Hon DARREN HUGHES (Labour) : It is a pleasure to have the opportunity to address the Committee, and, indeed, the nation this morning, on the very important matter before us, the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. When we began the debate on Part 2 last night, my friend and colleague the Hon David W Parker was busy outlining the direction Labour will be taking during this debate. We are strongly opposed to Part 2 of this bill, because it means a very simple thing for accident compensation: New Zealanders will be paying more and getting less. If members of Parliament in the Committee this morning vote to approve Part 2, they will ensure that Kiwis out there facing a rising cost of living and economic uncertainty will be paying more for accident compensation in New Zealand and getting less. We in the Labour Opposition do not believe that that is a fair deal for anybody, at all. That is what is at stake as we debate clauses 45 to 59 of this bill.

We are very interested this morning to hear from the Associate Minister for ACC, Pansy Wong, who has taken over from Dr Nick Smith as the Minister in the chair, for a variety of reasons, no doubt. We are very keen to hear her views as to whether she contests the contention by Labour that people will be paying more and getting less as a result of the clauses that are in front of us. One of the areas I will look at first of all is the first clause of Part 2, clause 45, “Validation of disclosure of information for assessment of levies”. The issue of how levies are set has become hotly contested. People earning average amounts of money have faced an increase in their accident compensation levies. Of course, the small tax reduction they may have received last year was well offset by the increase in accident compensation levies. Those same workers on average incomes will face an increase in their GST to 15 percent this year, as well as further increases in accident compensation levies.

We want to hear a justification from the Minister in the chair of the way levies are being set in respect of clause 45. If we take one group of levy payers in our country, motorcyclists, we see that it is pretty clear that the disclosure of information for assessment of their levies has been subject to the grossest political manipulation by Nick Smith, Pansy Wong, and the National-led Government. They have run the line that motorcyclists in New Zealand are somehow an incredibly dangerous group of people who should be socked with massive, massive levies. The Government wants political congratulations for the fact that it reduced the proposed levy increase for motorcyclists from many, many hundreds of dollars to just several hundred dollars. The approach the Government is taking is inequitable and unfair, because it is not applying the same principles that it is socking the motorcyclists with to other groups in society.

I want the Minister in the chair to try to explain to us why that it is fair. If it is fair to misrepresent the effect that motorcyclists are having on our accident compensation scheme, why is she leaving other groups out of that assessment? The only assumption that members of the Committee can make this morning is that this bill is just one in a tranche of several bills, which can only lead us to ask who will be the next to pay unfair accident compensation levies when that disclosure of information for assessment of levies is made under clause 45.

What are the levies now paid by pedestrians and pushbike cyclists for their accident compensation? What level of assessed risk is taken into account for people in that category in the same way that the Minister is now doing for motorcyclists? I think that the Minister needs to come clean on those matters, because it seems to me that we are being asked to change accident compensation for one group of people, to move it away from the no-fault system, to make an assumption about the risk that they have on society, and to take into account no other factors. For example, Government Ministers have been going around claiming that motorcyclists are 16 times more likely to have an accident than other road users.

DARIEN FENTON (Labour) : I am pleased to take a call on Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, and this morning I will address two issues that are affected by this part. The first is around the abatement of holiday pay. We heard some very interesting comments from the Minister yesterday, and also in response to previous questions. He said workers who receive their holiday pay when they are on accident compensation are double-dipping. This provision is one of the most miserly provisions in the bill.

Hon Ruth Dyson: Disgraceful.

DARIEN FENTON: It is disgraceful. We are talking about pre-injury earnings, so we are talking about workers who have been working happily in their jobs—not going to work to deliberately be injured, as the Minister has suggested in past comments. They are working happily in their jobs and accruing holiday pay, and in some cases they have not been able to take their holidays. They may be saving them up or may be thinking about taking a holiday with their family, and then they are injured on the job, through no fault of their own. They go on to earnings-related compensation. If those workers are then fired because it is a frustration of contract, or if they are made redundant for some other reason, they suddenly, because they have lost their jobs, have to use their accrued holiday pay. The earnings-related compensation stops, and they have to use their holiday pay before that compensation resumes.

I think that provision is very mean. If workers are lucky enough to have used their holidays before being injured, this does not apply to them; they carry on receiving earnings-related compensation. How mean is this provision? This is such a mean and miserly provision. In fact, the Cabinet paper that recommended these and other changes says the estimated saving from this provision is $1 million. In the scope of the scheme, that is a tiny amount of money. Yes, it is a saving, but it will be paid for by the injured workers themselves. Treasury actually warned that the relatively small savings did not seem to justify the unfairness of this provision. It said “Claimants may think it is unfair to have weekly compensation abated because of annual leave accrued while they were earning or accrued in a previous financial year but that was not paid until termination of employment.” As I said, workers who have taken their holidays prior to being injured receive earnings-related compensation, but if they have not taken them—because they were too busy or hard-working, or because they have not been able to agree with their employer on when they will have their holidays—then that is just tough. They have to give up their holiday pay—their very own money that they earned as holiday pay—and have their earnings-related compensation suspended.

We spent quite a lot of time on this provision in the Transport and Industrial Relations Committee; it was very interesting to try to get clarification of it. The member opposite, Michael Woodhouse, insisted that when workers are on accident compensation they actually accrue holiday pay. In the end we all agreed that they accrue leave, and if they go back to work they actually get that leave. But I am here to tell the member that I have talked to all the unions about this, and a whole lot of wage claims are coming to employers, based on Michael Woodhouse’s insistence that workers who have been on accident compensation should be accruing holiday pay. I have gone and told them to thank Michael Woodhouse and the National Party for that, and a whole lot of pay claims are coming their way.

Hon Darren Hughes: Did he make a mistake?

DARIEN FENTON: Well, he will not admit he has; that is the problem. He will never admit it. Right to the last minute at the select committee, he insisted that he was right. So I thank Michael Woodhouse. I have given the advice to the unions. They are taking it seriously and saying Michael Woodhouse thinks he knows what he is talking about, so they are off to do a whole lot of pay claims for all those workers on accident compensation who did not receive accrued holiday pay.

The other issue I will talk to this morning is the proposal to reduce the weekly compensation for seasonal and part-time workers. This is another miserable provision. It particularly affects workers who are women, Māori, Pasifika, and in low-paid jobs—around half a million workers. These are workers in meatworks, fish processing, and a whole range of seasonal jobs. This provision will change the basis of the calculation of their pay back to the pre-2008 basis. It means that they will end up much, much worse off than they would be at present should they be injured in their jobs. As I said, this provision will significantly affect low-income workers, and it also exposes those workers to manifestly unjust compensation. They will end up not just on the minimum wage for earnings-related compensation, but in some cases on a heck of a lot less than that. It is very, very unfair.

I will give an example of the negative impact of this change. A young mother who has been financially dependent on her partner for most of the year undertakes seasonal work for 20 hours per week and is severely injured during the fifth week on the job. Her $450-per-week earnings for the 4 weeks prior to her injury will be divided by 4 weeks initially, under new clause 36 (1) in schedule 1, and she will receive 80 percent of this or $360 for 4 weeks only, after the first week of incapacity due to the injury. For the rest of the time that she is incapacitated, her weekly compensation will be calculated by dividing the total amount of her income over her brief employment. Eighteen hundred dollars divided by 52 weeks is $27.70 a week. That will be the compensation for that worker. How on earth is that woman supposed to help her family to survive on that? It is a long way from real compensation, which, we should remember, is one of the Woodhouse principles that the National members say they support. It is a long way from real compensation for her severe work injury, and it is an unacceptable erosion of the social contract that underpins the scheme.

Furthermore, the process by which that worker is categorised as non-permanent is, to a large degree, very arbitrary. It requires the Accident Compensation Corporation (ACC) to essentially make a guess as to whether the employee would have continued to work for another 12 months. There is no way of knowing that. It assumes that seasonal workers go to work for 3 months. It does not take into account that many seasonal workers go from one job to another. It just assumes that they work for 3 months, and that is the end of it. It should go without saying that in many cases it cannot be foretold by ACC whether a worker would have continued to work after his or her seasonal job ended. Given the severe nature of the possible consequences of being a non-permanent employee under this bill, the test is fraught with uncertainty, and that is simply unacceptable. For these reasons we believe that this proposed amendment is absolutely unfair and should not proceed.

The other whack that will happen for seasonal workers—they get a double whammy—is that they will go on to injury-related compensation and, because they are seasonal workers, they will be paid out their holiday pay.

Hon Ruth Dyson: They’re not on holiday.

DARIEN FENTON: They are not on holiday; they are injured. But they will have to use their holiday pay. Their payments will stop. The $27.70 a week that the woman I have described might be entitled to will stop, and she will have to use the holiday pay that she has accrued in her seasonal job. That is incredibly unfair.

Hon Ruth Dyson: Michael Woodhouse said that was all right, did he?

DARIEN FENTON: Yes, and so did the Minister. He kept on saying that workers who are injured should not be better off when they are on earnings-related compensation. Well, I think I have demonstrated this morning that under this provision, workers will be significantly worse off. It is totally unfair that that woman should receive $27.70 a week. It is totally unreasonable.

I do not accept the Minister’s assertion that somehow these workers are gaming it. The implication of the Minister’s comments is that workers are gaming the system and better off under the provisions that Labour introduced in 2008. We brought in those provisions in 2008 for casual and seasonal workers for the very reasons that I have described: because what was happening before was unfair. Again, I say that we are talking about the most vulnerable workers in our country. There are around about half a million of them, doing very important work and being paid the minimum wage. They are struggling along, trying to feed their families and to do the best they can, and hopefully trying to find another job in between. One group of workers who were brought to our attention in the select committee were school support staff. We know from the fair pay campaign late last year that these are very low-paid workers. They are affected by this provision.

The CHAIRPERSON (Hon Rick Barker): I call Lynne Pillay.

Hon Steve Chadwick: That was a very good speech.

LYNNE PILLAY (Labour) : That was a very good speech. I congratulate my colleague Darien Fenton on outlining very, very clearly some, and I say only some, of the major pitfalls and major claw-backs in the bill. When we negotiate in workplaces, “claw-backs” is what these clauses are commonly known as. If we look, we see that these are conditions and rights that the previous Labour Government reinstated to hold with the principle that the accident compensation scheme should be a no-fault system, a social contract when people are injured. All New Zealanders have felt very, very proud of that system. It has worked and it is not broken. I note that Pansy Wong, the Associate Minister for ACC, is the Minister in the chair. I have not heard Pansy Wong speak on this before and she should take a call. Nick Smith’s contribution yesterday is probably why we are not hearing that contribution now. It was absolutely appalling. It was offensive to many people and certainly to all people on this side of the Chamber.

I congratulate, obviously, the Labour Opposition, but also the Green Party, who have consistently opposed this bill on the basis that it is simply unfair. It simply takes away rights from New Zealanders and that is not the principle of what accident compensation is all about—it is the absolute opposite. So I congratulate the Green Party but I challenge Māori Party members on this and tell them it is not too late to change their mind. It is inappropriate to support many of the clauses. I urge them to change their mind and to take a call—

Te Ururoa Flavell: We voted against it.

LYNNE PILLAY: That is excellent, but the Māori Party supported sending the bill to the select committee, and if it had opposed it at that stage, perhaps the bill would not be back before the Committee.

The Minister has claimed that the accident compensation scheme is broke. I have talked about that claim before, but it is very important. How many times have we heard the Minister, Nick Smith, say “ACC is broke.”? Well, it is not broke. It has $11 billion in reserves so how can it be broke? In fact, it is quite the opposite. If we look at independent advice, we see that PricewaterhouseCoopers from Australia found that the administration costs of the scheme are lower than for any other scheme. That confirmed previous assessments, and that is a very, very pertinent point. The accident compensation scheme has been criticised by the National Government but has been assessed independently as the most cost-effective in terms of administration.

That is simply because of the simplicity of the scheme. It is simply a no-fault structure. It covers injuries at work or elsewhere with a broad pool of levies coming in. I urge the Government to reconsider its position; accident compensation levies do not need to rise. The only reason the Opposition can perceive that levies would rise is that there is—

Darien Fenton: An agenda.

LYNNE PILLAY: —an agenda. What could that agenda be under a National Government?

Hon Maryan Street: Two guesses.

LYNNE PILLAY: I do not think we need two guesses. I think we need only one guess, and that is privatisation. That is ultimately what will be at the end of this process. As I have said before, we saw absolute slashes to conditions in the accident compensation scheme under the former National Government. We saw the slashing of lump-sum payments. This bill is very much the same scenario.

