Changes confirmed by Government
Cabinet has announced their decisions following our levy consultation. After reviewing your feedback, they have decided that the Vehicle Risk Rating programme will end and all light passenger vehicles will be charged a flat fee according to whether they are a petrol or non-petrol vehicle.
This will come into effect on 1 July 2019.
More information on all the decisions
Our original proposal
Vehicle Risk Rating (VRR) applies to most passenger cars.
Some vehicles are not part of VRR and pay different fixed rates. These include:
- vans and utes, which make up around 15% of the light vehicle fleet
- heavy vehicles such as trucks and buses.
VRR charges a different Motor Vehicle levy based on how much protection the car provides to people inside and outside of the car if it crashes.
There are four different levy rates that can be charged depending on which “band” a car is placed in:
- Band one applies to cars that offer the least protection and charges the highest levy
- Band four applies to cars that offer the most protection and charges the lowest levy.
Current levy rates for
If you want to know what band you are in use our rego calculator on the ACC website:
|Band||Number of vehicles||Levy for petrol cars||Levy for non-petrol cars|
ACC uses information gathered by Monash University from real-world crashes and the New Car Assessment Programme ratings to decide which band applies to a specific make and model of car.
What VRR is trying to achieve
VRR charges higher levies to owners of cars that provide less protection to people inside and outside of the car in the event of a crash. If you drive a safer car you pay a lower levy.
Before VRR was introduced in 2015 most passenger cars were charged a flat levy rate. This meant that drivers of safer cars ended up paying for the costs of injuries from accidents involving less safe cars.
VRR tries to reduce this cross-subsidisation so that drivers pay a levy that better reflects how safe their car is.
VRR was not intended to improve road safety or influence people’s decisions when purchasing a car.
It was hoped that it may have contributed to the discussion around road safety but there is no evidence, here or overseas, that VRR or a similar annually charged amount is an effective tool to improve road safety awareness.
Should we keep VRR or remove VRR?
The Minister would like to hear what you think about keeping or removing VRR.
Matching the amount of levy charged to the level of risk is a long-standing component of ACC’s levy systems. For example, motorcycles are charged more than cars and larger motorcycles are charged more than smaller ones.
ACC also uses this approach for the Work levy. If you're an accountant you, or your employer, will pay a much lower levy rate than if you were a professional rugby player.
But levies are not always so closely linked to risk.
If your hobbies include home renovation and skateboarding you're more likely to have an injury than if you were a chess and scrapbooking fan.
If you're injured during any of these activities then you're covered by ACC but the costs of this are funded either through a flat levy on all employees and self-employed, or through general taxation.
VRR rewards those with the safest cars
One of the criticisms of VRR has been that it rewards those who can afford the latest, safest model of car, and punishes the elderly, the poor, and the young who can’t. These people tend to drive older cars and these cars tend to be less safe than newer cars.
Even though there are safe cars available at all cost points, not all people who want to buy a safer car will be in a position to do so.
While wealthier people tend to drive newer cars there's a significant portion that drives cars that are levied near the top of the scale.
It adds extra complexity into the Motor Vehicle levy system
If VRR was removed there would be some administrative saving that could be spent on other road safety initiatives.
Removing VRR is not anticipated to affect the Government’s road safety objectives.
Regardless of whether VRR is kept or not, the Government is considering how the real-world crash data that underpins VRR could be maintained and used to help motorists make well informed safe-vehicle choices.
The following tables compare the current rates under VRR with the proposed rates for the 2019/20 to 2020/21 period.
Indicative levy rates for petrol driven vehicles (including hybrids and electric vehicles)
If you want to know what band you are in use our rego calculator on the ACC website.
|Band||Current petrol rate||Petrol rate if VRR stays||Petrol rate of VRR is removed||Difference between proposals|
Indicative levy rates for non-petrol driven vehicles
|Band||Current non-petrol rate||Non-petrol rate if VRR stays||Non-petrol rate if VRR is removed||Difference between proposals|
If you want more detail on this topic and the thinking behind what is being proposed, see the full consultation document.