidents on the road are also increasing, so we need to change our commitment to safety on our roads.
Over the last two years, we've paid an average of 30,400 road accident claims per year, this is 9% higher than 2016.
We want to explore options for how individuals can help achieve this.
If you want more detail on this topic and the reason we proposed this, see our full consultation document.