Wong Pansy: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Wong Pansy: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
[Sitting date: 27 February 2007. Volume:637;Page:7684. Text is incorporated into the Bound Volume.] 
PANSY WONG (National) 
: 
 Kia ora Mr Chairperson. New section 169 to be inserted in the Injury Prevention Rehabilitation and Compensation Act by Part 1 of this Injury Prevention Rehabilitation and Compensation Amendment Bill talks about the level of levies. The levies for both the existing employers’ levy account and the self-employed levy account come from three sources as is correctly stated in the bill. First of all new section 169(1) provides that the levy is paid by an employer to the employer’s employee for that period or is collected from private domestic workers etc. and then it depends on the level of earnings deemed by regulation to be derived by a self-employed person. But new section 169(2) of the bill makes it very clear that the extent of the funds to be collected from the levies should be calculated “so that the cost of all claims under the Work Account is fully funded.” That account would be a merger between the employer levy and the self-employed levy. 
But a strange situation is happening here. Members will remember that the legislation states that all these levies should be calculated so that the cost of all claims under the combined work account would be fully funded. But right now before the merger the employers’ account is showing a surplus of $688 million which means that the liability is more than covered by the existing levy account. In the self-employed work account there is a $60 million surplus. So the question I would ask the Minister in the chair Ruth Dyson is that if both of those accounts have a surplus over those estimated liabilities why should the Accident Compensation Corporation (ACC) continue to hold on to these surpluses? The estimated liabilities are already fully funded in both of those accounts. 
It gets even more ridiculous. I will use the specific example from the Meat Industry Association. I would like the other parties—including New Zealand First and the Greens—to listen to this carefully because I know that they are trying to look after the self-employed and those parties will have a problem with that. By passing this legislation they will punish those self-employed people. Let me demonstrate why. The Meat Industry Association has listed the following figures for its members. At the moment the ACC levy rate for 2006-07 is $8.30. If there is no merger of those accounts next year the levy will be $6.57 per $100 but if the merger goes ahead those members will pay $8.83. It simply does not make sense to punish the self-employed by making them pay more under the merger situation. I would like the Minister to take a call on that issue and tell the Committee why that should happen. 
The reason is that the ACC looks at the surplus situation in the employers’ levy account and sees that there is a margin of 63 percent and it looks at the self-employed account and sees that there is a margin of 20 percent. The corporation adds the two together and arrives at a margin of 53 percent. So in the process it says it will rebate $100 million because bringing the employers’ account down from a 63 percent margin to a 53 percent margin will mean the employers are entitled to a rebate of $100 million. The problem is that we are being told that the self-employed account which sits on a 20 percent margin has to go up to 53 percent. This means that the self-employed will have to come up with $100 million extra for the next 2 years. 
It does not make sense because the ACC states that it needs to work with a surplus of only 11 percent just in case the liability exceeds the funds but it does not need to work with a margin of 53 percent. So the ACC has a policy of reducing those margins to 11 percent by 2010 but in the meantime for the next 2 years it wants the self-employed to pay $100 million extra. 
So I would like the Minister in the chair to take a call on that issue. She needs to answer this question. She cannot say that she has not been asked about it because the Meat Industry Association has written to her and asked her to please explain why she would want the self-employed members of the Meat Industry Association to pay $360000 collectively to cover a claim cost of around $25000. 
 This is all to do with the ACC being very conservative. It is concerned that it might get the calculation wrong. So even though the corporation thought it needed to work with a margin of 53 percent I would say that no private enterprise nobody who runs a business can have the luxury of saying: “Well I really want to cover my bases. A 10 percent profit is not enough. I want 53 percent.” Private industry does not have those luxuries. But the ACC today through Parliament is seeking political parties’ support to increase a margin that it thinks is sufficient at 11 percent to 53 percent. 
I challenge parties like New Zealand First and the Greens to rethink their position of punishing the self-employed. I can assure them that for the next 2 years their offices will be flooded with letters of complaint from the self-employed as soon as those notices hit the letterboxes. But I think for a start that if the Minister is so confident about this bill then she should take a call to explain to the public why the ACC should want a margin of 53 percent when its stated official policy is 11 percent. Why should the Minister not agree to be fair to the employers and rebate them and also to not punish the self-employed? The ACC should work within the existing margin of the self-employed work account which is 20 percent. Therefore the self-employed would not have to face a hefty bill up to the tune of $100 million for the next 2 years. It might mean that in 3 years’ time down the line they would get a rebate. 
Nobody has the luxury of asking people to pay money in advance and not even pay interest on it. If people have overpaid their tax to the Inland Revenue Department even the department would give them some interest because it has had the use of their money. I would say that the ACC is a monopoly organisation and it is an outrage that it will charge the self-employed $100 million extra for the next 2 years. Members should think about it. How can we expect the self-employed to accept a position whereby they would have been levied at $6.57 per $100 if the merger did not go ahead otherwise they will have to pay $8.83? I think that New Zealand First and the Greens will have to look at their position because for the next 2 years they will have a lot of explaining to do if they do not support my amendment which will come under Part 2 “Transitional provisions”. 
But in Part 1 there is an issue of principle outlined whereby the legislation shows that liabilities should be fully funded—but we want answers as to why a 53 percent margin over the fully funded position is supported in this Parliament by the Greens and by New Zealand First. I think that those parties have a lot of answering to do. For a start the Minister might be able to help out those members if she would just take a call and explain why the ACC is demanding a 53 percent margin on the merged work account.