Hon RUTH DYSON (Minister for ACC)
: I move,
That the Injury Prevention, Rehabilitation, and Compensation Amendment Bill be now read a second time. This bill builds on the framework provided for in the existing legislation by ensuring that the accident compensation scheme is funded in a fair and sustainable manner. The primary purpose of the bill is to merge the self-employed work account and the employers’ account of the Accident Compensation Corporation (ACC) into a single work account, so that levies are more stable and better reflect industry risk. The account merger will allow levies paid by businesses to be based on the industry risk associated with their industry grouping, rather than on their business structure. The bill also renames the medical misadventure account.
Some submissions to the Transport and Industrial Relations Committee expressed concern that the merger would be contradictory to the basic insurance principle of grouping industries on the basis of discernible risk factors. The merged work account will continue to group enterprises on the basis of discernible risk factors, but it will not group enterprises according to their business structure. The use of self-employment as a rating factor results in the different treatment of small businesses that carry out similar—or even the same—activities, with similar risks. For example, a self-employed plumber currently pays a different levy rate from a sole-trading plumber operating within a company structure, even though he or she faces the same risk of workplace injury.
The self-employed work account has had a high degree of volatility, due to its small earnings combined with a high turnover of levy payers from year to year. Small businesses, particularly, have cited levy instability as creating problems for their business-cost planning. The account merger will ensure that levies are more stable for both the self-employed and employers. It will also encourage industries to better coordinate health and safety across their workplaces, regardless of their business structure.
This merger is not intended to redistribute the excess reserves currently in the employers’ account to the self-employed. The transition period of 3 years provided for in the bill will allow the self-employed and employer levy rates in each industry or risk class, and the relative funding positions of the employers’ and self-employed work accounts, to be equalised. The Government is proposing to ring-fence approximately $100 million of reserves in the employers’ account, and to reimburse those funds to employers through rebates during the transition period. Also, during that period levy rates for classification units will be able to either increase or decrease only by up to 25 percent in relation to the previous year’s levy for those units. After the transition period, employers and the self-employed in the same industry or risk class will pay the same levy rate. If, as some had requested, the entire excess reserves in the employers’ account were to be refunded to levy payers in one year, then employers would experience significant increases in levy rates in years to come, which would defeat the objective of levy stability. ACC Partnership Programme employers would be more likely to exit the programme to take advantage of the rebate of the excess funding, to which they have contributed little, and that would also jeopardise the functioning of the programme.
The proposed commencement date for this merger to take effect is 1 April this year. Because both accounts are projected to be adequately funded for the 2007-08 year, that will make the transition to a single work account easier by reducing the impact of the merger on levy payers. The public was informed of the proposal to merge the accounts
during the 2007-08 levy round. ACC provided information about the proposed policy package, and indicative levy rates, for the merged work account. In November of last year ACC also published updated indicative levy rates on its website, to assist those seeking to understand the levy impact of the merger proposal. Furthermore, the Department of Labour wrote to everyone who made submissions on this bill, and on the proposal during the levy consultation, with information as to how the proposed rebates would be funded.
As I mentioned earlier, the bill also renames the medical misadventure account as the treatment injury account. The Injury Prevention, Rehabilitation, and Compensation Amendment Act (No. 2) 2005 replaced the “medical error” and “medical mishap” definitions with a definition of “treatment injury”. That bill also removed the necessity to find fault in order to obtain cover for treatment injuries, and the new provisions were implemented on 1 June 2005. Health professionals and health organisations are now familiar with the new systems, terms, and cover provisions. It is appropriate that the medical misadventure account now be renamed the treatment injury account.
The bill returns to the House unchanged. However, the Transport and Industrial Relations Committee—to which I give my thanks—has recommended that a few minor corrective amendments should be made during the Committee stage. I will release a Supplementary Order Paper to make the minor corrective amendments recommended by the committee.
I conclude by thanking the select committee for its consideration of this bill, and commending the progress of the bill to the House.
PANSY WONG (National)
: National will continue to oppose the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, because it legalises stealing from the employers’ account. The only reason that the Transport and Industrial Relations Committee did not bother to make any amendments was because National—and other rational parties—realised that there was no goodwill and no open-mindedness from the Labour Government side about even considering any changes. So we will simply oppose this bill.
Let us look at this position. As at June 2006 the employers’ account, which is to merge with the self-employed work account, was standing with a very healthy margin of 77 percent above estimated claims liability, while the self-employed work account’s margin was 16 percent. This bill simply indicates that the combined, merged account would maintain a margin of 53 percent and equalise the amount. Let me illustrate this. It is, for example, as if I have $10 in my pocket and the Minister Ruth Dyson happens to have $40 in her pocket. I come along and say what a good idea it would be to pool together our two sums of money and spread it equally. I want to know how many people in this House would believe that the Minister would hand over $15 to me so that we could both end up with $25. None. That is what I expected. All rational, intelligent members of Parliament know that. No two people would be willing to simply pool together their money for no good reason. Yet the Labour Government is passing this legislation to force employers who have collected levies due to the number of their employees and their earnings to pay those levies over to the merged account.