I want to talk about hearing loss. I know that a number of my colleagues have spoken about it. In terms of hearing loss, the bill imposes a bar where people will get work-related—

Hon Ruth Dyson: It is all right to be a little bit injured.

LYNNE PILLAY: Exactly; as Ruth Dyson says, it is all right to be a little bit injured, and never mind what a medical professional says. We already have a bar in terms of age with regard to eligibility for hearing aids. I know that Labour members will attest that there were some very compelling submissions about hearing loss at the Transport and Industrial Relations Committee. I ask whether I am correct on that, and Darien Fenton is nodding. If people have work-related hearing impairment through no fault of their own, and even though their quality of life is diminished with just a little bit of hearing loss, then this lousy Government is saying that funding accident compensation coverage for those people is unacceptable. It is saying that those people who have anything less than 6 percent hearing loss should foot the bill themselves. The principle is no-fault coverage for a work-related injury, but this Government is saying that if it is just a little bit of hearing loss, or what the Government perceives as being a little bit of hearing loss, regardless of what medical professionals and the Deaf Association say, then the Government does not have to fund accident compensation coverage for it. This Government says that it will make those injured people pay, even though the hearing loss has occurred through no fault of their own.

What will this do, and what alternative do people in that situation have? Either they foot the bill, or they think that it simply is not fair and will look at whether they can sue their employer, in many cases. What is the principle behind accident compensation? If we go back to basic principles, it is a no-fault system. This change is absolutely silly. The amount that will be saved will be minimal, but this measure will also cause considerable stress, anxiety, and financial stress for people who have suffered a work-related injury. We are absolutely opposed to this change, as we are opposed to many of the other clauses.

One such clause is clause 53, which amends the work-related gradual process provisions. We know that this change will affect older people, but we are also hearing from many people at the moment—and I think that many of my colleagues will confirm this—who have been told that their claim is a gradual process injury. They are not getting any support from the Accident Compensation Corporation (ACC), so they have to go through this long process of going to a review and having to challenge ACC’s decision. Many people go to a review, which, without support from ACC, obviously causes considerable financial strain. People also have to wait long periods of time for their review and to be able to see justice served. After going through that process, many of those people may also see the original decision upheld.

But the other thing that concerns me is the number of people who do not go through that process. People see that the stress and anxiety of all of this process is too hard and they just drop their claim. They just box on, not getting the financial support that they are probably entitled to. The cost-cutting agenda of ACC is nothing short of ruthless. I am pleased to see that the Minister of Labour is currently the Minister in the chair, because the next thing I want to talk about is holiday pay.

Hon Ruth Dyson: She won’t know about that.

LYNNE PILLAY: Oh yes, people should use up their holiday pay. This Minister of Labour is not familiar with many, many issues to do with labour. I think that even she would accept that; I think I see her nodding. The situation is that holiday pay is not double-dipping. Holiday pay is a right that has been accrued by work. People have worked and they have accrued that right to holiday pay. I have news for the Minister and the Government: when people are injured, they are not on holiday. It is not a holiday. If the Government went out and spoke to injured people, it would see that.

JOHN BOSCAWEN (ACT) : We started this debate this morning with Darren Hughes asking the question about the fact that surely we are paying more and getting less with the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. I wonder why we are paying more. That surely is the question. Why are we paying more? I do not know how closely Darren Hughes has listened to this debate. It is pretty obvious that Lynne Pillay has not listened to this debate, because she criticised the Māori Party for supporting this bill, and the Māori Party made it very clear that it was not supporting the second reading. In fact, the Māori Party voted against the second reading and will not be voting for this bill. So Lynne Pillay has not been listening to this debate.

Let us now address the question that Darren Hughes asked. He said we are paying more and getting less. Well, why are we paying more? We had claims in 2005 totalling $2.2 billion. In the space of 4 years, the claims paid by the Accident Compensation Corporation (ACC) have gone from $2.2 billion to $3.6 billion, which is a 57 percent increase over 4 years. That is simply not sustainable. Darren Hughes may think that money comes from fresh air but if the claims keep increasing at 12 percent per annum indefinitely, of course we will pay more. Someone has got to pay. Lynne Pillay said that the accident compensation scheme is not broke, and that levies do not need to rise. Maybe we will get to a state where levies will not rise, but we certainly will not get to that state where levies do not rise if we keep paying claims that are increasing by 12 percent per annum.

I believe that one of the major contributions to this debate was made by Maryan Street, when she said during the second reading that medical science has advanced so much since the accident compensation scheme was passed and brought into being in the early 1970s that people who would routinely have died as a result of accidents now live on. That is one of the major reasons that we have a blowout in accident compensation. It is not the only reason, but it is a contributing reason. People who would have died now live on, but they live on as paraplegics, as tetraplegics, and the cost of keeping those people alive can run into many hundreds of thousands of dollars, and even into many millions of dollars.

Grant Robertson: What is the member suggesting should happen to those people?

JOHN BOSCAWEN: I will listen to Mr Robertson. What I am suggesting is those people should be allowed to live on—absolutely.

Hon Ruth Dyson: Phew. How very generous of you!

JOHN BOSCAWEN: It has to be paid for, I say to Ruth Dyson. My sister was involved in a fatal car accident 30 years ago and she lived for 53 hours. One of the hardest decisions my mother had to make was to allow her life support system to be turned off. She would not have had the quality of life that she could have had with medical science today. With the advances in medical science, if that accident had happened today, she might have been able to live on. My mother would have wanted her to live on. The wonderful thing about accident compensation is that the advances in medical science would have enabled her to live on, but it comes at a very significant cost. We need to address that issue. We have people living today who are tetraplegics and paraplegics and the cost of their living on is many millions of dollars. Life is precious. Life is absolutely precious, and if those people can live on with any semblance of a normal life we absolutely need to allow that to happen, and that is one of the beauties of medical science.

But we need to recognise that that has a huge impact on claims of accident compensation. That is one of the contributing reasons why we have calculated liabilities of accident compensation of some $23 billion. If a person has a fatal accident—let us say, in 1995, which is 15 years ago—and they become a tetraplegic, they can live on. But they require round-the-clock care, 24 hours a day.

So what happens is that there is a cost. An actuary can calculate the cost of a person living on from, say, the age of 25, for a further 40 years. It may come to $2 million, $3 million, $4 million, or $5 million. That actuarial calculation is done for all other claimants and I think the current valuation of ACC’s liabilities is some $23 billion. Lynne Pillay’s contribution to the debate was saying that because we have assets of $11 billion, ACC is not broke. Well, if the forecast costs of looking after and maintaining the life support systems that keep those people alive, supporting them, and giving them income are some $23 billion, ACC is currently running at a deficit of $12 billion. There is a cost.

I find it very interesting that when it comes to superannuation, Labour criticised National’s decision not to continue pre-funding New Zealand superannuation. We have a New Zealand Superannuation Fund of some $12 billion. I do not hear Labour saying that because we have $12 billion in reserve in the Superannuation Fund, we do not have to contribute—no. In the case of ACC, it is exactly the same. We have assets of $11 billion, liabilities of $23 billion, and a $12 billion deficit. We need to wake up to the fact that in the time, going on 40 years, since accident compensation was adopted, there have been advances in medical science, and that is fantastic. It is fantastic that there have been advances in science so young people like my sister—who was not able to live 30 years ago—can live today and their families can have them around, but there has to be a cost.

We need to recognise that there have been substantial extensions to the accident compensation scheme. Clearly, the country cannot afford it. We cannot carry on indefinitely increasing claims by 12 percent per annum, year after year after year. This Government is trying to put a lid on that and recognise that claims have blown out. What do we do? We introduce competition, choice, and ways that we can reduce the number of injuries occurring. We need to improve rehabilitation rates. This is not a simple issue, but the Government has woken up to the reality that we cannot keep increasing claimants by 12 percent per annum, at fives times the rate of inflation, year after year. Thank you.

Hon MARYAN STREET (Labour) : I would like to respond to a couple of points that Mr Boscawen has just made in the previous speech, even though none of it bore much relation to Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. Mr Chair, I hope that you will allow me to provide some rebuttal, albeit a little tenuously connected to Part 2.

First, I wish to register my sympathy and respect for the personal family story that Mr Boscawen told. Such stories touch us all, and the story goes to the heart of the accident compensation scheme. I thank the member for raising it, and I want to treat that story, that part of the member’s own family history, with a deal of respect. It is true that near-fatal accidents and very serious injuries that may result in tetraplegia can cost the accident compensation scheme something in the order of $20 million over the lifetime of a person these days. Because our medical technology has improved substantially, because our support systems are better than they were 40 years ago, and because prices and costs have increased, yes, it is quite true that even one such accident a year can cause a $20 million liability to be loaded across the lifetime of that person.

But for my part, I would rather have such a system than not have it. I would not wish to see people compensated and supported at a time of a traumatic injury for one or two years only, or even perhaps for three years only. The reality of the situation is that we proceed with our busy and full lives, something happens, an injury is sustained, and people’s lives are irrevocably changed. They are changed for life. I want to be part of a society that is compassionate enough to say we will support those people for the duration of their life because they are human beings and because we value them. I cannot put a price on anybody’s life. I can say some people with extraordinary disabilities arising out of injury have been among the most inspirational people I have ever met, and to think that a Government, a State, a country, a society would choose not to support those people does not sit with my values and with the values of the Labour Party. That is the first point.

I wish to turn to a couple of issues that come out of Part 2. I want to revisit clause 55, which my colleague Darien Fenton spoke about earlier, and which is to do with the calculation of weekly earnings for weekly compensation. I, too, am pleased that the Minister of Labour is in the chair at the moment, because I want to draw some facts to her attention. The Minister in charge of this bill, the Hon Nick Smith, comes from Nelson. In Nelson there is a lot of seasonal, casual, and part-time labour. It is a region that is fundamentally dependent on primary produce. Fortunately we produce it well. I live there also, so I know that we do it very well. But there is a lot of seasonal work. It is a good year for low-paid workers in Nelson if they can move from trimming the vines to picking the apples, and to harvesting the kiwifruit in succession. But quite often workers find that they can get work for, say, only 40 weeks out of 52. And let us not exaggerate the case and say it is 4 weeks out of 52; let us say it is nearly a year, but not quite.

The amendments in this legislation have compensation being calculated on the basis of a 52-week year rather than the number of weeks worked. Anybody can work out that if one divides earnings by 52 rather than by the number of weeks worked—for example, 40—one will get a much smaller figure. If we think about the principle of compensation, it has always, from the very beginning in the Woodhouse report, been set at 80 percent of income. The purpose of that is to prevent people from doing the very thing that the Minister in charge of this bill accuses people of doing; that is, earning more on compensation than they would do if they were in work. Receiving 80 percent of one’s earnings is an incentive to get back to work. Receiving 80 percent of the household income is an incentive to get back to work. That is why that percentage was set; that is what it was designed to do.

What we have in Nelson is not only the average hourly income being, the last time I looked at the figures, some $2 less than the average hourly income across the country—and the Minister in charge of the bill should be aware of that—but also a lot of seasonal work. So suddenly, to divide a 40-weeks-a-year income by 52, and then pay compensation at 80 percent of that, will cause hardship to already low-paid workers. The Minister of Labour, who is currently in the chair, needs to drive that home to her colleague the Minister for ACC, because for some reason he does not get it.

The Minister for ACC persisted with yet another myth—another of Nick’s myths—when he said people are likely to receive more through compensation than they would through their earnings. That is both untrue and nonsensical at the same time when people are working a short year and are on low rates of pay, if the system divides their earnings by 52 rather than 40 and then takes 80 percent of that. Hardship is suffered by some 76 percent of the families who live in Nelson. Some 76 percent of them did not benefit from tax cuts from this Government. They are low-income earners. Nelson is beautiful; it looks lovely when we drive in. I love it. It is a fantastic place to live. But let us not be fooled into thinking that the whole region is not sustained by the low wages that come out of primary production. This clause will create hardship. It is not fair. The nonsense that the Minister for ACC spouts about people receiving more while they are on compensation than they do when they are working is simply that: it is arrant nonsense.

The next clause I wish to speak to is clause 53, and it is to do with work-related gradual process, disease, or infection claims. We have had some discussion about this clause in relation to hearing loss, in particular. I want to make a couple of points. One is that work-related gradual process injuries, if we take hearing loss as a particular example, have been monitored and have been subject to research and analysis for numbers of years. In fact, one of the advisory panels to the Minister is particularly engaged on this aspect of the accident compensation scheme. The hearing loss figures, as an example of a work-related gradual process injury, were actually in decline. They have been declining because most of the people who have been subjected to noisy work environments have become older and have been detected.

