Hon Dr NICK SMITH (Minister for ACC) : I relish the opportunity to debate Part 1, both to flush out some of the nonsense that Labour members have been running on this issue and also to put the case fairly and squarely about the sensible and balanced reforms in this bill. I make no apologies for the core driver behind the bill being the need to improve the affordability of the accident compensation scheme, and to reduce the pressure on levies this year and in coming years.

There can be no question that Labour allowed accident compensation costs to get out of control. Over the past 4 years claim costs have risen by 57 percent, or by over a billion dollars extra per year. This rate of claim cost increases is five times the rate of inflation. Labour somehow pretends that we can have those sorts of increases in claim costs, but that it will not cost so much as a penny for motorists, for workers, and for the businesses that pay the levies. But that is fairyland stuff, and it illustrates just how financially illiterate Opposition members are.

The last annual report of June 2008, a report signed by the previous Minister for ACC, Maryan Street, declared a loss of $2.4 billion 6 months prior to there being any change of Government. For that member to then stand in the House last week and say that Labour left accident compensation in good financial shape was just a nonsense, and it is untrue. Then just months later, after that $2.4 billion loss, Labour engaged in an irresponsible and reckless pre-election lolly scramble. Labour made over a dozen changes to the scheme to make it more generous and to extend entitlements without making any provision to fund them. Part of this bill is unwinding some of those unfunded extensions.

Members opposite have referred to this bill as a complete dismantling of accident compensation, as breaking the social contract, and as ripping up the Woodhouse report, but that is all just political hyperbole. Let us just go through and debate what is in the bill. Firstly, this bill pushes out the full funding date from 2014 to 2019, in order to take the pressure off levies, and, secondly, the bill pulls back on those extra entitlements that Labour added in the dying days of its Government but never funded. I am really looking forward to debating the clauses on holiday pay, on seasonal workers, on the tests for rehabilitation when people go back to work, and on the provisions about self-inflicted harm and suicide. I think that fair-minded New Zealanders, on weighing up the rights of injured claimants and the rights of levy payers, will come to the conclusion that what is in this bill is fair.

Let me put a few essential questions that we need to debate in these Committee changes. The first is whether people should be better off on accident compensation than they were when in work. Was that what the Woodhouse report and our accident compensation scheme was all about? Members on this side of the Chamber say no; members on that side of the Chamber say yes, they should be. It is a very simple question. Should criminals be able to get accident compensation lump sums and income compensation for injuries they suffered when committing crimes? Members on our side of the Chamber say no; members on Labour’s side of the Chamber say that accident compensation should be for crims. A third question that is at the core of this Committee debate is whether businesses with a good safety record should get a lower level of levy than those businesses that have a bad safety record. Members on my side of the Chamber say yes, they should, whereas Labour members say they should not. Again, I say I am looking forward to debating all of those issues.

The changes in this bill are about securing for New Zealand an accident compensation scheme that is fair for levy payers and fair for claimants—a scheme that is affordable in the long term and does not just pass the bill on to some future generation, or, worse still, pretends that nobody pays, which seems to be where Labour is at. This bill is about securing a fair accident compensation scheme, and one that is affordable.

I have tabled a Supplementary Order Paper. One of the first changes I want to make is to call this bill what I think all members in the Committee would call it, and that is the Accident Compensation Amendment Bill. You see, in 2001, in that sort of stroke and fever for political correctness, we changed the name of the Act to the Injury Prevention, Rehabilitation, and Compensation Act. The most interesting thing is that going back to 2001, do members know that rehabilitation rates have got worse in every single year since? Do members know that injury prevention has been so unsuccessful that injury prevention rates have got worse over the succeeding 9 years? You see, members opposite somehow believed that if we just changed the name of the Act, we would fix the problem. Members on this side of the Chamber say that we should call the Act what it was called for all those years, and not play these silly games of political correctness and of renaming Acts away from what ordinary New Zealanders would prefer them to be called. Let us call accident compensation what New Zealanders call it, albeit there is not a member of the Government who does not believe that rehabilitation and injury prevention are important. It is just that we have to do more than change the name of an Act to make some progress.

The last point I note in respect of the Supplementary Order Paper is the change that we are making with regard to the safety levy for motorcycles. The reality is that the record of motorcycle safety over the last decade is a tragedy for dozens of New Zealand families. At the same time that we have seen a 20 percent decline in the overall road toll, we have seen a 20 percent increase in the number of motorcycle accidents and fatalities. The state of Victoria has gone down the track we are taking, and it is the only state in Australia that has been able to reverse the trend of motorcycle accidents. My view is that the provision in the Supplementary Order Paper, which came as a consequence of discussions with leaders of such organisations as the Bikers Rights Organisation of New Zealand and the Ulysses Club, is a very constructive way in which we can make progress on injury prevention and try to reverse that trend in motorcycle accidents. The trend is not only costing the scheme a great deal of money but causing a great deal of heartache for dozens, if not hundreds, of New Zealand families.

This is a fair, balanced bill. The Supplementary Order Paper improves this bill; the Committee should pass it.

Hon DAVID PARKER (Labour) : The Minister who has just resumed his seat has misrepresented the Labour Party position in a number of ways. I do not, in this first call, have a chance to respond to all of the accusations he made as to the Labour Party position that were incorrect. I think history shows that through the more than 30 years that we have had the accident compensation system in New Zealand, Labour has consistently stood by the principles that lay behind its foundation, because those principles are fair—and we continue to do so. The Minister made it clear that his justification for the changes that are made to the scheme is that it costs too much as it is, and therefore cannot be afforded. Yet not one submitter—or the department in its original submission—presented any evidence to the select committee to show that it is more expensive for employers in New Zealand than it is for employers in overseas schemes. Indeed, it took the Opposition’s questions of officials to get some information as to cost comparisons. We would think that if cost was being used as the basis of the justification for drastically reducing the entitlements that people have and need following an accident in New Zealand, robust information would be provided to the select committee. It was not.

I was also disappointed that neither business submitters like Business New Zealand—and I name Business New Zealand not to be pejorative; I value its submission to the select committee—nor any other business representative who made submissions gave us any information as to comparative costs. That surprised and saddened me. Amongst its members are multinational companies that operate not just in New Zealand but also in Australia, Canada, and other jurisdictions around the world. Those submitters would have had, had they desired to get it through their contacts, information on the relative costs in New Zealand and overseas. From their failure to do so, we cannot conclude anything other than that the New Zealand scheme, even in its present state, is cheaper than alternatives overseas.

We explored that a bit through the officials. They provided us with the best information they had as to comparisons with Australia. This came from information that was presented to the Workplace Relations Ministers Council in 2008, which I understand is a meeting between Australian and New Zealand officials. It showed that the cost per $100 of earnings was significantly higher in Australia in 2006-07 than in New Zealand. That year was chosen because I think it was the last date for which they had comparable information. The average for Australia was $1.73 per $100 of earnings, whereas in New Zealand it is 94c per $100 of earnings.

Hon Dr Nick Smith: And what does it exclude?

Hon DAVID PARKER: That excludes motor vehicle accidents on both sides of the Tasman. In terms of the advice that officials gave us, it was full costing for the year of claims in the 2006-07 year. It excluded the tail—

Hon Dr Nick Smith: Oh!

Hon DAVID PARKER: I say to Dr Smith, if he does not already understand this—and as he says, “Oh!”, using the microphone to his advantage, as he is not meant to do as the Minister in the chair—that it excludes the historic tail because, of course, the historic tail is a different pool to be funded. In terms of the full cost of 2006-07 accidents, they were meant to be fully paid in New Zealand at 94c, and the comparative cost was $1.73 per $100 of earnings. So where is the justification for reducing entitlements compared with Australia?

We hear from the Government that New Zealand is always a poor performer compared with Australia. In some areas that is true, but in the area of accident compensation it is not. We have a more efficient scheme. It is cheaper to administer. We know from the PricewaterhouseCoopers report—and, again, the select committee had this information—that the administrative costs of the accident compensation scheme are amongst the lowest, if not the lowest, in the world. That is one of the reasons why levies are lower compared with the service that is provided than is the case in overseas jurisdictions.

We know that, at least currently, it does not make a profit. At present, the Government-owned Accident Compensation Corporation (ACC) is the provider of cover for risk. It does not make a profit. It covers its costs, including the full costs of accidents. There is a problem in New Zealand with a declining rate of rehabilitation. That is a matter the Minister referred to, and I acknowledge it. Rehabilitation rates for long-term injuries have declined at approximately 1 percent per annum over recent years. That is a trend that is also true in overseas jurisdictions. We know that it is, in part, a consequence of aging populations. As people age they both break more easily and take longer to recover after they are injured. Both of those things are realities. That does not mean to say that we should not strive to do even better in terms of achieving better rehabilitation rates. Labour certainly does not oppose measures to improve rehabilitation rates.

None the less, it remains true that costs for employers are significantly lower per $100 of earnings in New Zealand than in Australia. Of course, Australians earn higher wages as well, but I am not making a comparison on total wages. I am making it, for that reason, on the basis of per $100 of earnings. Even on that basis, rates are lower for New Zealand employers. I ask the Minister how it can be justified to decrease further the rates for New Zealand employers, effectively at the cost of injured people and the State. We already know that even under existing rules, many of the people who are exited from the accident compensation scheme end up on unemployment benefits, at a cost to taxpayers rather than employers. We already know that many of the people who are exited from the scheme do not get back into work and are left languishing on benefits.

No system is perfect. We readily acknowledge that there are always ways in which the scheme can be improved, but there is no justification for changing the threshold from 35 hours per week to 30 hours per week. That is the number of hours at which people will be deemed to be work-ready for full-time work. Currently they have to be able to work 35 hours a week; that will go down to 30 hours per week. This will be amplified by other contributions later, in concert with the fact that now accident compensation will not have to have regard to pre-accident earnings.

Effectively, someone could be earning quite a good income on a salary. The example given by a submitter was a bank teller, who might suffer an occupational overuse injury and cannot work for some period. If the bank needs someone to fill that person’s role and he or she is effectively laid off work, so becoming reliant on accident compensation, that person can be pushed off the scheme when deemed to be work-ready because he or she can work for 30 hours per week, even if he or she was working 40 hours per week previously—and ACC will no longer have to have regard to that person’s pre-accident earnings. So effectively such a person could be forced off the scheme when he or she is able to be a shelf-stacker at a supermarket or something like that, working for the minimum wage. Of course, the levies will go down for the employer, but the level of compensation received by the injured worker will be completely inadequate, and that is unjustified.

Hon Dr NICK SMITH (Minister for ACC) : I want to gun straight down into the debate on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill because the speech made by Mr Parker showed exactly the sort of area where we do need to have a free and frank debate.

I have some questions for the Labour members. In 2001, they changed the law to the 35-hour test from the 30-hour test. They changed it so that it went up. My simple question to those members is around the fact the Department of Statistics, during the entire period of the previous Labour Government, said that people were in full-time work when they worked 30 hours, and in the Work and Income office, in respect of the invalids benefit and the sickness benefit, it is a matter of Labour policy that 30 hours a week is full time. So why should the person who suffers from cancer and is talking with the Work and Income officer about whether he or she is able to go back to full-time work have the test of 30 hours a week, but an accident victim has a test of 35 hours a week?

Hon David Parker: Because they used to work 35 hours.

Hon Dr NICK SMITH: That member needs to be able to answer that key point. We see from the Government that the Inland Revenue Department, Statistics New Zealand, and Work and Income New Zealand are all saying 30 hours a week. Why should the Accident Compensation Corporation (ACC) be any different?

The second point, in response to Mr Parker’s contribution, is that he puts a great deal of weight on the data between New Zealand and Australia, but only in relation to the work account. Every time Labour members get to their feet to talk about accident compensation the only thing they want to talk about is the work account, which is about a quarter only of the accident compensation scheme. The earners account, I say to Mr Parker, is in the most trouble. The earners account is paid for by ordinary hard-working New Zealanders and is quite a regressive tax. As people go on to earn higher incomes, they are not hit as hard by the earners account. So it is ordinary workers who are paying for these sorts of costs.

But the real issue I want to gun in on is why is it that Labour members think crims should get accident compensation. I think every New Zealander has sat back, looked at Graeme Burton, seen the way in which accident compensation has provided him with a free leg, and then seen the way that he has gone on and attempted to murder others, and, overwhelmingly, New Zealanders have said that is not right. Labour members say that the law as it is, is OK. Do they know how many cases there have been when a person committing a crime has not gone under the accident compensation scheme in the last 10 years? It is true that such people can apply to the court, and the court can make a ruling. How many in the last 10 years? It is zero—absolutely zip. So Labour members are arguing that the current law works fine, yet in 10 years there has not been a single case where the court has imposed disentitlement. The last court case involved a person convicted of dangerous driving that resulted in very serious injuries. ACC took it to court and asked that the lump-sum payment that that person was entitled to not be provided. The court said that the test in the current law is so high the person should receive his or her lump-sum payment. So, effectively, Labour members are saying that law is OK and crims who injure themselves should be able to get lump-sum payments, income compensation, and full rehabilitation. In my view, that is wrong.

Let us go back to the founding of the accident compensation scheme. It was about losing the right to sue. If I commit a criminal act, who do I sue? Who will I sue to try to get some compensation payment? National members say that the community does not owe compensation to those who injure themselves when committing serious crimes, and that, along with the hundreds of letters that I have seen from New Zealanders, is why I say there is support for that sensible change.

Hon MARYAN STREET (Labour) : There was so much that was wrong with that last speech from the Minister for ACC that it almost beggars belief. I will start at the beginning of this process. The accident compensation system is one that, we all know, is second to none in the world. It is something that other countries aspire to; they wish that they had been visionary enough to put it in place 40 years ago, as New Zealand did. The Injury, Prevention, Rehabilitation, and Compensation Amendment Bill offends against each and every one of the five principles that the accident compensation system is predicated upon. Not one fundamental principle of our accident compensation system is not infringed, broken, or damaged by this bill. The first of the principles underlying the accident compensation scheme is community responsibility. They also include real compensation, complete rehabilitation, comprehensive entitlement, and administrative efficiency. I will deal with each of these.

The community responsibility principle was the one that Owen Woodhouse and his commissioners outlined beautifully in the Woodhouse report. It was about the fact that workers should be compensated for injuries because they cease to be productive economic units when they are out of the workplace. He extrapolated beyond that to include women. In fact, if one reads the Woodhouse report, one sees that the mores of the time are reflected in it in that the expectation was that women would be at home and that men would be in the paid workforce. In order to accommodate women who were supporting the productive worker—to use the old term—the accident compensation system was extended to non-work injuries. That was how it came to cover non-work injuries. The community responsibility principle meant that everybody shared. If we all paid a little, we all would get a lot. The motorcyclist who comes off his or her bike is welcome to my share of the earners levy, because there may be a time when the amount that he or she pays is of benefit to me when I have a motor accident or a non - work-related accident, for example. What everybody pays in as an earner or as a motor vehicle owner benefits everybody. I am happy to work on that basis. This legislation offends that principle by the fact that it is predicated on a private insurance model. National cannot get past the idea that we are talking about State-funded insurance, and it would like to hand it over to the private sector as soon as possible.

The second principle is real compensation. Clause 55 offends against real compensation. I ask members and the Associate Minister for ACC, who is sitting in the chair, to think about that. Clause 55 addresses compensation for casual workers. If anything in this bill does not look like real compensation, it is this clause. It reduces the kind of compensation that a casual or part-time worker can expect to get. I will elaborate on that a little bit later.

Clause 4 offends against complete rehabilitation. There is reference to the move from 35 hours to 30 hours. The Minister was talking about workers who had worked 35 or more hours a week being considered to have worked full-time; that is because they were working 35 or more hours prior to their accident or their injury. What we will have now is not complete rehabilitation back to working 35 hours in the job they were working in before, but partial rehabilitation back to working 30 hours in some other occupation. So that is another principle offended against, and infringed by, this legislation.

The fourth principle is comprehensive entitlement. Let us look at clause 6 in Part 1 to see whether it refers to comprehensive entitlement. Clause 6 refers to hearing loss of 6 percent or more that has been caused by a personal injury. According to audiologists, and also, I believe, submitters who came before the Transport and Industrial Relations Committee, 6 percent represents considerable hearing loss. I ask why people who, because of injury, have a hearing loss of just under 6 percent should not be able to access hearing aids and devices to allow them to hear comprehensively, which they were able to do before their injury. That infringes and offends against the principle of comprehensive entitlement. Now one cannot have a 1 percent, 2 percent, 3 percent, 4 percent, or 5 percent hearing loss; it has to be 6 percent or more to get compensation. That is not comprehensive entitlement.

The fifth principle that is offended by this legislation is administrative efficiency. What was broken? The overseas comparison that was done by PricewaterhouseCoopers showed, in fact, that our accident compensation scheme worked at a higher level of efficiency and rate of return than any comparable system overseas. So it was not broken. What this bill will do is create disputes. It will create a crowd of people who want to sue. It will open the door to pressure to sue and will create an administrative nightmare. In that respect, this bill offends against the principle of administrative efficiency.

When an organisation is deemed to be as efficient as the Accident Compensation Corporation is in administering the scheme, then there is no need for the comprehensive, wholesale reduction represented by this legislation. This legislation is about people paying more and getting less. It is about increasing levies where they did not need to be increased—and I will come back to that point in a later speech—and, at every turn, depriving New Zealanders of entitlements that allow people time to recover, time to rehabilitate, time to get back into the workforce in their original occupation where that is humanly possible, and time to get back into the earning stakes that they were in previously. That is also offended against by this legislation. There will not be any consideration of previous earnings, under this bill. It will not matter what workers earned before their injury; it will matter only that they can do 30 hours’ worth of something, which may not be remotely connected to or anywhere near as well paying as the job they had before their injury. And that is meant to be satisfactory for New Zealanders.

This is appalling legislation. It is founded on a misunderstanding—that is the most complimentary way that I can think of saying it—of every single one of the principles in the Woodhouse report, which gave us a first-class and a world-class worker compensation system. This legislation is destroying something that is profoundly precious to New Zealanders. My colleagues will take up some of the individual points in a moment, but it is clear that not one single principle of the accident compensation system in the Woodhouse report is not broken, damaged, or offended against by this legislation. It is a travesty. I feel sorry for the officials who have had to front up and try to prepare something along the lines of the Minister of ACC’s wishes. They cannot have their hearts in it, because most of those I know are committed to the accident compensation system.

DAVID BENNETT (National—Hamilton East) : I will follow on from that speech from Maryan Street by thanking the officials for their hard work on the Injury Prevention, Rehabilitation and Compensation Amendment Bill. It is a large bill, and they did their work on it in a very timely manner, so I thank them very much for their work. I also thank all the submitters throughout New Zealand who took an active interest in the bill. Many submitters related their personal circumstances to the Transport and Industrial Relations Committee, but many also represented points of view in relation to accident compensation and what they see as the fundamental concept behind the scheme.

Following on from the previous speech, in which the member talked about the Woodhouse principles, I think it is important to remember that some of the changes made in this bill relate to things that have occurred subsequent to the adoption of the Woodhouse principles on which the accident compensation system was set up. It is not right for members opposite to say the bill is against the Woodhouse principles, because many of the recommendations in this bill relate to things that have been done subsequent to the Woodhouse principles being invoked in the original legislation. I think that members and people out in the community who are listening to this debate need to be aware that the Woodhouse principles are firm, and that the accident compensation scheme is here to stay. In this bill we are making sure that the scheme can survive and be there in the future, to deliver on the Woodhouse principles and to deliver what people expect from it. That is the nature of being in Government at the moment. The Government has to deal with some issues. We have to deal with the financial circumstances that the scheme is in and provide a platform for it to go forward, so that it can deliver the kind of comprehensive care that people expect in order to get back into the workforce.

The measures contained in this legislation are not mind-boggling in the sense that they change the fundamental approach to accident compensation or worker compensation in New Zealand. In fact, many of the things in the legislation relate to something that most political parties are in alignment on—that is, the extension of the full funding date. Most political parties, in the select committee, were very supportive of doing that. Only one party, the Green Party, was not supportive of it. Those members see the situation in a different light from the other parties. But the Labour Party is very supportive of extending the full funding date; it is that party’s policy to extend it. Those members want to extend it as much as the National members do, but they will not vote for it. It is something that they want to do, but they will not vote for it. It is very disappointing to see the Labour members not voting for something that they believe in, but I ask what one would expect other than that at this stage of the legislation. Those members are denying support for this legislation on the basis of what is in vogue. They are doing so because they think the appropriate way forward is to put up a fight, but we actually need to look at what the best thing is for the accident compensation scheme, and I say this legislation delivers the changes that are best for the scheme.

I will now look at some of the changes that have occurred. Changes have been made with regard to casual workers, part-time workers, and non-earners, and to do with the abatement of holiday pay. There are some changes to vocational rehabilitation. Changes have been made to the eligibility threshold for hearing loss, and to the provisions to do with wilfully self-inflicted injury and suicide. There has been a strengthening of the disentitlement provisions for criminals. The bill allows some safety incentives for employers and vehicles. There are also changes to the financial reporting provisions. All those provisions deal with trying to provide a stronger accident compensation system going forward.

