MOTOR TRADE ASSOCIATION
Submission To
ACC
On
Levy Rate Consultation 2012/2013
Motor Trade Association Inc
PO Box 9244
Marion Square
Wellington 6141
Phone 04) 385 8859 Date 16 August 2011
1
Levy Consultation
ACC
PO Box 242
Wellington 6140
Via email: levyconsultation@acc.co.nz
Dear Sir / Madam
Submission: Levy Consultation 2012/2013
This submission is from:
Motor Trade Association (Inc)
PO Box 9244
Marion Square
Wellington 6141
The contact person in respect of this submission is:
Name: Tony Everett
Title: Dealer Services and Mediation Manager
Ph: (04) 381 8827
Fax: (04) 385 9517
Email: tony.everett@mta.org.nz
Thank you for the opportunity for MTA to provide comment on the Levy Consultation 2011/2012
regarding the views of, and its effect on, the automotive industry.
Yours sincerely
Tony Everett
Dealer Services and Mediation Manager
2
Levy Consultation 2012/2013
Introduction
1. The Motor Trade Association (Inc) (MTA) which represents approximately 4,100 businesses in
the automotive industry takes this opportunity to convey its views on the ACC Levy Consultation
2012/2013.
2. Members of our association operate businesses including general automotive repairers,
collision repairers, service stations, vehicle importers and distributors, and vehicle sales.
3. We appreciate the opportunity to comment on the ACC levies for the 2012/2013 term.
Submission
4. MTA support the 2012/2013 submission made by Business NZ toward the Earners Account and
Work Account.
5. MTA do not support the Business NZ submission as it relates to the Motor Vehicle Account.
6. MTA considers the Motor Vehicle Account is too general in nature covering a wide range of
road users, some who pay ACC Vehicle Account levies, and some who do not. By its very
nature it is not an account which readily lends itself to an absolute risk allocation approach.
7. Unlike the Work Account in which occupational classes can be defined, separated, and levied
according to the respective accident recovery costs, the Motor Vehicle Account covers a wide
range of user groups that cannot be easily categorised for levy setting purposes.
8. For the sake of comparison, within the Work Account a forest worker does not directly impact
the accident risk faced by say a mine worker. The two are unrelated and therefore able to be
separated for levy setting purposes.
9. This same logic cannot be applied to road users. All road users are interrelated, because they
occupy the same road space. Every road user therefore directly impacts the relative accident
risk profile of every other road user.
10. These interrelationships make it difficult, and potentially inaccurate to apply variable levy
structures.
11. Motorcyclists are an identifiable sector as a consequence of vehicle licensing structures. This
means they can be separated for ACC levy purposes. Conversely cyclists cannot, and
therefore do not face ACC levies. These two scenarios illustrate significant inconsistancies.
12. It is accepted that motorcyclists’ accident recovery costs far exceed the levies collected via ACC
directed levies. On the face of it, it seems reasonable that motorcycle levies should carry a
premium.
13. But it is also known that a significant proportion of motorcycle accidents (up to 40% according to
some studies) are caused by the drivers of other vehicles. The risk model applied by ACC
requires the party at risk pays for the failures of another party who may be the cause of the
accident. In the example provided under paragraph 8 above, this suggests the forest worker
should subsidise the accident recovery costs of the mine worker – certainly illogical in that
context, but perhaps not too dissimilar to the approach being applied within the Motor Vehicle
Account.
14. Other complications exist within the risk model, which opens the levy setting mechanisms to
criticism.
3
15. The owner of two cars is not two times more likely to be involved in an accident as the owner of
one vehicle, assuming similar driving frequencies. Yet the ACC levy process charges the owner
of two cars twice within the annual vehicle licence component, despite the fact that risk is best
defined by time on the road – not by virtue of owning two cars.
16. Drivers of old small cars are arguably at greater risk than drivers of new large cars, yet that
aspect is not currently directly reflected in the levy structures.
17. As noted above, some road users, cyclists and pedestrians are not levied at all.
18. Arguably, driver accident history should also be considered, as this is a very strong indicator of
risk. Many other examples exist which highlight inaccuracies within the current levy setting
outcomes.
19. Ultimately the Motor Vehicle Account will have inaccuracies by virtue of the fact that it is trying
to accommodate a wide range of different user risk profiles, which are not all able to be tracked
in a logical and consistent manner.
20. For these reasons, and despite the inconsistencies identified above, perhaps the Motor Vehicle
Account should try and recognise to some extent the relative risk profiles, in a manner which
serves as a public signal but not at a level which demands more definitive research and risk
analysis.
21. MTA would support the implementation of some price signals within the levy structures, to
reflect risk relativities. Price signals do not have to be, and in most likelihood cannot be,
absolute. Price signals should be there to highlight the existence of higher risk, and not
necessarily try to match the respective accident recovery costs on a sector by sector basis.
ACC is ultimately an insurance product, and like all insurance it does need to provide general
cover irrespective of absolute individual risk profiles.
22. On that basis the ACC system could provide reasonable signals to influence driver behaviour.
4