MICHAEL WOODHOUSE (National) : I am delighted to take a call on Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. In particular, I want to concentrate on clause 58, “Abatement of weekly compensation”, because if there was ever an example of not letting the facts get in the way of a good rant, it was from the Labour members this morning. Actually, this is an extension of the irrational—in fact, ill-informed—rant that started in the Transport and Industrial Relations Committee and is continuing today.

One of the more disappointing aspects of this is that Labour members were prepared to sit by while submitter after submitter complained about things in the bill that just were not there. So what I want to do is take the members on the other side through a couple of pieces of legislation. I know that is difficult for some, because it involves reading the law, so I will go very slowly. It is quite appropriate, I think, that the Minister of Labour is in the chair at the moment, because it actually relates to the Holidays Act 2003. Who passed the Holidays Act? Oh, it was Labour. That is right. So for the benefit of the members on the other side who do not understand and have never employed staff, I am going to work very slowly through it. Under section 16 of the Holidays Act, every employee is entitled to 4 weeks’ annual leave. That entitlement to annual leave accrues even though the employee—

Hon Ruth Dyson: Everyone’s wrong except Michael.

MICHAEL WOODHOUSE: See, is it not amazing how Labour members cannot listen and talk at the same time. They think they can, but they are actually listening with their mouths, not their ears. That really prevents a bit of learning. The entitlement to annual leave includes when people are on maternity leave, when they are on volunteers’ leave, and when they are on weekly compensation. When the anniversary of their entitlement to that annual leave clicks over, that 4 weeks is banked. It is calculated on their ordinary earnings and is paid out.

When an employee’s contract is terminated, the provisions of sections 23, 24, and 25 of the Holidays Act apply. I have to accept for the benefit of Darien Fenton, that she was correct; I misunderstood this aspect of the law. The officials clarified it for me. What is really interesting about this is that employers are actually paying out holiday pay at a level greater than their requirements under the Holidays Act specify. I know of a number of employers who pay that proportion out, notwithstanding the fact that they do not have to because the definition of gross earnings, as set out in the earlier definition in the Act, and which is applied in sections 23 to 25, does not include weekly compensation. So here is the thing: I will run through the scenario of a nurse who suffered a shoulder injury—

Darien Fenton: All those wage claims mounting up!

MICHAEL WOODHOUSE: Opposition members are trying to listen and talk at the same time. It took 2½ years and about three surgeries before it was agreed reluctantly that that nurse would never return to active nursing again, and her contract of employment was terminated under the frustration provisions. She had, up until the time of her injury, accrued annual leave for her work. That is a concern of Mr Parker’s, I know. She was on 80 percent weekly compensation, and used that annual leave to top up her earnings so that she was getting the same take-home pay as she would have if she had not been injured. Two years passed, and the entitlements to annual leave, in accordance with section 16 of the Holidays Act, clicked over, and she was validly entitled to those. That is what we are talking about in terms of the abatement provisions. We actually paid out the balance of the year for which she did not accrue annual leave prior to her termination. I now know that, under the law, we did not have to. Here is the point: if we do not pay it out, it cannot be abated. So that is a red herring, as well. What we are talking about, essentially, is annual leave accrued during the period of incapacity that is then paid out. All this bill does is simply say that we should not pay twice.

Darien Fenton: What about seasonal workers?

MICHAEL WOODHOUSE: Well, I will come to seasonal workers if I get a chance; I may not have time. Before the end of my speech, I will also quickly touch on the issue of it costing only $3 million or $4 million. The Opposition says that the hearing loss provisions and the Holidays Act issues cost only $3 million or $4 million. Let me tell members that the accident compensation scheme actuaries are provisioning over $1 billion in full-funding entitlements for hearing loss.

CAROL BEAUMONT (Labour) : How very interesting that speech by Michael Woodhouse was. I will just go back to a couple of simple points in relation to holiday pay, because I think we should keep to the main point, here. The main point in relation to holiday pay in the Injury Prevention, Rehabilitation, and Compensation Amendment Bill is that it will, blatantly unfairly, provide that holiday pay accrued before the injury will be counted and abated against weekly compensation. When people have an accident, it is a random event. One cannot plan for it. One circumstance might be if a person has had the good fortune to go on a paid holiday with the holiday pay that he or she has accrued for the time worked prior to having an accident. Another circumstance might be that of a person who has accrued holiday pay and could have a paid holiday, but, unfortunately, has an accident prior to taking that paid holiday. It is as simple as that. I will not go into all the technical detail about other points around holiday pay, because I want us to focus on the real issue. The real issue is that this bill perpetrates a completely unfair outcome for workers. It is an attack on workers’ rights, in fact.

As other members have said, I am very glad that Kate Wilkinson, the Minister of Labour, who I am sure is listening intently to what I am saying about holiday pay, is the Minister in the chair. I ask the Minister to talk about this matter, and to explain it. I think it should be explained to the workers of this country why this provision is fair. Even Treasury, hardly the place where worker-friendly advice is forthcoming, points out that this will save only $1 million, but that in principle it is unfair. Let me say that again. Treasury says that in principle this provision is unfair. I would like the Minister to take a call and explain to us how she can justify a provision that saves $1 million—a provision that even Treasury says is unfair—and basically randomly affects workers, based on when they have an accident and whether they have previously taken a paid holiday. Two workers in the same workplace could find very different outcomes for themselves, because of this provision.

There can be no justification for treating people differently. It is just a mean-spirited and unfair provision. I know that for some people in this Chamber, talking about whether things are fair or unfair is really a bit of a red herring. They do not like it. They think that is not really the point. But New Zealanders do care about fairness. I believe that most New Zealanders do not yet understand this provision. Certainly, members on this side of the Chamber will be making it crystal clear to people that this is what this bill does. Once people start to see this bill in action, I think the Government will hear significant concern being expressed to it, because of the blatant unfairness.

Submitters on this particular provision certainly recognised that this was an erosion of workers’ rights. A number of unions and the Council of Trade Unions explained pretty much what I have just said—that holiday pay is earned at a time prior to the injury, which effectively means that this provision requires a worker to fund his or her own compensation for the period of the abatement. Some of the cost is therefore effectively being shifted to the worker. There are a number of provisions in this bill that do exactly that. It is about cost shifting. It is about cost shifting to workers; it is about cost shifting to families; and, it is about cost shifting to the health budget, rather than accident compensation. There are a range of cost-shifting provisions in this bill, and this is one of them, but it is a really mean, nasty, unfair little provision that shifts the cost back to a worker who unfortunately did not have the opportunity to take the paid holiday that he or she was due. Again, I urge the Minister to stand up and tell us how this can be right.

Last night I made the point that a number of provisions in this bill are unfair. I have taken some considerable time this morning to explain in detail why I believe that one little provision around holiday pay is unfair. But let me say that the combined effect of this bill, including that provision, is a range of unfairness. It has a disproportionate impact on some groups in our society. Certainly Te Puni Kōkiri has made it very clear that this bill has a disproportionate impact on Māori. Certainly it is clear, and submitters have acknowledged this, that it will have a disproportionate impact on women. Some of my colleagues have talked this morning about seasonal workers. I think they would find that any analysis of seasonal workers in this country will include significant numbers of Māori and significant numbers of women. That is just one particular example where we will see a disproportionate impact on particular groups of New Zealanders.

The hearing loss threshold, as I said previously, will have a disproportionate impact on older New Zealanders, and on New Zealanders who have worked in our primary industries and in manufacturing, where we have had decades of people working in very, very noisy workplaces. Fortunately we seem now to have got that one largely sorted out. The hearing loss threshold will impact mainly on older New Zealanders. Those are some reasons why this bill is unfair.

But not only are the provisions of this bill unfair. Others have gone on to explicitly show that this bill is discriminatory in terms of our Human Rights Act. The Human Rights Commission made a very strong submission to our select committee, and I find it deeply troubling that no Government Minister who has been in that chair has taken the time to get up and tell us why we should not be concerned about the areas of discrimination identified by our Human Rights Commission.

In this bill it talks, for example, about discrimination against young people. It talks, for example, about discrimination against older New Zealanders. It talks, for example, about discrimination against those with mental rather than physical injuries. These are very important points being made by the Human Rights Commission, whose job it is, among its many jobs, to inform us as members of Parliament about the potential disproportionate impacts and the discriminatory impacts of things we are doing here. I would really like somebody on the other side of the Chamber to do the decent thing and take a call on this, and explain to us why we should be relaxed about things that the Human Rights Commission are identifying as discriminatory. I do not think those members will be able to do it, because I think the Human Rights Commission is absolutely right.

So we have a bill before this House that is unfair and mean-spirited, some of the provisions of which, like the hearing loss one, are justified only as so-called cost containment. So despite the fact that the provisions are unfair and discriminate against certain New Zealanders, this is a $3 million to $4 million saving, and the holidays pay one is a $1 million saving. This is mean-spirited, unfair, discriminatory legislation, and it affects workers’ rights. Of course, that is something, I am sure, that the Minister of Labour, who is the Minister in the chair, will want to talk to us about, and I am really looking forward to that. So far under her watch we have already seen the erosion of workers’ rights in this country, and I am sure there are many more to come. We have seen the erosion of workers’ rights in relation to the right to take a personal grievance.

This certainly leads me to be very nervous about the fact that there is more coming in this space, and the Minister has not ruled anything in or out, according to an interview I heard the other day. I would not be surprised if we found more New Zealanders losing their right to take a personal grievance, which I think will be something that, hopefully, will worry most fair-minded New Zealanders.

In respect of workers’ rights in this country, we have had very little effort by the Government to deal with issues around jobs, and that is a pretty important worker’s right—the right to a job. We have certainly seen low-paid workers being hammered, including, most recently, a 25 percent lift to the minimum wage being the response of this Minister to moving the minimum wage, which is the social floor, if you like—the minimum we believe that people should work for. I urge the Minister to get up and talk to us about on this provision around holiday pay in the bill. Thank you.

MOANA MACKEY (Labour) : I am very happy to take a call on Part 2, and I very much look forward to hearing more patronising speeches from Michael Woodhouse, lecturing the Committee on accident compensation. I say to the member that he would need to be here a little bit longer than 15 months to be as patronising as that. I think it is something the member should just build up to. He should talk to Mr Peachey, who is sitting next to him. He will explain how this place works.

Hon Members: Ha, ha!

MOANA MACKEY: Or maybe not; maybe Mr Woodhouse could explain to Mr Peachey how this place works—I do not know; they can sort it out amongst themselves. The fact is that we did not deserve that level of arrogance from that member, given that he did not answer a number of the very serious concerns we have been raising.

Jo Goodhew: You’ll get to the bill?

MOANA MACKEY: I will get there, I say to Ms Goodhew; I am responding to the comments made by one of her colleagues. Ms Goodhew could get to her feet and answer some of the questions that members on this side of the Chamber have been raising.

Jo Goodhew: Personal attacks—that’s all that is.

MOANA MACKEY: She says that these are just personal attacks. Well, Labour members say that this bill is an attack on every single vulnerable victim of an accident in New Zealand, and National should take it a little bit more seriously. I will pick up on the question that my colleague Darren Hughes asked. He said that this legislation would result in New Zealanders paying more and getting less. I absolutely agree. I want the next National speaker—indeed, the Minister in the chair, the Minister of Labour—to stand up and absolutely guarantee that not a single person in New Zealand will pay more for accident compensation and get less. If they are saying we are wrong, then can they absolutely guarantee that that is not what this legislation will result in?

Michael Woodhouse: We’re paying less than if you were on the Treasury benches.

MOANA MACKEY: Mr Woodhouse refuses to answer the question. The fact is—

Jo Goodhew: I raise a point of order, Mr Chairperson. I draw to your attention that thus far in this particular debate Speaker’s ruling 108/5 would appear to indicate to us that this member has not yet addressed the provisions in Part 2; she has not mentioned in any respect that part of the bill. I wonder whether you could rule on that.

The CHAIRPERSON (Eric Roy): I understand the point that the member is making. I have just assumed the Chair, so I have not had the time to apply myself to the nature of the content of this part. But I think it is a timely warning that this part of the debate is actually about addressing Part 2.