When I look at some of the changes, such as reversing the entitlements for wilfully self-inflicted injury or suicide, or strengthening the disentitlement provisions for criminals, I find it amazing that Labour members come into this Chamber and want to strengthen the entitlements for criminals. Those members want to see criminals get a better result than other New Zealanders do. They want to see criminals be supported and the accident compensation system go down the tubes, which would hurt ordinary New Zealanders who do not have criminal convictions or a criminal record. When we look at the provisions on allowing safety incentives for employers and vehicles, we see that they will lead to a stronger accident compensation system. We are setting up a situation where we can take into account workplace history.

KEVIN HAGUE (Green) : I would like to begin by sharing the thanks that David Bennett has just expressed to submitters and officials. I thought David Bennett was a very fair chair of the committee, and I appreciated his performance.

The Minister has raised the matter of the initial bargain that New Zealanders struck in creating accident compensation: the social contract. I refer to the submission of the ACC Futures Coalition about that social contract: “The significance of the social contract cannot be overstated. In giving up the right to sue for covered injuries, the public necessarily gave up all the Court-ordered remedies which flow from civil suits. These included: complete compensation for lost earnings (both past and future), compensation for pain, suffering and loss of amenity, compensation for loss of congenial employment, compensation for handicap in the labour market, compensation for loss of pension, as well as compensation for the cost of treatment and/or rehabilitation.”

The Government is now seeking to renegotiate unilaterally the terms of that social contract. The Government cannot, simply by expressing a commitment to the Woodhouse principles, pretend that this bill is upholding those principles. I want to work through them in a couple of speeches, beginning with the community responsibility principle. Over the years Governments have moved towards a model for accident compensation that did not resemble the original form for accident compensation but instead resembled a private insurance model. This bill takes accident compensation further in that direction.

The bill provides for new regulatory powers to introduce experience rating and risk sharing into the accident compensation scheme. This will facilitate the introduction of no-claim bonuses, higher or lower levies for individual employers based on injury record, and risk rating for motor vehicles and owners of motor vehicles. It sounds like insurance to me. As Sir Owen Woodhouse pointed out, provisions such as these run counter to the community responsibility principle and have no place in the no-fault scheme that accident compensation is meant to be.

The community responsibility principle recognises that the various activities we undertake in society are interrelated, and that benefit and harm flow on to others. The community responsibility principle recognises, for example, that even though a disproportionately high number of motor vehicle injuries involve motorcyclists, a significant proportion of those injuries are caused by someone other than the motorcyclist. The community responsibility principle also recognises that increased use of motorcycles, where practicable, has environmental benefits if single occupant car usage is consequently reduced, as the greenhouse gas emissions generated by motorcycles are significantly less than from cars.

Experience rating and risk rating run counter to this principle. The experience rating of employers was found to have negative impacts when it operated in the 1990s. In particular, it had a negative financial impact on the accident compensation scheme. More funds were paid out in levy rebates resulting from positive experience ratings than were received in loadings on levies due to negative experience ratings. It seems particularly bizarre that when the Government is attempting to paint a picture of financial strife in the scheme, it proposes to introduce a policy that will have a negative impact on its financial performance.

The formula for experience rating changed each year in an attempt to address the above problem, resulting in year-to-year uncertainty for employers. Experience rating placed pressure on Accident Compensation Corporation staff to remove costs by moving claims from the work account to other accounts, and increased the likelihood of employers contesting whether an injury was a work injury, with the resultant uncertainty and delays in cover and rehabilitation for the injured person. The Accident Compensation Corporation was required to spend significantly more time and money in defending cost allocation through the dispute resolution process, rather than focusing on the rehabilitation of claimants.

I come now to the principle of comprehensive entitlement. Maryan Street has already spoken a little about the issue of the removal of cover for hearing loss. The removal of the right to be covered by accident compensation for people who suffer a hearing loss of less than 6 percent erodes one of the core Woodhouse principles upon which the scheme was founded—that of comprehensive cover.

Hearing loss has only ever been covered by the scheme if it has been caused by an accident, by the work environment of an employee, or by medical treatment. A claimant does not get accident compensation cover if it is caused by a natural process or by disease or infection. But even if hearing loss is caused by an accident or by the work environment, this bill will deny accident cover to someone who is only a little bit deaf due to that cause.

The Transport and Industrial Relations Committee heard from very many submitters who said that a 6 percent hearing loss is very much more than just being a little bit deaf. So claimants with low-level hearing loss caused by industrial deafness will have to meet the cost of hearing aids and any other costs arising from it themselves, even if their overall hearing loss attributable to all causes is significant. This is like denying people cover if they have only small fractures or only minor ligament damage. Given the stocktake now under way, this has the potential to be the thin end of the wedge for removing cover for injuries that are considered minor. In going down this path, what is next? Who is next? Will a person be denied cover if he or she has only a small fracture?

The disentitlement provisions of this bill also erode the principle of comprehensive entitlement. The Minister has made much of the disentitlement provisions in relation to criminals. I made the point at the select committee, and I make it again now, that the disentitlement for this category of persons amounts to a double penalty. A person who commits a crime is punished for his or her crime. The punishment is proportional to the crime the person commits. By denying people cover from injury rehabilitation and compensation, that person is effectively punished a second time, but punished in a way that is disproportionate to the crime they have committed, whereas the “repugnant to justice” provision in the existing law actually deals with that perfectly adequately.

I want to talk about the disentitlement resulting from intentional self-harm or suicide, because at the very core of accident compensation is the principle of no fault. The punishment that this bill seeks to impose on the families and dependents of those who have harmed themselves at their own hand is a fundamental breach of that no-fault principle.

I come now to the principle of complete rehabilitation. I agree with the ACC Futures Coalition that the existing vocational independence provisions are already a breach of the Woodhouse principle, but the provisions in this bill take that breach further and rip it further apart. The bill removes the requirement that the vocational assessment of suitable work takes into account a claimant’s earnings before his or her incapacity, and we have already heard about that in this debate.

A claimant who is earning, say, $1,500 a week before his or her injury will have that weekly compensation stopped if he or she is found to do be able to do some job for 30 hours a week that pays only the minimum wage. This runs counter to the purpose of the Act, which is to rehabilitate injured claimants to the greatest extent possible. It is an exercise in cost transfer. It transfers the cost of rehabilitation from the State—from the Accident Compensation Corporation—on to Work and Income, to the injured people themselves, and to their families. So that is a fundamental breach of yet another Woodhouse principle.

I come now to the Woodhouse principle of real compensation, and, in particular, to the provisions of the bill in relation to holiday pay and the erosion of cover in the bill for seasonal and casual workers. The bill will result in holiday pay paid on the termination of employment being treated as earnings for the purpose of abating weekly compensation. This proposal is both unfair and an erosion of workers’ rights. Holiday pay accrues in respect of time when a worker, subsequently injured, has not yet sustained an injury.

Hon Dr NICK SMITH (Minister for ACC) : I want to respond to a couple of points about the Injury Prevention, Rehabilitation, and Compensation Amendment Bill raised by the Green MP Kevin Hague, when he talked about a fundamental attack on the Woodhouse principles. Let me firstly deal with the awful and tragic issue of suicide, where he said the bill breached the Woodhouse report. The opposite of that is true; it is absolutely the opposite of that. The Woodhouse report dealt with the sensitive issue of self-harm and suicide. Owen Woodhouse concluded that it was not right that an accident compensation scheme provide cover for that situation. That cover was only included as an add-on to the scheme during the term of the previous Government. It was only an add-on put in place by the previous Government; it was not recommended in the Woodhouse report.

The simple question I have for Mr Hague is this. If a family loses a loved one from heart disease or from cancer, what is the entitlement of the family who is bereaved? The answer is that they are eligible for support from Work and Income. So the real question I have for Mr Hague and the Labour members is why people who take their own life should have their families treated more generously than the families of those who tragically die from heart disease, cancer, and many other ailments. That is the real question.

Hon Steve Chadwick: Does the member understand about blame and family blame? That’s so sad.

Hon Dr NICK SMITH: The second challenge I would give to the member who is chipping in is this: why, when Labour extended the scheme to include suicide and self-harm, did it not fund that?

Hon Maryan Street: For goodness’ sake.

Hon Dr NICK SMITH: The member says “For goodness’ sake.” If the Labour members want to extend schemes like the accident compensation scheme, someone has to pay for it, and we should be honest and upfront about that. It is dishonest for Labour members to argue in this Chamber that we can have those extensions to the scheme, but that nobody has to pay for it. That is not true.

The next question I want to deal with is the issue of the limits in respect of the questions—

Hon Maryan Street: ACC earned $1 billion more than it paid out.

Hon Dr NICK SMITH: That is Maryan Street again. Let me show members where she is being quite dishonest. She signed the accounts for the Accident Compensation Corporation (ACC) in June—

Hon Maryan Street: It was in the annual report that that Minister signed.

Hon Dr NICK SMITH: That is right. Maryan Street signed a set of accounts that showed a $2.4 billion loss when she was the Minister. That was based on a model of full funding, not the cash-in, cash-out model that she is trying to drag us into now. She said, when she was the Minister, that the proper accounting rules for ACC were for full funding. I acknowledge that the Green members are quite upfront and honest about the fact that they do not support full funding; they want “pay as you go”. That is fair enough. I do not agree with them, but at least they are consistent.

I have a simple question for Labour members. Labour members are saying that when they were in Government, they supported full funding. In fact, they actually extended full funding to other accounts. But when we get into the debate on this bill, they suddenly want to change their tune and use the numbers on a “pay as you go” basis. So I have a simple challenge for Labour members: are they in favour of full funding or “pay as you go”? Is Labour in favour of “pay as you go” or full funding? We are in favour of full funding, the Green Party members said they are in favour of “pay as you go”, but what is Labour’s position? Here is a fundamental policy issue about accident compensation. The spokesperson on accident compensation, David Parker, says Labour is in favour of full funding, and Maryan Street, who was in favour of full funding when she was the Minister, does not know what she favours. Members can only conclude that Labour members have no idea what they stand for in respect of accident compensation.

Then we come to a further issue, around holiday pay. The Green member argued, and Labour members have also argued, that people should somehow be able to receive accident compensation and their holiday pay entitlements at the same time. For goodness’ sake, in building our welfare State and social provisions such as holiday pay, accident compensation, and benefits, whenever did we say that people should be better off when they are off work after an accident than when they were working? That is what that means. The Labour and Green members are arguing that people should be better off after an accident than they were when they were working. That is not sensible; that is not sound. They say people have earned their holiday pay. Of course they have, but nobody is denying them the right to their holiday pay. We are simply saying they cannot receive holiday pay and accident compensation at the same time if they are not returning to work.

Let us be very clear what the provisions of this bill do. If people are off work temporarily—let us say they are off work for a month—this bill makes it absolutely plain that they keep their holiday entitlements. They do not have to use them as a substitute for accident compensation. But if people are to receive accident compensation permanently, they cannot get both. I think that is fair. Members are saying we can have these double add-ons because they are totally unbalanced in their view of the levy payers who actually have to pay for that.

What was most extraordinary from the Green member was the argument that crims should get accident compensation income lump sums, because otherwise—

Lynne Pillay: That’s right.

Hon Dr NICK SMITH: This is very interesting. The Labour members are arguing that crims should be able to get compensation. The most interesting part in the minority report is this: “Labour members agree that … an offender like Graeme Burton should not receive lump-sum or earning-related compensation.” But who was in Government when Graeme Burton committed the awful tragedy against Karl Kuchenbecker? Who was the Minister? It was Maryan Street. Did ACC apply to the court to have him disentitled? No. Well, who is to blame? It is Maryan Street.

Hon Maryan Street: Why not?

Hon Dr NICK SMITH: That is a good question. Who was the Minister at the time? It was Maryan Street. You know, during Maryan Street’s time as Minister there was not a single occasion when there was disentitlement for any criminal.

I am looking forward, as all members of the Government are, to getting out on the traps to argue that a vote for Labour is a vote for accident compensation for crims, and a vote for National is a vote for a party that takes a more balanced and reasonable perspective than that. We say that whether or not people commit a crime, they should get medical care. But I find it offensive that a person who has committed a criminal act then gets a lump-sum accident compensation payment, and that is why we are making that change.

The last point I want to note is in respect of the issue of hearing loss. Both the Labour and Green members effectively say we can have a limitless scheme. They argue against levy increases, but say we can have a scheme that goes for ever. I went along to my local audiologist and had a test, because I wanted to have a feel for these provisions. I did a lot of tractor work in my student days, and I was advised by my audiologist that I have a hearing loss of about 1.9 percent, which is within the frequency that is work-related. Those members say I should be able to claim accident compensation for that, because they believe in a limitless scheme. National members say that is not possible. When we look at the huge increase in cost associated with hearing aids, it is our view that there need to be some sensible limits. Australia has a minimum hearing loss limit of 5 percent in some states, and of 6 percent in others. The UK, other developed countries such as Canada, the US—

Hon Steve Chadwick: It’s heartless.

Hon Dr NICK SMITH: The member says it is heartless. I just think that is left-wing mumbo-jumbo from a member who is disengaged from the real issues of cost in respect of accident compensation and the fact that someone has to pay for it.

The simple question is whether the Labour members believe that I should be able to get an accident compensation scheme - funded hearing aid? We say no to that on this side of the Chamber. My hearing loss is not bad enough, at only 1.9 percent, to need a hearing aid, but if the hearing lost is over 6 percent, then people do. The members opposite do not want to acknowledge that accident compensation cannot be limitless. They want to promise everybody every little entitlement out there and somehow pretend that someone does not have to pay for it. That is not the case, and that is why members opposite are incorrect.

MOANA MACKEY (Labour) : I am happy to stand and take a call in response to some of the comments of the Minister in the chair, the Hon Dr Nick Smith. He said in his first call on the Committee stage of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill that he really wanted to have a proper debate about this legislation. I say to the Minister for ACC that if he is genuine about that, then he should stop misrepresenting what Labour members have said and believe, and he should stop misrepresenting the information that the Transport and Industrial Relations Committee was given. If he is genuine about having a proper debate about accident compensation, then he needs to tone down his hyperbole and his rhetoric. I say to that Minister that if the only way he can make his arguments is by misrepresentation and exaggeration, then he has to seriously question how strong his arguments are. That is all I have heard from that Minister, and it is disappointing. It is very disappointing, because this bill is immense in its impact on New Zealanders and on their families.

I find it incredibly offensive when David Bennett and the Minister in the chair get to their feet and say that Labour likes criminals, that it thinks that criminals should get a free ride, and that it thinks that criminals should have all their accident compensation paid for. The Minister knows that that is not true. In fact, he read out the part of Labour’s minority view, attached to the bill, in which we said we do not believe that Graeme Burton should have received that funding, that there is a problem, and that it is up to the Accident Compensation Corporation (ACC) to take action if it believes that that is appropriate. It is not up to the Minister, and the Minister knows that. He accused Maryan Street of not stopping that happening, when he knows full well that she did not have the power to do that when she was the Minister for ACC. Again, I say to the Hon Nick Smith that if he has to misrepresent the law to that extent, then that throws into doubt his credibility and his arguments.

ACC has the power to disentitle people now—it does. And if there are reasons why the corporation is not doing that, then the Minister should find out what those reasons are. As the corporation has said, sometimes it does not know whether those people have been convicted. It does not know if they have been found guilty. It assumes they are innocent until proven guilty. If there is a problem with information sharing, then the Minister should address that, and Labour members have said they would support his action. But the Minister should not introduce—

Hon Dr Nick Smith: It’s in the bill. No, you’re opposing it.

MOANA MACKEY: I tell the Minister we are opposing everything else in this Draconian legislation, but I say there is no need to go that far.

The Minister talks about Graeme Burton. I want to take the debate back down to the other end of the scale, and ask the Minister about people who face large fines and reparation. Under the Minister’s legislation, wealthy people, who can pay those, do not lose their entitlements. But they have done the same thing as poor people who cannot pay, and who have had to go to prison. Wealthy people who can pay their way out of that are not disentitled, but poor people, who have had to go to prison because they do not have the money to just pay the fine or reparation, are disentitled. I ask the Minister how that is fair. How is it fair that someone who can pay that is not disentitled, and someone who cannot pay it is, for exactly the same offence? Let us be clear: when we are talking about this, we are not only talking about the Graeme Burtons of the world. Most people agree that it would have been an appropriate action to have him disentitled for that.

But we are talking about someone who is driving home from work after working three shifts, who is really, really tired so should not be driving, and who causes an accident that harms someone else, and harms himself or herself in the process. That person would be disentitled, and his or her family would be disentitled. But someone who does a stupid manoeuvre on the road and overtakes unsafely—[Interruption]—they would be disentitled, I say to the Minister. Under his law, they would be. But people overtake unsafely, they speed, and they cause an accident. It is wrong, it is bad, and they should not do it, but those are also the people we are talking about. We are not just—

Hon Dr Nick Smith: It’s not true.

MOANA MACKEY: You see, this is what worries me—what I am saying is absolutely true, but the Minister is just shaking his head and saying that it is not true. What concerns me about the approach of this Minister—and he knows what he is talking about—is that this is not someone who is not intelligent. This is an intelligent Minister, who knows that what I am saying is right.

Dr Ashraf Choudhary: Really?

MOANA MACKEY: Yes; he is intelligent. But—

Michael Woodhouse: Makes a change for ACC.

MOANA MACKEY: Right. Well, Mr Woodhouse has decided that what I am saying is not appropriate enough or relevant enough for him to take seriously. He has just said that David Parker and Maryan Street are not intelligent. I thank Mr Woodhouse for his contribution to the debate—stellar, as usual!

I am trying to say that this Minister knows that what I am saying is true. Under his legislation such people would be disentitled, because their offence can result in a sentence of 2 years or more. They would be disentitled; their families would be disentitled. We will point out the section to the Minister where that clause is. So if a worker causes an accident and harms someone when driving home when really tired because that person works three jobs and should not be driving, then he or she is disentitled.

MICHAEL WOODHOUSE (National) : I am very happy to take a call on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill during what will be a pretty long evening, I think. I will start firstly by acknowledging the honourable member Kevin Hague for his contribution to the Transport and Industrial Relations Committee, as well as to the debate in the Committee of the whole House today. He is not a permanent member of the committee, but he made a very considered contribution. I strongly disagree with many of the principles that underpin his view, but I certainly acknowledge the clarity of his position. I also acknowledge the officials. I do not feel sorry for them; I do not think they need anyone to feel sorry for them. They are a very intelligent bunch. They discharged their duties well, dispassionately, and in accordance with the policy framework that the Government set them.

I come back to the member Mr Hague’s questions about breaches of the Woodhouse principles as set out in the royal commission report. He mentioned community responsibility as an example of a breach by the Government in this bill, and he used the example of experience rating. I suggest to the member that we already have experience rating. It is in the form of industry classifications. It is not a question of whether that is a form of experience rating; it is a question of degrees. We accept the principle of community responsibility. Everybody pays. The member Ms Street talked about the example of the motorcyclist who had been prepared to pay a levy. It is insurance 101. It is accident compensation 101, even if one does not want to call it an insurance scheme. However, I think that even Mr Hague would reject the notion that workers in the forestry industry, the fishing industry, and the other very high-risk industries should pay the same premiums as office workers or casual cleaners. That is a form of experience rating. What I am trying to point out is that we can have community responsibility, but we are talking about degrees.

I think the member Lynne Pillay’s interjection on the Minister in the chair, the Hon Dr Nick Smith, summed up the attitude of the members on the other side of the Chamber. She said that Labour’s changes that moved away from the Woodhouse report principles were improvements, but that the Government’s changes were somehow breaches of the report. I think that sums up the attitude of the Opposition on this matter. It is not rational. The finance-change deniers continue to think that we can have a scheme without constraint, and that simply is not possible. They think that we can continue to have cost increases five times the rate of inflation, and expect there to be no consequences. The levy payers, the insured, and the people who are claiming have a right to clarity about what they can expect and how much they can pay. The member Mr Parker goes on and on about comparisons with Australia. Those comparisons cannot be made; they are different schemes. I suggest that, if this is such a fantastic scheme, if the principles that underpin this scheme are so sacred, why, in 42 years, has not a single Western jurisdiction followed them?

Darien Fenton: Doesn’t the member support the scheme?

MICHAEL WOODHOUSE: Absolutely, but what I am saying is, members should not deify it, say that it cannot be changed, and suggest that it is world leading, when not a single Western jurisdiction has followed it. In relation to levy increases, there is an idea that somehow, because Australia’s levy rates are a bit higher than ours, that that is OK, we can continue to lump cost increase on top of cost increase on employers and expect them to pay. Well, that is simply not the way business works, but I would not expect members on the other side of the Chamber to understand that.

I will move into an area, though, where I think we did agree. The Minister is not sure and I am not sure, but I think it is still Labour policy that full funding continue. The Greens have been very clear in their principled stand against full funding, and I think the committee respected that. They would like the scheme to go back to a “pay as you go” basis. That must be incredibly awkward for Labour, because their members say they support the concept of full funding, but just about every single union came to the select committee and said that they did not. The Service and Food Workers Union, the Council of Trade Unions, the Maritime Union, the Rail and Maritime Transport Union, the New Zealand Nurses Organisation, the New Zealand Educational Institute, the Public Service Association, and FinSec all said they did not want full funding. But here is the thing: in response to questions about when they had previously articulated that view, they could not say. Did they oppose it in 1998, when full funding was first proposed? No. Did they oppose it in 2001, when Labour made amendments to the bill? No. Did they oppose it in 2008? No. Not a single representative of the unions had previously said that they did not support full funding. Why would they? Full funding was working.

