Recommendation with Minister

Should we increase the average Motor Vehicle levy?

The number of road accidents, and cost of treatment is increasing. We propose increasing the average Motor Vehicle levy to offset the increasing injury costs.

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.

Our recommendation

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.

Everyone should take a proportional share of the increased costs that we need to cover as determined by the class of vehicle they drive through their rego and petrol levy. This excludes motorcycles, mopeds and heavy goods vehicles, which would continue receiving a subsidy from other road users. 

Under our proposed option, we would continue to collect 55% of the average Motor Vehicle levy for petrol driven vehicles through petrol charges. However, because we’re proposing to collect a higher overall amount to cover the growing cost of road injuries, the petrol levy would increase from 6 cents to 7.9 cents per litre. 

Benefits

  • Makes sure that the amount most motorists pay is based on the risk of injury they present in the event of a crash
  • Most road users share an equal part of the extra costs needed to pay for road injuries through their rego, but those that use the roads more, pay more
  • Motorcycle levies increase in line with other classes of vehicles, but not to the extent that it becomes unaffordable.

Disadvantages

  • Motorcycles and heavy goods vehicles will continue to be cross-subsidised by other vehicle classes
  • Despite the motorcycle levy falling short of the money needed to cover motorcycle injuries, it's still considered prohibitive by some motorcyclists. And any increase will make it more unaffordable for them.

The amount that you as an individual pay will be dependent on your vehicle type and class

If you own a light passenger vehicle under 3,500kgs, eg a car

The Minister for ACC is consulting on whether to retain or remove Vehicle Risk Rating (VRR) and this will impact how much you'll pay. The VRR proposal has the indicative rates for petrol and non-petrol cars. 

Review of Vehicle Risk Rating

If you own any other vehicle

You can find your proposed rate in our levy rate table.

Proposed 2019-2021 Motor Vehicle levy rate table

Other examples of how we could collect these extra costs

As the costs and volume of road accidents are increasing, we need to take another look at how we're collecting levies from motor vehicle owners. This is to make sure we're being fair and transparent.

Along with the approach outlined above, there are a number of other approaches we could consider when it comes to collecting the money needed to cover these increasing costs. We have provided some other examples below, along with their benefits and disadvantages.

 

Example one

Everyone pays a proportionately equal increase

Example two

Vehicle classes charged full cost of the risk they pose

Example three

Motorcyclists exempted from any increase

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.

More information

If you want more detail on this topic and the reason we proposed this, see our full consultation document.

ACC levy proposals for the 2019 to 2021 levy period
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27 Sep 2018
Open for feedback

We were open for feedback from 27 September to 25 October 2018.

25 Oct 2018
Closed for feedback

We've reviewed your feedback. Thanks for telling us what you think!

Nov 2018
Recommendation with Minister

We've reviewed your feedback and based on what you've said we've made recommendations to the Minister. 

Dec 2018
Changes confirmed

Based on your feedback and agreement from the Minister, we've now confirmed our changes. Have a look at the topic to see what we've agreed.