If the Minister is actually reasonable and says there is good reason to merge the two accounts because business structure should not dictate the risk, then why not, at the minimum, allow the employers’ account to start off in the same position as the self-employed work account margin? The funding policy of the Accident Compensation Corporation (ACC) is that within 5 years it would refund the excess margin in those accounts to the people who pay the levy, or collect extra levies if there is an insufficient amount in the account—and we are only 1 year off that place. ACC also indicated that by 2009-2010 the levy margin should be only 10 percent. Even if we are generous and
let the employers’ account margin drop to the same position as the self-employed account margin, it would mean that employers would be entitled to a refund of over $600 million.
The Minister stood there and pretended that the Labour Government is generous. She said we should let them have $100 million—but it would be not even in one single year but over 2 years. Even the Inland Revenue Department—the department that helps people—recognises that the use of money attracts interest. If taxpayers had overpaid their tax, then even the Inland Revenue Department would pay them some interest for the use of money.
ACC explained why the employers’ account is in such a healthy position. It is partly because of the additional premium collected. The other reason is that, ACC says, it makes good investments. Good on them! But members should think about which principles those premiums were paid under. ACC is a statutory monopoly insurer.
So, for this very, very basic reason, National will say that no legislation—and I am challenging parties that support this bill—should be passed in this Parliament that will legalise stealing from the employers’ account, because that money is collected into a monopoly organisation and employers should be entitled to their refund. I urge the other parties to think about that. Let us put aside whether the employers’ account and the self-employed work account should be merged. There is no excuse for legalising stealing. I will be introducing an amendment during the Committee stage to state that, as a minimum, parties that are responsible should say that if the employers’ account ends up with overpayments, then they should be entitled to those refunds.
I also want to touch on the issue of the process. The Minister said that ACC had written to all those people who made submissions, so there should be no excuse for people not understanding what is happening. Well, no submission was open to the public. Because of the truncated period of submission, only certain organisations were invited to make submissions. We also know that the original bill in 2001 promised full consultation in setting the levy. I invite the next speaker from the Government benches to explain the meaning of “full consultation”. Does it mean that ACC will publicise some figures on its website? What is the process of verification of the premium that was set by ACC?
So National has a lot of problems with legalising the stealing of money from the employers’ account, which should be properly refunded to those employers. We have a lot of problems with the process. All the submitters—even the ones who were invited to make submissions—have problems with the short time period. National also had problems with the very clear body language of the Labour Party members in the select committee, which indicated that they are not open-minded about any suggestions.
The last point I want to touch on is that this is meant to be an insurance policy. The insurance premium is based on risk and reward for good behaviour. Yet the Minister mentioned that the objective of an insurance policy is levy stabilisation. If levy stabilisation is the key objective, then this should not be treated as an insurance-based policy for work injury. The Government should not even pretend it understands what is meant by insurance that takes risk into account.
The other thing that really worries us is the Government once again urging the so-called industry to reach over and help each other to achieve a good outcome. National would consider at this stage that there is no way we can reach over and help Labour in terms of managing its members. For example, Mr Field’s present predicament, I hope, is not something that all members of Parliament can reach over and share the blame for. This is a socialising insurance premium policy that takes into account the risk of the type of industry, but does not take into account how individual self-employed people or business owners can behave in order to reduce their premiums.
Hon MARK GOSCHE (Labour—Maungakiekie)
: It is no wonder the insurance companies that tried to write the policy for the National Party and funded it for its last election are so disappointed. They thought it was bad having Dr Paul Hutchison fronting up for the National Party, but now they have to put up with Pansy Wong. She presented us with a most muddled set of nonsenses about the process in the Transport and Industrial Relations Committee. The process was actually very simple. It was straightforward and would have taken half the time had it not been for the idiotic questions that came from the two National Party members I have just named—
David Bennett: Aw!
Hon MARK GOSCHE: —not from those who are sitting down the back on the other side. They are much more sensible.
National has to get over the ideological position that it wants to sell off accident compensation, as it tried to do when it was last in power. It opposes this Injury Prevention, Rehabilitation and Compensation Amendment Bill because that is what it wants to do. Why did it have a separate account for self-employed people? It was because the insurance industry did not want them. The National Government was going to allow its mates in the private insurance market to cherry-pick the best part and leave the Government-owned organisation to cover the rest.
Members opposite are still thinking that way. They still want to privatise what I think is the best accident compensation system in the world—a system that is held up throughout the world for all sorts of reasons, because it is fair and, even more important to business, cheap. It is cheaper than all those schemes National members point to in their examples from Australia and the United States. But that does not matter. Ideology is always going to win, over on that side of the House, over common sense and good policy—which this bill is. For people who are listening to this debate, we are simply saying that for people whose risks are the same—for example, unemployed plumbers doing exactly the same work as plumbers who are set up under a company structure—over time as we equalise the premiums their levies will be the same.
We received very interesting submissions from, I think, the seafood industry. It was represented by one of its officials, who did not—after the National Party asked him numerous times—want to say whether he was opposed to the bill. His life was worth more than that, because he was in the unenviable position of having half his members opposed to the bill and the other half in support of it. Why? The reason was that two guys could be standing next to one another on the back of a fishing boat, one self-employed and the other working under a company, but each would be paying a different rate. They could be doing exactly the same job and carrying exactly the same risks—and the National Party says that that is the way it should be.
