Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
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.] 
Injury Prevention Rehabilitation and Compensation Amendment Bill 
In Committee 
Part 1 Amendments to principal Act 
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. 
Hon RUTH DYSON (Minister for ACC) 
: 
 The purpose of the Injury Prevention Rehabilitation and Compensation Amendment Bill was not obvious from the contribution of the member who spoke previously so I would like to outline it. 
The bill aims to do two things. The first is to amalgamate the two accounts that cover injuries incurred during a person’s work—the current self-employed work account and the employers’ account—and to rename the combined account the work account. It covers all injuries that occur at work. It may sound quite obvious that we have one account to cover all injuries that occur at work and certainly some people have asked me over the last few months why we have two separate accounts. The reason is very clear and it should be obvious to members who were in the House in the 1990s. That excludes the members who are currently interjecting; they may not know. In 1998 when the then National-led Government privatised accident compensation its funding mates the insurance industry of New Zealand did not want to take on liability and responsibility for the self-employed because there were too many of them to deal with in one go. So in order to have a compulsory privatisation of the employers’ account National had to separate the self-employed work account and the employers’ account. That is why they were separated. It was for no principled reason but solely for the purpose of privatisation. The insurance industry did not want to cover the self-employed because there are so many of them and it involves a lot of administration. 
But would a self-employed plumber who is doing his or her job every day on looking down the road and seeing a person who is employed as a plumber reflect to himself or herself that the two people may be paying the same levies because they are exposed to the same risk? In fact they may be doing literally the same job on the same site but have a different business structure. The answer is overwhelmingly yes. This is a very basic issue of fairness. If two people are doing exactly the same job and are exposed to exactly the same amount of risk why would they be insurance risked on the basis of their business structure rather than their literal exposure to risk? The answer is that they should not be and this bill fixes that. We are calling it a work account because that is what it is. It would be very cumbersome to call it the employers’ and the self-employed work injury account so we are calling it the work account. That is the first thing that this bill does. 
The second thing is that the bill replaces the old term “medical misadventure” with “treatment injury”. I want to acknowledge the concerns raised by New Zealand First during the consideration of this bill. We have moved away from a system that in the past under previous accident compensation legislation required people who were injured at the hands of a health provider—at the doctor’s at the chiropractor’s at the physiotherapist’s or in the surgery—either to show fault from the health provider or to demonstrate that their injury was both rare and severe. We changed that in the last amendment bill but we did not change the name of the account. The name of the account which is still the medical misadventure account does not reflect the actual practice which is to treat all injuries regardless of where they occur as injuries and to investigate their circumstances separately. 
The concerns that New Zealand First raised through Peter Brown were that we must not through this change of name in this amendment bill lose the focus of the quality assurance contribution to the health system that the old medical misadventure system provided and that the new treatment injury system is designed to ensure as well. So I give the whole Committee but particularly New Zealand First my commitment that the change in clause 12 will not in any way undermine the quality assurance contribution that we need to make through being able to investigate the causes of injury at the hands of a health provider. 
There are two amendments in the name of Dr Paul Hutchison to this part and I would like to make a brief contribution in reference to them. Dr Hutchison is a very considerate and considering member despite the fact that he represents the National Party. I have given what I consider to be serious consideration to his amendments. I regret to advise upfront that although I will not be recommending support of them I do believe in the principle in them—he will persist in using the word “premiums” when the word is “levies”—and I have taken them very seriously. 
Dr Hutchison’s first amendment proposes to insert in clause 11 a new section 175A “Independent auditing of proposed premiums”. Independent auditing already occurs; it is available under the Official Information Act. It is my view that people should not have to go through that process and that to have the very information the member is seeking made public would be a very valuable contribution. But I am not convinced because the member did not discuss it with me—and that would have been a good and thoughtful move—that that needs to be provided for by an amendment to the legislation. A handwritten amendment with no consideration has still had good consideration from me. I give the member a commitment that that information will be available on the Accident Compensation Corporation website and that he will not require his legislative change in order for that to be done. It is a thoughtful contribution and I think it will help businesses—both the self-employed and people in different business structures—to assess how their levies were determined and to look at their business planning. I am very keen on that. 
