Smith Nick: Estimates Debate — In Committee 
Smith Nick: Estimates Debate — In Committee 
[Volume:656;Page:5575] 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 In speaking to the estimates for Vote ACC I will draw attention to the very ugly fiscal position that was to this Government by the previous administration. As the previous speaker Michael Woodhouse noted over the last 4 years the liabilities of the accident compensation system have grown by more than $10 billion. That is more than $5000 for every single New Zealand household. 
At the moment the corporation is preparing the figures for the annual report. The bad news is that when I had to advise the House in February that the liabilities had got to $21.9 billion I thought that they could not get worse. But I have to say that the preliminary figures I have for the end of June show that they have deteriorated further by billions. When we campaigned one of the things we said was that we had quite deep concerns about the way in which the accident compensation scheme was managed and we said that we wished to have a stocktake. Today I have announced the details of that stocktake which is provided for in the estimates and which was promised by the Government. 
The steering group will consist of the former chair of the Accident Compensation Corporation a person who has done considerable work for both Governments in respect of the Electricity Commission and a person who in my view has a deep level of knowledge of New Zealand’s accident compensation system the Hon David Caygill. We will also include on the steering group firstly an academic in public policy for whom I have huge respect. He is Professor Neil Quigley of Victoria University. I note that both of those gentlemen by being respectively on the Electricity Commission and at Victoria University are effectively already doing work for the Government for which they are drawing a salary from the Public Service. But they have said that they will do the new work without additional charge and I acknowledge that in this Committee. 
The third person on the steering group is Gordon Smith. Gordon Smith is from Havelock North and he has extensive experience in the insurance industry. He has been chief executive of the Farmers’ Mutual Group for the past 7 years. He alongside officials from the Department of the Prime Minister and Cabinet from Treasury and from the Department of Labour as well as the new chair of the corporation John Judge will oversee this very important piece of work. 
It is about a thorough examination of each of the accident compensation scheme accounts covering the motor vehicle account the earners account the employers’ account the non-earners account the treatment injury account and the residual claims account. It will look at alternative options both for service provision and for funding. It is the view of the new Government that experience-rating is the sort of initiative that we need to take in respect of the accident compensation scheme. We also want to look at the monitoring of the accident compensation scheme and also the oversight and governance of the $10 billion investment fund of the Accident Compensation Corporation. 
I have said quite publicly that the scale of the problems that we have within the accident compensation scheme the sorts of levy hikes that we are potentially looking at if we do not make significant change are such that we do need to have this stocktake group do its work but it will not include work on investigating whether the work account is opened up to competition simply because the scale of the issues that we are facing is so huge. Quite frankly the work account is in better shape; the problem is with the earners account and the motor vehicle account. 
I also want to make it plain that key stakeholders like the New Zealand Council of Trade Unions and Business New Zealand will have the opportunity for input into that important stocktake process. The stocktake group’s work programme is to be completed by June of next year. My expectation is that we will require a bill reforming the accident compensation scheme in the latter part of this year as well as one flowing on from this important work next year.