Where is the logic in that? We look forward to some National Party speaker further on in this debate getting up and telling us what the logic is behind that. It is not as though at the moment we are saying to employers who have built up money in their fund that we are going to take it all off them and give it to the self-employed. That is not what the bill says. But Pansy Wong over there would say that we are stealing off people. Well, she should actually do her work—that is what she is paid for in this place—and read the bill. She sat in on the submission process and heard it. She questioned the officials and heard their responses. They were very sensible, very straightforward, and very easy to understand. Some valid questions were raised by submitters, such as what their levies would be. So we asked the officials—as a good select committee does—to send out that information, and they did so. I congratulate those officials on an excellent job well done, and on being able to put forward the information submitters asked for.
But National Party members, still too lazy to do their work, have not even read that yet. This country deserves a better Opposition than the one we have here. Why do those members not just leave the place and give their jobs to the insurance companies? Those companies would write their policies, fund their campaigns, and expect to be delivered accident compensation on a plate, except for the bits that do not become very profitable, such as provisions for self-employed people.
Oh no, no! Their mates in the insurance industry do not want that. And if Pansy Wong dares to say that this is about stealing, then I would like her to come up with some words to describe the behaviour of the National Party in the way it is beholden to private insurance companies, whose representatives sat up in the gallery week after week and watched this House debate the privatisation of accident compensation. I remember watching them. They were from that company called HIH Insurance—that really great company the National Party gave accident compensation to. How many billions of dollars did that company lose in Australia when it went under?
Hon Ruth Dyson: And who paid for that?
Hon MARK GOSCHE: Who paid for that? Was it the company’s shareholders? No, not on your life! It was the ordinary people of Australia who paid for that massive failure—and the National Party wants to revisit that sort of thing.
This is a fairly small, innocuous sort of bill. It is not hugely earth-shattering, but I congratulate the Minister on bringing it before the House. Yet National members are stuck in their old ideological mode. Its members have put on fresh new faces, as they do with their new leader, and pretend that they have changed, but they prove every time they do this sort of thing in the House that they are just the same right-wing old Tories they always were. No—I apologise to those right-wing old Tories—this lot is even worse. Even those right-wing old Tories told us what they thought. They got upfront and said what their real policies were. They did not go running around pretending to have friendly faces, when in fact everybody knew they were not friendly.
But this lot still have their policy to privatise accident compensation, just as they want to sell off State houses and all the other things that prop up society in the way we should. We should make sure that people’s risk—whether those people standing on the back of fishing boats are self-employed or people who happen to be employed by the company—is the same, that their levy is the same, and that they are in an equal situation. I do not think that anybody in his or her right mind could actually argue against that, except for those in the National Party.
DAVID BENNETT (National—Hamilton East)
: I appreciate the call on the Injury Prevention, Rehabilitation and Compensation Amendment Bill that is before us. In looking at what the Labour Party has been saying, I believe there is a fundamental difference in society, and especially in business, that its members just do not understand. There is a difference between being an employer and being self-employed. Employers generally have commitments to their employees that they have to maintain. They have to provide a safe environment in which people can work and they are generally audited to make sure they comply with those regulations, whereas self-employed people are generally people who are starting out and taking a few risks. They will go out there and do what they have to do in order to get their product, or their job, completed. They will take risks that employers just cannot afford to take because of their responsibility to other people. That is a concept we would not expect Labour Party members to understand.
They cannot understand it because they have never been in that position, whereas a lot of people on this side of the House have been there and done that. They know what it is like to go out and milk cows, or do whatever they have to do to get by, to get going, and to make a business successful. They know what it feels like to take the risk of doing
the extra work they would not ask employees to do, because they know they have to save some money to make their business successful. That is the fundamental difference we have in relation to this legislation, and that is why we have a difference in the way those two business entities have been treated.
This legislation seeks to change that. It seeks to put everyone together in a great universal pot, which I guess is the collective socialism one would expect from the far left. Those members think that if those two ingredients are put together things will be equal, and that the great ideals of a society based on equality will come about by treating everyone the same. Well, it does not work that way. People are different and businesses are different; they deserve to be treated differently.
We see a number of things in this legislation. The first is the difference between employers and the self-employed. The second has to do with the reserves employers have built up, which equate to about $511 million. That is money employers have paid into an account they did not need to pay into, because the account is being merged with another account that has only $115 million in it. Effectively, over a number of years employers have been paying excessive levies, and the Government has decided that it will put that money into one big pot, worth about $700 million. I do not know why the Government has such resources there—perhaps it wants to raid them in a year’s time for its election spending. The real reason it should have the account there is so that it can give the money back to the employers who have actually paid into it. The Government should not take money off the employers and put it into some great merged account that it thinks will achieve its goals of equality. The employers have paid in that money and they deserve to get it back.
The Government is talking about some kind of scheme—a 2-year window of opportunity—where it will rebate some of its new levies for employers. That will account for about $105 million of that $500 million. That may seem fine, but the reality is that Labour is doing that just for show. It is just keeping the employer levy down for 2 years. Why would it want to do that? The reason is that when the two accounts are merged, the employer levy will have to go up. So if Labour uses the $105 million to keep the levy down, employers will not notice the change for the next 2 years. But once that rebate has come off, employers will see their levies go through the roof. That is the real reason Labour is doing what it is doing with that levy rebate.