I want to segue back to the second reading, when the member Ms Street said in her call: “They were meant to be fully funded by 2014, and the National Government at the time”—that is, 1998—“picked the period of 15 years out of the hat. The number was arbitrary. It could have been 10 years, it could have been 20 years, but National said that it would split the difference and make it 15 years.” That is nonsense. I worked for the corporation at that time; I know the people who made those calculations. The calculations were very, very soundly based, they were scientific, and they were intended not to impose an undue burden on employers and other levy payers while we moved towards full funding. Guess what? The scheme was working.

I have shown the graph I have here to members in the Chamber; I want to show it again because it is really important. This shows the path that the scheme, from 1999 to 2014, would have taken to get to the point when 100 percent of the assets matched the liabilities. Not only were we on track until about 5 years ago, but we were actually ahead of the game. The red line shows the actual proportion of assets to liabilities against where we would have needed to get to, to get to 100 percent by 2014. We were ahead of the game. But it is pretty easy to see where the downturn came in. Was the downturn in 2009, when we had the largest recession in 80 years? No. Was it in 2008, when we had the wobbles and went into what Mr Cullen called a technical recession? Was it in 2007, when things were not great but also not bad? Actually, the downturn, when we were at 70 percent and then tanked, was in 2006. It was at a time when the rates of return on the corporation’s investments, and on the sharemarket generally, were at a really, really good rate.

So let us not pretend that being thrown off the path to full funding in 2014 has anything to do with investment returns. Yes, we had had problems with investment returns, but in my view it had everything to do with sloppy management and oversight at a policy level, which allowed the corporation to take its eye off the rehabilitation ball, and the finance-change deniers on the other side of the Chamber to think there did not need to be any fiscal constraints—the come-one, come-all policy.

I wonder what those 42,000 people who were callously thrown off district health board waiting lists thought they would do to get their surgery and their hearing aids. Well, I know what they did. They went back to their general practitioners, faced with absolutely impossible odds. They had a craps-shoot with the corporation, and some of them won. Why did they win? Private insurers said that the corporation had to give a “decline” letter before the private insurer would pay for their surgery. What happened? Surgeons would put the application to the corporation, and the corporation would accept it. Why? That was the culture that was set up. But there needs to be more fiscal constraint, and I think the Opposition supports the move to extend full funding. I know that Opposition members do not agree with why, and that they will still come up with that trumped-up privatisation agenda that I know the Minister will refute soundly in this Committee stage. But I would still like a member for Labour, from the other side of the Chamber, to take a call and say “We support full funding and here’s why.”, because I do not think we have any notion of whether they do or do not.

DARIEN FENTON (Labour) : I have news for that member: unions and the Labour Party sometimes disagree. We do not always agree on everything, just as I hope that Business New Zealand and the National Party do not always agree on everything.

Hon Ruth Dyson: Business Roundtable.

DARIEN FENTON: Or the Business Roundtable—who knows?

I will talk a little bit about Part 1, but I want to explore the issue of privatisation, given that the member has raised it. I look forward to the responses of the Minister in the chair, the Hon Dr Nick Smith, to my comments.

Part 1 contains some pretty miserable provisions—the so-called cost containments—despite the fact that just about all the Government departments advised the Minister, and the select committee, actually, that these provisions would primarily affect low-income Māori, Pasifika, and other workers, and the vulnerable, and would shift costs to health and welfare, and to the injured workers themselves.

Part 1 creates the platform for returning to the past—or back to the future—and for the privatisation of the scheme. The Government says that the bill is about cost containment and saving our accident compensation scheme, but we know that the changes in this bill are a prelude to privatisation, which National has admitted it is working on; it is part of the deal with the ACT Party. National wants to reduce the accident compensation costs in order to make the scheme attractive to private insurers.

Merrill Lynch (Australia) says that privatisation of the work account means $2 billion in revenue for Australian insurers, with a profit of $200 million a year. New Zealanders will pay for that. New Zealanders are already paying more and getting less, and that situation will only get worse. So Labour opposes this legislation, and I will go into why. First of all, I say that the scheme is not broke—

Hon Dr Nick Smith: I raise a point of order, Mr Chairperson. We are dealing with Part 1. There is no clause anywhere in this bill that has provisions for competition or privatisation. The member says she will go into great detail about it, but it is not one of the provisions in the bill.

The CHAIRPERSON (Lindsay Tisch): Thank you. I ask the member to concentrate on Part 1.

DARIEN FENTON: Speaking to the point of order—

The CHAIRPERSON (Lindsay Tisch): No, I have ruled.

DARIEN FENTON: I do want to recall what happened the last time National played with accident compensation. National has been in Government before, and it created a nightmare for workers in the past. I see Part 1 as a repeat of that.

Hon Steve Chadwick: Going back—back.

DARIEN FENTON: That is true. The language of the Government is about providing choice. We have heard from the Government in this debate that this bill is about providing choice for people.

Michael Woodhouse: God forbid that we provide choice!

DARIEN FENTON: That is right. The last time National had the reins of power it used exactly the same language, but the only choice we are talking about here, really, is choice for employers—to choose between insurers competing for business. There was no choice for injured workers. So what happened? Well, it was inevitable. We saw what happened the last time the National Government had a go at privatisation. Privatisation is on this Government’s agenda. It is not in the bill, but the bill creates a platform, through the arguments about funding and about cost containment, for making the scheme much more attractive to private insurers.

There are several things in this bill that we will talk about as we go through Part 1, and I am happy to address them. But I make the comment that others have expanded their comments way beyond Part 1, so I am a bit disappointed that I cannot do that. The provisions in Part 1 that Labour members will be addressing are things like the lack of focus on the importance of accident prevention.

The fact that the Government is now proposing to change the bill’s name from the Injury Prevention, Rehabilitation, and Compensation Amendment Bill to the Accident Compensation Amendment Bill says that this is not about injury prevention; it is about accidents. We are getting something that is all about accidents. There is nothing in the bill about injury prevention. The previous Labour Government was very big on injury prevention, but now we are seeing cuts to health and safety training, and provisions—cuts here and cuts there—that are cutting back injury prevention.

The other things we will talk more about in Part 1 are the changes to vocational independence. I am really looking forward to exploring why the Minister does not understand that 35 hours of paid work a week is not the same as 30 hours of paid work a week. It is 5 hours a week less. That is a problem for people—

Hon Steve Chadwick: That’s what they wanted.

DARIEN FENTON: Well, that is true, but that is a real problem for people who are trying to get back into the workforce, and who are trying to make ends meet. We will also talk about the cover for work-related gradual process injuries. That is also an issue, as changes to the three-part test are blatantly unfair. We will also talk about holiday pay; I am looking forward to debating that.

Hon Dr NICK SMITH (Minister for ACC) : I challenge the previous speaker, Darien Fenton, over the proposed change of the name for the Act. Opposition members are very offended that the Supplementary Order Paper I have tabled states that we should call the legislation, when passed, the Accident Compensation Act. Actually that was the name of the Act from 1974 until 2001. Are they saying—

Hon Members: Back to the future.

Hon Dr NICK SMITH: No, I am simply saying that we should call it what it is. Darien Fenton is concerned to point out that the legislation is about injury prevention, but let me tell members the record: in the time during which the name of the Act was changed to the Injury Prevention, Rehabilitation, and Compensation Act, the number of injuries was 1.34 million. In the 8 years that the Act has been called the Injury Prevention, Rehabilitation, and Compensation Act the number of injuries has actually gone up by 300,000. So my question for the member is whether by changing the name of the Act and calling it the Injury Prevention, Rehabilitation, and Compensation Act, we have prevented any injuries. The record is awful. If I look through the 1990s, I see that in the last 5 years when the Act was still called the Accident Compensation Act—which I think most New Zealanders would call it—the rate of injury increase was a whole lot less. So that shows that changing the name of an Act actually does not change much, at all. It is an exercise in politically correct nonsense.

Kelvin Davis: Then why change it?

Hon Dr NICK SMITH: Let me tell the member exactly why we should change it. If the average New Zealander out there wanted to know what his or her rights were under the accident compensation scheme, and looked up the Act on the web, what would the person look for? I would look for the Accident Compensation Act, but how many people would know that the Act is called the Injury Prevention, Rehabilitation, and Compensation Act? I say that very, very few would. So in answer to the member, I ask: why not call it what it is? Why do we have an Act that is principally about accidents but that does not mention the word “accident”? Why is the word not—

Hon Steve Chadwick: It won’t change anything.

Hon Dr NICK SMITH: Well, this is simply about rejecting the politically correct nonsense that drove the previous Labour Government for 9 years, when it believed that if it changed the name of the Act, suddenly that would fix things. The truth is that over the last 9 years when Labour was in Government, rehabilitation rates got worse every single year. When Labour changed the name of the Act, injury prevention failed, and the number of injuries increased in each and every year. This Government is a pragmatic and common-sense Government that says we should call the Act what most New Zealanders would look for—that is, the Accident Compensation Act.

Hon DAVID PARKER (Labour) : I want to take the Minister in the chair, the Hon Dr Nick Smith, to task with his misrepresentation of Labour’s position in respect of criminals. This is really populist policy on the part of National: “Let’s kick the criminals, again; let’s make it look like Labour’s in favour of criminals, and unfair compensation to criminals.” The first point is this example that is given with Graeme Burton. What a load of rubbish! Under the existing law the Accident Compensation Corporation (ACC) could have applied to disentitle Graeme Burton from any lump-sum compensation or earnings-related compensation. That is absolutely clear, I tell Dr Smith. The existing legislation provides for that. I do claim some expertise in this: I am a lawyer. ACC told us that ever since this provision has been in there, to the extent that it can go back in its records, it has only ever applied to the court in 12 cases. In nine of those cases the court agreed and said the person should be disentitled. In three of those cases the court said: “No, that’s wrong. It’s too tough. You’ve had your criminal penalty.” I would almost guarantee that if Graeme Burton had any earnings-related compensation or lump-sum compensation, and ACC had applied to the court and said that he should be disentitled, then the court would have made a wise decision and it would have disentitled him.

But then, really, the Minister went even further than that and complained that Graeme Burton had been given a prosthesis, as he had lost his leg. Now, this is where I disagree with National. What a miserable, inhumane society he stands for if National stands for people like Graeme Burton walking around on crutches. Although Graeme Burton is a bad person, National would have him eventually re-enter society with a stump and no false leg. Does the Minister really want to live in a country where we not only take away a person’s accident compensation and give the person a serious term of imprisonment—and a person like Graeme Burton may never get out of there—but then we stop him getting a false leg? That is what the Minister stands for, and other members in the National Government stand for that too.

I have recently travelled to some Third World countries. One of the most distressing things for me is to see beggars, without legs, on stumps and inadequate crutches. If we as a society stand for not only taking away people’s compensation and giving them a criminal penalty but also have the Minister saying things like: “Look, it’s terrible; he’s had a prosthesis.”, what sort of a country would we be? That is the difference between the National Party and the Labour Party. I tell Dr Smith that that might be popular policy but it is wrong. It is just wrong.

The existing law is adequate. It is not the fault of the Minister or the previous Minister if ACC sometimes does not apply to disentitle when it should in terms of earnings-related compensation or lump-sum compensation. I agree with that. I also agree that there might be problems with the data that ACC relies upon, and that it ought to have more access to criminal justice records so that it can turn up these cases and make the appropriate application. But this change goes far further than that, and, as Moana Mackey says, it applies to anyone who has any sentence of imprisonment in respect of an imprisonable offence that could have a maximum period of imprisonment of 2 years. It does not have to be someone who is imprisoned for 2 years; the person could be imprisoned for a week.

That is where her example about how this causes injustice is most apparent. Someone could lead a blameless life all of his or her life, and make a stupid mistake driving home from work and injure someone coming the other way. The person is charged with careless use causing injury or careless use causing death. The maximum penalty for that is more than 2 years’ imprisonment. The person might be a low-income person and might have other fines that have not been paid because he or she cannot afford to pay a fine. The person gets sent to prison for a month, so not only does the person suffer the criminal penalty but he or she loses all accident compensation. That does not affect just that person; it affects the family. Again, that is not the sort of society I want to live in. I am happy to leave that issue to the jurisdiction of the courts to judge what is just. What is being done here is unjust, and just takes the country in a poor direction.

Hon Dr NICK SMITH (Minister for ACC) : I welcome the opportunity to have the debate about the criminal disentitlement provisions of this bill, because Labour members are effectively arguing that the provisions in the law as they stand are fine and do work. But if that is the case, why has there not been a single case of disentitlement in a decade? Why has there not been a single case? Those members are standing up in this Chamber and saying that the Minister is being disingenuous, the Minister is being dishonest, because there are provisions in the law right now that allow criminals to be disentitled. Well, I simply say to them that that may be so in theory, but members like me on the Government side are actually interested in what happens in practice. The current provisions do not work; the legal threshold is too high.

Why do we know that? We know that from case law. If we take the most recent example—

Hon David Parker: Nine out of 12 applications were disentitled.

Hon Dr NICK SMITH: How many were there in the last decade? I tell Mr Parker that what has happened—

Hon David Parker: How many have been made—

Hon Dr NICK SMITH: I gave Mr Parker the decency of hearing him out, so perhaps he might also do the same for me, if he wants to have this debate. In the most recent case where the corporation did go to court, the case was thrown out and the person received lump-sum compensation. Labour members cannot argue about that.

The second thing was that Ms Mackey argued that I was saying that anybody who was convicted of an offence with more than 2 years’ imprisonment would automatically be disentitled—

Lynne Pillay: That’s right.

Hon Dr NICK SMITH: The member says: “That’s right.”, but she misses out on a key point, and that is where Labour members are not saying what the proposed law says. The provision states that not only do people need to be found guilty of committing an offence with a penalty greater than 2 years, but they need to be sent to prison or have home detention—both those tests.

Hon David Parker: That’s what I just said.

Hon Dr NICK SMITH: That is not what Moana Mackey said. The issue and challenge I have is when members opposite point out minor offences and say that a person will lose his or her entitlement. I challenge those members to go to the practical decisions of the court. Do we really think that the average law-abiding New Zealander—the exact example that Moana Mackey gave was of a person who was overtired, crossed the centre line, and was involved in a serious accident—in a court of law will be sent to prison under our current legal system? Not on your life!

Hon David Parker: Sometimes, yes.

Hon Dr NICK SMITH: No, that is not true, and Mr Parker knows better than that. The reality is that our judges are under enormous pressure. The reality is that most people who drink and drive do not go to prison on a first offence. It is only when there are multiple offences one after another, and gross irresponsibility, that our judges send people to prison or require them to have home detention. That is where Labour members are being quite disingenuous about these criminal disentitlement provisions.

The last bit they are not mentioning—quite deliberately, I suspect—is that there is also a provision for the Minister, if he or she believes that the disentitlement is unfair, to provide an exemption. The further point that Labour is not acknowledging is that there is no question on the part of members on this side of the Chamber that this is a humane society, and that people should get emergency and other care funded by the accident compensation scheme. What we are saying, and what I make no apologies for saying—

Hon David Parker: Then why did you mention the prosthesis?

Hon Dr NICK SMITH: Absolutely—Mr Parker wants to raise the Graeme Burton case. I say that Graeme Burton did not get lump-sum compensation, to the best of my knowledge; nor did he get income compensation. The issue there was his prosthesis. I make no apologies for the fact that this bill says that unless a medical practitioner provides that a prosthesis is essential for his day-to-day life, he will not get it. Do I think that New Zealanders welcome the fact that they provided that man with a prosthesis that enabled him to go on and commit a further attempted murder? I have to say, for my part, that I am disgusted that my compensation scheme levies gave that man the mobility to again attempt murder. That is where we do differ.

Hon David Parker: It didn’t. That happened after the murder.

Hon Dr NICK SMITH: I am sorry?

Hon David Parker: That was after the murder; the prosthesis—

Hon Dr NICK SMITH: No, no. What David Parker is ignoring—and I challenge him to look at it—is the video of Graeme Burton in prison, with that prosthesis, attempting to commit another murder. Mr Parker is arguing that we need to provide Graeme Burton with that mobility so he can continue to consider those sorts of acts of thuggery. I make no apologies for saying no to Graeme Burton in that case.

LYNNE PILLAY (Labour) : I want to start by congratulating the Minister for ACC, because every time he jumps to his feet on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill we see the National Government’s true agenda. I want to take him up on what he said, not in this round but in the round before it. He said the bill is to be renamed with the words “accident insurance”, because that was what the legislation was called in 1990. It used to be called that. That epitomises the back to the future approach of this Government. We did not used to have a lump-sum payment, so maybe we should go back to that situation, too. We used to have only 3 weeks’ holiday pay, so we should go back to that, too. We did not use to have Working for Families, so let us get rid of that, too. Let us go back to all those things. We did not use to have cheaper doctors’ visits, so let us go back to that, too. We did not use to have workers’ rights in this country under a National Government, so let us go back to that, too. There is no excuse whatsoever for the Minister in the chair to get to his feet and say to members in this Chamber that it is OK to do certain things because that is what used to happen. That is the argument that that Minister is running in this Chamber.

I will talk a little more about dog-whistle politics, which is just typical of that Minister. Again, as has been discussed by my colleagues before me, the issue relates to prisoners’ compensation. Nick Smith said a couple of speeches ago that the Government knows that is not right. I say to this Minister that if he had gone out to the steps of this Parliament last week, he would have heard a lot of Kiwis talking about things that just are not right.

Hon Dr Nick Smith: Ha, ha, ha.

LYNNE PILLAY: That is right; the Minister can laugh. He sits in the chair and laughs. He laughs at people who use their democratic right to come to this Parliament to tell this Minister that the Government’s lousy bill is an insult, and that the Government’s application of the accident compensation scheme is an insult to workers and New Zealanders—to claimants and New Zealanders. That Minister sits there and laughs, with a big smirk on his face. I tell the Minister that that is an insult to all New Zealanders.

But what about the people who rallied outside Parliament? What about the biking community, who said the big hikes in the cost, the lack of support, and the “pay more, get less” campaign were not right? Why is the Minister not listening to them when he talks about what is not right? What about the survivors of sexual abuse, who have been denied their rights by this Government? What about them? They came and said that was not right. Did the Government listen to them? Does the Minister stand in this Chamber and say that is not right, so we should not do it? No, that Minister does not do that. What about the many, many people who have suffered so much stress and anxiety over waiting for their claims to be heard, to be looked at, under this Government, and who in many instances then find, when the claims are heard, that their claim has been denied and they have to go to review? Does the Minister listen to them saying that is not right? No, the Minister does not do that. What about the submitters who came to the Transport and Industrial Relations Committee and opposed the bill in droves—those who came to the select committee, and said this bill is not right? Did the Minister listen to them? No, the Minister did not listen to them.

The other thing that I want to call this Minister to task for is his attitude towards suicide. I find that personally to be absolutely offensive—absolutely offensive. When the Minister was speaking, I was saying that things move on and improve. All New Zealanders are incredibly proud of New Zealand’s accident compensation scheme. It is a social contract, and it is something that we all hold dear. But surely as politicians, as activists, and as people in our communities, we want to improve the situation for all New Zealanders. That is what this Parliament is about. Well, that is what those of us who are now in Opposition understand, and certainly what the Green Party understands, Parliament to be about. When caring New Zealanders are very concerned about suicide in this country, when the previous Labour Government invested so much into suicide prevention initiatives—so much into promoting support for people, and into promoting an understanding of mental health issues—what does this Government do? This Government does exactly the opposite of what Labour did.

When a family suffers the loss of a loved one through suicide, it is an absolutely devastating occurrence. Let us be really clear that if a family suffers that, this new bill sets it out that in that instance, the surviving spouse or partner of the deceased claimant, any child of the deceased claimant, and any other dependant of a deceased claimant are not entitled to any compensation.

Hon Ruth Dyson: That’ll teach them!

LYNNE PILLAY: The Government is saying “That will teach them; that will teach them. This is punitive. How dare they commit suicide?”. What I find even more offensive is that I was looking at an article entitled “Suicide danger in ACC delay: expert.” Here is the irony: we have a Government whose accident compensation policy is making experts become very concerned that claimants will consider committing suicide, and the Government is saying “Oh yes, but if people do that, there will be nothing to assist their families.” I will tell members something: we hear some pretty reprehensible stuff from the Government side of the Chamber, but I think that this one absolutely caps it all. I think that this one caps it all. I would urge the Minister to stand up and try to explain again to the Committee why he thinks that measure is acceptable.

I also want to talk very briefly about independent accident compensation reports referring to “draining the swamp” in cutting back services. Under the National Government, reports are saying accident compensation has gone too far towards having a customer focus and the Government needs to begin tightening the gateway, by reducing the levels and the costs of treatment provided. I think that using the term “effectively draining the swamp” says it all of this Government’s attitude towards accident compensation claimants and what is supposed to be a comprehensive rehabilitation and compensation scheme. It certainly is not.

We are seeing Labour’s accident compensation scheme, which was the pride of the world and that put New Zealand up there, along with women getting the vote and our nuclear-free policy—which, oops, would have been gone by lunchtime, and which could well go under a National Government—be reduced now to a shoddy insurance scheme, one that, if its terms and conditions were laid out, no one would sign up to.

I also want to talk about people who have hearing loss. [Interruption] I think the Minister’s position is more one of having a closed mind than a lack of hearing. To acknowledge the submitters in this Chamber and the people who gave very comprehensive submissions to the select committee, but for them to see the only acknowledgment of what they said to the select committee in the Green Party’s and Labour Party’s minority view report is an insult to them. I want to talk about the hearing loss provisions, because under the new proposal in the bill hearing loss does not count if it is just a bit of hearing loss. If it is just a bit of hearing loss, irrespective of whether people need hearing aids—irrespective of whether they need that assistance—if it is less than 6 percent hearing loss, then they are not entitled to any assistance. That is just absolutely ridiculous.