In the same way in relation to the member’s other recommended amendment to clause 11 to insert new section 175B “Provision of forecast statement of financial performance” I say that that information is currently provided to me and I would like to consider some way in which we can better have a quality debate in the public arena so that people do understand the basis on which their levies have been set. They might not wake up in the morning and say: “Yippee! I am very pleased that I have to pay this contribution for potential injuries.” But they will have a very in-depth understanding of the analysis that has gone on behind the setting of their levy and hopefully an understanding also of the main driver of this legislation which is to lower their levies by lowering their injury rates. If they better understand the link between the injuries that are incurred and costs then perhaps we will have a little more commitment to injury prevention. 
On that basis I regret that I will be recommending to my colleagues that Dr Hutcheson’s amendments are not supported. But he can take credit for the consideration behind them and be assured that their intention will be implemented. 
David Bennett 
: Hollow words. 
Hon RUTH DYSON 
: I raise a point of order Madam Chairperson. I deeply resent the implication in David Bennett’s interjection. I take offence at it and I ask that you ask him to withdraw and apologise. 
The CHAIRPERSON (Ann Hartley) 
: The Minister has taken offence at the member’s words. I ask the member to withdraw them. 
David Bennett 
: I withdraw and apologise. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 I am pleased to have the opportunity to speak on this very unfortunate Injury Prevention Rehabilitation and Compensation Amendment Bill—unfortunate because it is a blatant robbery of funds that employers have in good faith paid since 1999 to fully fund their account. It is a blatant grab by the Labour Government which is purely ramming through the ideology it has in terms of so-called social insurance and is disobeying the basic principles of insurance whereby those who are at higher risks should indeed have higher premiums. Merging the accounts undoubtedly acts in a directly opposite way to basic insurance principles and it is very regrettable that the Labour Government has just failed to see that unless we apply basic insurance principles to accident compensation it will never ever be efficient. That is of great worry. 
Here we have two accounts. The first is the employers’ account into which employers since 1999 have in good faith paid their premiums and accrued a substantial surplus yet the Labour Government has said that it wants that money to go to a merged account that will cross-subsidise the self-employed who unfortunately have higher risks and higher injury rates. It is sending exactly the wrong message from that which it should be sending. 
One of the things I am very concerned about is that in New Zealand we have had an increase in the incidence of moderate and severe accidents. Despite 6 years of this Labour Government— 
Darren Hughes 
: Seven. 
Dr PAUL HUTCHISON 
: Seven? Sadly 7 but it will not be much longer. Despite 7 long years of this Labour Government the incidence of moderate and serious accidents has gone up. But in this legislation the Government is trying to put in provisions that will give exactly the opposite message to the community out there in terms of accident prevention and of inputting safety measures within their organisations. 
The facts are that injury rates are lower on average in the employers’ account and that is by virtue of the fact that employers are better organised have better infrastructure in place and have worked very hard since National so appropriately privatised the account back in 1998. We saw a decrease in accidents a dramatic increase in safety procedures in the workplace and decreased premiums. That is the fact of what matters but in this bill we are seeing a blatant manipulation of the levies by the Labour Government. That has been brought about by the fact that substantial money is being transferred from the employers’ account to the residual account and the Labour Government is artificially putting down the levies. 
It thinks it can fool the public by this mechanism. But we should know that if a car driver out there has many accidents and they are his own fault he should pay a higher premium. That is a simple rule of basic insurance philosophy. Yet this Labour Government wants to go in a totally opposite way to that. It says that it wants to reward those in the self-employed group who have higher injury rates and higher risks. The Government is going to bring down their levies and give them some money to boot. That is the total lack of logic of this Labour Government. 
I do take seriously the fact that the Minister has said that she would support—only in principle—the two amendments I have brought in. I am deeply saddened she will not support them and I hope that the rest of the Committee will look at those amendments. They are thoughtful as the Minister said and I think they will contribute to the transparency we really need in this accident compensation debate. 
Firstly in relation to Part 1 clause 11 I propose that the following section section 175A is substituted: “Independent auditing of proposed premiums”. One of the major problems we have in this country is that the general public does not understand the levy setting in this country and in this amendment is a mechanism whereby “proposed premiums and the rationale for such premiums must be audited by independent third party actuaries yearly”. The Minister says that that happens but the difficulty is that we cannot get to them because of the Official Information Act. [ 
Interruption 
] Well that is what the Minister told us just a few minutes ago. 