Labour should be giving the whole sum of money back to the employers, and it should be treating employers and the self-employed differently. Members may ask what that actually means. Well, the ministry has told us that there could be an increase of up to 25 percent in relation to the levy of the previous year. Can members imagine running a business and increasing the price of their product by 25 percent in one year? At the end of that year there would not be a business. But it is all right for the Government to do that to employers. It is expected that 8 percent of employers will get a levy rate increase of between 5 and 45 percent—that is, up to 45 percent more in levies than exists under the current regime. Members should imagine businesses getting a 45 percent increase in their levies. That is not exactly the kind of thing people should be doing to New Zealand business if they want to transform the economy, grow the economy, or—more likely now—just sustain it.
Let us look at some of these numbers. For employer classification levies in 2007-08, we are at present looking at levies of about $2.43 for lobster fishing—basically, for ocean and coastal fishing. Under this new scheme, without the employer rebate, it will mean that in 2 years’ time the figure will be $4.31. So the levies will go from $2.43 to $4.31 for the fishing industries. Those industries are really struggling under a high export dollar, but these guys in the Government are going to give them another kick in
the guts through their employer levies under the Accident Compensation Corporation (ACC) scheme.
I turn to meat inspection services. The figure will go from $1.26 to $2.02. I say to Mark Gosche that we have read the legislation and we have read the numbers, and the Government cannot do that to another industry that is really struggling in New Zealand. I take another example, the timber industry, where the levies will rise from $1.13 to $2.74—a huge increase for an industry like that one.
Members should look at other industries that they would not expect to have such big increases, such as sport. That will be good for Trevor Mallard, will it not? Let us look at what the Government is going to do there. The levies in equestrian sports will go from $4.83 to $5.65. Labour should be encouraging people into sports in New Zealand. Rugby league levies will go from 75c to $1.01. Effectively, levies in the sports area will increase by about 17 percent.
This Government prides itself on culture, does it not—a Government that has an interest in the cultural affairs of this country? What has it done there? The levies will increase from 24c to 36c—a big increase on a percentage basis. This Government does not really care about our youth—it does not care about getting them into sport—it does not care about cultural interests; it is just prepared to do whatever it has to do in order to get more money. This is another tax-and-grab from this Labour Government.
There will also be an effect on self-employed people; some of them will have from 20 to 50 percent increases. The police, and those in stevedoring, plastic products, and chemical products will have increases at large rates, as well.
This bill was intended as a means of putting together two pieces of the ACC components that should always have been separate. They represent different ways of doing business. They represent the different structures of New Zealand business. Yet the Government has put them together in a process it believes will create equality and fairness. Well, it will not create equality and fairness; all it will do is make employers pay through the nose for the self-employed. It is a farcical attempt by this Government to push through something without any consultation.
In the select committee we were very surprised to see such legislation being proposed without there being time for genuine consultation. The reason there are not many submissions on this legislation is that people simply were not given time to make submissions. It was within about a 6-month period that people became aware of the changes, and those changes were forced upon them this year. That is simply not good governance for business. It shows that this Government has no idea of how businesses plan ahead. It shows how this Government is prepared to make its changes just willy-nilly, as it desires, without having any knowledge of the consequences or the approaches to take.
New Zealand business deserves more. New Zealand culture deserves more. New Zealand sports deserve more. But what will we get? We will get a regime that lumps it all together for the sake of this Government. There is a sum of $500 million that has been stolen off employers. It is time for the Government to give the money back to them and show that it really cares about transforming this economy.
SUE BRADFORD (Green)
: The Green Party supports this short and, for bills concerning accident compensation, unusually simple bill. The primary purpose of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill is to merge the Accident Compensation Corporation’s (ACC) self-employed work account with its employers’ account. This is just sensible. There is no good reason why a self-employed person carrying out a business should be levied differently than a person who registers a company that employs him or her as its sole employee. Yet that was the consequence of
the anachronistic legacy of the two separate accounts that flowed from the National Government’s failed privatisation of accident compensation in the 1990s.
This bill presents an opportunity for the National Party to distance itself from the hard-right policies and the hollow men of the Brash years. It is a chance for National to show that it is acting in the interests of New Zealanders who have the misfortune to be injured, rather than in the interests of its mates in the insurance industry. Yet what we see in this House is the National Party opposing this bill, perhaps on the basis that the merger of the accounts would make it more difficult for some future National-led Government to privatise accident compensation again.
It is time for the members on the National benches to come clean about their accident compensation privatisation policy. Who wrote it, or at whose behest was it written? Was it written by Stephen Cosgrove of QBE Insurance, who reportedly met with Dr Brash in August 2004 to discuss the re-privatisation of accident compensation insurance? Or was it written by Ross Chapman of the same company, who reportedly met with Dr Brash in July 2005? Or perhaps it was written by the chief executive officer of the Insurance Council itself, Chris Ryan, who reportedly had numerous meetings and communications with Dr Brash and Dr Hutchison on the privatisation of accident compensation.
It is also time for the members on the National benches to come clean about some other matters in relation to its accident compensation privatisation policy. Did National receive a $1 million-plus anonymous donation through one of its dodgy trusts from the Insurance Council, in recognition of its privatisation policy, as Nicky Hager claims it did in
The Hollow Men, as advised by a confidential National Party source? It is time for the National Party, which had the temerity to make allegations of corruption in this House for most of the past year, to come clean about its own links with the insurance industry and the funding it may have received from it. It is also time for the electoral law to be changed, to ensure transparency in the funding of political parties. Whatever the links were between the National Party’s accident compensation privatisation policy and the allegations of it receiving substantial donations from the insurance industry, the public, in the interests of democracy, has the right to know.