There are many, many other things like that. Under Labour, casual and seasonal workers were covered, but under this Government’s bill they will become another group of workers who will miss out on having assistance and coverage. That is an insult to workers.

The CHAIRPERSON (Lindsay Tisch): Before I call the next member, the comments made by Miss Pillay related to Part 2. Hearing loss comes under Part 2. I just remind members that we are on Part 1.

Hon Ruth Dyson: Is that not under clause 6, in Part 1?

The CHAIRPERSON (Lindsay Tisch): OK, but certainly hearing loss is mentioned in detail in clause 52. I call the Hon Ruth Dyson.

Hon RUTH DYSON (Labour—Port Hills) : I want to talk to just three points in relation to Part 1. The first is the repeal of section 31 under clause 8, the second is the disentitlement for people who wilfully injure themselves or commit suicide, and the third is the great leap backwards that the Minister has decided to take in terms of work capacity. Let me start from that issue.

I will make three points in relation to the changes of work capacity. I am reminded of the good old days under Bill Birch, whom I must say Nick Smith is making look quite good in comparison—he is certainly making Murray McCully look good in comparison. In the old days of work capacity, people used to say “work cap; kneecap”. Workers who were quite seriously injured got minimal rehabilitation, then went through a shonky assessment process, were told that they were fit to work for 30 hours a week, and were moved to independence, which is what accident compensation was in the olden days of the previous National Government.

That meant that they either went on the dole, or they received no income at all if they were married to an income earner and did not meet the criteria for any income from our social security system. This scheme is a great leap backwards to those old days. We have seen a change to the consideration of a person’s pre-injury earning capacity. If somebody who is in a high-income job—it might be a Minister of the Crown—suffers a serious injury, he or she is not able to take on that responsibility any more; he or she is not able to do his or her job. That person is assessed for work, and it is determined that he or she is able to work for 30 hours a week, as a cleaner in a Minister’s office. There is a big income gap between the earnings of a Minister and the earnings of a cleaner in a ministerial office, but that will now meet the criteria for being assessed as fit to work, because that person’s pre-injury earning capacity has been biffed out. Instead of the assessors having a “requirement” to consider someone’s pre-injury earning capacity, the word has been changed to “may”. The officials confirmed to the select committee that the word “may” means the assessors may or they may not consider someone’s pre-injury earning capacity. That is an absolute outrage. It is outrageous to forget what a person has lost as a result of an injury, in terms of how much income he or she is able to attract because of his or her skill and hard work. That is the first great leap backwards in the work capacity.

The second is the move from working 35 hours a week, which provides a liveable wage for most people, to working 30 hours a week. How can the primary income earner afford to keep his or her family on 30 hours of work a week? I guess the Minister can, because actually a Minister does not have to work any hours a week, and I would not be surprised if some of them do not work any hours a week. But for a wage earner, working 30 hours a week does not provide a living wage if one is the primary income earner for a family.

The third great leap backwards, just in this single clause in Part 1, is the requirement that the job for which the person is being assessed is a real job that exists in New Zealand. Let me give an example of what used to happen, and what this legislation says can happen again. In the olden days I used to get people coming into my constituency office, saying that they had been assessed as being fit to be a car-park attendant, but there is not one single job as a car-park attendant in New Zealand. Another one had been assessed as being competent to be a lift operator. I remember the days when department stores like James Smith’s, Kirkcaldie and Stains, and Ballantynes in Christchurch had lift operators. I do not know that I went into the lifts in Smith and Caughey’s, to be honest. The lift operators would ask people which floor they would like to go to, sir or madam, and they would push the button. When people arrived at the floor, the lift operator would tell them what was on that floor, just to make sure people got it right. We do not have those sorts of jobs any more. Having an assessment that says one is fit to be a lift operator means nothing.

Hon Dr NICK SMITH (Minister for ACC) : I challenge both Ruth Dyson and Maryan Street, in the sense that they have decided to get quite personal in this debate on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. Let us just talk direct. During the period that Ruth Dyson and Maryan Street were Ministers for ACC, the unfunded liabilities grew by $13 billion. It is all very well to wear one’s heart on one’s sleeve, but the truth is that we cannot provide accident compensation security for ordinary New Zealanders if we are driving the scheme broke. That is exactly what those two Ministers did, and it is a matter of public record.

Hon Steve Chadwick: I raise a point of order, Mr Chairperson. The Minister’s comments have no bearing at all on Part 1 of the bill.

The CHAIRPERSON (Lindsay Tisch): I know this is a robust debate; words are flying around. We cannot call someone “chicken”. I heard that from somewhere. We will not have that sort of language. This is a robust debate. If the Minister wants to refer to some points that have been made previously, that is fine, but the Minister cannot concentrate his 5-minute speech on those rebuttal points. I ask him to come back to Part 1.

Hon Ruth Dyson: I raise a point of order, Mr Chairperson. I used the word you refer to, and I withdraw and apologise. It was inappropriate.

The CHAIRPERSON (Lindsay Tisch): Thank you.

Hon Dr NICK SMITH: The issue is that the member Ruth Dyson has just got to her feet and said—[Interruption] I raise a point of order, Mr Chairman. You have insisted that during the course of contributions from members, I do not interject. Every time I have attempted to answer, after members opposite have challenged me to get to my feet and answer their points, I have been shouted down by members who have moved their seats—

The CHAIRPERSON (Lindsay Tisch): I will determine the level of interjections, and whether they are acceptable or not.

Hon Dr NICK SMITH: Members opposite have argued that it is inhumane for the work test in this bill to be 30 hours. They argue that it is not reasonable for the Accident Compensation Corporation (ACC) to tell somebody that if he or she can work for 30 hours a week, that is a reasonable requirement. The simple question I have for Labour members is why it is OK for the test to be 30 hours for someone who is on a sickness or invalids benefit, but not for someone on accident compensation. During the entire period of the previous Labour Government, 30 hours was the test used by the Statistics New Zealand, the Inland Revenue Department, and Work and Income. Why would we have a different definition when it comes to accident compensation?

The last point I want to cover is very sensitive, and it is related to suicide. We have had those arguments. I think it is going way beyond the margins to blame people for causing suicide. It is an awful tragedy. There are far too many suicides in New Zealand.

Hon Ruth Dyson: Oh, what concern!

Hon Dr NICK SMITH: I simply challenge Ruth Dyson that if she and members opposite really believe that the accident compensation system should cover suicide, they should note that Owen Woodhouse, the architect of the scheme, did not include suicide in it.

Hon Ruth Dyson: They’re dead, for goodness sake.

Hon Dr NICK SMITH: I ask Ruth Dyson whether she, with all her passion, is giving an absolute commitment that a future Labour Government will put suicide back into the scheme.

Hon Ruth Dyson: We put it into the law.

Hon Dr NICK SMITH: Will she put it back in? It is a simple challenge. I have been in this House a wee while and I have heard all sorts of passionate debates, but the real test for Labour members as to whether they really believe that is whether they will give an unequivocal commitment they will put it back. Members can see that they are silent, are they not? Is it not interesting? It shows it is all puff. I think they know, and in fact I am sure the Labour spokesperson for ACC, David Parker, knows in his heart of hearts that it was a mistake for Labour to extend accident compensation without the funding—

Hon Ruth Dyson: Rubbish.

Hon Dr NICK SMITH: The member Ruth Dyson says it was a mistake, just like it was a mistake when she extended free physiotherapy into the scheme. [Interruption] Mr Parker says that was a mistake. I am looking forward to seeing Ruth Dyson stand up in this Chamber and apologise for introducing free physiotherapy. Does Labour now accept that it was a mistake?

Hon Steve Chadwick: I raise a point of order, Mr Chairperson. This is the Minister’s eighth call in this Part 1 debate. He has not referred to Part 1 yet. He has made personal allegations, and they have gone far of the mark.

The CHAIRPERSON (Lindsay Tisch): I hear what the member says. I will determine whether we have gone outside the scope of the debate, but I ask all members to concentrate on Part 1. When we look at Part 1, there are a number of clauses on which I have yet to hear any debate. There is a lot of material here that can be debated. I ask for the debate to be concentrated on Part 1.

Hon Dr NICK SMITH: A key part of Part 1 is the decision that suicide and self-harm is a tragedy but not an accident. It is a very simple point, and it is a point on which there is a difference in the Committee. My simple challenge to members—

Hon Steve Chadwick: Tell family members that. Tell family members who have to live with the blame and the shame.

Hon Dr NICK SMITH: I ask the member Steve Chadwick where the funding was when the previous Labour Government extended the scheme to include suicide and self-harm. I searched under the desk; I searched in every corner. In fact, in the first year I became Minister, the accident compensation scheme made a loss of $4.8 billion. Members of the Labour Party are in denial that there is any sort of issue. The simple fact is that if expenses rise—when we extend the scheme and do not fund it—we end up in financial difficulty. Change is required; that is what Part 1 is about.

JOHN BOSCAWEN (ACT) : It seems to me that this is a very fundamental debate. The one very fundamental issue driving this debate is that this country has an accident compensation scheme that we literally cannot afford. It comes down to that very basic fact. When we look at why we cannot afford it, we see that in the last 4 years, claims paid by the Accident Compensation Corporation (ACC) have increased from $2.2 billion to more than $3.5 billion. Claims have increased by 57 percent over 4 years and, as we have heard, that is five times the rate of inflation.

What choices does the Government have? It can leave the scheme as it is currently, and costs can go up next year, the year after, and the year after, but what will happen eventually is there will be protests on the steps of Parliament, as we had with the motorcyclists late last year. People will rise up in protest when what they are being asked to pay for the service that is being provided becomes too great. We see a parallel right now in Greece. That country is verging on bankruptcy, and we see a Government there that has not made the hard decisions that are required. This Government is accepting the fact that we have a scheme that the country cannot afford.

I ask myself what has driven the increases in the costs of claims, and I break those issues into three areas. We have heard that the scope of the accident compensation scheme has been significantly widened since it was first introduced, and after the Labour Party came into Government in 1999.

Hon David Parker: 6 percent of the increase in liabilities; only 6 percent.

JOHN BOSCAWEN: Mr Parker talks about 6 percent of the liabilities. I am not sure exactly what he is talking about, but I read in the select committee report that the payments for claims paid out by ACC over the last 4 years have increased from $2.2 billion to $3.5 billion. What country can sustain a 57 percent increase over 4 years? If nothing is done about it, we will end up in exactly the same situation as Greece now finds itself, and Spain will likely find itself. That is right; that is exactly what we will find ourselves in.

During its term the Labour Government obviously extended the scope of the scheme in many ways. We have heard this afternoon about extensions to cover suicide—compensation for members of a person’s deceased family. We have talked about the extension to physiotherapy services, and the change from 30 hours to 35, and now the proposal to change it back to 30 hours. There have been a significant number of entitlement increases, and that is one of the reasons that drive the cost of compensation increases.

There have been demographic and technological changes. During the second reading debate, Maryan Street talked about advances in medical science. She talked about the fact that 20 years ago people who had accidents and might have died now live, and they live on at great cost. Life is precious, but if we can save a person’s life and give them any sort of meaningful life, then I support that. But that is a cost paid by society. We also heard from David Parker that as people age, their bones become more brittle. I think he said that they break more easily. As our demographics change, as our society grows older, we will have bigger costs relating to accident compensation claims. Without any changes to entitlements, but just from the simple ageing of society and through the development of medical technology, the costs of those claims will increase.

I believe there is a third reason why the costs of claims have blown out, and I put the responsibility for this clearly back with the previous Labour Government. Yes, entitlements are being reduced. There is a move in this bill to wind back entitlement. I put the claim fairly and squarely with the members of the previous Government who are sitting on the Opposition benches.

One of the fundamental changes that the previous Labour Government made when it first came to power was to scrap choice in accident compensation cover. The previous National Government opened up the work account to competition. Five separate insurance companies were offering cover, in addition to ACC. There was a choice in the provider, and premiums dropped by some 30 percent. But more important, when the account is opened up to competition, the competing providers of accident compensation have a massive incentive to try to rehabilitate people to get them back to work.

Darien Fenton: Utter rubbish.

JOHN BOSCAWEN: So if you are an insurer in private business, you would be happy to have the claim go on, year after year? Let me explain. If you open up the work account to competition—

The CHAIRPERSON (Lindsay Tisch): The member cannot bring the Chair into the debate.

JOHN BOSCAWEN: I apologise, Mr Chair. The previous Labour Government closed down choice; it closed down competition. The tragedy of that is that we did not see the continued reduction in rehabilitation rates and prevention rates; we saw a blowout in increases. In fact the Minister in the chair, the Hon Nick Smith, spoke about the increasing rate of accidents.

We can talk about the cost of compensation, but what about the human cost? What about the cost to workers? What about the cost to ordinary New Zealanders who have accidents? What about the cost to ordinary workers who have accidents that could have been prevented, whether or not they occurred in the workplace? The great tragedy of what happened in 2000, when the offer of choice and of competition was taken away by the previous Labour Government, is that it resulted in an increase in accidents and a further contribution to the blowout in claims.

There has been a huge blowout in the cost of claims. The reality is that the Government has to do something. We have a choice. Either we can continue to accept that accident compensation claims will go up by 12 or 13 percent per annum ad infinitum and take the consequences of that, or we can seek to address it. I believe the National Government has done a very good job of trying to address the fundamental cause of accident compensation claims increasing at five times the rate of inflation, in the way that they have. Thank you, Mr Chair.

Hon RUTH DYSON (Labour—Port Hills) : I took a call earlier in this debate, which is, with respect to Mr Boscawen, on Part 1 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. It is not a general debate on the history of the Labour Party and ACT’s view of it. When I took an earlier call in this debate, I said I wanted to talk about three points in Part 1 of this amendment bill. The third point was about work capacity—the great leap backwards that the Minister of ACC is instigating. Unfortunately, the Minister took a call as I was just about to make a point that I had hoped he would agree with and say “You’re right. We’ll change this and make it fair.” But because he interrupted me, he did not get a chance to do that. So, perhaps, he might.

The point is this: under the amendment that the Minister is putting through the House under urgency, there will no longer be a requirement through the work capacity assessment procedure to ensure that the job that the person is determined to be able to do is a real job. I started giving examples of real-life New Zealanders who, under the old system that is now being brought back into our society by this amendment bill, were determined to be fit to be a car-park attendant, a lift operator, or, in one tragic example, a person was assessed as being able to work for 30 hours as a tap dancer. This is not a made-up story; I really wish it were. I wish it were funny. I wish that that person had not had to go through the humiliation not only of being fit to be able to be a tap dancer for 30 hours a week and getting the letter from the Accident Compensation Corporation (ACC) congratulating that person’s move to independence, but also the humiliation of appearing on the Paul Holmes show with one leg, showing that that person would be really hard pushed to be a tap dancer. That person had one leg, but because that had not been the result of an injury, it was not classed as being an issue for the assessor.

That is the shonky nonsense that that Minister, his Government, and his supporting ACT and Māori Party members will bring back into this House. Why would members do that? Why would members do that to good, hard-working, ordinary New Zealanders who happen to have had the misfortune of being injured at work? Why would the Minister, his colleagues, and his supporting parties want anyone to have to go through the humiliation of having an assessment for a job that does not exist? Why would they want them to have the humiliation of being told they are fit to be a car-park attendant or a lift operator and then have no income and no job to go to? Being fit to do a job that does not exist is no help when one has to go and pay one’s grocery bill.

I urge the Minister in the remaining stages of this debate to put in a little Supplementary Order Paper so that we do not have to put good, hard-working, injured New Zealanders through that humiliation. Review and appeal by Paul Holmes and John Campbell should be a thing of the past. We should have legislation that is fair, that treats injured workers with respect, and that gives them the support and rehabilitation they deserve in order to get back to a job so they can support their families. This legislation does not do it. It is a disgrace and it hurts people who do not deserve to be hurt by our law. All they have done is to be injured; I cannot imagine why anyone would want to make their life worse for them.

The other two points I want to talk on in the remaining time—perhaps I will have time for only one—are in relation to clause 8 in Part 1, which repeals section 31. Section 31 relates to the ministerial advisory panel on work-related gradual process disease or infection. I am puzzled to know why the Minister thinks he has enough knowledge, given that it is clear that medical experts internationally look to each other for help. But the Minister thinks, for some reason, which is of a puzzle to every single person in this Parliament, let alone to the public, that he knows better than every medical expert around the world. The evolution of understanding about gradual process disease and infection has been rapid. If our legislation is not based on the best possible advice to the Government, then people who are affected at work, who have asbestosis, lung cancer, hearing loss, and brain injury because they have been exposed to solvents, may not get the compensation and rehabilitation that they deserve.

In this area, New Zealand is woefully ignorant. The establishment of this ministerial advisory panel sought to move us to a place where we could be part of the international debate and where we could look at young men whose brain cells have been turned to mush by exposure to solvents when they have been doing their apprenticeships as spray painters. We might be able to stop future young men having that damage occur to their brain cells. But, no, the Minister knows better. “Let their brain cells turn to mush.” is what he says. He does not need any advice. He knows better than any other person what is wrong.

• Sitting suspended from 6 p.m. to 7.30 p.m.

Hon RUTH DYSON: Before we adjourned for the dinner break, I was talking about the work capacity process, which has been significantly amended in Part 1 of this legislation. The work capacity process determines whether people, having been injured and gone through some rehabilitation and perhaps treatment, are able to be exited from accident compensation—or moved to independence, as this process used to be called—because they have recovered from their injury and have been rehabilitated to the point where they can now be moved off the scheme. In order to determine that exit, those people go through a work capacity process. Currently, the work capacity process requires people to be determined as being able to work for 35 hours a week. That is about the level that we would consider that somebody would be able to keep his or her family. On a 35-hour a week wage, it would be a bit of a struggle if it were a low wage, but that is the minimum at which we can expect that to happen.

Those people have to be determined as having a real job, and I will come back to that in a minute, because I want to explain the difference between what Nick Smith and his colleagues in National, ACT, and the Māori Party are proposing to do to the integrity of this assessment, and what the situation is currently. The third part is that, under the current legislation, what a person was earning before the injury is taken into consideration. So if one is in a very high-earning job and one has a significant injury, one cannot be determined as fit to work in a very, very low-paid job. I use the example of a Minister of the Crown. Ministers of the Crown get paid quite well compared with the rest of the country. If a Minister has an injury, currently the Minister could not go through the work capacity assessment process and be determined as being fit to be a car-park attendant, because that is not a real job in New Zealand as there are no car-park attendants; he could not be determined as being fit to be a lift operator, because we no longer have lift operators in New Zealand; and he could not be determined to have any other capacity to do a job unless that job was one that a person could get in New Zealand. We are real about what capacity we have and about what jobs people might be able to get.

But the other consideration that is currently in the law is that the earning capacity of the Minister is taken into account. So not only could the assessor not tell a Minister of the Crown that he is fit to be a lift operator—because there is no such job, so he could not do that—but also the assessor could not say that the Minister is currently earning around $200,000 a year but that in the work capacity assessment process, the assessor has decided that the Minister could get a job cleaning a Minister’s office. The assessor could say that you are able to do that and that your injury has left you in such a state that you can do that job. Well, you could not currently do that, Mr Chairman—not you personally—unless you were a work capacity assessor. But an assessor could not say that one is off accident compensation and able to do a job that was well below one’s current earning capacity. That is a fair way to treat injured people.

Under this amendment, that goes. A person can be determined to have any job at all, whether or not it is real, so we could see the Minister having an injury and being determined as being fit to be an interplanetary traveller. That might be the job that he is determined fit to be in, and I hope that he does well on that galactic travel. He will not have to be assessed on only 30 hours, as currently the situation is for 35 hours a week. That is not bad on a Minister’s salary, because it does not matter how many hours a Minister works, but if one is on a minimum wage, then the difference of 5 hours a week is huge. Nor does the assessor have to take into that calculation pre-injury earning capacity.

The work capacity assessment process is, in a word, unfair. That is what Nick Smith is responsible for doing to injured workers in our country, and Labour will oppose this every step of the way because it is just wrong.

The final point I will make in this contribution to Part 1 is with regard to the clause that I most resent. It is the clause that I have found the Minister in the chair, the Minister for ACC, has inclined himself towards making the most distasteful comments on, which are the comments that I personally know, from holding conversations with people outside this Parliament, have been extremely hurtful to them and their families. It is clause 10, which inserts new section 119 in the Injury Prevention, Rehabilitation, and Compensation Act. This part of the Act allows people who have wilfully inflicted an injury on themselves or people who have attempted or committed suicide to have entitlement granted to them, if they are still alive, or their family if they are dead. I would just ask the Minister one question, and that is what he has against people who commit suicide. I ask what it is about their families that makes them less worthy of recognition under a comprehensive injury prevention, rehabilitation, and compensation scheme. I ask what it is about people who are dead because they have deliberately committed suicide, who have deliberately considered that they wanted to end their life, had had enough of this world, and had nothing to live for, quite literally. Why do those people’s families not deserve their earnings-related compensation and support for the funeral grant in the same way as the family of a person who falls asleep, loses control of his or her car, accidentally smashes into a tree, and dies deserve that funeral grant? Why is that family more deserving than are the families whose husband, wife, son, or daughter chose to take their life?