Hon Ruth Dyson 
: I said that you can get to them because of the Official Information Act. 
Dr PAUL HUTCHISON 
: We can get to them but they are not open to the public. The Minister is saying that in good faith she will ensure that they are available to the public. If the Minister thinks that is a good idea why does she not support the amendment? I call on the Greens the Maori Party New Zealand First United Future and all the other parties in Parliament to support an amendment that the Minister herself has said is a highly sensible and thoughtful amendment. The same goes for— 
Darren Hughes 
: Huh! 
Dr PAUL HUTCHISON 
: Now we hear “Huh!” from Darren Hughes the member by a very very thin margin for Otaki. He should be adding a sensible contribution to this debate not by saying “Huh!” but by persuading his Minister that this is a very sensible amendment. 
Let us go on to clause 11 where I propose that a new section 175B is also substituted: “Provision of forecast statement of financial performance—ACC must provide yearly a forecast statement of financial performance for the next five years to allow levy funders to analyse current premium setting performance against projected outcomes.” Again the purpose of this amendment is to make the levy setting mechanisms as transparent as possible and hopefully as understandable as possible to all those who are involved. I am delighted to see that the Minister is nodding her head and I would appeal to her not only to say that she supports this idea without supporting the amendment but to formally support the amendment because I do believe that it is a serious contribution to this debate. We can see the National Government-in-waiting is ready to do all sorts of useful things to accident compensation and I am glad that the Minister is recognising them. 
 Finally I want to speak on the amendment put up by my colleague Pansy Wong. That is in the next part but let me foreshadow it. Again it is another very sensible amendment and it comes to the nub of the philosophy behind this unfortunate Labour Government bill. One would hope that in accident compensation and accident prevention good faith is demonstrated by whoever the Government is. The Government certainly in good faith required collection of levies from the employers and they have done that for the last 5 years. The employers in good faith have paid expecting that fund to be fully funded. Here clearly a surplus has accrued and sadly the Labour Government wants to grab it. This absolutely defies the principles of good faith as does its insistence against the idea of rating which it is so determined to object to. 
I think we will find in this debate that the Labour Government is in denial about the idea of relative risk rating. It will cite some very obscure literature from Europe and maybe North America that is irrelevant to the fact that people out there actually respond to financial signals. I agree that robust safety management practices have to be put in place within all businesses whether they are large or small—I absolutely agree with that. But clear financial incentives also should be in place and one of the major problems that this bill encompasses is that of merging the two accounts. It is directly opposite to all the basic principles. The Labour Government is saying it wants to reward those who take risks and who are not helping the New Zealand safety record. That is wrong. 
SUE MORONEY (Labour) 
: 
 It is my pleasure to speak to the Committee stage of the Injury Prevention Rehabilitation and Compensation Amendment Bill—a very sensible bill that has come before this House. The last speaker Dr Paul Hutchison took some time to rewrite history and I want to make some comments on how we have come to consider this bill here today. The only thing that was increased by the National Government when it was in power and privatised the accident compensation system was donations to the National Party. That was the only thing National was able to increase by its privatisation agenda. Donations to the National Party did not do anyone who actually had an injury that needed treatment in this country any good but those donations were all that it was able to increase. So I want to set the record right on that to start off with. 
It is time the member who just finished speaking and his party caught up with the rest of the world in applauding the accident compensation system we have. The no-fault system and the levy system we have in place are the envy of other countries. That is because Governments like the Labour one have stood up and said we are going to have a no-fault system we are going to stick with a system that is fair and a system that is simple and we are not going to sell out our policies to the highest bidder. 
This bill sets right an artificial barrier that was brought in by the last National Government. It is some time ago since we had a National Government and it is now time we put this artificial barrier right. In fact these accounts were not separated to start off with but during the 1990s they were separated for the purposes of privatisation by the National Government. It is quite an artificial barrier: the self-employed working in exactly the same industry and doing the same occupations have ended up in a separate account from the employed. 