What the National Party forgets, or chooses to forget, is that its short-lived privatisation of workplace accident insurance was a disaster for people injured at work. A few weeks ago I received an email from one such person, who is still suffering under the sorry legacy of that scheme through the transitional provisions of the 2001 Act. His email has the subject line: “WorkAon unfair and ruthless.” It is an email that I imagine most other members of this House also received.
He says: “The thought of having to pay out money to injured people is an insult to their agenda, so it goes without saying that they will put whatever obstacles in the way of injured people to avoid paying any money. They are not operating under the ACC laws. WorkAon’s efforts in the field of accident compensation are probably the worst that you could possibly come across. I have been told by some doctors that it was commonplace to have to wait for more than a year for their bills to be paid. What way is this to run a business? It would appear as though their first duty was to the organisations that are paying levies to them and also their shareholders not for the injured people that are unfortunate enough to have to rely on them for compensation as a result of the Government allowing big business to arrange their own cover.” The letter writer went on to detail a sorry sequence of events, including WorkAon refusing to accept medical reports from specialists who had examined him and referring him to its own tame specialists whose opinions it then preferred.
This highlights the problem with privatised workplace accident insurance that the National Party just does not seem to get—or chooses to ignore—in the interests of its friends in the insurance industry. The National Party says it wants to introduce
competition into the scheme, but the competition the National Party proposes advantages only the employer. There is no competition for the injured worker. Accident compensation insurance is not a normal insurance arrangement. Cover, compensation, and other entitlements are prescribed by statute, not by contract. The easiest way for private insurance companies to be profitable and gain market share in the area of accident compensation is to deny the cover and entitlements that an injured person is entitled by statute to receive. They can do so in the knowledge that the accident compensation law is extremely complex, and the injured person will often not know how to challenge an unfavourable decision. They can do so in the knowledge that many claimants will not be able to afford the legal representation they need in order to challenge anything that goes against them. They know that the health professionals doing the assessments will often be contracted to the employer, and the perception, if not the reality, is that their assessments are far from independent and unbiased.
They know, too, that the purportedly independent review process involves a reviewer appointed by the employer, which further undermines any perception of independence. The consequence, of course, was that the private insurance companies in 1999-2000 deliberately, or negligently, refused to extend cover and entitlements that they were bound by statute to extend. They knew that most injured people would not challenge those erroneous decisions, and that this was a far easier way to reduce their levies and increase their market share than their spending money on advising their employer clients on how to reduce risk.
The other thing the National Party refuses to understand about accident compensation is that it is a no-fault scheme. This distinguishes it from most insurance arrangements, where the insurance company can recover funds expended on a claim from the party responsible for the action that gave rise to the claim. That is not a possibility when it is deemed no one is at fault, and this, too, leads to competing private insurance companies attempting to minimise claims expenditure by wrongly declining claims. These are the reasons that accident compensation should be retained in the public sector. The National Party’s blinkered view that everything that is private is good and everything that is public is bad is one reason that it is not yet fit to be Government again. The Green Party believes that there are some things the public sector does do best, and accident compensation is one of them. Despite the shortcomings of the public accident compensation scheme—and I am the first to accept there are still some significant shortcomings, particularly regarding the definition of personal injury—that scheme operates infinitely better for injured workers than did National’s privatisation experiment, which they propose to revert to.
I am pleased that New Zealand First, which supported the disastrous accident compensation privatisation experiment back in the late 1990s, is now supporting the aspects of this bill that merge the employers’ account and the self-employed work account. At least it appears that that party has moved on and can now see sense. The National Party, however, still seems to be stuck in a time warp, promoting yesterday’s failed policies. Its record on accident compensation is one of failure and duplicity. This is the party that went into the 1996 election campaign promising that it would not privatise accident compensation, yet, by the end of the following parliamentary term, it had partially privatised accident compensation.
If National is serious about again sitting on the Government benches, it should front up to this House and to the public of New Zealand and tell us the full story, for better or for worse, of its links with the insurance industry. It should acknowledge that the privatisation of accident compensation in the late 1990s was a disaster for injured people, and repudiate that policy. It should also withdraw its misguided opposition to this simple little bill, which does no more than rectify an anomaly that causes wildly
fluctuating ACC levies for self-employed people, and redress the situation that different people carrying out essentially the same business with the same injury risk can still pay vastly different ACC levies—just because of the way they have chosen to structure their businesses.
PETER BROWN (Deputy Leader—NZ First)
: I want initially to respond to something the honourable member Sue Bradford referred to, in relation to New Zealand First. She said she was pleased that we were finally supporting the accident compensation system and had given up our thoughts of privatising the system. Let me put the facts straight.
Sue Bradford: Oh, didn’t you support privatisation?
PETER BROWN: No, no. If the member listens to me, she will hear our viewpoint. When the system was privatised—shortly after National had dispensed with us as a coalition partner—we did not agree with that privatisation. We thought it was too quickly done. But, in fairness to National, after the privatisation had had its 6-month trial we thought it was working better than National had envisaged. It was certainly working better than the way in which we had thought it would be working, at the time of the change of Government. I see the member there is nodding her head. So we did not see any reason to change it after the 6-month trial; we felt it should be given a 2-year trial, at least. Then it could have been changed back, nationalised, if need be.