MOANA MACKEY: Thank you, Mr Chairperson. Perhaps Ms Goodhew needs to read Part 2, which actually refers to levies, if she thinks that the costs—

Jo Goodhew: You didn’t mention the word “levies” once.

MOANA MACKEY: Oh! OK. “Levies”. Is the member happy? Can I now talk about the cost on New Zealanders? I said the word “levies”. Is Ms Goodhew happy now? I notice how sensitive National members are; they do not like us talking about the cost on New Zealanders. But the reality is that the cost for New Zealanders will go up, and they will get less service because of this legislation, which Ms Goodhew and her National colleagues are voting for. I think that the next National speaker needs to absolutely, categorically state that that is not the case. I guarantee members that the National members will not do that, because they cannot. They know that all the evidence that the select committee heard, and all the evidence that came out in the PricewaterhouseCoopers report, shows that New Zealanders will get less and pay more.

I spoke on Part 1 last night, and one of the questions I raised—which also comes up in Part 2, under clause 51—was not addressed. That is, the fact that under this legislation someone who has a large fine and pays it can keep his or her accident compensation entitlement, but someone who has a large fine and cannot pay it, and ends up going to prison for non-payment of the fine, will be disentitled from accident compensation. I would like the Minister in the chair to answer that question, because I want to know why. We have heard a lot of argument and rhetoric around this clause, about how it is all about the worst of the worst and it is all about Graeme Burton, but I actually want to ask a serious question. How is it fair that someone who can pay his or her way out of a large fine can keep accident compensation entitlement, but someone who cannot pay and ends up going to prison—ends up with a custodial sentence—loses the entitlement? If Mr Woodhouse, who appears to be the guru on all of this, would answer that question—

Michael Woodhouse: It’s a nonsense question.

MOANA MACKEY: I think that just shows exactly the colour of this National Government. I say to Mr Woodhouse that under this legislation someone who commits an offence but cannot pay the fine goes to prison and loses his or her accident compensation entitlement, but someone who commits exactly the same offence and can pay the fine because he or she is wealthy, gets to keep his or her entitlement.

Michael Woodhouse: It’s an outrageous insult on the judiciary!

MOANA MACKEY: Well, I tell Mr Woodhouse that we are passing legislation that will be enacted, and I think we should be clear. This could be fixed if the Government cared enough about it to fix it. Instead of standing up and making patronising speeches that do not address any of the concerns of members on this side of the Chamber, maybe the Government could look at fixing these anomalies and taking some of these concerns a bit more seriously than it is.

The other issue I raised last night was that, instead of only talking about the Graeme Burtons—which we all agree was a serious issue, and that is why the Accident Compensation Corporation (ACC) has the ability to disentitle—members on the other side of the Chamber should maybe look at the reasons why ACC is not using that power, and resolve them. One of the questions the select committee asked was whether it is about information sharing. ACC said that one of the problems is that it does not know when people have been convicted. How can it disentitle people when it does not know whether they have been convicted? If the issue is information sharing between departments, then that issue should be fixed, and I would like the next National speaker or the Minister in the chair to tell us that it has been fixed. We could fix it in this legislation. We could make it absolutely clear that that information can be given directly to ACC so that it can use its power to disentitle where appropriate.

The other thing I would like to raise is the concerns that were raised by the Legislation Advisory Committee. Mr Woodhouse is very concerned about good practice and good law. Well, this committee had a lot to say about this bill, and in particular the fact that we are now reversing that entitlement. Currently the Minister cannot disentitle; ACC does it. I think that separation is appropriate. This bill says that the Minister can entitle someone, but nothing in here has any criteria around that power. So we are now giving a power to a Minister, who can be lobbied and politically persuaded. I mean, National has done a deal with ACT over this and other legislation—it hated the “three strikes” law and it was only going to select committee, but it has done some deal to support some other legislation, probably this legislation, and now they think “three strikes” is wonderful. Ministers deal in politics; Ministers make political decisions. Now a Minister has the right to entitle someone to accident compensation. This right is not sitting apart from the politics and with the department. The Legislation Advisory Committee said that in that section there should be criteria around how that decision is made.

I would like the next National speaker or the Minister in the chair to explain why there are no criteria in this bill relating to this power. How will we ensure and how will the people of New Zealand have confidence that that power will not be completely unhindered by any kind of control; that the decisions that are being made will be appropriate and not political decisions; and that all politicians—but Ministers in this case, who can be very prone to lobbying on a number of issues—will put that lobbying aside? Labour members believe that there should be criteria. If a Minister is going to have this power—and there is a question over whether a Minister should have this power—then there should be criteria so people can see clearly and transparently how those decisions will be made. Maybe Mr Woodhouse could tell us why there are no such criteria in this legislation.

For someone who had a lot to say for himself not very long ago, he has gone very, very quiet. Now he is doing that whole: “I am looking up at the gallery.” thing; he did not really hear what I had to say; he does a little bit of a quirky smile. I say to Mr Woodhouse that it is all textbook; we have seen it all before. Maybe, instead of pretending that he is waving to some constituent up in the gallery, he could answer the question I am putting, which is why there are no criteria—

Jo Goodhew: You have no idea how to actually talk about the bill, Moana.

MOANA MACKEY: Oh, Ms Goodhew is getting upset. “Levies”—there, is she happy? I said the word “levies”. Maybe Ms Goodhew could answer the questions about why there are no criteria in this legislation for the power we are giving the Minister. Does she know? Does she care? No, not really. She just wants to go home. She is just upset that we will not roll over and let the Government pass this terrible legislation, which will be incredibly damaging for all New Zealanders.

Maybe Ms Goodhew could stand up and explain—and I think this is a very simple question—why people who use up all their holidays get to have accident compensation, and people who do not take their holidays do not. How is that fair? No one knows when he or she will have an accident. No one can predict that. But if people happen to have taken a holiday before they have the accident and used up all their holiday pay, they still get their accident compensation entitlement. But if people are unlucky enough to plan their holiday for the period after they end up having the accident, they get nothing, and they lose their holiday pay. I ask Ms Goodhew how that is fair. We see that she is now doing the “tugging on the ear, pretending I’m not listening” routine, which is a variation of Mr Woodhouse’s “pretend I’m looking at someone in the gallery” routine. Maybe she could answer that question. Again, she had so much to say for herself before; maybe she could take a call and explain to me how it is fair that people lose their entitlement just because they did not take their holidays.

ALLAN PEACHEY (National—Tāmaki) : I appreciate the chance to make a modest contribution to the debate on Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. I will begin gently. I do not know that the last speaker—Moana Mackey, who is a very experienced member of this Committee—particularly addressed Part 2, but she certainly got a lot of her agenda out there. I gently point out to her that on this side of the Chamber we write our own speeches. We do not need an Opposition member to tell us what we will talk about.

It is with a slightly heavy heart that I speak this morning. We have been through the first reading of this bill and a lengthy select committee process during which, on occasion, the contribution of Opposition members was valued and very positive. We have had the second reading and have been through Part 1 in the Committee stage. We are now on Part 2, and all the Labour members have done is to get a whole pile off their chests, much of which is not particularly relevant to this legislation.

I repeat to Opposition members the offer I made to them last night. Let us get rid of all the posturing, posing, and displays of emotion that have been going on. In this debate on Part 2, I ask why the Opposition members do not reach out to the Government members in the way we are trying to reach out to them, and agree that we have to save the accident compensation scheme. Part 2 is about saving the scheme, so why do we not get down to work and do so together? The people of New Zealand require us to save the scheme, and that is what Part 2 does. Along with Part 1, it is about making the scheme affordable and financially viable for ordinary New Zealanders well into the future.

The member Ms Beaumont did a far better job than the speaker who followed her, Moana Mackey, of addressing the clauses of Part 2, and I commend her for that, at least. She talked about Part 2 being an attack on workers. I do not understand that. An attack on workers would have happened had Labour remained in office. The consequence of Labour remaining in office and persisting with the attitude it has shown in this debate would have been the collapse of the scheme as a 24/7 accident insurance scheme that still has the potential, if fixed by measures such as those contained in Part 2, to serve New Zealanders well.

The phrase “mean-spirited” was used. I cannot see what in Part 2 could be described as mean-spirited. What is mean-spirited about introducing changes to the legislation that save the scheme within the realms of what the country can afford? The Opposition should have learnt from 9 long and, some would say, miserable years in Government that we can throw money at a situation for only so long. At some point in time, responsibility has to be exercised. I ask Labour members when they will start showing some responsibility.

We heard the phrase “blatant unfairness”. Is it blatant unfairness to the taxpayers and levy payers of New Zealand to make the accident compensation scheme more affordable and, therefore, to save it? That is what Part 2 does—

Colin King: Sustainable.

ALLAN PEACHEY: As my colleague Mr King says, it makes the scheme affordable and sustainable. What is blatantly unfair about that? Nothing in Part 2 is blatantly unfair to anybody. The words “mean”, “nasty”, and “unfair” are emotive words that have no meaning in Part 2.

Hon DAVID PARKER (Labour) : I will talk to clause 53 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, which relates to transitional provisions concerning gradual process workplace disease. This clause relates to a change that is being made to the Injury Prevention, Rehabilitation, and Compensation Act. The change disentitles some people who can currently prove a workplace accident relating to gradual process disease. After this transitional provision comes into effect, they will not be able to. I will explain to those who are interested the nature of the change that is being made and how it is unfair.

Currently it is quite hard to prove a work-related gradual process disease or infection. If someone has an illness, there are often a lot of possible causes. If someone has an illness that may be related to exposure to chemicals at work or on a farm, for example, then there is some onus on that person to show that exposure to those chemicals caused the disease, and not some other cause. I would have thought that is quite a hard, albeit appropriate, test to meet. One of the ways in which the Accident Compensation Corporation (ACC) goes about assessing whether this link is sufficiently proven is through ministerial advisory groups of experts, who look into these things. As the quality of science improves and their knowledge as to these links grows, the decisions that are made by ACC no doubt become better. Incidentally, another provision in this bill does away with those advisory boards, which to me seem necessary and ought not to be disposed of.

My point in respect of clause 53 is that, in addition to the existing test, this bill introduces another impediment to getting cover. That impediment is found in clause 7, which does not come into effect until the transitional provisions of clause 53 apply. The new test in clause 7 says that people will not be able to get compensation for work-related disease caused by exposure to chemicals if that same chemical is found to any material extent in their non-employment activities or environment. So if someone now has exposure at work to chemicals that cause disease, and if that exposure causes a disease, then that person can get accident compensation. But if he or she has material exposure outside of work—at home—the Government will deem that that person did not get the disease from work. It does not have to be greater exposure at home; it just has to be some material exposure.

I could understand if employers were saying that they were paying for the cost of non - work-related exposure to these chemicals, that it was too tough, and that maybe there should be some sort of pro-rata assessment of whether that injury should fall inside or outside the employers’ compensation scheme. I can see myself being persuaded that if there were partly a work cause and partly a non-work cause, then the compensation should be proportionately divided and put to the different accounts. Indeed, if there is no compensation for work-related disease partly caused outside of work, then a person might not get full compensation if part of it was caused outside work. But to completely take away cover from someone who has a work-related disease because some of the disease was not work-related is just wrong. It is unfair. It denies the reality that this person has suffered work-related disease as a consequence of exposure to chemicals at work.

These things are real. I think that most people who run constituency clinics will have met people who worked in photographic processing shops; that problem is dying out as technology changes. They were being exposed to the chemicals—

Hon Ruth Dyson: Glutaraldehyde.

Hon DAVID PARKER: I am told glutaraldehyde is the chemical; I do not know that from memory. Those chemicals cause skin problems and respiratory problems, and in some cases people have terribly affected lives. These consequences are not minor; they are life-changing events. This clause would say that amateur photographers—presumably some of these employees are amateur photographers—would no longer be entitled to compensation relating to personal injury caused by gradual process disease or infection as a consequence of exposure to those chemicals at work, despite the fact that the vast majority of their exposure to those chemicals was at work and therefore was the cause of their injury. That, in my opinion, goes too far. As I said, I could understand an argument to rateably apportion the cost between the two different causes, but to say that just because there is a material effect from the outside-of-work exposure those people should have no right to any compensation for their work-related injury goes too far.

Again, the question is: why are we doing this? We already know that work-related accident compensation levies for employers in New Zealand are lower than they are anywhere in the world that we are aware of. The only information the Transport and Industrial Relations Committee had in that respect was the comparison with Australia, which clearly showed that the costs for our employers are already lower. So what is the justification for reducing them further by effectively excluding cover for these real injuries?

