MOTOR TRADE ASSOCIATION

Submission To

ACC

On

Levy Rate Consultation 2016/2017

Motor Trade Association Inc

PO Box 9244

Marion Square

Wellington 6141

Phone 04) 385 8859 Date30 October 2015

Levy Consultation
ACC
PO Box 242
Wellington 6140
Via email:

Dear Sir / Madam

Submission: Levy Consultation 2016/2017

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:

Thank you for the opportunity for MTA to provide comment on the Levy Consultation 2016-2017 regarding the views of, and its effect on, the automotive industry.

Yours sincerely

Tony Everett

Dealer Services and Mediation Manager

Levy Consultation 2016/2017

Introduction

  1. The Motor Trade Association (Inc) (MTA) represents approximately 3,800 businesses in the automotive industry. We welcome this opportunity to convey our views on the ACC Levy Consultation 2016/2017.
  2. Members of our association operate businesses including general automotive repairers, collision repairers, service stations, vehicle importers and distributors, and vehicle sales.
  3. MTA has had the opportunity to consider the submission from Motor Industry Association and signal our support for their submission.

Submission

  1. Earners Account. MTA supports the proposal to reduce the Earners’ levy from $1.26 to $1.21 per $100 of liable earnings (-4% decrease). We also support increasing the minimum and maximum liable earnings limits.
  2. Work Account. MTA supports the proposal to reduce the average Work levy from $0.90 to $0.80 per $100 of liable earnings (-11% decrease). We also support increasing the minimum and maximum liable earnings limits.
  3. Motor Vehicle Account. MTA supports the proposal to reduce the average motor vehicle levy from $194.25 to $130.26 (-33% decrease). We also support reduction in the petrol levy by 1.2 cents per litre (from 6.9 cents to 5.7 cents. We support the idea of smoothing rates to avoid sudden and substantial swings in rate settings from one year to the next. MTA supports further investigation into broading the application base for diesel powered vehicles to include a RUC based component.
  4. Motorcycles. MTA supports the proposal to decrease the Motorcycle Safety levy from $30 to $25.
  5. Additional comments about Motor Vehicle Account
  6. Vehicle Risk Rating. From the outset MTA supported ACC proposals to introduce risk rating for cars based on crash performance, and MTA again reaffirms ongoing support for the VRR strategy and scheme.The proposed developmentsoutlined in the consultation documents will help refine the VRR methodology and should help build increased support for the scheme by the public at large. ACC specifically sought feedback on the sequencing priority of Steps 3a (Market Groups) and 3b (NCAP scores older than 6 years)– in that respect MTA would prefer step 3b be applied before step 3a. Market Group (3a) is a fairly crude measure which assumes any vehicle will provide similar crash performance to its obvious competitors of the time, whereas NCAP (3b) provides a specific collision test rating for the vehicle in question. MTA looks forward to participating in the Phase 2 consultation discussions as part of the Motor Vehicle Industry Experts Group.
  7. Vehicle levy cross-subsidisation. NZ does not have the luxury of being able to separate trucks,cars, and motorcycles on our roads. This leaves all road users sharing the same road space. Every road vehicle, whether it be a truck, car, motorcycle, or cycle, impacts the road risk profile of every other road user, albeit to varying extents. Because of this close and inseparable interdependence between all road users, MTA supports the current ACC stance that cross-subsidies continue to be applied across different vehicle categories within the Motor Vehicle Account.
  8. Aggressivity. Levies are increasingly being set with recognition of a vehicle’s relative aggressivity toward other road users. But, the inclusion of aggressivity within the levy setting process is perhaps not well understood by consumers and more needs to be done to bring the concept into the discussions.Aggressivity is factored into the TSSI data within the Vehicle Risk Rating scheme, but that contribution is not defined. ACC’s consultation documents state that 42% of motorcycle accidents don’t involve other types of vehicle – therefore the reverse also applies, whereby 58% of motorcycle accidents do involve other types of vehicle. Given the vulnerability of motorcyclists, it is likely those other vehicles contribute significantly to motorcyclist injuries. In that light some level of cross-subsidisation is relevant. Given the increased cross-subsidisations and price-signalling that is now a part of the ACC levy structures perhaps some sort of matrix should be provided which highlights the various ‘pluses and minuses’ that are applied to each levy group. This would serve to quantify the various factors that have been considered in reaching the proposed levy, and help condition the discussions and criticisms which often arise during the annual levy setting process.
  9. Levy Price Signals. Notwithstanding the comments made in 7.2 and 7.3 above, MTA also supports the idea that levies include price signals,where able and relevant, to help build consumer/user awareness. The Vehicle Risk Rating scheme is one such examplewhere vehicles which are deemed to pose higher injury risk are charged a higher levy.
  10. Motorcycle Levies. MTA supports the idea that further work be undertaken to consider vehicle characteristics within motorcycle levy settings. Recognition of additional engine capacity bands is worthy of further consideration. Also, recognition of motorcycle safety systems such as ABS and traction control is also worthy of consideration within ACC levy structures.
  11. Trade Plates. MTA has concerns about the magnitude of levies applied to Trade Plates. No information is provided in ACC’s consultation document covering the incidence and cost of injuries sustained by occupants of vehicles being operated under Trade Plates. Given vehicles can only be operated under Trade Plates in certain and prescribed conditions, typically testing or evaluation, we would have expected related injury costs might be less than those experienced in the open environment. Is that assumption valid? Because Trade Plates are a distinct licence category, we assume specific accident and injury information would exist to enable comparison.
  12. Driver recognition. MTA submits that the Motor Vehicle Account levy collection processes should be expanded at some stage in the future to include contribution from driver licence holders to broaden the collection base and include further scope for the introduction of appropriate risk based price signals. Just as individual vehicle types are risk rated, arguably a similar approach should be applied to driver licensing. Driver performance profiles and accident history would be logical places to start. If there is a strong correlation between accident rates and driver performance characteristics (as indicated by driver infringements), then these factors should be considered when setting driver risk profiles. This idea will bring a whole new factor into consideration for ACC, but these concepts are not unique and are already well established within other open market insurance products.

MTA welcomes the opportunity to discuss any part of its submission with ACC.

Consultation process. MTA appreciates the difficulty in engaging with stakeholders in consultation process, and that ACC have made significant efforts to provide information in relatively short, easy to digest ‘sound bites’. But from our perspective accessing and considering all relevant documents has not been easy, and it has been difficult to identify the key points ACC has sought to promote for specific comment. Further, we have concerns that some consultation documents appear to have been updated or amended partway during the consultation period. Early commentators may not be responding to the same documents as later submitters.

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