However, the Government nationalised the system and brought back the Accident Compensation Corporation being the sole provider. In all honesty, the Government did not do the job properly in the first instance. The Minister for ACC, Ruth Dyson, will acknowledge that. New Zealand First had about five areas of concern at that time—significant areas of concern. One of them was medical misadventure. We thought that that should have been covered by accident compensation from the word go. I made personal representation to the Minister—and her predecessor—on that very issue, and was told that it was too costly. Since then the Government has addressed that issue and medical misadventure has been embraced by accident compensation.
National members have come to the party and have raised all sorts of facts and figures. I listened to David Bennett with some interest. He said—and I hope I am correct in this—that the employers’ account is worth $511 million and the self-employed work account is worth $115 million. He said that both of them together are worth in the vicinity of $700 million. Actually, they add up to $626 million, which is $74 million short of the member’s figure. There is a gap in his mathematics, or maybe he is trying to hoodwink people.
It is well known in the public arena and in this House that the National Party wants to sell a few of our assets and privatise them. I can list quite a few, such as Television New Zealand (TVNZ)—[Interruption] That was Rodney Hide. He would sell everything, with due respect. The National Party would sell TVNZ, Air New Zealand, Meridian Energy, Genesis Energy, and Mighty River Power, and we know that it would privatise, at least, the Accident Compensation Corporation employers’ account and the motorists’ account.
We think there are very good reasons for amalgamating the employers’ account and the self-employed work account. I listened to Pansy Wong; indeed, I have spoken to her, and she has outlined her concerns personally to me. She may or may not have a point. I am not sure I have got fully to grips with where she is coming from, but I am certain that when we come to the Committee stage she will give us a better understanding of this.
Let me read what the Transport and Industrial Relations Committee said: “The bill, however, allows levy rates to differ between the self-employed and employers until the end of the 2009/10 tax year.” David Bennett listed a whole range of figures to show
how much levy rates are going up and what have you. It was convenient for him to say they are going up by so much and, by inference, say it is because the two accounts are being combined. That is not true. The levy rates are going up for some reason, but it is not because the accounts are being combined.
The report goes on to say: “The Government has proposed a mechanism utilising different levy rates to equalise the funding reserves. This mechanism would provide rebates totalling approximately $100.5 million to employers and a loading to be applied to self-employed classification units to bring the total levy income up to the level ACC would otherwise receive under separate accounts.” The worst thing I can say about that statement is that it is a blasted long sentence. It should have been split into two, or more. But, basically, it explains that there is a degree of flexibility in the mechanism.
To some extent, all politicians form their responses by gauging the submissions received by the select committee. But, equally so, they gauge public concern by the number of people who contact MPs about an issue. On this issue, I am not aware that any New Zealand First MP has been contacted privately at all, by anyone.
Rodney Hide: Why bother?
PETER BROWN: I say to Mr Hide that we are involved with this Government on confidence and supply. We have a great deal more influence with the Government than he has. Mr Hide has achieved exactly nothing since he has been in Parliament. In the last year New Zealand First has achieved a great deal in cooperation with the Government. That is true.
Much has been said about this bill, but the little bit that concerns us the most—and, again, the public have not raised it with us—is the change of the name of the medical misadventure account to treatment injury account. That sticks in our throat a little. We think that the original name, “medical misadventure account”, better reflects what it is all about, and that the name “treatment injury account” makes it all sound too nice and cosy. We are talking about an account that covers people for accident compensation when a doctor makes a stuff-up or something else goes wrong. To call it a treatment injury account does not sit comfortably with us, and we would have preferred to keep it as the medical misadventure account. But, having said that, we are not prepared to pull the bill down on this.
Rodney Hide: Oh!
PETER BROWN: No, we are just saying that this does not sit comfortably.
Pansy Wong: Would the member bring an amendment?
PETER BROWN: I do not know. We may well do that. We will be voting for this bill, whether or not the name of the account changes. I say to the House that the name change does not sit comfortably with New Zealand First, but in all other respects we are comfortable with the bill and we will be supporting it.
TARIANA TURIA (Co-Leader—Māori Party)
: Tēnā koe, Mr Deputy Speaker. Tēnā tātou katoa. There are three critical components to this bill that the Māori Party seeks to bring to the House. The challenge when considering any merger such as is proposed in this bill, in merging the employers’ account and the self-employed work account into a single account, is that there is a risk that specific issues may be submerged in the joining. The specific issues that we seek to highlight are: the context of Māori as employers and as self-employed, the relationship of tangata whenua to the Accident Compensation Corporation (ACC), and the adequacy of this bill to ensure a responsiveness to Māori alongside the pursuit of whānau well-being.
The proposed changes in merging the employers’ account and the self-employed work account into a single work account will impact on Māori employers in terms of the way they will support an ongoing commitment to a fair and sustainable accident compensation scheme. The household labour force survey in June 2006 identified that
there are 4,500 Māori employers, and that number is growing fast. The New Zealand Institute of Economic Research has described the rapidly increasing participation of Māori as employers, to the extent that economists now talk meaningfully about a Māori economy. Indeed, in 2003 the New Zealand Institute of Economic Research quantified an annual tax contribution of $2.4 billion from the Māori economy.