John Boscawen said that costs are going up and therefore we should truncate the scheme. It is true that medical costs are going up. They are going up for a number of reasons. There has been high inflation in the health sector, which I think will abate, and ever more sophisticated procedures are available to ensure that people live healthier, longer lives in the face of injury and disease. Those procedures cost, and as a country we face the pressures of meeting that additional cost.

We make choices as to how the extra wealth that is generated in a society is allocated. We are a country that grows wealthier over time. Every country, as it grows wealthier, chooses, if they have a bit of disposable income or more disposable income, to spend more of that disposal income every year on health care, because health care is so intrinsically important to quality of life. If people have the choice of spending more on quality of life—if they can afford it—they do. As a country we can afford to pay more for quality of life every year, and we do. We should not be stuck in some 1950s paradigm that says that that was all we could afford back then, and therefore all we should try to aspire to afford these days is the level of cover that we used to have. That is not the way for New Zealand. We want improving quality of service in medical services in New Zealand as the economy improves and as technology improves. That is called progress. Some of the comments we heard from John Boscawen seemed to be that the reality is that medical procedures all become too expensive and we just have to put a ring-fence round it and say that we are sorry, but people will not get anything more. I disagree with that view. I think that we can as a country pick up some of these additional costs, because we become wealthier as our economy grows.

That is not to say that we ought not to be prudent and to try to manage costs. I certainly agree that we ought to maximise rehabilitation so as to minimise those costs, but I am certainly not one of those people who thinks that we should have as an objective keeping expenditure in these areas static, because in reality we cannot unless we freeze ourselves in time and slowly become a backward country.

I will also talk about the residual levy. I agree with some provisions in this part of the bill. There is a problem with the levy-setting process of the accident compensation scheme. Changes in rates of return can have an enormous effect on the capital pool that is needed to fund some of these old residual claims over time, and therefore the change in the parameter of expectation as to what the rate of return on investments will be for the next 20 years might go from 5 percent to 4.5 percent per annum. That change has an effect worth many billions of dollars on the pool of assets that is required to be held by the scheme to meet the long-term life of those old claims. That number bounces around every year and causes real volatility in the levy that is set for those residual claims, particularly as we approach the end of that funding. We are doing two things here: we are extending the date from 2014 to 2019, which is good; and we are putting that date in stone, which I think is a wise policy decision by the Government, and I congratulate it.

Hon RUTH DYSON (Labour—Port Hills) : Deciding who to give the next call to was a major dilemma, and I really think you moved forward on it with courage and correctness, Mr Chairman! I thank you very much for giving me the privilege of taking the next call.

I will add to the comments made by the member who has just resumed his seat, the Hon David Parker, in relation to John Boscawen’s comments, but I will also recall different comments that that member made during his contribution. John Boscawen began his speech by asking why we are now paying more and getting less in accident compensation. He asked why that was. Well, the answer is very simple: we have a National-ACT Government that will make New Zealanders pay more levies, pay higher levies, and get less through reduced entitlements. That is what we get under a National-ACT Government. Mr Boscawen should ask that question while looking into the mirror. What part has he played in making sure that New Zealanders under the scheme now have to pay more and get less?

As an example of that reduction in entitlements I will look at clause 54 in Part 2, which is the part we are debating at this moment. I think that this debate will go on for some time, given the number of people I have seen seeking calls. The provision I will refer to, which will certainly cause people to be paying more and getting less, relates to vocational independence. “Vocational independence” is a lovely term, is it not? It sounds as though people who have had an injury have had proper, high-quality rehabilitation and are now able to move back into a paid job if that is what they had before, or even if they did not have a paid job previously—a younger person, a student, or a parent with the primary responsibility for caring for the children may not have been in a paid job.

Vocational independence sounds great, but the National Government has gutted the basis of the vocational independence assessment. It has made three major changes with this amendment. Clause 54 refers to the assessment, but it does not give the details of those dramatic changes. The first is that people’s pre-injury earning capacity will no longer be considered as part of the vocational assessment process. For example, a Minister of the Crown, earning quite a good income, has the misfortune of having an injury—I would not wish that on any Minister of the Crown. That Minister then goes through some rehabilitation. Part of the vocational independence assessment, under this legislation, will no longer require one’s earning capacity as a Minister to be taken into account. The vocational assessor might tell the Minister that he or she is fit to work as a cleaner in a Minister’s office, and that would be determined under this amendment as vocational independence. Well, there is one word for that: “unfair”. It is not fair for a person to be moved so dramatically from one scale of earning or potential earning to another, much lower scale because of an injury. People’s pre-injury earning capacity should remain as part of the consideration. The officials confirmed to the Transport and Industrial Relations Committee—and I give them credit for doing so—that changing “must” to “may” can be interpreted by a vocational assessor as “may not”. So it will not matter a toss to the vocational assessor what the person was earning before his or her injury; all the vocational assessor will be interested in is turfing that person off accident compensation.

The second change that I will refer to is that, where a person is assessed as having the capacity to do a job, it will not matter whether it is a real job. It will not matter whether such a job is available in New Zealand. Many examples of that happened in the 1990s, and this bill will head us in that direction. There were many examples where people were deemed to have the capacity to be a lift operator, for example. I ask members when the last time was that anyone in this Chamber went into a lift in Kirkcaldie and Stains, Smith and Caughey’s, Ballantynes, or James Smith’s and had a lift operator ask which floor madam or sir would like to go to. We do not have lift operators in New Zealand any more. Those were the olden days, which is where clause 54 in Part 2 of this amendment bill will take us. That is exactly the situation this clause will take us back to, because the clause removes the requirement for the job that the person is assessed to be capable of doing to be a real job.

The other example that I recall very well was that of a man who was assessed as being capable of being a tap-dancer. I have not seen a lot of tap-dancing jobs going in New Zealand on which one could earn money or keep a family, but that was what the vocational assessor said. Later that same week Paul Holmes interviewed the tap-dancer. It was revealed that the man—who had been assessed by the Accident Compensation Corporation (ACC) as being vocationally independent, able to move off accident compensation, and fit to be a tap-dancer—had only one leg. That would be a very, very hard duty to perform, but that is exactly what this amendment makes possible again.

The Minister in the chair, the Associate Minister for ACC, is right to hang her head and keep her mouth closed. She seems to be—and she should be—ashamed of what she is doing to ordinary, hard-working New Zealanders who have had the misfortune of being injured. This amendment takes us back to having no consideration of pre-injury earning capacity. Georgina te Heuheu thinks it is funny. Well, I do not think it is funny that people who had high-paying jobs, who worked hard to get ahead in their careers, and who were able to offer their families good financial support because of their hard work and determination will now be told by ACC that that does not count any more, and that they are fit to do very low-paid, menial jobs with no career prospects. Under this amendment, that is all right. Well, I say to Mrs te Heuheu that it is not all right. I will be very interested to see members of the Māori community front up to that member and say exactly what the impact will be on Māori families. That member should be raising questions with her ministerial colleagues rather than laughing at the unfair treatment that this amendment will dish out.

The third change in the work-capacity vocational independence assessment outlined in clause 54 is the reduction in hours. Currently, people have to be determined to be fit to do a real job—taking into consideration their pre-injury earning capacity—for 35 hours a week. That is fair. It is not a full-time job, but it is pretty close to it; 35 hours a week is, in the main, enough to keep a family on. This amendment reduces that requirement to 30 hours. Someone may be deemed to be capable of working only 30 hours in a low-paid job. Even if that person is able to get a low-paid job, he or she, frankly, could not keep his or her family going on that many hours a week. It is just not possible if one is the primary income earner. The inclusion of that amendment says to injured people that we do not care what they were doing before the injury, we do not care whether there is a real job, and we do not care whether they can afford to keep their families on 30 hours a week. That is not what Labour says. Labour believes that what people were earning before their injury should be taken into account in the assessment process. They should be able to work for 35 hours a week, and the job that they are determined as being fit to do should be a real job.

That is what ordinary New Zealanders who have the misfortune of having an injury deserve out of a scheme that they pay for. They pay for it out of their hard-earned income; they deserve fair treatment when they are injured. That is all the New Zealand public want. They do not want what National and ACT are dishing up, which is to pay more for accident compensation but get less in return. They just want a fair go. Frankly, I do not think that is too much to ask.

Throughout this bill there are amendments that cut back provisions that people now expect as part of the social contract they have bought into with the Government. We will see increased calls for the right to sue. I am sure that Associate Minister Pansy Wong will say that maybe people should have the right to sue, but why would any one of us want to take New Zealand down a track of litigation, of stress, of putting money into lawyers’ pockets, and of many hundreds of people losing their entitlement and their rights to a fair go through the court system? We have a fair and just system now, and we should keep it.

JO GOODHEW (Junior Whip—National) : I move, That the question be now put.

Hon ANNETTE KING (Deputy Leader—Labour) : I came to the Chamber to listen to the debate on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill because it is an issue that Labour intends to fight strongly on. We are believers in the accident compensation system that has served New Zealanders so well for so long.

I listened to Mr Peachey’s speech; it was a 3-minute attack on Labour’s record in Government. He stressed the need to have an affordable and sustainable system. I tell Mr Peachey that this bill—and as a constituency MP, Mr Peachey will know this—will undermine the confidence that New Zealanders have in the scheme that they are paying for. It is their scheme to cover them when they have an accident. As other members are doing in their constituency offices, I am picking up on people coming back to us asking why they are being denied cover under a scheme they thought they would be covered by.

I agree with the points that Mr Peachey made about the scheme needing to be affordable and sustainable, and so do New Zealanders. But from the National Government we are getting nothing more than a propaganda campaign to undermine accident compensation for its own political purposes. I ask people to read a story in the newspaper today about a 15-year-old girl who injured her hip playing sport. The mother has gone vocal because she said that she thought the accident compensation scheme would cover her child in the event of an accident, yet she was turned down for cover. Why was she turned down? Because the medical assessor for accident compensation said she had an unusual-shaped hip. Before she had that accident she was playing sport and was an active child. She was like any ordinary kid at 15—lively, running, and enjoying life. She is now in such agony and pain that she can do nothing. She can hardly walk. She is on painkillers. That is a very good example of the system not being fair. Why would that child be turned down just because an assessor said she had an unusual-shaped hip?

I say to Mr Peachey that when he makes speeches about the scheme being affordable, sustainable, and all the fancy words the National members are using he should think about the New Zealanders who need to have access to accident compensation and rehabilitation. This is not an insurance scheme, as National has tried to paint it; it is a scheme to help New Zealanders in the event of an accident. If they have an accident, they need help.

I was staggered by John Boscawen’s comments. He really labelled what this Government is doing, and I think it should be said by every member of the Opposition. He said that we are paying more and getting less. I thank Mr Boscawen for that comment. New Zealanders will be paying more and getting less. I have a question for him: why is he voting for a bill that will mean people pay more and get less? That seems a bit crazy to me. We have had no answer to that question.

I think one of the big issues in these transition clauses is the issue of New Zealanders who will lose access to hearing aids that they need because of hearing loss. People have already come to me around this issue. They have come to me because they have a workplace injury: they have lost their hearing at work. They have gone to work year after year and worked in a noisy environment in a time when they did not take a lot of care about health and safety. A lot of those changes came in under a Labour Government, and much of it was called “bossy PC” Government. But we believe in workplace safety. Many New Zealanders who have gone to work in a noisy environment year after year now have hearing loss. The reason why the Government is changing the entitlement is not that it does not want people to have hearing aids; it is that it thinks too many are getting them and it is costing too much money. It is saying that because the cost has gone up—of course, the cost of hearing aids has gone up, too—it will now put a threshold on when people can get a hearing aid.

We and the National members have been told that many New Zealanders who do not meet this threshold will still not be able to hear daily things around them. A very good example was their not being able to hear children speaking, because of the pitch of their voices. We were told that these people would miss out on parts of their lives that they should be able to enjoy with help from the accident compensation scheme. They did not choose to lose their hearing. They did not deliberately go out, put on earphones, and listen to heavy metal; they were actually working amongst heavy metal and heard the noise and the thumps of their workplace, and so they lost their hearing. I think it is shameful to treat our workers in such a way.

I also endorse the comments made by Ruth Dyson around clause 54 and the area of vocational assessment. I have to say that I had not heard the story of the one-legged tap-dancer. He was assessed following an injury as being able to tap-dance—he had a job he could do. He was assessed as being able to be a tap-dancer, but he was found to have only one leg. I imagine it is quite difficult to tap-dance on one leg. The only thing I can say is that the person was lucky he did not have both legs missing. He may have then been assessed as being able to do something else. Who knows?

