Adams Amy: Questions for Oral Answer — Questions to Ministers 
Adams Amy: Questions for Oral Answer — Questions to Ministers 
[Volume:651;Page:714] 
4.  
AMY ADAMS (National—Selwyn) 
 to the  
Minister for ACC 
: What advice has he received on increased costs for accident compensation over the term of this Parliament and when was he first advised of these? 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 Officials sought an urgent briefing immediately after the Prime Minister’s announcement of my appointment and before I was sworn in as Minister. They advised that the Accident Compensation Corporation (ACC) had a significant funding crisis in the non-earners account that required an additional appropriation of $297 million or an additional 32 percent this financial year arising from escalating costs. I have subsequently been advised of significant blowouts in the other accounts with an average 26 percent increase in costs for next year. The total increased cost for the term of this Parliament is $4.093 billion. 
Amy Adams 
: Will the Government have to increase accident compensation levies on workers employers and motor vehicles to meet this multibillion-dollar blowout? 
Hon Dr NICK SMITH 
: Officials have recommended very substantial levy increases on all the accounts for this year and subsequent years to fund these blowouts. The Government’s view is that households and businesses are in no position to be facing huge additional accident compensation levies. This has to be balanced against the legal requirement to fully fund accident compensation over the medium term. The levy increases I will be detailing this afternoon for the earners and work accounts are half those that are recommended by the Department of Labour. We will be advancing work urgently to contain costs and to investigate extending the full funding period to minimise these increases in future years. 
Hon Ruth Dyson 
: Is the Minister aware that the ACC conducted a widely publicised public consultation process prior to the election outlining the proposed levy rates for 2009-10; if he is not aware of that fact what does that say about his attention to detail and if he is aware of that fact why did he not tell Bill English and John Key to stop them making fools of themselves by suddenly being shot by the proposed levy rates? 
Mr SPEAKER 
: The Hon Nick Smith may answer whichever of those questions he chooses. 
Hon Dr NICK SMITH 
: The basic problem is that the levies on which the previous Government consulted with the community were significantly less than what is required to fund the blowouts. The part that I find extraordinary about the Labour Party is that its members have dismissed these sums as insignificant and that is perhaps why the new Government is facing a decade of deficits. 
Craig Foss 
: What advice has the Minister received on the accuracy of a statement made by the Hon David Parker in respect of the non-earners account blowout not being in the Pre-election Economic and Fiscal Update where he says: “Papers show that Ministers acted appropriately throughout as the money needed had not been quantified until the election period.”? 
Hon Dr NICK SMITH 
: The money needed was clearly identified in a report to the former Minister on 14 August based on a PricewaterhouseCoopers valuation. A further 60-page technical report was completed by ACC on 22 August which confirmed those figures. The election was not called until 12 September and the Pre-election Economic and Fiscal Update closing-off date was 8 September after the previous Government had that information. 
Craig Foss 
: Is the Minister aware of the Cabinet minute of 10 December 2007 that noted increased costs in the non-earners account and required the then Minister to report back on a clear funding policy before the levy-setting process began in August 2008; if so did that occur? 
Hon Dr NICK SMITH 
: Yes there was a very clear Cabinet minute last December requiring the former Minister to report back on funding issues in the non-earners account. That did not occur and there is no explanation as to why it did not occur. 
Craig Foss 
: Has the Minister received any advice about the accuracy of the statement issued by the former Labour Minister for ACC as to why the blowout was not included in the Pre-election Economic and Fiscal Update? 
Hon Dr NICK SMITH 
: Yes. The statement is inaccurate in three respects. It states the first advice the former Minister received was on 14 August yet the chief executive of the ACC has advised me that the then Minister was given a heads-up in May. The statement also claims that the paper dated 14 August states: “approximately $300 million per annum 2009-2013;”. The paper never uses the word “approximately” but notes that the change in baselines was $305.654 million and gives equal accuracy in subsequent years. Contrary also to Ms Street’s statement it also specifically notes a request for increased appropriations in this financial year—something she did not disclose. 
Craig Foss 
: What advice has the Minister received on the accuracy of the claim made by the Hon David Parker that it would have been constitutionally inappropriate for the Labour Government to address this urgent problem in the non-earners account during the election period? 
Hon Dr NICK SMITH 
: The statement is also incorrect. That additional appropriation was not from any change of policy but simply to maintain an existing level of accident compensation cover. I find it strange also that Labour would make that claim when it seemed to be no problem at all for it to promise in the middle of an election campaign interest-free student loans big increases in Working for Families and many other initiatives. It seems that if it is good news Labour can do it; if it is bad news it hides it. 
Hon Ruth Dyson 
: I seek leave to table two documents. The first is the advice from ACC of 14 August to the former Minister giving the indicative outline of changes to the appropriation baselines of “approximately $300 million 2009-2013” and also the accompanying documents from the Department of Labour and Treasury challenging that advice and telling the former Minister that they were seeking independent actuarial advice. 
Mr SPEAKER 
: Leave is sought for those documents. Is there any objection to those documents being tabled? There is objection. 
Hon Dr NICK SMITH 
: I seek leave of the House— 
Hon Ruth Dyson 
: I raise a point of order Mr Speaker. You put the leave request only on the first document so I think my point of order comes before the Minister’s point. 
Mr SPEAKER 
: Both members will resume their seats. As I heard the honourable member I thought she had described two documents because if she were not describing two documents her description was way too long and I alert her to that. I had given the call on a point of order to the Hon Nick Smith and that point of order will be heard now. 
Hon Dr NICK SMITH 
: I seek the leave of the House to table three documents. The first of those is a report by PricewaterhouseCoopers dated 7 August 2008 that values the outstanding claim liabilities for the ACC. The second document I seek leave to table is in respect of the report to the former Minister on 14 August 2008 detailing to three decimal places the additional appropriations required and the third I seek leave to table is a technical report on Vote ACC dated 22 August 2008 which is the review and the confirmation of the size of the appropriation that was required. 
Mr SPEAKER 
: Is there any objection to those documents being tabled? There is no objection. 
Documents by leave laid on the Table of the House. 
Hon Ruth Dyson 
: I seek leave to table the advice from the Department of Labour given to the former Minister for ACC about the fact that it was considered unconstitutional for Cabinet at that time to make decisions. 
Mr SPEAKER 
: Is there any objection to that document being tabled? There is no objection. 
Document by leave laid on the Table of the House.