A recent 2006 study of Māori employers by Eljon Fitzgerald and Eva McLaren gives us much room for optimism about the way in which Māori employers will respond to this change. Employers were asked about their strategies to retain and care for staff. Good relationships, working conditions, and management strategies were seen as important means of retaining employees. Innovation was favoured—for example, one employer takes his shearing gang to Australia every year during the off season. An interesting observation from the study was that 13 percent of the employers felt that an easing of compliance issues would be helpful in facilitating employment growth. As one employer noted, accident compensation charges have increased 800 percent per staff member, which takes a big toll on business.
The burden of compliance issues also impacts on the self-employed. Over the past two decades, Aotearoa has witnessed an unprecedented rise in the numbers of self-employed Māori—in fact, there has been a massive 156 percent increase between 1981 and 2001. Perhaps one reason to account for the growth in the number of the Māori self-employed comes from a simple financial risk assessment. The median earnings for self-employed—$30,350—are now higher than salary and wage earners, which is $29,280. Māori males make up the majority of Māori self-employed. In 2005 there were 9,750 men self-employed compared with 5,800 women. The number of Māori women who have grown their businesses to a point of being able to employ others has barely moved in 15 years and makes up only 1.3 percent of Māori women in employment.
I was really interested when I was listening to Mr Bennett talking about the notion of self-employed people taking short cuts and taking more risks. I thought about my own husband, who was self-employed as a bricklayer and plasterer, and I do not ever recall him taking short cuts and taking risks, because his business was dependent on the quality of job. So I could not quite get the gist of that.
Given the relative youthfulness of the sector, and the recent growth, there is concern that the impacts of this proposed legislation will mean that levies will almost certainly increase. Instead of levies being calculated on the earnings indicated in the tax return, they will be allocated according to risk. This will mean, in effect, that levies will be calculated according to the risk of injury in that sector, and by wages. For those high-risk industries that so many of our people are employed in, such as fishing, farming, and forestry, levy increases are likely to be very significant. For new businesses and new self-employed, the costs will be even more dramatic as ACC will require the next year’s levy in advance.
In many ways then, for both employers and self-employed, it is a case of balancing the see-saw. On the one hand, the advantages of a single work account cannot make both policy and practical sense. It will provide greater levy stability and ensure a clearer focus across particular industries and enterprises for both injury prevention and health protection. On the other hand, we recognise that the consequences of merging accounts might mean that small businesses and the self-employed are faced with choices that may, in effect, set them up for future accidents. We would be concerned if any resulting levy increases might cause employers to compromise health and safety standards by cutting back on the appropriate equipment or putting strain on the work environment by employing fewer staff.
The second key issue is related to whether Māori will perceive any benefits from the single work account, given the limitations that have been previously reported on Māori
uptake of accident compensation. Research points out that although Māori workers have a higher injury rate, they are less likely to make an accident compensation claim and more likely to be declined cover. ACC General Manager for Māori development, Chad Paraone, outlined that in 2005, the rate claim per 1,000 for European was 361 compared with 289 Māori. The corporation identified several reasons for the lower claim rate: a lack of awareness from Māori about accident compensation entitlements, communication issues and difficulty in navigating the system, and concern about the loss of a job and a working income. Many believe that the 80 percent of previous income that accident compensation covers will be inadequate to cover household expenses. In the light of these findings, the corporation has allocated $2 million for a Māori access strategy to look at marketing, capacity building, provider development, community partnerships and advocacy, and knowledge management. We would actually be quite happy if Māori were treated equally and with respect by ACC.
Finally, having looked at the implications of this bill for employers, the self-employed, and recipients of accident compensation, we turn, as we always must, to the well-being of whānau. By merging the accounts, we support the drive to simplify compliance costs and to provide a clearer focus on injury prevention and health protection purposes. But we cannot be complacent that a shift in compliance structures will necessarily fix up the other longstanding issues occurring in the field of injury prevention, rehabilitation, and compensation. The Māori Party has been aware of the pivotal research undertaken by Dr Peter Jansen on Māori consumer use and experience of health and disability and ACC services that reveals that Māori are currently not receiving entitlements to care, rehabilitation, and compensation at a level comparable with the proportion of Māori in the population. That is despite the fact that Māori have a greater need for, but less access to, treatment.
We have been reassured by the Minister, who has also been concerned about the statistics relating to workplaces for Māori in New Zealand. She has described Māori as overrepresented in high-risk industries and under-represented in claims and entitlements from ACC. We also point out that sports activities are the main cause of injury for Māori, resulting in 30 percent of injuries. Once injured, Māori are less likely than non-Māori to receive treatment from a physiotherapist for their injury. It may be timely to consider how sporting bodies take into account the needs of treatment and rehabilitation for sporting injuries.
The Minister has given her commitment, in this House, that Māori, like all other New Zealanders, will receive the compensation and rehabilitation to which they are entitled. We welcome this commitment and hope that it is translated into action for this bill—and any other related to injury prevention. The issues raised by our constituents about accident compensation, or by employers and the self-employed about the single work account levies, point to an urgent need for education about safe working-practices and measures to adopt safety standards. Also evident is the need for the corporation—which it has recognised—to change the way in which it operates, so that it can be responsive to Māori whānau.