This is the stupidity of this whole change. Why would we not take into account someone’s pre-earning capacity and his or her capability to do a job? It is demeaning to New Zealanders—who may well have gone to university, got qualifications, been top earners, and supported their families—to be told that they have been assessed as able to do a job that does not relate to anything they have spent their life doing, and that many of them will have paid to be qualified in. This is another method of reducing access to accident compensation for New Zealanders. I know there will be many, many other examples.

This is a sad day. I hope New Zealanders are listening to this debate, because they are seeing the gradual destruction through the tyranny of the majority in this Committee of a scheme that has served New Zealanders well. When we were in Government we were not looking for New Zealanders to pay more and get less; we were looking for a system that worked and provided cover to many, many people, including the families of people who commit suicide. I think this Government has taken an axe to the scheme for no other purpose than its own political philosophy and ideology. We knew it was coming, unfortunately. We warned New Zealanders it would happen. We said that National would make drastic changes to accident compensation and would set out to undermine and privatise the scheme, which is exactly what is happening in conjunction with ACT.

At the end of the day, we will see New Zealanders demanding the right to sue. We have to ask whether we would blame them. The mother of the 15-year-old I told members about will be asking why she should not sue, if she cannot get compensation. What about the ACC doctor who said her child should not get cover, because she has oddly shaped hips? We have to wonder why an ACC doctor would do that, other than that he or she was being paid by ACC. That is an extremely serious issue. Too many cases come to me where people say they have grave doubts about the fairness of the assessments that are done on them.

I conclude by saying that Mr Peachey wants a sustainable and affordable system, but National is making New Zealanders pay more and get less. That is what this bill is doing.

GRANT ROBERTSON (Labour—Wellington Central) : I thank the Chair for giving me the call on this occasion; I know it was a tough choice with such an admirable team here ready to take the fight to the National Government on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill.

I will speak about the transitional provisions in Part 2, particularly those relating to compensation for earnings and holiday pay. However, I want to make reference to an interjection we heard from Sir Roger Douglas when Annette King was saying that the bill is going through with ACT’s support. We need to take ourselves back in this debate and remember that the ACT Party supports this bill on the condition that the scheme moves towards privatisation. Sir Roger can correct me if he likes, but that is the ACT Party’s reason for supporting this bill—that the scheme move towards privatisation. Sir Roger just said the bill does not go far enough yet, but clearly that is the reason why ACT supports this bill. Clearly, National’s direction must be towards privatisation, because that is why the ACT Party is supporting the bill. The Māori Party is not supporting this bill. Its members have said today in the Chamber that they are not supporting this bill, and I am sure that is because they believe that National is going towards privatisation. The ACT Party is leading National here, saying that it will go with National as long as it goes in the direction of privatisation. That agenda is what lies behind this bill.

Hon Annette King: Peter Dunne will go where he can.

GRANT ROBERTSON: Well, we do not know what Peter Dunne will do, but I am sure there will be a ministerial job at the end of it, whatever it is.

In Part 2 we see the essence of the unfairness of this bill, particularly in respect of compensation for earnings. I refer back to the original principles of the Woodhouse commission, which established the accident compensation scheme, and, in particular, to the principle of real compensation. I will read out what the commission said. It observed that modern households have several financial commitments that “do not disappear conveniently if one of the hazards of modern life suddenly produces physical misfortune.” We can understand that. Financial commitments do not go away. We all know that. We all know about the fixed costs that we have in our lives and need to meet. In particular, people who are on lower incomes and people who undertake seasonal work have to work very, very hard to manage their budgets to know they will be able to handle things if something comes along.

When New Zealanders accepted the Woodhouse report and when the accident compensation scheme was put in place, they entered into a social contract that said: “We’re not going to sue, we’re not going to do anything that’s litigious, because we accept that the scheme will look after us, 24-hour, no-fault.” The commission went on to say that a social compensation system “should rest upon a realistic assessment of actual loss, both physical and economic, followed by a shifting of that loss”—and these are the important words—“on a suitably generous basis.” The figure of 80 percent for earnings-related compensation was designed to offer real compensation and to take into account those words, but to leave a proportion of the loss with the injured person in order to encourage personal initiative. We can understand that. We have supported that system over a long period of time. Well, under this bill that system is completely and utterly undermined. The transitional provisions that we see here will undermine that principle for a number of workers.

We are returning to the position before the 2008 amendment when weekly compensation for non-permanent employees would be averaged out to reflect the fact that had they not been injured, they would have expected periods of earnings and non-earnings over a 12-month period. So, for people in casual employment or in employment where they are not certain of their futures, their compensation will be divided over a full 12-month period. That is unfair and unjust. National members opposite need to stand up and say why they are putting forward a bill that increases unfairness. Most of us in the House have come here because we want New Zealand to be a fair place, yet we have before us legislation that manifestly increases unfairness.

In the Council of Trade Union’s submission to the committee, it cited an interesting example of people who will be treated unfairly as a result of the clauses we are debating here. I will read out the example it gave. A woman who has been financially dependent on her husband for most of the year undertakes some seasonal work and is severely injured on the fourth week of the job. Her earnings of $450 per week for the 4 weeks of her job is divided by 52 weeks. At 80 percent, that means that her weekly compensation will be $27. How is that fair? How is it fair that somebody in that situation will have his or her earnings divided over the course of a whole year?

The process whereby an employee is categorised as non-permanent is also completely arbitrary under these new changes. It essentially requires the Accident Compensation Corporation to make a guess as to how long the employee might have continued working over the 12-month period. This provision is another unfairness, another way in which the principle of real compensation brought forward by Owen Woodhouse as part of the social contract is being undermined by this bill.

I want to look at the key principle of community responsibility. Society accepts that we have a responsibility for those who have been hurt through no fault of their own. Annette King talked about people who have suffered hearing loss, not because of something they themselves have done but because of doing jobs that many people in this Chamber would not want to do, like jobs in heavy industry. Michael Woodhouse, who has lectured us today about the accident compensation scheme, would not want to do those jobs, but I am sure he knows many people in Dunedin who do those jobs, many of whom, I am sure, he has worked alongside in the past. They have done those kinds of jobs and as a community—

Hon Member: Not alongside.

GRANT ROBERTSON: Not alongside. Perhaps he knew some of them. He probably refereed them when they were playing rugby. But that community responsibility is undermined if we say to those people: “We don’t think you are worth it. We think you’re worth $27 a week. That’s what we think you’re worth.”

Hon Annette King: And no hearing aid.

GRANT ROBERTSON: That is right; as Annette King says, no hearing aid. So that principle of the Woodhouse commission is totally undermined.

I want to raise the issue of holiday pay, which is dealt with in clause 58. Treasury has pointed out that the provision saves only $1 million, but it is incredibly unfair to those who have already earned holiday pay but have been unlucky enough not to have actually used it. Let us look at two workers with different circumstances at the time they have an accident: one worker is up to date and has not accrued any holiday pay, and the other worker is owed 4 weeks’ holiday pay. Under clause 58, both workers are treated completely differently, and that is manifestly unfair. Labour members have asked members opposite over and over again to tell us why they support something that is so manifestly unfair. The bill requires holiday pay, including holiday pay accrued before an injury, to be counted and abated against weekly compensation. That will result in manifest unfairness right across New Zealand.

Every constituency member in this House will have had people come to them to talk about the unfairness of the accident compensation scheme. Someone came to me on Friday with exactly that problem. He was unable to work out what the bill would mean for him, was dealing with difficulties at the moment, and was scared about the future and that of his family. For a bill to come before the House that puts people in that position is shameful for National members. They should be prepared to take a call on the clauses that put into practice the unfairness around compensation for hours lost and around holiday pay. Yet we have failed to see that from any member. I would like to see the Minister in the chair, the Associate Minister for ACC, take at least one call this morning to defend the bill. We know how much she loves talking in the Chamber, but we have not heard her today.

This bill is unfair and unjust and Labour will continue to oppose it and ask National for answers.

Hon PETE HODGSON (Labour—Dunedin North) : I want to take up some remarks made by my colleague Grant Robertson when he referred to the Woodhouse report and the social contract. We are seeing in the Chamber today changes to the legislation that directly and determinedly abrogate that contract. The contract was that the right to sue would be removed and in the stead of the removal of that right there was to be a thing called an accident compensation scheme. The idea of accident compensation back then was always manifold. It included, for example, back then, 30 years ago, significant attention on injury prevention. It included the idea that people would be substantially—and the figure chosen was 80 percent—kept free of the risk of their being injured as a result of an accident through no fault of their own, and it was on the basis of no fault. Now we see, through these changes, creeping deterioration of that contract, and my colleague Grant Robertson and other speakers have given example after example of that.

Holiday pay would do as an example—one example. If one is sick and goes to Work and Income and says: “I have an illness, I need some sick leave.”, I wonder whether members could tell me whether Work and Income would say to that person to first of all use all his or her holiday pay. Is that the case?

Hon Member: Yes.

Hon PETE HODGSON: Oh, it is the case. Let us come to bereavement leave. In the situation where someone has an illness, and applies to have access to bereavement leave, is that person told to use his or her holiday pay first? If a member of Parliament breaks his or her leg, is that member of Parliament told by Parliamentary Service that before he or she goes to the Accident Compensation Corporation (ACC) he or she must use up his or her holiday pay? Actually, he or she is not told that, for this reason: members of Parliament, if they break a leg, receive no pay cut at all. They do not go near ACC; they do not need to—not if they are going to be away for a week or two. One can be a parliamentarian with a broken leg; I have seen a number of them.

There is a difference between people in different strata of society. If I am a meatworker and I break a leg, my pay stops that day. If I am a member of Parliament and I break a leg, my pay does not stop, and unless I am away for a long time my pay will not stop. So, you see, we already have a situation where some people in society need not worry too much about accident compensation and the finer points about whether holiday pay is up for grabs. Members of Parliament are some of those people and yet we, as a group of 120-odd people, are deciding by majority to remove the rights of a whole lot of others, even though we do not even face the problem ourselves.

National members should be actively defending this legislation, for indeed I find it straightforwardly indefensible, but there is not a word from them on these transition provisions in Part 2—or indeed much else in this legislation. We see National members doing the opposite: they are staying silent, talking about a system being broken when it is making $1 billion profit a year, and saying that we must move quickly to constrain the ability of people to get accident compensation for financial reasons. That is not the social contract. The social contract was never: “We’re going to take away the right to sue so long as we can afford it.” The social contract was that the right to sue goes and therefore we as a society will set out to get some social insurance running to ensure that if people are injured through accident they are held free from personal damage from that. No longer is that the case.

These days, under this legislation, meatworkers should get injured late in the season, because if they are injured early in the season, it is too bad. The way the calculations are done means that those injuries will be thoroughly improperly and incompletely compensated. The meatworker’s fault was to get injured early in the season; if a meatworker is injured late in the season, then there is less fault visited on that private individual. That is not a social contract; that is penny-pinching—

Hon Ruth Dyson: Cheating.

Hon PETE HODGSON: —and it is cheating. What is more, it is cheating on a group of people who are already limited in their ability to secure 12 months’ income because of the very nature of their seasonal work.

Entrenched unfairness is being legislated here, and that is not nice. It feels ugly and it is also, in my view, something that should be defended. I think that the people who are about to do this to the public of New Zealand have an obligation to get up and say why they are doing it. They have an obligation to give the other point of view, an obligation to say there are reasons behind this legislation, and here they are. This is supposed to be a debating chamber. It is not. It is an echo chamber, because there is nothing coming back from the Minister in the chair, the Hon Pansy Wong, and there is nothing coming back from the so-called staunch supporters in National, every one of whom will vote yes to pass this legislation. Not one of those members is getting up to defend it. Is there a word for that, which begins with “c”, that I am not allowed to use? There may be.

Let me just ask another question. Why is the hearing loss threshold of 6 percent defensible? Why is that defensible? Does that mean that the Government has come to the view that all hearing loss of 1, 2, 3, 4, and 5 percent must be age related and that hearing loss beyond that may be accident linked or injury linked?

Hon David Parker: No, because that is over and above the 6 percent.

Hon PETE HODGSON: OK, so I am advised by one of my colleagues the Hon David Parker, who is our spokesperson on ACC and who knows about these things, that the way it is done is that age-related hearing loss is estimated first and then 6 percent is added. That means that if one is an older New Zealander, one needs to have a hearing loss of somewhat more than 6 percent before the scheme will operate. So if hearing loss that is age related is already taken into account, why is the figure not 0 percent? Let us see if the Government can answer that.