How can that be fair? Well, it is not fair. It is a huge insult to people who have ended their lives, for an often inexplicable reason. It is made even worse, because the family members of someone who has chosen to end his or her life always ask themselves whether they should have done something more to try to prevent that. They ask whether there was something that happened today, yesterday, last week, or last year that they could have done differently that would have stopped their husband, wife, brother, sister, son, or daughter from taking their own life.

On top of the huge question that they have as to why they lost that person, on top of the guilt they feel, and on top of asking themselves what they could have done better—questions that cannot be answered, because their family member is dead—the Minister is saying that because their brother, sister, son, or daughter deliberately took their life rather than the death just happening in a car crash or in a plane crash, or when that person was walking across the road, this family is worth less to New Zealand society in terms of what support we should give them, than the family that lives down the road. That is just a total disgrace. The Minister had the audacity to quote Sir Owen Woodhouse. Well, Sir Owen may well have a comment to make, and he is more than capable of making it directly to the Minister. But I have to say to the Minister that, by saying that Sir Owen Woodhouse said originally—

JOHN BOSCAWEN (ACT) : Ruth Dyson asked the Minister in the chair, the Minister for ACC, what he has against people who commit suicide. My response to that is to ask Ruth Dyson what she has against people whose loved ones die of cancer or of heart disease. The Minister said earlier this evening that there is no basis for that distinction. Someone who is struck down with cancer or with heart disease at a very, very early age does not get the income that—[Interruption]

Hon Dr Nick Smith: I raise a point of order, Mr Chairman. During the course of Ruth Dyson’s contribution, despite portions of her contribution being quite offensive, members on the Government benches, including Mr John Boscawen, who clearly did not agree with her listened to her courteously. From the moment that John Boscawen has attempted to answer the very questions that Ruth Dyson challenged members of the Government to answer, she and Maryan Street, who is sitting next to her, have shouted a barrage of remarks, to the point where I could not hear a word of what Mr Boscawen was saying. I think that interjections need to be rare and reasonable.

Hon Darren Hughes: Speaking to the point of order, Mr Chairperson—

The CHAIRPERSON (Hon Rick Barker): I do not need any assistance with this.

Hon Ruth Dyson: He thinks it’s a big joke.

The CHAIRPERSON (Hon Rick Barker): Excuse me! The Committee is entitled to robust debate and, with due respect to the Minister, one of the reasons he could not hear John Boscawen speak was that the member stopped and let the barrage of comments continue.

Hon Dr Nick Smith: I couldn’t hear him.

The CHAIRPERSON (Hon Rick Barker): He did stop. I am keen for this debate to be robust, but I will not have the debate interrupted unnecessarily. The point has been made, and it has merit, that the interjections should not be to the extent that they interrupt the flow of the debate. I say to members, let us have a robust debate, and let us speak loudly and forcefully. That is good; that is Parliament at its best. But let us make sure we can hear the debate.

Hon Darren Hughes: I raise a point of order, Mr Chairperson. I support your ruling, Mr Chairperson. I just hope it extends to ensuring that the Minister does not use his live microphone to interject on speakers who are speaking. For example, when the Hon Ruth Dyson was speaking Dr Smith chose to interject on her, using the live microphone that is in front of him. The Minister shakes his head, but it is clear that he did that. I heard it but I did not interrupt, because I thought there was a free flow. But if he interrupts the debate himself as the Minister in charge of the bill to make that point, then I think he has to exercise some self-discipline himself.

The CHAIRPERSON (Hon Rick Barker): I say to the member that points of order should be raised at the time. The member’s point of order has expired; the time has gone. I try to put my finger on the microphone. It is very difficult, in the heat of debate, for people to be completely restrained. I have had difficulty myself. On occasions I have been seriously challenged; it is difficult. Let us get on with the debate.

JOHN BOSCAWEN: Thank you, Mr Chairperson, and I thank Mr Smith for his point of order. The Chair is quite right; I had deliberately stopped speaking, because I was not prepared to speak into that barrage of criticism. The Labour members seem to have their heads in the sand. The last time that I rose, I raised the issue that claims paid by the Accident Compensation Corporation had increased by 57 percent over the last 4 years. Let me make it clear to the Opposition that the increase is from $2.2 billion a year to $3.6 billion a year. The Government has a choice: it either addresses that issue or continues to see claims go up by 12 percent per annum until the country is broke. This Government is far more responsible than to see that occur.

I want to come to the issue of the rating of employers and the levies they pay. Ruth Dyson said in her earlier speech that I was not addressing Part 1. Part 1 clearly makes provision for employers to be rated on their claims history: on their ability to prevent accidents. We currently have a rating system whereby different classes of employment attract different rates. Naturally someone involved in a very passive job, like sitting in a clerical job, may be paying, say, $1 per $100 worth of earnings, or it might be 50c per $100 of earnings, whereas someone in a much riskier industry—it could be forestry, where there are a lot of saws and falling timber; it is a far more dangerous occupation and a far more dangerous industry—pays a much higher rate than that. This bill makes provision to rate employers within a particular industry differently from one another, based on their claims experience. It creates something very, very important, and that is incentive. It is very important to get the incentives right.

Let us take someone in the sawmilling industry who employs people to go out with chainsaws and cut down timber in our forests. If such employers are able to instil in their employees better safety standards and better procedures so they can achieve a much lower rate of accidents for that particular industry, why would we not reward those employers? Why would we not create an incentive, so that employers are incentivised to do whatever they can to reduce the rates of accidents? From the employers’ point of view, they have the advantage of being able to reduce the levies they pay for accident compensation, but, more important, if it reduces accidents, is that not what we should be trying to do? We should be trying to reduce accidents.

We have had from the Opposition this afternoon a barrage of criticism in respect of reforms that are sorely needed. The Minister has made it very clear that the rate of injuries and the rate of accident prevention issues have worsened in the last 8 or 9 years. I come back again to the fact that in 1999, when the previous Labour Government was first elected, premiums were some 30 percent lower than at present. Rather than allowing employees and employers to continue to have choice, to continue to have competition to drive down those rates, the Labour Government came in with a policy of abolishing that choice, and New Zealand has seen the consequences of that. And, yes, entitlements are being reduced in this bill. They are being reduced because, quite frankly, the country simply cannot afford them. The country simply cannot afford them, because although claims can increase by 12 percent per annum for 1 year or for 4 years, we cannot do that indefinitely. This Government is introducing mechanisms to create the right incentives.

DARIEN FENTON (Labour) : I want to address clause 14, which is about experience and risk rating. Clause 14 allows for regulations that would establish experience rating and risk sharing in respect of the work account. It states that such systems may include no-claims bonuses, higher or lower levies, and claim thresholds. Proponents of this amendment will argue that it provides employers with an incentive to keep the claim numbers down, and that, I think, is what we have been hearing from the previous speaker. But, unfortunately, keeping claim numbers down is not necessarily the same thing as keeping injury numbers down.

Experience rating has been criticised on the basis that it gives rise to the likelihood that employers will seek to access the benefit from the experience rating system by encouraging workers not to lodge claims or to disguise workplace injuries as non-work injuries. If experience rating is also linked to the total cost of an employer’s claim, this will give rise to the likelihood of undue pressure being placed on workers to return to work.

At the Transport and Industrial Relations Committee we heard from many, many submitters who have been involved in this and who were involved during a previous time—in the 1990s, actually—when we did have experience rating, and their evidence from the 1990s, and from overseas, indicates that experience rating is a crude tool that cannot accurately reflect the safety performance of employers or improve their performance, and it can lead to pressure being applied to workers not to report their injuries. That is the real concern of the Labour members.

There are real questions about whether financial incentives work in improving worker safety. During the select committee process we asked about this and we got information about it, but the Labour members are not satisfied with the answers. We draw the attention of the stocktake to a current consultation being conducted by WorkCover South Australia, which is reviewing its penalty bonus system.

The authors of the discussion document, who worked with PricewaterhouseCoopers to gain a better understanding of the system, found that there were only very weak links between the bonus penalty rate and claims outcomes. No evidence was found to suggest that the bonus penalty scheme has delivered better health and safety outcomes for workers. The authors also conducted a literature search and concluded that the majority of findings in the literature review were negative towards the experience rating systems. Also, studies supporting experience rating tended to be less robust than those against.

So, as I said, we heard a significant number of submissions about concerns in respect of experience rating. If we go back to the last time we had this kind of provision under New Zealand legislation, we have to go back to the 1990s, when the last National Government had that kind of provision under private insurance. The experiences were pretty grim, actually. What we heard from submitters, and from the experiences of people who were involved in that at the time, was pretty inevitable because the profit incentives overrode everything.

There were arguments about who was covered and who was responsible, and workers got caught between those arguments. There were many instances of spurious rejections, as, firstly, workers had to prove that the accident happened while they were on the job, and not outside of their job, and, secondly, workers had to jump through a range of hoops time and time again. Many had huge battles to get their claims heard, at all.

I am trying to find, as I speak, the claims the National Government made back in the 1990s about experience rating and what that actually meant. Members of that National Government talked about the wonderful nirvana we would have, where workplaces that had lower accident rates would somehow have lower levies, and those that did not would have higher levies. That did not happen, of course.

ALLAN PEACHEY (National—Tāmaki) : I appreciate the opportunity to take a call on Part 1 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. This bill has been introduced into the House, it has had its first reading, and it has been to the Transport and Industrial Relations Committee. The work of the select committee was pretty onerous and time demanding, but we got through it. The bill has had its second reading, and now, even at the Committee stage on Part 1, Labour members are failing to recognise their responsibilities in this matter. I waited through the first reading debate, the deliberations in the select committee, the second reading debate, and this debate on Part 1, and the word “responsibility” has not fronted.

There are levels of responsibility, and before this debate is finished, I hope that Labour will start to show some respect for what the Government is trying to do and what the people of New Zealand need the Government to do. That responsibility is on two levels. Firstly, Labour should accept responsibility for the damage done to the scheme over the last 9 years. Part 1 tries to salvage what was a world-class accident insurance scheme introduced by a National Government. I suspect that that is what Labour members hate most about it; it was a National Government that brought this scheme to New Zealand. I ask them to take responsibility for the damage they caused to that scheme by trying to turn it into a social welfare measure. Secondly, in this Part 1 debate I am looking to Labour to join with the Government to take some shared responsibility for saving the scheme. If we continue to go down the path that Labour wishes to follow in this Part 1 debate and we carry on and go their way, the accident compensation scheme will be destroyed as a viable 24/7 service available to the people of New Zealand. Maybe that is what those Labour members want.

One thing has come out of the Part 1 debate today. We had a very, very passionate speech from Mr Parker, full of feeling and full of condescension towards the Minister. That member did one thing that will not be lost on the people of New Zealand: he clearly aligned Labour with the criminal class in New Zealand. There was not one mention of the victims of crime, and that will not have gone unobserved. The list member Mr Parker made a very interesting point. He tried to draw attention in the Part 1 debate to the differences between Labour members and the National Government. The difference was clear: they care more about the criminal class of New Zealand than they care about good, basic, decent New Zealanders. That will be the message that the people of New Zealand take from the contribution that Labour members have made to this debate on Part 1.

I repeat my invitation to the next Labour speaker who gets on his or her feet to do the decent thing, take responsibility, and admit that Part 1 fixes up a system that Labour almost destroyed.

Hon MARYAN STREET (Labour) : I wish to take up some of the challenge of the previous speaker, Allan Peachey, not least because it was a repeated misrepresentation of some of the nonsense we have previously heard from the Minister in the chair, the Minister for ACC, which was ably refuted by my colleague Moana Mackey. I am not going to go over the answers; I just ask that member to have a look at the Hansard for Moana Mackey’s speech, which shot down that stupid claim very easily.

I want to deal with two things in particular, and they go to the question of responsibility, I say to Mr Peachey. The first thing I want to refer to is clause 10, again, and I ask members opposite and the Minister to consider the word “compassion”. This legislation lacks any compassion. In the rush to perpetuate the Minister’s falsehoods around the financial status of the Accident Compensation Corporation (ACC), he has wrapped values and sentiments with which Labour does not associate—and the lack of compassion is one of them. If the Minister had ever bothered to talk to the architect of the accident compensation scheme, Sir Owen Woodhouse—who is a member of the Order of New Zealand, in his 90s, and still well able to lecture the Minister on what was meant by the system and how it is working—he would have found that, in fact, suicide was intended to be in the original report. It was intended to be there. I ask the Minister to ask Sir Owen Woodhouse, instead of sitting there shaking his head like a clown at a sideshow in a fair. All he needs to do is open his mouth and then he would have the complete picture. The Minister needs to understand that suicide was always intended to be there. It was simply, as Sir Owen has said elsewhere, the religious convictions of one of the commissioners that compensation should not be paid out to people who were committing, in that commissioner’s view, a mortal sin, that prevented it from being there at that time 40 years ago.

We have come a long way since then. I think of the young people I know who have attempted suicide and survived. They have survived for a range of reasons, not the least being good medical intervention, and then they have rehabilitated through the provisions of the accident compensation scheme.

I ask members opposite not to throw away compassion in some drive—misguided though it be—to make the scheme seemingly more cost-effective. There is more at stake here than money.

I want to go to the next point, which is about responsibility. One of the things that has always been a difficulty—or at least it was in the 9 years when Labour was previously in Government—is to address injury prevention and to address rates of rehabilitation that beleaguer some of our efforts and some of the things we aspire to achieve through our accident compensation scheme.

The injury prevention issue was taken so seriously by the previous Government—unlike this Minister, who wants to wipe it out of the language and the name of this legislation—that a cross-disciplinary injury prevention strategy was devised. My predecessor in the portfolio, Ruth Dyson, launched it, and I had the privilege of working along with the people who were trying to prevent injury. There were six work streams. I will not go through all the details, but I just say that some of them were obvious: road transport accidents, drownings, violence, falls, and suicide prevention. Those were some of the work streams under the injury prevention strategy. They brought together officials from justice, police, corrections, health, and education—a raft of officials from across Government departments—to address injury prevention.

Some interesting findings came out of that, not the least of them being that across all six of the work streams alcohol was a factor. So 19 percent of drownings are affected by alcohol. People go out on a boat, have a few drinks, fall over the edge, and that is it—19 percent, or one in five, more or less. Similarly, falls are precipitated, in large measure, by alcohol. We know that alcohol accounts for a significant proportion of our road transport accidents. It also accounts for at least 30 percent of the violent acts that are done in public places, not to mention domestic violence.

What was the purpose of all of that? The purpose of those work streams, and finding out that information, was precisely to take responsibility for injury prevention at a Government level, across a raft of Government departments. We started to see some improvements. We have seen fewer drownings in recent years than in years before. We have seen a drop in road transport accidents and deaths. We have seen some awareness begin about the kinds of things that need to be done in order to effect a comprehensive and complicated injury prevention strategy.

This bill not only erases injury prevention from the very title and from the purpose of the legislation, but completely negates any sense of compassion and any sense of the purpose of education. What did we hear frequently from National members when they were in Opposition? We heard a lot about the nanny State, and we heard that they did not like Government ads on television. They did not like the Government interfering and telling people how to run their lives, like how to be safe in the water, how to avoid road transport accidents, how to drink sensibly, or how to avoid and to report domestic violence.

So what did we have from the nanny State-ists opposite? We had the accusation that the Government should be playing no part in this. I tell Mr Peachey that that is irresponsible, and it is what his party and that wretched, wretched Minister is doing. He is not applying any sense of responsibility to injury prevention and to accidents in this legislation. Labour is the party that took responsibility for trying to address injury prevention and rehabilitation rates. From that Minister we get half-truths and stuff that is purely misleading, and that is the least polite thing I can say about it in the Chamber. That Minister is misleading. Not only that, he is incompetent.

This is a serious issue that works across a range of Government departments and goes right to the heart of the responsibility of a Government for its citizens. If we have the information and we know that alcohol affects six of the main causes of injury, it is a Government’s responsibility to do something about it.

Hon Dr Jonathan Coleman: What did you do about it?

Hon MARYAN STREET: It is not the Government’s responsibility—I say to Dr Coleman, who is a medical practitioner—to sit behind papers and pretend that what the Minister for ACC says is even remotely useful. It is a disgrace. This is a disgrace. This legislation will take us back, because no responsibility is being taken for injury prevention or for rehabilitation. Yes, these are difficult issues, but they will not be solved, cured, or addressed in our society by legislation that takes away any focus on injury prevention and that denies compassion. I do not want to be in that society.

Hon Dr NICK SMITH (Minister for ACC) : The member Maryan Street has the cheek to talk about responsibility in relation to our accident compensation scheme. Let us look at the facts that relate to her period as Minister for ACC. Which Minister was responsible for running the scheme down so badly that during her last year as the Minister, it incurred a loss of $2.4 billion? I ask Maryan Street, what was irresponsible, having declared to this Parliament a loss of $2.4 billion, about then adding 12 additional aspects to the scheme? Which members in this Chamber believe that those unfunded extensions were responsible? They were not. That member is unfit to ever hold a ministerial warrant in this country again in any area where she has financial responsibility.

Even worse than that, Maryan Street was advised in July 2008 of the $300 million shortfall in the non-earners account. What did she do? She hid it. She hid it, in breach of the Public Finance Act. In fact, it is a matter of public record—

Hon Maryan Street: I raise a point of order, Mr Chairperson. The Minister knows that there was an inquiry, which said that was not true. The Minister has misled the Committee.

The CHAIRPERSON (Hon Rick Barker): Points of order are about order. The member is making a point about the content of what a person said. That is not about order; that is a debatable point.

Hon Darren Hughes: I raise a point of order, Mr Chairperson. This is a fresh point of order. I accept your ruling. Is it in order for the member who is on his feet to accuse another member in the Chamber of breaking the law?

The CHAIRPERSON (Hon Rick Barker): I would make two points to the member. Firstly, generally, it is not. Secondly, at the moment when the offence was committed, the member should have taken a point of order.

Lynne Pillay: She did.

The CHAIRPERSON (Hon Rick Barker): No, the member Maryan Street was not saying it was an accusation about breaking the law; her point of order was on a slightly different tack from that. Had the member said she had been accused of breaking the law, it would have been taken differently.

Hon Dr NICK SMITH: Let us be very clear about the public record. Labour members are sensitive, and I will tell members why they are sensitive. They know the public will never again trust them with the Treasury benches, given the sort of mismanagement that occurred with regard to the accident compensation scheme. In August 2008, Maryan Street received a memo stating that the non-earners account required an additional appropriation of $300 million. I will tell members how significant that was. Members on this side of the Chamber will know that one of the key issues of the election campaign was the affordability of policies, and we had argued as a front-bench team very tightly over matters as small as $10 million, not $300 million. Let us go back and look at the television clips of the election campaign. Maryan Street knew that when the Government opened the books—and it was the lead story in the middle of the election campaign—there was another $300 million nasty surprise.

Let me tell the Committee how I started my career as the Minister for ACC. The Prime Minister phoned me on the Sunday night and told me my portfolio mix. I was immediately phoned by officials from the Department of Labour, who offered to fly urgently to Nelson. I said to them that surely I could wait until I had my warrant, but they said it was urgent that I should be aware of a very serious problem in accident compensation—a very serious problem that Maryan Street had known about for months, but that she had swept under the carpet.

Maryan Street had breached the Public Finance Act, and her career will forever have a black mark for her irresponsibility. I will not be lectured on responsibility in this Chamber by that particular member, who is yet to apologise for the damage that she did to accident compensation. I will talk about some of the facts about Maryan Street’s record. It is a matter of fact that in Maryan Street’s last year, she signed off on Accident Compensation Corporation accounts that showed a $2.4 billion loss. I will tell members how serious that was: last year’s accounts for New Zealand showed an overall loss of $10 billion, and nearly half of that was because of accident compensation.

But now that member and her colleagues have the cheek to go on the campaign trail to protest against levy increases, and in the next breath to protest about any reduction in entitlements. Labour is saying to New Zealanders that they can have a fully funded scheme, they can have more entitlements, and they can have reduced levies. Who believes that?

The CHAIRPERSON (Hon Rick Barker): Before I call Sue Moroney, I just ask the Minister whether he would like to write down the name of the audiologist he went to; I want a test to see whether I have any industrial deafness!

SUE MORONEY (Labour) : I want to bring this debate back to Part 1, because I feel that the debate has strayed somewhat. I particularly want to talk about victims. Members on the other side of the Chamber seem to think that members on this side have not thought about victims. Well, I can tell them that we on this side of the Chamber care deeply for victims, and that is why we are opposing this bill. I will tell the Committee, and listeners, a true story about someone who is affected by clause 10—the very unfeeling clause 10 of Part 1.

David Bennett: Is this story about a victim?

SUE MORONEY: Yes, I will name the victim. I think he is known to David Bennett, because I think he has visited David Bennett and been told that he will get no help and support, whatsoever. His name is Bruce Gardiner, and he is from Hamilton. I hope that members on the other side of the Chamber will give the story the respect it deserves, because it is not a very pretty story.

Bruce Gardiner was a milk tanker driver, and he was setting about doing his job one day, just as any other day started out for him. But quite quickly his life was changed for ever, because a very young man ran out in front of Bruce Gardiner’s milk tanker in order to take his own life—in order to commit suicide. Not only has Bruce Gardiner suffered already at the hands of this Government because of the mental injury that he suffered as a result of the trauma associated with that accident; his compensation has already been taken away by this uncaring Government—

David Bennett: He wasn’t even covered by your one, anyway.

