The New Zealand government has ordered an independent review of the Accident Compensation Corporation amid concerns about declining rehabilitation rates and increasing costs, and says levies will rise over the next three years.

The no-fault scheme covers everyone who is injured in an accident, whether working or not, and includes visitors to the country. It is funded by levies on earners, vehicle owners and businesses.

“ACC provides critical support to New Zealanders in times of need, but I am concerned that ACC’s performance has been declining for a decade,” ACC Minister Matt Doocey said. “Rehabilitation rates are down, weekly compensation costs are up and average costs per claim are up.”

The review will examine claims management and whether ACC has the right interventions and settings to help people return to independence as soon as possible. 

“Alongside the review, I am working with the ACC board and the Ministry of Business Innovation and Employment to strengthen performance monitoring and achieve more targeted and cost-effective social rehabilitation services,” Mr Doocey said.

The earners and business levy will increase by up to 5% a year for three years to meet rising costs. For someone on the median full-time pay of about $NZ70,000 ($63,370) a year, that equates to an extra $NZ42 ($38) for the 2025-26 financial year, the government says.

Vehicle owner levies are also being increased by 5%, plus an inflation adjustment for three years.

ACC says it spends $NZ7 billion ($6.3 billion) a year on healthcare and weekly compensation to support the 2 million injury claims it receives.   

CEO Megan Main says more people are receiving weekly compensation and remaining on the scheme for longer with non-serious injuries, while rehabilitation and care service costs have risen.

“The scope, cover and cost of the ACC scheme also continues to grow due to recent court cases and policy decisions, and we are also required to account for the lifetime costs of injuries that have already occurred,” Ms Main said.  

“Health and social insurance schemes internationally are facing similar challenges in balancing scheme boundaries, rising healthcare costs and funding.” 

Ms Main says the government’s decision to increase levies will alleviate the pressure, while the ACC has intensified efforts to improve rehabilitation performance and supports the review.

“We hope any findings will further help us improve our rehabilitation performance and assist us in ensuring the long-term sustainability of the ACC scheme,” she said.