If it were to be 1 percent, that means that the little wee accident was not compensatable. That, itself, is a break of the social contract. But we have got ourselves up to 6 percent. I suspect that many people in the public arena are not aware that 6 percent hearing loss is substantial. It does not mean that someone hears 94 percent of everything; it does not mean that. It does mean that in a busy society where there is a lot of incidental noise and where there may be more than one conversation running, that hearing loss is very substantial under those circumstances. So we have a 6 percent threshold that was no doubt stolen from some other jurisdiction, which, no doubt, did not have that social contract in the first place.

This system is unique to New Zealand. It is unique in our history. It is the envy of the world. When one goes to Australia—I suspect the 6 percent threshold came from Australia, did it not?

Hon David Parker: Well, it’s misrepresented!

Hon PETE HODGSON: Oh, it has been misrepresented! It came from Australia, but it became an aberration on the way over. It is a trans-Tasman aberration. If we go to Australia, we will not find even the history of the social contract. How do we know? Because if we engage in conversation with any doctor in Australia he or she will say, sooner or later: “Gosh, we would like your accident compensation scheme, because we would not have to self insure so much for our practice. We would not have to put up with ambulance-chasing lawyers. New Zealand does not have them, but we have them in Australia.” Members must see that the system is different. Not only that, but our scheme is known to be better. So why would one take a system that is known to be better, proven to be better—in fact, was there not a great big report in only 2008?

Hon Ruth Dyson: PricewaterhouseCoopers.

Hon PETE HODGSON: A PricewaterhouseCoopers report. The scheme got a big tick, was it? Am I right?

Hon member: That’s right.

Hon PETE HODGSON: There was a big tick for the scheme, then a change of Government, which said: “Oh, let us change it.” That has to be defended in this House. National members of Parliament must get up and answer that. I ask my colleagues across the Chamber what PricewaterhouseCoopers got wrong. What did it get wrong? It was a massive report, and what did the National Party in Opposition say at the time? Did the National Opposition members say it cost too much?

Hon David Parker: Probably.

Hon PETE HODGSON: They probably did say it cost too much. Did they read it? Who knows? The big review said things were pretty good with the accident compensation scheme, and only months later it somehow has all turned to custard. That is not believable, it is not credible, it is not defensible, and therefore it must be defended by the people who will vote for this legislation to come forward. I say to them that they have an obligation to get up and put their point of view—we will listen to it—so that the public can see what the other side of the debate looks like.

DAVID BENNETT (National—Hamilton East) : I move, That the question be now put.

DAVID SHEARER (Labour—Mt Albert) : I am very pleased to take a call on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, which the Opposition is opposing very strongly, because it really cuts to the heart of what divides us as parties in this Committee. One of the principles on which the accident compensation scheme was established was that we gave up the right to litigate in order that we would have a scheme that stood by us and supported us when we had an accident. The whole point about this bill is that it undermines that contract. It undermines our ability to get the sort of assistance and the sort of support that we need when we have an accident. That is the sort of message that is coming through the doors of my office when I meet my constituents in Mt Albert.

As the Hon Annette King spoke of, Mr Boscawen said that the whole point about the accident compensation scheme is that we will be paying more and getting less. That is exactly what this bill will cause. It further undermines the contract we have with New Zealanders, who expect us to stand up and defend a system that gives them the right to proper compensation and proper support when they have an accident.

Another principle on which this accident compensation scheme is based is that it spreads risk. No matter what we do in our society—whether we are a timber worker, a factory worker, or work in a more benign office environment—we all pay an amount that means that we are all supported and receive the same compensation. This is so that we do not end up like people in other countries like Australia, where if they want to take their kids to school sport or something like that, they have to pay more to ensure that their accidents are covered.

The passage of this bill moves us towards the privatisation and the undermining of those principles. Why are we passing a bill that requires us to pay more and get less? Frankly, because the Minister for ACC is saying that the accident compensation scheme is technically insolvent and is going down the gurgler. What a lot of nonsense! That statement completely misrepresents what insolvency actually is, and that has been picked up by many of the commentators who have an understanding of what the scheme does in New Zealand. Rod Oram, for example, noted last year that “ … there is a huge gap between the rhetoric of John Key and Smith, and reality.”

Jonathan Eriksen, an actuary—that is, an expert on insurance and claims—of Eriksen and Associates said: “All this talk of liabilities being blown out is complete nonsense. It’s ill-founded and smacks of scaremongering, which, given the current economic picture, is the last thing people need to be told,”. We are talking this up, and people out there in New Zealand are starting to believe, unfortunately, that this scheme can no longer be affordable for New Zealand when, actually, that is not the truth, at all. That justification is being used to ram through this bill, which will mean that New Zealanders pay more and get much less.

A respected journalist in the New Zealand Herald,Brian Fallow, said this last year: “For the Government to wrap legitimate concerns about slippage in ACC’s performance in a whole lot of shrill scaremongering and scapegoating is gratuitous. Indeed it is downright irresponsible when talking about the scheme to use terms like ‘insolvent’ and ‘going down the gurgler’—even if the context is counterfactual—because there are people who depend on it to keep body and soul together and will do so for the rest of their days.” It is exactly the contract on which we established the scheme. It is exactly the contract by which New Zealanders gave up the right to litigate their accidents—giving massive amounts of profit to lawyers, as they do in other countries—in order to have a scheme that will support them and that they will be able to depend on.

This scheme, as many of my fellow party members have spoken of, is very good value. We heard from Pete Hodgson about the comparisons with Australia. Let us look at what accident compensation costs in Australia, in terms of the rate per A$100. New Zealanders pay A$0.94; South Australians pay A$3.14; and the average Australian payment is A$1.73. In other words, our scheme costs employers about half of what Australia’s scheme costs Australian employers. It surprises me, therefore, if employers are paying so little for the New Zealand scheme—and I assume that they are aware of it—that a Government that proposes to support and be supported by New Zealand businesses might want to go down that track and increase the levies that employers pay for their workers.

The last thing I will speak about is exactly how unfair many of the clauses in this bill are. The Hon Ruth Dyson talked about pre-accident earnings, and asking workers who were on a high income to go back to work earlier and accept a job at a lower level. They have been legitimately paying their contribution to the accident compensation scheme, and they have outgoings in their household at a certain level. They expect, under the contract that New Zealanders have with the scheme, that they will be able to come back, get the proper support, and maintain their households without being economically deprived. The pre-accident earnings clause in the bill is not fair. It is simply not fair.

Grant Robertson mentioned holiday pay. Those provisions are also grossly unfair. It means that if I fortuitously have an accident the first day back from my holidays, having used up my annual leave, I will not be penalised by having to sacrifice my holidays. But if I happen to be saving my holidays and have an accident the day before I go on holiday, I will lose those holidays to accident compensation. Holidays are a basic right of New Zealanders. That provision is mean-spirited. I contest Mr Peachey’s claim that it is not mean-spirited, and that the bill will enable the scheme to be far more sustainable and affordable. It is simply not. This particular clause will save $1 million.

All New Zealanders are fair people. They want a fair go. They want their accident compensation to be fair. They want it to be fair on all people. They want to be able to pay a levy and know that their kids can go out and play sport, and if they have an accident, they will be compensated. They want to know that workers in high-risk occupations will be compensated in the same way that people in low-risk occupations are. Yet clause 58 of this bill, which is about holiday pay, is grossly unfair and unjust. As Mr Boscawen quite accurately said, this bill will mean that we pay more and get less. The bill simply reinforces what Mr Boscawen argued it should not do. For that reason I think it is completely right that Labour stands up and defends a scheme by which New Zealanders have entered into a social contract, and on which they depend.

Hon MARYAN STREET (Labour) : I appreciate being given a chance to speak further on Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. I will address two things in particular. I will pick up where I left off in my last contribution about work-related gradual process injury. There are just a couple of things I am sure that members opposite are not aware of; they may not have included them in their slash-and-burn approach to accident compensation if they were.

Work-related gradual process injuries, and, in particular, hearing loss, were decreasing at the time that I had the privilege of holding the portfolio of the Minister for ACC. The point about that is that a range of workers have moved through their lives, and they might have started by working in a quarry or an engineering plant in the 1940s or the 1950s, when things like industrial deafness and injury through repeated exposure to noise and machinery were not as well researched or understood as they are now. Typically, people with work-related hearing loss are men in their late 50s, 60s, or 70s. They are able to trace back perfectly easily to the start of their hearing loss, which is not age-related but because of their occupation. A doctor could just look at them and ask where they worked when they started work. They might say they worked in an engineering plant or a quarry, and the doctor would know for certain that the hearing loss was work-related and that it happened gradually over time.

People who have benefited from receiving hearing aids have moved through the system, so the number of those appearing in recent years has been declining. One of the worrying things—and this is where I want to come to my point about the 6 percent threshold on hearing loss before one is eligible for entitlements under this bill—is that we were beginning to see an increase in the number of young people emerging with work-related hearing loss. I would be very interested to know if the Minister has any awareness of this data and this research, or if the Associate Minister for ACC, Pansy Wong, who is in the chair, could speak to that. The concern is that young people, particularly those working in social environments—I am thinking of nightclubs and bars, where it is not “cool” to wear industrial earmuffs when one is serving drinks behind a bar—are exposed to continual loud music and noise. Suddenly we were beginning to see an increase in the number of young people with work-related hearing loss. This Government is now saying that those young people will have to demonstrate that they have a 6 percent or greater hearing loss before they are eligible for any entitlement.

I will make another point about the hearing loss issue. One of the things that Accident Compensation Corporation (ACC) did very successfully was to leverage down the cost of hearing aids. It used to be that it did not matter at what level one’s hearing was impaired, and it did not matter whether it was a high-range or low-range sound that one’s hearing was impaired at, audiologists would prescribe a one-size-fits-all hearing aid. Technology has moved on, and now hearing aids are devised to accommodate low-range, high-range, or mid-range sound, and can be tailored appropriately. It is true that the cost of hearing aids has escalated hugely, but it is also true that the industry was absolutely gouging the price of them. ACC was able, because of its huge size, and the number of claimants it had needing hearing aids—

CHRIS TREMAIN (Senior Whip—National) : I move, That the question be now put.

Hon RUTH DYSON (Labour—Port Hills) : I will pick up the points that were started by the member who spoke before me, Maryan Street, in relation to gradual process disease and infection. The criteria and thresholds of those are dramatically altered by this Injury Prevention, Rehabilitation, and Compensation Amendment Bill.

Throughout the debate we have had what I regard as some pretty callous and cruel references to people who have been injured—particularly to those who have injured themselves deliberately, and who are now disentitled under the provisions in Part 2. But I say to the Minister in the chair, Pansy Wong, and to her ministerial and backbench colleagues, that we are talking about real people. We are taking away entitlements considered by society to be fair entitlements for the loss that people have incurred because of an injury, whether or not it was self-inflicted. I think that it is time the debate in this Committee recognised the harsh reality for many families of the impacts of an injury.

I will tell members about one such family. I know them well: Tony, Annette, Leeanna, and Sonia Gibson. I will read a statement from Tony. He said, in relation to his son Jason: “Jason pulled up at my place to pick up his small daughter. He opened the door to his van and he fell out on the ground. I said to him: ‘Have you been drinking?’, and he said: ‘No, I’ve been spraying the inside of tanks with two-pot paints.’ ” Jason was 25 feet away from his father at the time, but his father could smell the toxins. He thought that Jason had paint in the van, so suggested they take it out; the van was empty. The smell of the solvents was coming because Jason had absorbed them when he was doing his painting job. Later on, not very long after that incident, Jason came to his parents’ house and said that he had hay fever - like symptoms. He said that the night before he had jogged up Dyers Pass Road to the Summit Road and then his nose had started bleeding, which was quite unusual. His father suggested he go to the doctor and be tested for lead poisoning. Jason was a painter and this was a logical suggestion from his father. The next day Jason did that. He had a blood test taken. That same day, at 4 o’clock, the doctor rang him and said he needed to go to hospital immediately as he had blood cancer. Six days later Jason died. He had suffered five massive brain haemorrhages directly as a result of the solvents that he had absorbed just by doing his job. Jason was 29 when he died. He left his wife Sonia without a husband and his daughter without a father. These are real people whom we are talking about.