SUE MORONEY: Oh, so David Bennett is about to tell the Hon Nick Smith, the Minister in the chair, that when the previous Labour Government passed the bill, Bruce Gardiner had already suffered his mental injury. But Bruce Gardiner has had enough guts, enough courage, to campaign for others who face his situation, because he wants to make sure that no one else faces the living hell that he faced. He did not get any compensation for the mental injury he suffered as a result of being involved in that unfortunate incident.

David Bennett does not care, because he thinks that is fine. He thinks it is absolutely fine that not only did Bruce Gardiner not get that compensation at the time but no Bruce Gardiners in the future will ever have that compensation. David Bennett’s Government has made sure of that. It has made sure that people receiving mental injuries through work accidents will not get compensation. So that is one part of the story. The second part of the story—

David Bennett: Labour didn’t give it to him.

SUE MORONEY: The Labour Government did change the law to recognise mental injuries suffered through work accidents, so the member is quite wrong.

But the part of the story that really brings us to this bill is that now the family of the young man who caused the issue, the family of the young man who committed suicide, will no longer be able to get compensation under this bill. Bruce Gardiner has told me how horrified he is about that, because after that event changed his life for ever he became very, very involved with the young man’s family. Can members imagine the situation when that accident occurred, and he had to tell the family, because it happened outside the family property?

David Bennett: What clause are you talking about?

SUE MORONEY: I am talking about clause 10, and I think David Bennett should read the bill. That family now will not get compensation for that—

David Bennett: They don’t get it now.

SUE MORONEY: Yes, they can—yes, they can; I think that that absolutely shows the lack of understanding. The compensation that they used to pay for funeral expenses will no longer be available. It will no longer be available under this bill. I really think that the Minister should educate his own caucus about this, because those members do not seem to understand what they are about to vote for. They do not seem to understand that they are about to take that compensation away from families who are already suffering. Through no fault of their own they are paying funeral expenses that are covered now, I tell Mr Bennett, but they will not be covered because of his vote on this bill. Because of clause 10, they will no longer be covered.

Dr PAUL HUTCHISON (National—Hunua) : I am grateful for the opportunity to speak on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill—and what a mouthful that is. I must congratulate the excellent Minister, the Hon Nick Smith, on coming to the conclusion that it is appropriate we call this bill the Accident Compensation Amendment Bill. I absolutely guarantee that if any Labour member went out on to Lambton Quay and asked anyone what the “IPCR Act” is, they would not know it to fall over it. [Interruption] They would not know it to fall over it.

We have just heard a very shrill lot of verbiage from the Hon Maryan Street, who was going on about injury prevention. I tell Maryan Street that it would be worthwhile for her to actually look at the annual report for 2009 of the Accident Compensation Corporation (ACC), which states that despite all the money that Labour put into the scheme, and all the money that Maryan Street lost, the rate of serious non-fatal injuries among all populations has shown an increase. It has gone up from 211,000 in 2005 to 218,000 in 2007.

There has been an increase in rates across the road, work, and falls areas. The rates of assault and intentional self-harm are also showing an increase, but that could be a result of reporting behaviour. Finally, the frequency of hospitalisation from serous non-fatal injuries has increased since 2004. That is the legacy of Labour’s contribution to the accident compensation scheme over the last few years.

Labour members say that they are sorry about it, but the issue is deadly serious. They are simply off the planet. The Hon Nick Smith has explained the situation—because on that side of the Chamber is the previous accident compensation Minister, and the corporation’s last report showed a loss of $4.8 billion. In the year prior to that, the corporation reported a loss of $2.2 billion. That makes that member responsible for a debt of $1,800 for every man, woman, and child in New Zealand. That is a significant amount. The member shakes her head. She will not take responsibility for that very fact.

We also heard Maryan Street talking about the various Woodhouse principles, and she went on about community responsibility. She said: “If we all pay a little, we all get a lot.” She went on and said something to the effect that a motorcyclist who comes off his bike, no matter how he has driven his bike, whatever it is, he should still receive and pay the same. This is quite extraordinary left-wing socialist cant. She has totally forgotten the idea of individual responsibility and the basic concept of incentives for better behaviour. This is shown so demonstrably well in the affiliated providers’ scheme. [Interruption]

The member might just listen to this. The affiliated providers’ scheme has an excellent record of low premiums, excellent rehabilitation—getting people back into the workforce much faster than anywhere else—and huge interest by industry to actually apply injury prevention. She forgets those basic principles—a human instinct—that must be followed.

I turn now to the speech made by the Hon David Parker. He was talking about just how low the levies are in New Zealand when one looks at the benchmarking programme that is taken throughout Australasia. Once again, we see misleading comments coming from the Labour Party.

LYNNE PILLAY (Labour) : I shall start by commenting on one of the statements made by Dr Paul Hutchison: “We all pay a little; we all get a lot.” That is exactly what National members say when they talk to the Business Roundtable: “Under our new tax regime this is the plan: we all pay a little, and we all get a lot.” I know that Paul Hutchison is someone who has got a conscience about health issues, and I feel really sad that he has been pushed into running some sort of silly argument to curry favour with the Minister for ACC.

Hon Darren Hughes: Last time it was Jonathan Coleman.

LYNNE PILLAY: Exactly. I know that other members have spoken about this matter before, but the PricewaterhouseCoopers report found that the administration costs of New Zealand’s accident compensation scheme are lower than those of any other scheme. We must forget the smoke and mirrors that the Minister puts out there, and forget the dog-whistle politics that he puts up in the Chamber, because the reality is that our scheme is the envy of the world. It is the envy not just of our region; it is the envy of the world. Our accident compensation employer levies compare favourably with premiums for worker compensation in Australia. We aspire to be on a par with Australia on wages. Despite the Government not increasing the minimum wage, despite it curbing wage bargaining, and despite it telling many people in the State sector that they cannot have a rise, somehow we magically will raise our wages to match those of Australia! No one here believes that rhetoric, not even Dr Paul Hutchison, who looks slightly bemused. We know that our accident compensation system, premiums, and delivery were—I will not say “are”, and I will go into why I am saying “were”—far superior to Australia’s.

What has this Government done? It has blown the whistle. It has said “This is outrageous.” Government members have made complete idiots of themselves in the Chamber—and I say that, Mr Chair, knowing that it is OK to say it—by whipping up a storm about how inappropriate it is to give any form of compensation to prisoners. But we know that that is not the key thing on the minds of ordinary New Zealanders. For them it is about value for money. It is about delivering to the many, not the few. It is about a system that works for all New Zealanders. It is about not seeing their friends, their families, their children, their mothers, their fathers being dealt to by a system that this Government is nothing short of corrupting.

I take my hat off to the people who have rallied against this Government. The Minister stated earlier that he has a degree of hearing loss, and somehow that is meant to give him an affinity with people who have suffered an injury.

Darien Fenton: He didn’t get it from working in a factory.

LYNNE PILLAY: No, he probably got it from hearing himself when he is absolutely raging, frothing at the mouth, and going crazy. At the end of the day, I assume that the Minister is saying that he understands the position of people who get a disability or an injury through some form of work-related activity. The reality is that, in terms of people whose hearing is impaired, this Government has imposed a ruling, despite every professional piece of advice being to the contrary, that a hearing loss of less than 6 percent—and I acknowledge my Green colleague here—somehow does not count, somehow is insignificant. Well, I ask the Minister to put himself in the position of people with a hearing loss a little less than 6 percent. I say that it is the professionals who should decide whether funding needs to be given for hearing aids. That decision should be made by the professionals who ascertain what the problem is. This Government is saying that a hearing loss of a little less than 6 percent does not count. It says that that is a small degree of loss, that if people lose a bit of their hearing, it does not count. That is simply not appropriate. It is simply not the reality.

I do not like looking back, but this Government does; that is what it bases its policies for the future on. If we look back, we find that this is exactly what the previous National Government did. One of the first things that it did when it came into power was to cut lump-sum payments for accident compensation. The first thing it did was to say that they were not affordable and we cannot do them. It said that we cannot afford to pay lump-sum payments any more. We are saying that this policy is exactly the same. I believe that this Government is thinking: “Right, lump-sum payments are a little bit controversial at the moment. We got dealt to the last time we cut them. They got reinstated. Let’s take another tack.” So it is talking about cost-cutting in areas that, as I have said before in the House, affect people who are very vulnerable, and often it is very difficult for them to mount a challenge and say that it simply is not fair.

That is why I take my hat off to the many people who came to Parliament Buildings last week to protest. Did the Government have the guts or the gumption to front up when people came to Parliament—the heart of our democracy—to say: “We protest at this. We don’t think it’s fair.”? Did the Government front up last week when people from the biking community and victims of sexual assault were saying: “This isn’t working. You’ve got it wrong. It’s not fair.”? No, it did not front up. We have heard the Government’s rhetoric that there are too many clients, they are draining too much out of the system, and the Government has to somehow change it. That is no different from a previous National Government saying that it had to drop lump-sum payments. It is about this Government wanting to cut some money, and cutting it where it can get away with it. Lump-sum payments at the moment are not up for grabs. They were when National came into Government last time. They are a little bit under the radar this time, so this Government will go somewhere else. We on this side of the Chamber are saying that that simply is not acceptable.

The other area where we are seeing it happen is in terms of workers who are deemed able to return to work. Under the current system, being work-ready was set at being able to work 35 hours. Many of us thought a 40-hour week was a standard week, but 35 hours is the measure in terms of people being deemed to be ready to go back to work. But, no, this Government is saying not 35 hours—30 hours. I can see the Minister taking notes and I urge him to stand up to take a call on this specific point. How can the Government deem that any worker in New Zealand can survive on 30 hours’ pay a week? Do not give me the answer “Because of our wonderful tax breaks.” These people are going to get a GST rise, and we all know that they are not going to get a tax break. The tax breaks, when they come in, will give a windfall to the people at the top. As I heard Dr Paul Hutchison say, “We all pay a little; we all get heaps.” That is the policy of National in terms of its tax cuts. It is the higher-income earners in New Zealand who pay a little and get a lot. I ask the Minister to stand to his feet and tell the Committee how low-income people, people who are deemed to be ready to go back to work when they can work 30 hours a week, will make ends meet with their escalating GST charges and their escalating doctors’ charges. I ask the Minister to respond to that.

Hon Dr NICK SMITH (Minister for ACC) : I want to put just three facts on the table to answer the points and address the misguided thinking of Lynne Pillay. She said the decision about whether somebody gets a hearing aid or not should be made solely by the hearing company that is providing the aid. Well, it is little wonder, I say to Ms Pillay, that during the last 3 years of her term in Government the accident compensation scheme’s claims costs over grew by $1.4 billion. She says that the decision has to be made by the company to protect the person. To pretend that the person who is installing the hearing aid does not have any interest is about as naive as the foolish decision that the previous Government made to provide for free physiotherapy, which even Labour’s own spokesperson for ACC, David Parker, says was a mistake. The reality is that claim costs are out of control because of the loose, woolly thinking of the kind that we have just seen from Lynne Pillay.

I have a very simple answer to the second question. She asked why should the Accident Compensation Corporation (ACC)—

Hon Maryan Street: How much have hearing aids decreased in cost, Minister, in the last 12 months? How much have they decreased?

Hon Dr NICK SMITH: Well, I cannot answer the questions if Maryan Street is going to continuously shout me down. Those members challenged me to get to my feet and answer the questions—

Hon Maryan Street: Well, answer them properly, Minister.

Hon Dr NICK SMITH: I will. I will answer Lynne Pillay very clearly. Lynne Pillay asked why this bill defines full-time work, or the point where a person can be exited from the scheme, at 30 hours. There is a very simple answer. When Labour was in Government it said that 30 hours a week was full time, according to Statistics New Zealand. During its 9 years in Government it said that 30 hours a week was appropriate for the Inland Revenue Department. It said that 30 hours a week was appropriate for Work and Income, with regard to people on sickness and invalids benefits. If Lynne Pillay cannot work out where the answer is, she has to answer the same question in all three of those other areas. We would be delighted to know whether it is Labour’s policy that it now be 35 hours for the Inland Revenue Department, for Work and Income, and for Statistics New Zealand?

Hon David Parker: No, because there’s a difference.

Hon Dr NICK SMITH: Oh, it is not. Well, then, I challenge Labour members to get on their feet and explain why one Government agency says to a person that 30 hours a week is full time but another says that actually, no, it is not. This Government is being quite consistent. I thought the last point was deeply ironic. Labour members challenged me for not having the courage to face up to a protest. I have to say to members that I think I have probably faced the biggest protest in Parliament. The last big one I really remember was the hīkoi. Do members remember it? I ask Lynne Pillay whether Helen Clark fronted for the hīkoi.

Hon Darren Hughes: Yes.

Hon Dr NICK SMITH: She did not. She did not, and Darren Hughes cannot rewrite history. They had a little gathering last week. Apparently the staff—

Hon Darren Hughes: The Hīkoi of Hope.

Hon Dr NICK SMITH: The hīkoi about the foreshore and seabed. It was the biggest protest during Helen Clark’s Government, and she did not front. They had a little protest last week. I asked my press secretary to look to see how many people were there. He came back to me and said there were more Labour caucus members than there were at the protest last week. It was a feeble effort, which all the journalists said was deeply disappointing.

The last point I want to make is this: Darren Hughes made an interjection to say that when Maryan Street signed the books declaring a $2.4 billion loss for the 2007-08 year—a full year in which she was the Minister for ACC—it was just because of the loss of investments. Let me put the record straight. Of the $2.4 billion that was lost—$2,400 million—in the 2007-08 year, what portion of that was due to investment losses? Do members know what the answer is? It was $1 million. Out of the $2,400 million loss, $1 million was due to investments. Maryan Street has run round all the Labour caucus members and said: “Look, it was not that bad, it was just the investment meltdown.” That is not true. The truth is—and Labour members need to reflect on this—that Maryan Street’s period of governance of the accident compensation scheme was reckless and irresponsible. If Labour ever proposes to put her in charge of any substantial organisation carrying taxpayer liabilities, it will in my view keep itself on the Opposition benches because of the cost fear that ordinary New Zealanders will have if she is ever put in charge again.

KEVIN HAGUE (Green) : The accident compensation scheme has over $10 billion in reserves and last year had an operating surplus of $1.5 billion. From where I stand, that does not sound like an organisation in financial crisis. The financial crisis exists only as a trick of accounting, an artefact of accounting. Probably all members of this House recognise that if we were to change the way that the scheme is funded, away from this full pre-funding model back to the “pay as you go” model, the crisis would disappear overnight.

I thank Michael Woodhouse for providing earlier this evening the long list of trade unions that came to the Transport and Industrial Relations Committee and supported exactly the position of the Green Party, which supports a move away from full pre-funding and back to “pay as you go” funding. To the list of organisations that Mr Woodhouse spoke about, I add the National Council of Women, the New Zealand Council of Christian Social Services, the ACC Futures Coalition, the New Zealand Council of Trade Unions, and, perhaps most importantly, the Retirement Policy and Research Centre. Economist Susan St John and accountant Michael Littlewood of the Retirement Policy and Research Centre have both provided very eloquently argued papers supporting the case for returning to “pay as you go”.

I have listened with interest to the debate at all stages of the passage of this Injury Prevention, Rehabilitation, and Compensation Amendment Bill. Tonight in particular I have listened for the arguments against that, for the arguments in favour of retaining full funding as the mechanism for funding the scheme, and I have to say that I have not heard any. In the more general debate in public I have heard three. I have heard members from the Government benches talk about the need to be fair to future generations. That is an interesting and wry argument for the Government to mount, because typically it is the Green Party that is saying that we need to be thinking about the long-term future, and that we need to be thinking about the legacy we are leaving for our kids and for their grandkids. In no area of Government policy have we been able to make any headway at all on that front.

Funding the accident compensation scheme is the single area of Government policy and activity where the Government has said: “Actually, we really need to make sure that we bear the costs of this, not future generations.” But when the Green Party argues for intergenerational equity, we are saying that we ought not to put off to future generations any cost or burden that will be exacerbated by that delay. By returning to “pay as you go” funding, we would not further exacerbate that burden.

Earlier this evening the Minister in the chair, the Minister for ACC, made the case that the position I had outlined on suicide was incompatible with the position in relation to health. Firstly, this Government funds health on a “pay as you go” basis. The funds required to deal with health costs in the future will be the same as the funds required to deal with accident compensation and rehabilitation of injuries in the future. “Pay as you go” funding of accident compensation is no greater burden than “pay as you go” funding of health.

Secondly, Government members have talked about the bind New Zealand is in because of our requirement to comply with the New Zealand International Financial Reporting Standards, which are accounting standards—in particular, to comply with standard 4. That standard imposes some requirements in relation to insurance schemes. In relation to commercial insurance schemes, there are sensible reasons for compliance with that code. But this is not a commercial insurance scheme. This scheme is not at risk of disappearing or collapsing, and therefore triggering those New Zealand International Financial Reporting Standards requirements. That is a false argument.

Thirdly, the Minister has argued in several contexts that in order to prevent accidents, we require a full funding model.

CAROL BEAUMONT (Labour) : I want to go back and talk specifically about one of the provisions of this bill that I think is particularly troubling, for a whole range of reasons. It is the issue of the coverage of workplace hearing loss. This issue, I think, typifies what is wrong with this bill overall. The provision in Part 1 effectively provides that there will be no cover for hearing loss created in the workplace if it is less than 6 percent. A 6 percent threshold is being set in place by this Government. I think it is reasonable to ask the question: why the 6 percent threshold? There is actually no reason; there is no good reason. It is an arbitrary figure that the Government has chosen for cost containment reasons. Cost containment is the justification.

I will talk about some of these people with hearing loss in my contribution to the debate. This threshold will save us approximately $3 million to $4 million a year. That is right—$3 million to $4 million a year. The consequences for the people who no longer have coverage as a result of this arbitrary threshold are substantial. I want to find out whether members opposite believe that that saving of $3 million to $4 million is worth it for the human cost that that will have.

I note as an aside that the Minister in the chair, the Hon Dr Nick Smith, had quite a good go earlier at some of the people in the hearing loss industry. He said that members on this side of the Chamber were just listening to people who provide hearing aids, as if somehow those people had a vested interest. Actually, if the Minister had taken the time to listen to the very, very good submissions that were made on this particular provision, he would have discovered that in this area there has been major cooperation by the parties and substantial efforts made to reduce costs.

One of the points made by one submitter was that we would be saving about $3 million to $4 million a year, but in fact the industry itself had saved something like $10 million over 18 months through its combined efforts and a cooperative approach. They were particularly galled by the fact that in the drafting of this bill no effort had been made to talk to anybody in the industry. We received submissions on this particular point from a whole range of people—from people who suffer hearing loss, from academics who study the trends in workplace hearing loss, from people who provide hearing aids, from audiologists who test for hearing loss, and from unions whose members work in industries where workplace hearing loss was a significant issue, particularly in the past—and I will come back to that point. That whole group of 46 submitters on this point—40 submitters opposed and six in favour—came up with some very compelling points, I believe, and points that have not been taken into account at all by members on the other side of the Chamber.

What does this 6 percent hearing loss mean for people? The Government is trying to say that this is quite a trivial hearing loss—less than 6 percent hearing loss is quite trivial. It is a small hearing loss. That is a bit like saying that someone is a little bit pregnant. So one is a little bit deaf. But it has real consequences for real people. I was very moved by one of the submitters who came to talk to the select committee. This submitter was an older man who had previously been a shearer. I know that members opposite probably do not give a toss about real people, but I will tell them about this real person. This real person worked in our primary industries, which are very significant to our economy, as a shearer. He took the time to come to our select committee to talk about hearing loss, because it was very significant to him.

He said that a hearing loss of up to 6 percent is not trivial. It means that one cannot hear things like birds singing and one’s grandchildren talking. That is not trivial. Those are significant losses to real people. Hearing loss means real things to real people. It is a loss, and it is not trivial.

I want to talk about whom hearing loss affects. Who is affected by this issue? I am sorry if I am boring one of the members opposite, but this is important. This is something the Government is taking away from New Zealanders. It is taking away the right to have treatment for workplace hearing loss if it is less than 6 percent. It is not trivial.

Whom does hearing loss affect? It affects an older demographic. It is mainly older New Zealanders who have this sort of hearing loss who are coming forward nowadays, who are having their hearing tested, and who are then being fitted with hearing aids. They are older New Zealanders who have worked in noisy workplaces. They have been shearers, worked in factories or meat plants, or worked on the wharves. These people are not high-income earners. They are working-class people, if you like, and often older men. Overwhelmingly we see significant numbers of Māori and Pacific workers in those kinds of industries.

The reason I am making the point that it is older New Zealanders who are affected is that this is one area where we have done some things right. Workplace hearing loss is not such a significant issue now because we can do something about it. It is perfectly preventable, and nowadays in most workplaces we can prevent workplace hearing loss. One of the academics who came to speak to the select committee pointed out that although there has been an increase in the number of hearing loss claims, this will not be a trend upwards. This is like a blip, and it should start trending down because we have a whole lot of older New Zealanders who worked in workplaces in times when we did not have hearing protection in place. We were not aware of the issues in the way that we are now. Those people will come through. I say to the Government, you are—

Hon Simon Power: Not “you”.

CAROL BEAUMONT: I am sorry, not the Chair but Ministers like Minister Power and others sitting across the Chamber are taking that away from older New Zealanders who have worked in some of our primary industries. They are working class people who have a chance to get treatment, a hearing aid, and their hearing restored so that they can hear their grandchildren speaking and the birds singing, and those are not trivial things.