The Māori Party will support this bill going forward.
JUDY TURNER (Deputy Leader—United Future)
: I stand on behalf of United Future to speak in support of the second reading of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. Business structure is not, in itself, a risk; the risk is in the activity of the business. I challenge one of the earlier National Party speakers David Bennett, who tended to suggest that if one were self-employed, one was some sort of cowboy. Speaking as somebody who has been self-employed, my experience, as part of that community, was that we were quite risk-averse due to the fact that we did not have a backstop, should anything go wrong. I have also been an
employer in a reasonably high-risk category and I understand the costs, constraints, and compliances in that sector.
So United Future welcomes this chance to maintain an activity-based classification, and we are also pleased to see that what remain are the programmes that allow for levy adjustments based on safety practices of the company involved. We also acknowledge in the second reading that although it may seem a small technical point that we have renamed the medical misadventure account the treatment injury account, it is important to reflect on the fact that although this is technical, and merely aligns the name of the account with the new terminology enshrined in the Act, the change in terminology happened to reflect a new approach by the Accident Compensation Corporation (ACC) to respond in a speedy way to injuries that were sustained due to a medical procedure, and to ensure that the victim gets what he or she needs: a rapidly funded response, which is not hampered by a lengthy process, setting in motion the need to apportion blame for why that injury happened. That matter can happen as a separate process, and ACC is now not able to withhold important funding and treatment for somebody in need, who has sustained a treatment injury.
United Future would like to congratulate the Transport and Industrial Relations Committee. We do not have representation on the committee but we did read with interest the report back, and we are happy to support the second reading.
RODNEY HIDE (Leader—ACT)
: The ACT party opposes this Injury Prevention, Rehabilitation, and Compensation Amendment Bill, and let us make it quite clear why. It seems that in this House there is a failure of memory in preference for an ideological position. The failure of memory relates to the success of giving people choice in accident insurance, rather than having a State-run monopoly, and I would remind members of the House that that experience was overwhelmingly positive. It was positive from the point of view of the costs to employees but also—most important—to the incentive to get accidents down and to the rehabilitation of people who were injured. I heard the Labour Government, and I heard the Green Party—and I do not know where New Zealand First members were—talk as though this was some experiment that was a miserable failure. It was not an experiment at all; it was called choice. It was called private enterprise, entrepreneurship, and competition, and—like when that is tried everywhere else in the world—it worked.
So who is being sold out by the ideological commitment of this Government, and that of other parties, to oppose privatisation at every opportunity? Well, actually, it is every New Zealand business; it is every New Zealand worker; it is every person who has been injured and denied an opportunity to become well. It is Māori and Pākehā; it is Chinese and Indian.
The idea that we stand up in this House and say that it was terrible and that it was all an ideological commitment is bollocks, because, when given a choice, New Zealanders are not stupid. Certainly, New Zealanders are not as stupid as this Government and this Parliament, because when New Zealanders look at this legislation, they ask what it will cost. They ask what they will get and what is best for them and for their businesses. They ask what is best for them as workers. That is not what we see this Parliament deciding. That is not what we see the Accident Compensation Corporation deciding, because what it cares about is what is best for the corporation over the worker and over the business—and for this Government and its short-term political interests over the interests of the entire country.
We oppose this bill because the ACT party stands full square for choice, privatisation, and free enterprise. I look forward to the day when there is a majority for some common sense, and for some decent policy that will deliver for the working
people of New Zealand—not this policy from those namby-pamby socialists over there, who would not know a working person or a business if they fell over one. Thank you.
Dr JONATHAN COLEMAN (National—Northcote)
: That was a great speech from the leader of the ACT party, and I think he pretty much expressed the National Party’s view as well in that couple of minutes. I must say that it is quite unusual for Mr Hide not to take his full 10 minutes, but I think he put the argument very succinctly.
The National Party strongly opposes this Injury Prevention, Rehabilitation, and Compensation Amendment Bill.
Rodney Hide: Privatisation’s better, eh?
Dr JONATHAN COLEMAN: What do you think, Rodney! My colleagues Pansy Wong and David Bennett have already spoken on this bill, and they have laid out the issues exceptionally well. In a nutshell, we are opposing this bill because the issue is really about the efficiency of a system enabling people to have choice in accident insurance. This bill will place a quite considerable burden on New Zealand businesses and employers, and, to be honest, it has been brought into the House in a most devious and deceptive manner. As my colleague Paul Hutchison noted in his speech in the first reading of this bill several months ago, this bill is another example of the “classic, arrogant behaviour” that has now become synonymous with the current Labour Government.
Rodney Hide: I feel so bad about this bill, I’m going to vote against it twice.
Dr JONATHAN COLEMAN: Well, why not? The first thing I will talk about is the deviousness of the bill as a whole. It purports, as members are aware, to bypass the normal consultation period. The reason given is that the transition period to the merging of the self-employed work account and the employers’ account needs to be as short as possible in order to ensure that the transition is fair and smooth. Apparently, to achieve this, the normal consultation period must be bypassed. So, essentially, the Government is planning to put through legislation without even hearing submissions from the industry—an interesting and not at all democratic concept. I am very interested to know how not consulting the appropriate stakeholders fully and not allowing them the time to give full submissions will result in a fair and smooth transition.