Sonia and Annette spent 2½ years researching the link between Jason’s solvent absorption and his death. They passed that information on to the Department of Labour to use in health and safety promotions, and I am sure the department has taken that up. In Part 1, though, the Minister has determined that the advisory group that was set up to find out facts about tragedies such as Jason’s death and how those deaths can be avoided in future—to get that information from best practice internationally and to share it with the Minister—is gone. We have abolished that committee.

There are three people in this Chamber who seem to know more than anyone else: Aaron Gilmore, who has probably written a book on knowing more than anyone else; Michael Woodhouse, who is determined to be the Minister because he does know more than anybody else about just about any topic; and the current Minister himself, Nick Smith. In respect of the talents of all those three members, I say that when Jason died, nobody knew the relationship between his solvent absorption and his job—the job that not only he did well and was very proud of but that also provided a decent income to keep his family—the job he really enjoyed doing. He got up every morning, looking forward to going to his job, but the job killed him because we did not know enough in our country about the danger he was exposing himself to. In the same way, my colleague Maryan Street alluded to the dangers that people in the 1940s, 1950s, and 1960s exposed themselves to, in terms of the noise, chemical absorption—particularly from solvents—and dangers that New Zealand society just did not know about then.

Hon DAMIEN O’CONNOR (Labour) : I welcome the opportunity to speak, however briefly, on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, because this is vital legislation for the agricultural and rural sector. The issues have not been raised in this Committee, but as the previous speaker said, in Part 2 there are some real dangers with regard to unknown work-related injuries relating to poisons used in the agricultural sector during the 1950s and 1960s that have now been clearly identified as being highly toxic, but without the results of that being fully known yet. It is very, very important that people who have put their heart and soul into their jobs, and who have worked their body almost to the point of collapse to create export earnings for this country can be rightfully compensated in their old age. There will be injuries that we have yet to clearly identify.

The principles of accident compensation must be upheld. Those principles say we are a society and a community of different occupational groups and we share risks at different levels, but it is through cooperation and the sharing of risks, experiences, and professions that we drive this country forward. This bill will divide us into little risk groups: high-risk groups of people who work on farms and in rural areas, chopping down trees, and low-risk groups of people who do the administrative work for their industries, and who sit on their chuffs in Wellington, as we do. If we allow the privatisation of accident compensation, we will see the division of this country into low and high-risk groups, and ultimately see costs and profits extracted from the very industries that drive this country and its economy.

In the rural provincial areas, through tourism, agriculture, farming, and horticulture people take risks every single day. They work in remote areas, they work with animals, and they work with machinery in the highest-risk occupations that we have identified. Through accident compensation we take a societal and a community approach that says we must move forward together, and we must ensure that there is adequate no-faults protection for each and every worker in this country. Yes, there will be some apportionment of higher risk through the earners account and the non-earners account, and that should be so. But if we are to divide up those accounts even more and assess, as the private sector will do, the very high-risk areas, then we may see small businesses that drive this country through farming, through forestry contracting and logging, and through agricultural contracting services, being driven out the back door.

There is a growing realisation throughout the rural sectors that the changes that this Government is making to accident compensation will undermine their viability and may see them become exposed to litigation—because that is the inevitable outcome of these changes—and to costs that will mean they cannot afford to employ people to do the work that is necessary. I say every New Zealander should read the Labour minority report on the bill, which clearly identifies these risks. But the Government, through blind ideology, is determined to push ahead and privatise accident compensation.

Part 2 deals with some of the technical issues, and speakers before me have rightfully identified the difficulties in assessing hearing loss and the long-term effects of that on any New Zealander. But there are unknown effects that will be eliminated from investigation and proper compensation by the changes that are being made here. If someone has his or her claim in now, that person will be OK, but some people do not know and have yet to make a claim.

DAVID BENNETT (National—Hamilton East) : I move, That the question be now put.

Hon DARREN HUGHES (Senior Whip—Labour) : I raise a point of order, Mr Chairperson. This point of order does not relate to the usual point of order taken at this time to try to influence your decision. I seek some clarification about the new Standing Orders. If a member has contributed to the debate at any one point, if a member has used one of his or her four calls to debate the part, under the new rules that member is entitled to move a closure motion. There is no question about that. This member has, of course, having been a member of the Transport and Industrial Relations Committee, exercised that right. But this member has previously moved a closure motion, and I am unclear as to whether that pushes him over the four calls that he is entitled to, or whether he is now able to move a second closure motion, his first one not having been accepted by you, and having been participating in the debate.

The CHAIRPERSON (Hon Rick Barker): I am advised, Mr Hughes, that a closure motion is not a call per se, so it does not affect the member’s calls.

Hon Trevor Mallard: Point of order—

The CHAIRPERSON (Hon Rick Barker): I will firstly give my ruling, then come back to the member. The advice I was given has been corrected. A closure motion is a call. There is no question about that. That accords with how I understood it. My advice is that a member can move a closure motion more than once, provided that the member does not take more than four calls. There is a limit of four. I am just checking my notes, and I think that Mr Bennett has not made four calls, but I shall ask the Clerk to double-check. The Clerk and my notes concur. This is Mr Bennett’s second call on Part 2. Mr Bennett has made one call previously, so he is within—

Hon Trevor Mallard: You can’t trust the whips!

The CHAIRPERSON (Hon Rick Barker): I am not worried about what the whips’ records say. They are utterly immaterial. It is my notes that count, and no correspondence is entered into. My notes say that there have been two calls. Mr Bennett has moved a closure motion—his second—which he is entitled to do.

Hon TREVOR MALLARD (Labour—Hutt South) : I raise a point of order, Mr Chairperson. This is a separate point of order, and it goes to whether a member is entitled to move the same motion twice. I can see that you are getting a nod, Mr Chairperson, but, from my understanding of the situation in the past, other members are able to move the same motion—and this is not something restricted to a closure motion; it is something that is general—but a member having moved a motion once and having had it rejected by the Committee, I question whether that member is allowed to move exactly the same motion again. I want to add one other point here, as to whether the closure motion was appropriately moved, because, as you are aware, one is not allowed to add words to the motion. After the member had received the call he said the words “Mr Chair”. He had the call—he had called for it, he had called “Mr Chair”, and you gave him the call—and he said “Mr Chair”.

Darien Fenton: He said “Thank you, Mr Chair.”

Hon TREVOR MALLARD: I did not quite hear “thank you” but he certainly said “Mr Chair”. I am advised from behind that he said “thank you”; I heard the “Mr Chair”. My question is whether those are additional words that obviate his ability to move a motion in the proper form.

The CHAIRPERSON (Hon Rick Barker): The member makes three points. Firstly, he claims that the motion moved by Mr Bennett was rejected by the Committee. That is not correct. The motion was not accepted by the Chair. That does not mean it was rejected by the Committee. It was the Chair’s decision. Secondly, Mr Mallard raised a point about the manner in which the question was framed—Mr Bennett’s putting in the words “Mr Chair”. I think that is a matter of courtesy and respect, and I would not knock out a closure motion for that. If a member thanked the Chair for listening to his point of order, again I think that is being courteous, and I would not discount a member’s motion for good manners. Good manners should be encouraged by everybody.

The question is that the question be now put. I will put the question, because we have had 2 hours and 40 minutes on Part 2, which is a rather technical part, and I think we have had a very good debate.

Hon TREVOR MALLARD (Labour—Hutt South) : I raise a point of order, Mr Chairperson. My point of order is only to give notice that it is my intention to recall the Speaker on that, but my colleague Mr Hughes has another point that he would like to deal with, just in case both of them can be dealt with by the Speaker at the same time.

Hon DARREN HUGHES (Senior Whip—Labour) : I raise a point of order, Mr Chairperson. I am grateful to my colleague Mr Mallard for giving me the opportunity to put this point of order to you now in order to save time, because we are still in the Committee of the whole House and his matter is a separate one. My point of order goes to Speaker’s ruling 7/1 in relation to seating and the attendance of members in the Chamber, and it particularly refers to an item brought before the House in 2003 by Mr Dunne, the member for Ōhariu, in respect of the positioning of members of Parliament when moving motions in the Chamber. Matters of seating in the Chamber are at the discretion of the party leader, and in most cases are delegated to the party whip, but Mr Dunne raised a point of order during the debate on the Smoke-free Environments Amendment Bill that challenged the ability of members of Parliament to move a closure motion from a seat other than that which had been allocated to the individual member. Mr Bennett is not normally allocated the junior Government whip’s seat, or, indeed, a seat anywhere near the executive seats. That is not where his seat in the Chamber is. [Interruption] I do not say that to be unfair or unkind; I am just making the observation that his seat—

The CHAIRPERSON (Hon Rick Barker): Points of order will be heard in silence, please.

Hon DARREN HUGHES: I am sorry; I did not mean to cast aspersions on the member in any way. I am saying that for members to move a closure motion, they should be seated in their own allocated seat, as Mr Dunne pointed out in 2003, and I ask you, Mr Chairperson, to rule on whether it was appropriate for you to accept the closure motion from that member, given that he was not in his seat. I believe that Mr Tremain had not exhausted all four of his calls and would be in a position to move a closure motion. The Hon Mrs Collins is seated in her correct seat; she would be able to move a closure motion. Te Ururoa Flavell is always extremely helpful to National, and I am sure he would be able to do so. Mr Garrett is an entirely different matter, but everyone else could have assisted in that respect.

The CHAIRPERSON (Hon Rick Barker): I come to the point of the member’s point of order. His contention was that a member of this House can undertake the functions of this House only from his or her allocated seat. If that were accepted as a legitimate point of order, I think it would have implications well beyond this matter, and I will come back to that in a moment. Firstly, I think it is the custom and the practice for members to move about the Chamber and sit in other seats to conduct their business. Very often both Labour and National members give speeches from seats that are not theirs. The Chair always recognises them and accepts their speeches from there. The chief Opposition whip well knows that from time to time the whips’ seats in the Opposition are vacated and neither of the whips sits there, and other members cast votes on behalf of their particular party. If the member’s point of order was to be accepted, it would mean that on no occasion could the Chair accept a party vote from the Labour Opposition if anybody other than the whip was sitting in the whip’s seat. Of course, that is a nonsense. No one would accept that. I think the custom is that people are able to move motions and speak from other seats, and I have no intention of disturbing that custom. I rule that it is perfectly in order for Mr Bennett to move a closure motion from a seat other than his own. Mr Mallard has given notice of a point of order. Are we ready to go?

Hon TREVOR MALLARD (Labour—Hutt South) : I move that the debate do now adjourn in order to get a considered ruling from the Speaker.

The CHAIRPERSON (Hon Rick Barker): The question is that the Speaker be recalled.

Hon TREVOR MALLARD: No, that the Committee do now adjourn in order to get a considered ruling from the Speaker.

The CHAIRPERSON (Hon Rick Barker): I think there is a technical fault with the member’s resolution.

Hon TREVOR MALLARD: It was a good go, though.

The CHAIRPERSON (Hon Rick Barker): The point is that the Committee cannot adjourn. If the member wishes to move that the Speaker be recalled because of a dispute over the Chair’s rulings, he is perfectly entitled to do that.

Hon TREVOR MALLARD: I would like to do both. You could start with the first one, we will have a vote on that, then I will move the second one.

The CHAIRPERSON (Hon Rick Barker): There are lots of things we would all like to do. I would like to have Christmas every day of the year and receive gifts, but that is not the way life is. I ask Mr Mallard whether he wishes to have the Speaker recalled; if so, he should move that and I will put it to the Committee.

Hon TREVOR MALLARD: I move, That the Chairperson report progress to obtain the Speaker’s ruling on the Chairperson’s acceptance of a closure motion on the question, That Part 2 stand part.

• Motion agreed to.

CHRIS TREMAIN (Senior Whip—National) : I raise a point of order, Mr Chairperson. I understand that if a vote is called for, we have the right to—

Hon Trevor Mallard: You didn’t call for a vote.

CHRIS TREMAIN: I said “No”, but the Chair said that the motion had been moved.

Hon Trevor Mallard: It had been carried.

CHRIS TREMAIN: Well, I call for a party vote, then.

The CHAIRPERSON (Hon Rick Barker): I want to say two points to the member about this. It is one of the conventions of this House that if a party wants the Speaker to be recalled, members support that. If the member seriously wished to challenge it, he should have called for a party vote and disputed it. The member did not; he just said he was opposed, and I took it at that. The member was required to take the next step and say: “Party vote called for.”; the member did not. I then said that the Speaker was recalled; the Speaker has been recalled. End of story.

• House resumed.