As I said, this is preventable. The implications of what the Government is doing here are unfair and discriminatory, a point that the Human Rights Commission made specifically to the select committee. This provision is discriminatory. Not only is it discriminatory, but the consequence of this is one that I do not think has had enough consideration, and that is that this provision restores the right to sue. Because people are taken out of coverage, the social contract is broken for those people, and the right to sue is restored. That is important. The accident compensation system has been a social contract in place all of my working life, and I have not had the right to sue for workplace injury, but I have had comprehensive cover under the scheme. That is changing here, and I urge members opposite, as I will be urging members of the public, to think about the implications of going back to a system where one had to sue to get some fairness. It is a serious matter.

I think it might be worth reminding members opposite of some more real examples, because I know how interested they were in the shearing example I gave them. Let me tell them about the 45-year-old building construction consultant with 4.7 percent hearing loss. He has a situation where he cannot hear well with background noise such as discussions at meetings or on the building site. Or I could tell them about the 56-year-old customs officer with 4.5 percent hearing loss, who works at the airport in a customs hall that is very noisy. He works with dogs and has to use a radio-telephone. He finds it difficult to hear at work when there is background noise. He attends training seminars but has difficulty hearing. His kids will not repeat what they are saying to him if he cannot hear it the first time, and a number of submitters talked about the implications between generations of hearing loss, and especially this low-level hearing loss.

MICHAEL WOODHOUSE (National) : I also want to talk about hearing loss. But before I do, I will touch on an aspect that Mr Hague raised in his call on operational surpluses. I point out that a $1 billion positive cash-flow does not constitute an operational surplus. If International Financial Reporting Standards were fully applied to accident compensation, the deficit that the Accident Compensation Corporation (ACC) would have to report would be much higher.

We have been talking at cross-purposes for the last several months on this issue, so I will share the benefit of my many years of experience as a chartered accountant with members across the other side of the Chamber. It goes like this: deficits, bad; big deficits, worse. When we have a $2.4 billion deficit, we are really starting to sweat. When we have a $4.8 billion deficit, action has to be taken, and that is what the Injury Prevention, Rehabilitation, and Compensation Amendment Bill is about.

I want to talk about clause 6, because if there is any example of the duplicitous nature of the Labour Opposition, it is in relation to hearing loss. The fact that members opposite shed crocodile tears for the so-called claimants who will be denied treatment really is quite rich. I want—

Carol Beaumont: Speak for yourself.

MICHAEL WOODHOUSE: —to speak for myself and my own experience. At about the age of 6, my hearing loss was picked up in public health screening tests. Many years of treatment followed, including three surgeries: I had tonsil and adenoid surgery, a radical mastoidectomy, and eventually a muscle graft that closed the cavity in the ear. But I was left profoundly deaf in one ear. I was told by an ear, nose, and throat surgeon at that time that a hearing aid would not help me. I cannot recall the extent of the loss, but I am sure it exceeded 5 to 6 percent. Many activities have probably aggravated my hearing loss over the years, but, under the current law, if an ear, nose, and throat surgeon was able to attribute one bit of my hearing loss to industrial deafness, I would be covered. All of the non-accidental causes would not matter. The vast majority of my deafness is non-accident - related, but I would nevertheless be covered by the accident compensation scheme.

But that is not the case, and the Labour Opposition knows that. Under the law as it stands now, the claimant is given cover but is denied entitlement to hearing aids. The previous Labour Government was prepared to tell claimants that, yes, they have cover, but, no, they will not be given a hearing aid. How big is this problem? It is not an isolated example.

Hon Maryan Street: Reconcile that with what the Minister just said a moment ago about the costs.

MICHAEL WOODHOUSE: Shh, I say to the member; she will learn something. Officials told the Transport and Industrial Relations Committee that currently the proportion of hearing loss claimants who received cover but were refused hearing aids was 42 percent. So 42 percent of all claimants given cover are declined their hearing aid requests. My question to the officials was how much worse can it get. I asked what would happen if we were honest with claimants and set a 6 percent threshold. The answer was really interesting: not much. It was very hard for the officials to estimate, but the best estimate was that it would go up by about 4 percent. So we have this choice: set an expectation on the part of 42 percent of claimants that the Government, under the current legislation, cannot meet, or be honest with those claimants, tell them what is appropriate, and decline the claim.

This debate is as much about what is not covered as it is about what is covered. The idea of a financial constraint is too much for the Labour Opposition to handle. But this scheme is not a back door through which 42,000 elective surgery patients, callously thrown off district health board waiting lists by the previous Government, can somehow get their surgery; that is the role of Vote Health, and we are seeing very, very good gains in throughput at the moment. It is not about giving cover to people who are so depressed that they would attempt to take their own lives, or about the fact that Sir Owen Woodhouse said they should not get cover. They deserve our compassion and the best care that mental health services and Vote Health can give us. It is certainly not about ACC being the default health provider in this country. It is not a crapshoot for hearing-impaired claimants whose hearing loss is primarily not due to industrial accidents. We owe those people more honesty, and, for that reason, this hearing-impaired New Zealander strongly supports clause 6.

DARIEN FENTON (Labour) : I would like to bring the debate on Part 1 back to the select committee process and to the number of submissions we heard. I think we heard about 46 or 49 submissions. I was on the Transport and Industrial Relations Committee, and it was a privilege to hear from submitters. I appreciate the effort they made to come to the committee to make their submissions during a very hot January summer, because this Government was rushing the bill through and had a very short time frame in which to report back. So here we are in urgency: hello, what a change! I acknowledge those submitters.

The majority of submitters were opposed to this bill, and I think it is very disappointing that the Government has not listened to the submissions. We see that in Part 1 where there have been almost no changes, just some minor technical changes.

Part 1 contains some very serious amendments to the current provisions, which New Zealanders have become used to having as part of their accident compensation scheme. For example, we see the removal of ministerial advisory panels. I find it incredibly arrogant that the Minister thinks he knows everything and does not need any independent advice about these issues, about gradual process and other diseases, about injury prevention, and so on. He says we should get rid of ministerial advisory panels because they might be inconvenient. As other members have mentioned, we are also seeing changes to vocational independence, which is really quite scary stuff. I heard the Minister responding to this issue and trying to argue that being deemed ready for work at 30 hours a week rather than 35 hours a week was somehow the same as other things.

We are talking here about workers who have been injured on the job, most often through no fault of their own. After all, let us remember we are talking about a no-fault scheme. Part 1 contains a provision that when people are physically able to work 30 hours a week—God knows what sort of job is being proposed for them—rather than 35 hours a week as it used to be, they will lose their earnings-related compensation. That will cause hardship to more injured people.

The next provision is a change to allow the Accident Compensation Corporation (ACC) to disregard pre-accident earnings. At the moment when ACC is assessing whether to deem someone as work-ready, it must have regard for the person’s pre-accident earnings. The bill changes “must” to “may”, which means, of course, “may not”. We have heard descriptions from my colleagues about what that could mean for people, when it comes to deeming them to be work-ready and having to go back into some job that bears no relation to what they were doing before. How undignified is that! It is absolutely undignified.

Then I will talk a little bit about the risk rating provisions and what they mean. There is a real sense of fear around this, because we have seen it before under the past National Government where there were risk ratings and risk assessments. We saw that many, many workers were too afraid to put forward their injury claims, and some employers actively discouraged them from doing so because it would affect their risk rating. I do not accept that there are some people whose only motivation is money. That is what this provision means—that the only motivation for preventing accidents and preventing injuries is money.

Then, of course, we come to the 6 percent threshold for hearing loss that some of my colleagues have talked about. I think that for the members of the Transport and Industrial Relations Committee this was one of the most poignant discussions in the committee. We heard from people who have hearing loss, and we heard from audiologists. The audiologists handed out earplugs to give select committee members a sense of what it is like to have a less than 6 percent hearing loss, and it is quite significant. I could not hear what they were saying without straining. As my colleague Carol Beaumont has said, someone described it as losing the ability to hear the birds sing, hear the grandchildren chatter, or being in a discussion with a group of people and being able to hear only the person next to one and not the conversation going on around one. It is quite significant.

What is most disturbing about the hearing loss threshold is its arbitrary nature. Where did it come from? Why were the professionals not consulted? They were aggrieved about that, and there was a sense of dismay among the select committee members about that, too. Apart from the fact that the Government did not consult anybody, and the regulatory impact statement states that very clearly, the Government did not talk to the professionals about what this meant and did not listen to what the professionals said when they came to the select committee.

When we talk about the 6 percent hearing loss threshold, we need to think about the thousands of workers in the workforce of the past who built New Zealand, who built the factories, who worked in the factories, and who did the jobs to build the New Zealand that we are all proud of today.

Lynne Pillay: They looked after us.

DARIEN FENTON: Yes, that is right. They were exposed to earlier industrial practices because they were acceptable then. Thank goodness we have moved on a little bit, although I feel very fearful about the lack of injury prevention provisions in this bill and the lack of an injury prevention focus from this Government.

The other issue the Minister has not addressed, and it has not been raised in this debate tonight, concerns the submitters who said the loss of cover for an up to 6 percent hearing loss opens up the right to sue. We have a 24-hour, no-fault compensation scheme, and the right to sue has not been part of it. I would be very, very interested in hearing the Minister’s response to that. Will we see litigation opened up—for the people who can afford it, because lots of people cannot afford to sue—to the people who can afford to take their employer or whomever to court and argue that they should be compensated because they are not compensated under this scheme as they previously were?

Part 1 is very, very important. There are other clauses in Part 2 that we will debate when the time comes. The select committee heard about some very significant changes in this part, and submitters came in their droves and in their numbers to oppose them. I find it very, very offensive to hear sniggering from members on the other side as the debate has progressed. That is offensive. When people come to this Parliament to put their point of view, Labour members expect them to be heard. Unfortunately, those people have not been heard at all, although the Government insists that this bill is all about saving the accident compensation scheme because it is in trouble, and about cost containment, and so on.

Accident compensation is about people. It is about people who are injured, either in the workplace or outside of the workplace. It is about people who get hurt, and who have grown up with the Woodhouse report and, since the implementation in the 1970s of a cross-party scheme, a no-fault, 24-hour compensation scheme. They have grown up to expect to pay their levies, and they expect better of this Parliament than we are seeing in this bill. There will be other things in Part 2 that we will want to comment on.

I have one final question for the Minister, and I hope the Minister in the chair, the Associate Minister for ACC, Pansy Wong, can answer it. Earlier on we started talking about privatisation. One of the members opposite brought it up and said that members were looking forward to hearing some answers from the Minister. So I ask the Minister to tell Labour members whether it is the Government’s intention to carry out privatisation—in other words, to open up the work account to competition. Thank you, Mr Chair.

CAROL BEAUMONT (Labour) : I want to take this call to look at a number of the provisions in Part 1 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. I believe that a significant number of these provisions are not only unfair but also discriminatory. These points were raised quite strongly by a number of submitters and by our Human Rights Commission, an organisation I have a great deal of confidence in. It seems not to have caused any concern across the Chamber. It has not led to any reconsideration of some of these provisions, but let me just comment on a few points.

First of all, and I would be interested in the point of view of the Minister in the chair, the Associate Minister for ACC. The Accident Compensation Corporation (ACC) has a number of strategic priorities, and some of these directly relate to this question of fairness and not being discriminatory, which I believe a number of provisions in Part 1 are. Strategic priority one is “Ensuring New Zealanders have confidence in ACC”. That is ensuring all New Zealanders have confidence in ACC, not just some New Zealanders. Of course, those older New Zealanders with less than 6 percent hearing loss may not have such confidence in ACC any more after these provisions are put into place.

Strategic priority three is that ACC needs to be “People-focused with good outcomes”. I guess those people who are being considered as rehabilitated if they can go back to work for 30 hours a week as opposed to 35 may not feel that that is such a good outcome for them.

Then strategic priority four is “Open and fair access for all New Zealanders”. I will go through some of the provisions in the bill and see how they stack up against those strategic priorities. Fairness is something that is valued very highly on this side of the Chamber. It does not seem to me that the inequality that some of the provisions in this bill put into place is at all worrying to the Government.

I am very glad that the Māori Party will be voting against this bill, because it is quite clear that these changes—and this advice was given by Te Puni Kōkiri—are likely to have a disproportionate effect on Māori, as Māori are more likely to be employed in high-risk jobs, to be from low-income families, and to have higher rates of imprisonment. That is one of the inequities of the various provisions in Part 1.

Then there is the issue of gender. When the National Council of Women submitted to the Transport and Industrial Relations Committee, it was very scathing about the fact that no gender analysis was done at all of the proposed impact of those changes on women. It was quite clear that there would be a disproportionate impact on women. It made this point in its submission: “women are more vulnerable to negative outcomes through a lack of social services, and the stringent reductions set out in this Bill will reduce those services further. In addition, many of the service providers—counsellors, physiotherapists, home care workers—are women who depend on ACC funding to deliver their services.” So there is a disproportionate impact on Māori and on women as a result of these changes.

In my earlier contribution, I also talked about the impact of the hearing loss threshold on older New Zealanders. For the reasons that I articulated before, the fact that we are now much better at protecting our hearing in the workplace means that fewer younger people with hearing loss will be coming through. It is an issue for people who have already been in the workplace and who have worked in very noisy industries. By nature, these are older New Zealanders. They are certainly being disproportionately impacted on by that provision.

Then, of course, there are the implications for younger New Zealanders who are specifically affected by one of the provisions in this bill, which I will come back to in a minute. This is very troubling. I do not know whether members opposite, other than perhaps members of the select committee, took the time to look at the submission of the Human Rights Commission. As I said at the start, it is an organisation that I know that everybody in this Chamber has confidence in. The Human Rights Commission talked about a number of provisions. It talked about the reduction of potential weekly earnings for young people to 80 percent of the minimum wage. It talked about the implications of reducing compensation for loss of potential earnings to 80 percent of the minimum wage in situations where young people under 18 have been incapacitated before they have been able to work or while they are in full-time study that commenced before they turned 18 and continued until they were injured.

Having analysed that provision, the commission stated: “The difficulty is that under the Bill people in this position will continue to receive 80% of the minimum wage for the entire time that they are in receipt of the benefit as there is no provision for this to increase after a certain time (as in the case, for example, with low income employees). As a precipitating factor is their age, this appears to be prima facie discrimination.” That was one of the provisions the commission talked about.

It also talked about the reinstatement of the former approach for calculating long-term compensation for non-permanent employees. It noted: “The Regulatory Impact Statement admits that the effect of the change proposed in the bill will achieve a levy reduction of $13 million but that it will also reduce weekly compensation for some casual workers. To reduce compensation for seasonal and part-time workers is to effectively penalise one of the more vulnerable groups in society”—I repeat: it will effectively penalise one of the more vulnerable groups in society—“and one that is most in need of state support through a period of injury and rehabilitation since they are least likely to have savings to fall back on.”

In other words, they are people with hardly any money who are working in a precarious sort of arrangement, who do not have savings, and who are being disadvantaged by these provisions. Certainly, the commission recommended the retention of the present formula.

It also looked at the issue of increasing the threshold for hearing loss, which I have talked about quite a lot tonight. I will not go back over all of that, but I note that the commission stated: “There does not appear to be a percentage measure for any other form of personal injury. The Commission therefore considers that the requirement that a claimant has sustained 6% loss of hearing before being eligible for treatment amounts to intra-ground discrimination as it imposes different criteria for those claiming compensation for hearing damage as opposed to other forms of injury.” There we are: there is another example from the Human Rights Commission.

The commission also talked about limiting compensation for self-inflicted injury and suicide. With regard to this provision, it concludes that again “it results in intra-ground discrimination between mental and physical injury and creates an extra hurdle for people with mental injury.” Before it is too late, I would urge members opposite, if they have not already done so, to look at the Human Rights Commission’s submission. It has gone into this in quite a lot of detail. It looked very closely at these provisions, and it has found a significant number of them to be discriminatory. I think we are duty-bound in this House to take note of that, and we are also duty-bound not to pass legislation that is discriminatory in the manner that the commission has noted. I would urge members opposite to look at that submission and see whether there is a chance that we can fix up those provisions.

I would also like to talk about a number of other provisions tonight. The first relates to changes to vocational independence, and this is where we are to substitute 30 hours for 35 hours. That will mean that a person’s capacity to engage for 30 hours in work for which he or she is suited by reason of experience, education, or training, or any combination of those things, will be deemed to be rehabilitated and able to go back into the workforce and, therefore, will be ineligible for accident compensation. Where that is combined with the provision relating to no longer having to take into account people’s pre-injury earnings it is a double whammy. It is a double whammy in the sense that one may be declared rehabilitated if one can work 30 hours a week, so one can earn only 30 hours’ wages, and at a rate significantly less than previously

Hon DARREN HUGHES (Labour) : As is clear by now, the Labour Opposition strongly opposes this Injury Prevention, Rehabilitation, and Compensation Amendment Bill, for very, very good reasons, as my colleagues have pointed out.

I will talk principally about Supplementary Order Paper 111, which is an interesting number, considering that Dr Nick Smith is in charge of an emergency-style recovery in terms of the way he handles legislation going through the House. Members will recall that this bill started out with Māori Party support. That fell away, so the ACT Party was put in the ambulance of Nick Smith’s bill. Its members said that they would support the bill’s second reading provided only that all the privatisation measures come in at the Committee stage. Well, here we are at the Committee stage, and the bill goes much further than Labour wanted, but nowhere near as far as the ACT Party wanted. I can only imagine that all of this was happening in the December period, when there was a slight distraction in that particular caucus room.

Labour members oppose this Supplementary Order Paper quite strongly, and I will come to the reasons for that in just a moment. Firstly, though, I will spend just 1 or 2 minutes rebutting some of the points that have been made in the Committee tonight by the Minister in charge of the bill, the Minister for ACC, particularly his comments about the financial viability of the accident compensation scheme. People listening to the debate tonight can ignore vast tracts of it, but they cannot ignore the fact that Nick Smith has played fast and loose with figures concerning the accident compensation scheme. He decided to declare the scheme near bankrupt. In what we were told by the Government was the worst recession in 80 years—though that did not turn out to be right—he looked at all the investments that the Accident Compensation Corporation (ACC) had made, and said that a terrible amount of money had been lost and therefore the whole scheme was busted. It was the same logic that the Government used on the New Zealand Superannuation Fund; it said that all the money was draining out of it, and that we would be borrowing to invest in a fund that was losing money. But as soon as the world economy recovered, the two parts of the Government accounts that recovered the fastest were the accident compensation scheme and the Government superannuation scheme.

One of the difficulties politically for Labour in Government was that the Accident Compensation Corporation used to perform so well in terms of its investments that we would get big headlines saying there was a $10 billion surplus in any 1 year, as though that money was cash that was available to be spent in that year. In fact, it was from the corporation’s investments. Government members have said tonight that the scheme is broke, but they fail to focus on whether its investments have recovered since the period that Government members have spoken of. I think some of the attacks made by Nick Smith were more a reflection on him than a statement of the facts.

I also want to refer to what Mr Peachey said. I see that he is in the Chamber. I thought he would be busy reading the Ministry of Education website for data and information, just in case that call finally does come. I know that we have teased him, but I think that the call from the Prime Minister must be hours away rather than days away in regard to a particular portfolio in which I know he has a certain interest. Mr Peachey got stuck into us about our supposed love affair with criminals—which I have never noticed before, but there we are. The Labour Party makes it very clear in its minority report that we do not believe there should be any compensation for people like Graeme Burton under the accident compensation scheme. We support the provisions in Part 1 that enable disentitlement of people like him. All that we are asking is whether somebody who is incarcerated for 1 week should lose all of his or her accident compensation entitlements, when a judge in a court of law has decided, based on all of the facts and none of the politics, that the crime was not worthy of the maximum 2-year penalty that that person could have been sentenced to. I must say that I watched the weekend news, and it is with a shudder that I see Graeme Burton, with all the evil crimes that he has committed, walking along on an artificial leg to stab somebody, with that artificial leg having been paid for by the taxpayer. None of us would support any support at all being given to somebody like that. Thankfully, in our country people like Graeme Burton are an extraordinary exception. Thousands of people pass through the criminal justice system every year. We should be tough on the worst offenders, but for those who have been sentenced to only 1 week, I think it is hard to argue this particular course of action.

I want to comment on new clause 22 on Supplementary Order Paper 111. It is about the rate of levies. There is particular reference in the amendment to the fate of motorcyclists. Nick Smith talked about the number of motorcyclists who have turned up at Parliament, and last year there were thousands and thousands of them. They were all pretty decent, hard-working Kiwis who were desperately concerned about the way that they were being treated. The Committee has not had a chance to consider their circumstances. For example, if we consider the vast increase in the number of motorcyclists on our roads in the last few years, we find that the actual rate of motorcycle accidents has been going down. One would not think that from the comments made by the Minister, because he took the raw number of motorcycle accidents. It is like saying that compared with the road toll in the 1960s, there are many more accidents now, so things must be much, much worse now—without taking into account the increased number of cars on the road at this time.

As we know, one of the great things from humanity’s point of view, but one of the more challenging things from the point of view of ACC, is that many more people survive accidents now than used to be the case. That is a wonderful, wonderful thing, but it makes for a challenge from an accident compensation perspective, because very intensive and expensive care is required. None of us would complain about that at all. In fact, we welcome it. We think it is a great thing that Kiwis now survive accidents that they previously did not survive, but there is no question that that has an impact on the ability to run a no-fault scheme.

Where the rubber hits the road in a literal sense for motorcyclists is that they have been demonised by the Government in its advancement of Part 1 in this debate. In fact, the new clause 22 refers to the motorcycle safety levy, which the Government wants to set up. I want to know from the Minister in the chair, Pansy Wong, who from an Opposition perspective is one of the most excellent Ministers at answering questions in the House, whether—[Interruption] She puts the Attorney-General to shame in that respect! I want to know from Mrs Wong, if she would deign to address us, how much of the levy will be spent on motorcycle safety, given that only $130,000 is being spent on it right now. How much does she believe will be raised from the motorcycle safety levy, and where does she think that money will be deployed? I think that is quite important, given how little of the debate tonight has been on the plight of motorcyclists. That is what a large amount of the public concern has been about. I ask the Associate Minister, Pansy Wong, to tear herself away from her no doubt crucial briefing papers on whatever matter it might be in order to tell us whether there will be a massive increase in the amount of money spent by the corporation on motorcycle safety. The levy is referred to in new clause 22 but we are none the wiser about how much of it will be spent on that particular topic.

I would also like the Associate Minister to answer for us why the levies on motorcyclists have increased so markedly when the scheme has a no-fault principle. I do not think that has been sufficiently explained. We talk the language of it being a no-fault scheme, yet that does not seem to be the case in relation to motorcyclists, who enjoy New Zealand roads and enjoy being outside, and who in my opinion are often among the safest people on the roads. Normally, motorcyclists are not at fault in respect of crashes and accidents that they are involved in. I think that speaks volumes for their commitment to road safety, yet the levies do not reflect that. Maybe Pansy Wong would be able to tell us about that.

I wonder whether she could also tell us whether new clause 22 takes into account that some bikes that have bigger engines are older bikes, and therefore are not capable of the kinds of speeds that some of the smaller engines are now capable of. Why is there a disparity in the way that those levies are charged? I think there are some equity issues there for motorcyclists.

The other point that I think has been overlooked by the Government in this respect—and new clause 22 goes some way to deal with it, but not as far as we would like—is that some motorcyclists own many bikes but are not riding all of them on the road at the one time. There is no real way for the Government to take account of that. I can see by the Associate Minister’s intense interest in the questions I am posing to her that either this matter was the topic of her PhD at university, or I am not making my points clearly and succinctly enough to elicit an answer. But knowing her respect for the parliamentary process, and the deft and elegant way in which she answers members’ questions, I am sure a detailed answer is being prepared by her at the present time.

Those are the issues for Labour members around motorcyclists. We believe that an injustice takes place in Part 1 that has not been addressed by the Government, despite the very constructive way in which the motorcyclist community around New Zealand has put its arguments. Phil Goff has done very well in trying to put those arguments. He has been meeting with motorcyclists and trying to articulate their concerns in Parliament, but so far there has been no joy from the Government. I hope Pansy Wong will answer those questions. I know that she is interested in them.

DAVID GARRETT (ACT) : I rise to speak on Part 1 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill in order to correct some misinformation that has been promulgated by Mr Darren Hughes. For those of us in the Chamber who are old enough to remember, Mr Hughes appears to be the Peter Thornton of the Labour Party, the troubleshooter who comes to fix things up. Maryan Street knows what I am talking about.

Mr Parker talked about the inhumanity of National in suggesting that when the tyrant, the fiend, Graeme Burton rejoins society, to deny him a $10,000 titanium leg will somehow make the National Party and, by inference, the ACT Party inhumane and lacking in compassion. Let me tell Mr Parker this: Graeme Burton is a psychotic killer. If Mr Parker were on Earth instead of Mars he would know that he will never be released, ever. He knows that. Darren Hughes is nodding. He knows it, too. He has tried to say that you did not mean what you said, but you did.

Hon David Parker: I did.

DAVID GARRETT: You said that we are—

The CHAIRPERSON (Lindsay Tisch): The member cannot bring the Chairperson into the debate.

DAVID GARRETT: My apologies, Mr Chairperson. The member is being disingenuous—or “disingenius” as Jacinda Ardern has put it—in claiming that members on this side of the House are lacking in compassion. Graeme Burton is entitled to food, medical treatment, not to be tortured, and not much else. He is certainly not entitled to a $10,000 titanium leg. Every such leg given to somebody like Graeme Burton means that somebody else does not receive the benefit of the scare resources of accident compensation. Mr Hughes—and you can look uncomfortable, Mr Parker; I am sure you will—can come down here and act as Peter Thornton as much as he wishes, but you said it.

The CHAIRPERSON (Lindsay Tisch): This the second time—

DAVID GARRETT: The member said it, Mr Chairperson. My apologies.

Hon David Parker: And I stand by it.

The CHAIRPERSON (Lindsay Tisch): I am on my feet. The member cannot bring the Chair into the debate. He cannot say “you”. I ask him to please respect that.

DAVID GARRETT: I was carried away with passion rather than with compassion. Yes, that member did say that. I would like the 152 people listening to this debate to note that the member stands by his statement that to deny Graeme Burton a $10,000 titanium leg is lacking in compassion. Well, I do not believe that is the case. Those resources are scarce. We all agree that accident compensation needs to be given to people who need it, not to criminals escaping from jail, not to Graeme Burton to enable him to kill somebody else. He will try again, I say to Mr Parker. If you are too stupid to realise that you should not be here—

The CHAIRPERSON (Lindsay Tisch): That is the third time that the member—[Interruption]. This is a debate on Part 1. To refer to another matter by way of reference like you have been doing, is fine but your whole speech cannot be on that subject. We are talking about Part 1 and we are nearing the end of the debate on it. I ask the member to confine his comments—with reference; that is fine—to Part 1. And I say for the third time that the member cannot bring the Chair into the debate.

Hon Simon Power: I raise a point of order, Mr Chairperson. Having been in the Chamber now for three-quarters of an hour and having listened to contributions from both sides of the Chamber, I think it is fair to say that Mr Garrett brings a certain forthright style to the debate in the Committee of the whole House. But his use of the word “you” has been no less or more regular than that of Carol Beaumont during her contribution. I ask that when members opposite are making a similar contribution and using a similar inappropriate word, a similar standard is applied.

The CHAIRPERSON (Lindsay Tisch): I thank the member for those comments. I have sat here for some hours now and I will judge the quality of the debate. I know that the member is exuberant and passionate about what he is saying, but on three occasions in a row I have mentioned and brought to his attention his use of “you”. The member has 2 minutes remaining. I invite David Garrett to continue.

DAVID GARRETT: It is not my habit to use up time needlessly. I think I have made my point. The scarce resources of the accident compensation system should be applied to people who need and deserve them, and Graeme Burton and other criminals do not fall within that class. I think Mr Parker will be haunted by his statement that he stands by what he said earlier, despite attempts by the troubleshooter to ameliorate what he said. Thank you.

Hon DAVID PARKER (Labour) : I do indeed stand by my comments. I agree there is a question as to whether it should be a $10,000 titanium leg or some other leg, but I certainly stand by my comment that we ought not to throw away criminals and not give them appropriate medical treatment. For me, to live in a society where someone has to walk around with just one limb because you are too miserable to see that we should live in a society—

The CHAIRPERSON (Lindsay Tisch): I have just spent some time speaking to the previous speaker for mentioning the word “you”. The member knows quite clearly that he cannot bring the Chair into the debate. I will be on my feet each time it happens.

Hon DAVID PARKER: And so you should be. I apologise for that reference. The courts already have the ability to say that someone should not get accident compensation entitlement. It is wrong to say that just because someone has been in prison, he or she should get no entitlement. Labour members are on record as saying that Graeme Burton should not get any compensation relating to income or disability, but I still stand by the comment that he should be entitled to a prosthetic leg, as anyone else should be in this society. It goes too far if we treat criminals so harshly that they do not get that form of medical treatment.

I will respond to one of the other issues that Dr Nick Smith raised in response to an earlier point. He said that I had pointed out that, on a cost comparison basis, the cost of New Zealand’s accident compensation scheme was a lot lower than Australia’s. He then said that I did not talk about the non-earners account or the earners account. That is quite true; I did not talk about those matters, because the select committee was not presented with any cost comparisons. For the Minister to criticise the Opposition for not providing information that the Government should be providing before it cuts entitlements to non-earners and earners seems to me to have it the wrong way round. It is the duty of the Government to show that those current entitlements are unaffordable. The only information we were able to ascertain was that in respect of the employers’ account the cost is already substantially cheaper than the equivalent cost in Australia. In respect of administrative costs, we also have good evidence that they are lower than comparable costs in Australia. Given that that was the only information we had on costs, it seems to me somewhat ironic that the Minister was criticising the Opposition for not providing the information that he refused, or was unable, to provide to the select committee.

I would like to make a reference to some of the statements that have been made about risk assessment and risk-weighted premiums for employers—or experience-rating, as it is called. We already have some self insurers in New Zealand, who are major employers. Officials were unable to provide us with any evidence that the groups that are self-insured and are fully exposed to their own risk had better rehabilitation or accident prevention rates than those provided by the accident compensation scheme elsewhere. So I cannot see how there can be such confidence that risk rating will reduce accident rates or improve rehabilitation rates. We were told that the research overseas goes both ways; the outcomes of it are unclear, and research has yet to be done in New Zealand. The cart seems to have been put before the horse. I would have thought that that research should be done before such a change is made, rather than after it.

Lastly, I will refer to the effect of the proposal that the Accident Compensation Corporation ignore pre-accident earnings when deciding whether somebody is properly rehabilitated. The proposal concerns not only earnings-related compensation, which stops after a period of time, but also ongoing medical treatment that could improve a person’s rehabilitation, and, therefore, that person’s chances of getting closer to his or her pre-accident earnings. If anyone on the other side of the Chamber thinks that private insurers re-entering this market will not take advantage of that particular provision, I suggest that is rather naive. When employers contract out their insurance to a private insurer, they have no control of the claim after the claim is made. They have devolved that responsibility to the insurer under their contract of insurance. The insurer takes it over. The insurer will do what insurers do all round the world, which is to try to cut costs in order to offer competitive premiums and make a profit for themselves. I think those provisions will be very dangerous, particularly when the scheme is privatised.

CHRIS HIPKINS (Labour—Rimutaka) : I intend to take only a fairly brief call on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. I know that is not something I have managed in the past, but I will give it a go. I stand to say at this point that Labour supports the 24-hour, no-fault accident compensation scheme, which the National Government seems to be intent on undermining at every available opportunity.

Just by way of introductory comment, I say that late last year I had the opportunity to meet with some visiting US senators. They were here to look at our health system. When I asked them which two things about the New Zealand health system they were most interested in, they said those were the accident compensation scheme and Pharmac. Those were the two things that they were the most envious of, because they believed that if they had similar schemes to those in the United States, then much of the health debate that people have there would be mitigated. So it is very concerning to see some of the provisions in Part 1 of this bill, which to my mind undermine the very good accident compensation scheme that we have, without a clear case having been made to support them.

There appears to be very little evidence here, and the National Government instead appears to be undermining the scheme so that it can get away with doing what it has wanted to do all along, which is to introduce privatisation into the scheme to a much greater extent than currently. It seems to me that National is relying on the old Roger Douglas theory of never wasting a good crisis, and if there is not a good crisis, then simply trying to create one. From listening to the Minister for ACC, Nick Smith, speak earlier, one would think that all of the problems with regard to accident compensation relate to a massive increase in the scope of the scheme under the previous Labour Government. In fact, only 6 percent of the increase in liabilities, I have been advised, results from the increase in the scope of the scheme under the previous Labour Government. So Nick Smith’s claim that the scheme was somehow left completely high and dry by the previous Labour Government because of a massive blowout in its scope is simply untrue.

As Darren Hughes pointed out, Nick Smith appears to be arguing the same logic for cutting into accident compensation as the National Government has used for cutting into the New Zealand Superannuation Fund. He argues that because the investments that the Accident Compensation Corporation (ACC) has been able to make on the international market have gone down in value in the recession, somehow that means we should make savage cuts into the scheme. Of course, the New Zealand Superannuation Fund has rebounded significantly during that time. I am sure that ACC will have made back a significant amount of the losses it made, as well.

I also note at this point that Labour supports the extension of the date for the full funding of historic claims, but we oppose the bill overall. If the National Government was really interested in, and really supportive of, extending the date for the full funding of historic claims, it would have supported the bill that Labour has had in the ballot since the last election. In fact, David Parker sought leave last year to introduce that bill, and the National Government blocked that. So if it wanted to extend that date, there was already a bill there. It chose instead not to do that and to come up with its own bill, which it is using as a vehicle with which to push through a number of other changes that are detrimental to the scheme.

I will talk about the cost of accident compensation, because many of the changes that the Government is proposing are being put forward on the basis that they will lower the cost, particularly for employers. When we look at the evidence of how the scheme stacks up internationally, we see there is not a great deal to support the notion that employers in New Zealand are paying a particularly high cost. In fact, Treasury advice to the Government stated that it is not clear that accident compensation costs are excessive. I refer to the minority view of my Labour colleagues on the Transport and Industrial Relations Committee. They noted: “At the request of the committee, officials provided advice comparing New Zealand levies for employers to premiums in Australia.” The advice showed that “ACC costs for New Zealand employers are substantially lower than the costs paid by Australian employers.” I could be mistaken here, but this could be one of the National Government’s key initiatives to catch up with Australia. It wants to catch up with Australia by making our employers pay the much higher accident-related levies that employers pay in Australia. I think National members have abandoned the idea of catching up with Australian incomes, so perhaps they are now going to console themselves by increasing the levies paid under the scheme by our employers, instead.

CLARE CURRAN (Labour—Dunedin South) : I will take a call on this bill to express my disgust and disappointment with the Government. I felt sick tonight sitting here in the Chamber listening to some of the comments from the other side, especially from the ACT member David Garrett. Would it not be good to be standing here tonight talking about legislation that is actually going to make things better, not worse, for New Zealanders? I am proud of our accident compensation system. It is not broke; it has $11 billion in reserve. But we have had countless spurious attacks on its robustness and its credibility, in the name, ultimately, of privatisation. New Zealanders will get less cover and pay more, and it is unfair. Members have heard tonight countless times from members on this side of the Chamber how inhumane and lacking in compassion it is. We have heard lots of passion from the other side of the House, but no compassion. It is unfair for the vast numbers of New Zealanders—

David Garrett: Put it on the record: you’re compassionate about Graeme Burton.

Hon Darren Hughes: I raise a point of order, Mr Chairperson. I am sorry to interrupt my colleague during her speech, but the ACT member, despite his closeness to the Minister of Justice, should not have moved to the National front bench to interject on my colleague, when he belongs a bit further back, in the scheme of things.

The CHAIRPERSON (Lindsay Tisch): That is a fair point. I think the member, by shifting to his own seat with his drink, has taken that on board.

CLARE CURRAN: I am talking tonight about the vast numbers of New Zealanders who will be disadvantaged by this legislation, this cruel and inhumane legislation that lacks compassion. It is hostile to decent people, who expect more from their Government. As members have heard countless times from this side of the Chamber, this bill will make our accident compensation system worse, not better. It will shift more of the costs of being injured on to the injured person and the State, thus eroding the protection of New Zealanders who are injured at work, despite the costs of accident compensation to employers already being substantially lower than those paid by Australian employers, as members have just heard my colleague Chris Hipkins talk about.

The case for cuts to entitlements is not made out, and members on the Labour side of this Chamber believe that the recent increase in the liabilities of the scheme are being used by the Government as an excuse for unjustified cuts to the accident compensation scheme, and ultimately for its privatisation. Most costs saved by the corporation will not go away; they will be passed on to the health system, to the injured and their families, and to other State agencies.

I would like to reflect on something I heard my fellow Dunedin MP, a list member for Dunedin, Michael Woodhouse, talking about authoritatively as an accountant. I have to say that I was very disappointed in hearing what he had to say tonight, and I say to him that ultimately he will be accountable on that, in Dunedin particularly. Countless New Zealanders have relied on accident compensation to re-enter the workforce; it is part of the fabric of our society. It works, yet this Government is eroding and destroying it. Michael Woodhouse, who is a new member, as I am, in this Parliament, will be accountable on this, and I wonder how many of the Dunedin constituents who might be listening to this debate tonight, at 10 to 10 at night, will be wondering what on earth is happening to this country: waterside workers, railway workers, labourers—people who do hard manual labour and who have accidents, and who are the backbone of the New Zealand workforce. I wonder what they are thinking tonight when they are listening to this debate.

I will address Part 1 and talk about the issue about being deemed ready to work at 30 hours a week rather than 35 hours a week. Labour members do not believe that that cut is justified. Most full-time workers work more than 35 hours a week, and most need income based on those hours to meet their living costs. Deeming an injured person vocationally independent when he or she is physically able to work 30 hours a week—which could trigger an end to earnings-related compensation—rather than 35 hours a week, is unfair and will cause hardship to more injured people.

The current rules, as the Labour minority report says, are strict, and deeming people to be ready to work does not mean that they can get a job. As the minority report by Labour refers to, there has been a study by Hazel Armstrong, published in the New Zealand Law Review, that showed that under the current rules only 32 percent of the long-term injured deemed work-ready were in full-time work. Twenty-one percent were in part-time work, 22.5 percent were on a Work and Income New Zealand benefit, 10 percent were not working but were not on a benefit, and 9 percent remained on a weekly compensation payment. The author, Hazel Armstrong, said that those figures demonstrated her point, that high exit rates are not the same as high return to work rates. That has implications for the State, because many workers put through the process do not return to work but are simply shifted from weekly compensation to Work and Income benefits. So the change to make this rule even tougher will reduce employer levies, which are already lower than overseas, but will do so at the cost of both the injured person and the State.

We have heard countless examples tonight that this bill will make things harder and will leave the vast majority of New Zealanders worse off, not better. As I said at the beginning, this bill is very disappointing. I have listened tonight to the debate from the other side of the Chamber with some disgust.

• The question was put that the amendments set out on Supplementary Order Paper 111 in the name of the Hon Dr Nick Smith to Part 1 be agreed to.

Hon DAVID PARKER (Labour) : In this first call on Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, I would like to address one of the changes that is made, in terms of the proposed deductions to earnings-related compensation. The bill proposes that where someone has holiday pay due at the time of his or her accident, that holiday pay is to be deducted from the earnings-related compensation paid to that person. Treasury, in one of the briefing papers that it gave to the Government in respect of this provision, pointed out that this particular provision does not save much money, and, more important, that Treasury was concerned about the principle. What this provision says is that people should have deduced from their post-accident earnings—earnings in the form of earnings-related compensation—their pre-accident earnings. Holiday pay that has accrued as at the date of an accident is due to employees as a consequence of their pre-accident earnings. It is an asset that is then theirs.

If we think about how this change applies in practice, we can see the inequity of it because of the arbitrary and inconsistent way in which it applies. If an employee was entitled to 4 weeks’ annual leave and had taken that annual leave just prior to having an accident, that employee would have no accrued holiday pay and therefore no deduction would be made from his or her earnings-related compensation. However, if an employee was soon to take his or her holiday, but had not yet taken it before suffering from an accident, the accrued holiday earnings would be deducted from the claimant’s earnings-related compensation in that case. That was the concern that Treasury noted. It said the principle of the accident compensation scheme is that people are compensated for their lost earnings, and there is no policy justification for deducting accrued holiday pay. Indeed, as I think I have illustrated, the effects of doing that are arbitrary and therefore unfair as between earners.

Again, I return to the underlying justification that the Government has used in support of these changes, which is one of the affordability of the scheme. I remind the Minister for ACC that the only information that we had as to cost comparisons between the New Zealand scheme and overseas schemes showed that the New Zealand costs for employers were considerably lower per $100 of earnings than those paid by Australian employees per $100 dollars of Australian workers’ earnings. We know that the administrative costs of the scheme in New Zealand are lower than Australia’s. We know that the cost of employer levies in New Zealand is considerably lower, and there is no justification for what I think is an inappropriate change to the scheme, which effectively takes from the injured employee pre-accident earnings in respect of his or her post-accident needs. It is just bad policy. It is wrong. It is not justified on a cost basis.

In the debate on Part 1 the Minister criticised the Opposition for not referring to costs in the non-earners account and in the earners account, which are another two accident compensation accounts. My response to that is that of course the Opposition does not have that information. It was not provided to the Transport and Industrial Relations Committee by the Government, so how we can be criticised for not referring to what the Government ought to have provided beats me. The best information that we have is in respect of the costs of other parts of the scheme. That is that the costs of the New Zealand scheme are lower by a considerable margin than the equivalent costs in Australia and, I believe, lower than those of schemes in most other parts of the world.

Hon DARREN HUGHES (Labour) : The Committee’s attention now moves to Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. There are many, many facts that the Opposition looks forward to regaling National with as we move into this debate, because this is an important part of the legislation. It sets out four or five separate areas that the Opposition looks forward to pursuing with the Government and the Minister in the chair in the morning, and we will not resile from the defence that Labour is making of the importance of making sure there is a 24-hour, 7-day-a-week, no-fault accident compensation scheme for the people of this country. That is what is at stake in this debate. It is what is at stake in Part 2. It is what will be at stake when we get to the debate on the title and commencement clauses, where it will become clear that the Government is changing the title of this law because it has no commitment to accident compensation in this country.

• Sitting suspended from 10 p.m. to 9 a.m. (Wednesday)