It was very well demonstrated when members of the Seafood Industry Council came before the Transport and Industrial Relations Committee that I sit on as a member. They made a very thoughtful submission and put the matter very clearly. They talked about coming forward with a submission where they could not necessarily support or oppose the bill in its entirety because the members of their council fell into both of those groups. They worked in exactly the same industry did exactly the same work faced exactly the same risks but ended up paying quite different levies and paid into different accounts and they could not see the logic of that. 
They brought forward to us the very practical scenario of two people working on the back of a fishing boat one being self-employed and contracting his or her services to the fishing company and the other working directly for that fishing company. As they were hauling the nets in those people faced exactly the same risks but they were on a completely different payment regime. The only reason for that was an artificial barrier based on the business structure that they were involved in. The reason behind that of course as I have already outlined was an artificial barrier put in place by the last National Government to ensure that the insurance industry could pluck off the profitable bits of the Accident Compensation Corporation and leave the rest of it behind. 
In my previous role before I came to Parliament I was actively involved in the issue of health and safety—training health and safety representatives in the workplace. Certainly my knowledge of working with people in the workplace doing the work and looking after workers’ interests in health and safety is that they clearly understand that the risks faced by working people in the workplace are the same whether they are self-employed or directly employed by the company. People who are heavily involved in this work in the real world—in the workplace—understand the good sense of this bill that is before the House at the moment. 
I want to take the opportunity to make a comment about probably the most worrying submission that came before the select committee when we were considering this bill. 
Darren Hughes 
: Who was that from? 
SUE MORONEY 
: The submissions I am concerned about came from those representing employers. They talked about the fact that the levies under this new regime would come down to such a low level that it would not be desirable for employers to go into the scheme set up by this Government. The new regime with lower levies actually gives employers an incentive to have certain health and safety systems in place. I felt that that was a very strange position to come from those purporting to represent employers. They were essentially telling us that even though they knew those very good programmes brought down the injury rate in their workplaces and improved morale and attendance and productivity in their workplaces because this bill brought in great stability and lower levels of levies they might choose to go off those programmes even though they knew those programmes had a very positive spin-off for their workers and their workplace. 
I think it is important we keep an accident compensation scheme in place. It is a fair scheme it is a simple scheme and it ensures that there is a clear link between injury prevention and the levies that are paid. This bill ensures that it makes a lot more sense. Irrespective of whether people are self-employed or employed by others the risks they face—because of the industry they are associated with—will be reflected in their levies. 
The last thing I want to say in speaking in the Committee stage on this bill is this. In the select committee we got a lot of information from the officials on exactly how the legislation would work—there were pages and pages and pages. It was very interesting to note. What we got before us was exactly what industry would end up on what levy and how long it would take for the transition to go through. I was interested that all that the National Party members particularly the one opposite who is interjecting a lot at the moment—David Bennett—really wanted to do was to go straight to the page that indicated the businesses they personally owned and to have a look at what the levies were for their personal businesses. They asked questions of the officials based on the industry that they owned businesses in. They very quickly went fairly quiet because they realised that this is good for them and that their own businesses will benefit from the reduction in levies that will happen under this bill. I finish on the note that the Labour members certainly took into account the effect this bill will have on all New Zealand workplaces all employers and all self-employed people. I commend this bill. 
DAVID BENNETT (National—Hamilton East) 
: 
 I say in relation to the speech from that last member whose implications were most dishonest and untrue that this legislation is a scam for New Zealand business a scam for employers and a scam for the self-employed. Let us look at the average rates. The average rate for employers is about 86c; the average rate for self-employed people is $2.03. Those are the average rates. There is a difference between the rates for employers and the self-employed. There is a big difference; it a real difference. 
The Government has put this bill together for one reason: so that it can hoodwink employers during the next election campaign. It is using this bill as a bribe so that it can go into the next campaign saying that it has reduced Accident Compensation Corporation (ACC) levy payments for employers and in some cases for the self-employed as well. That is all the Government is up to. This bill has nothing to do with being good for business and it is not about reforming the ACC; it is here so that the Government can go into the election saying that it has done this for business and for self-employed people. Should we expect that from this Government? Yes. It has stolen from us once in order to win an election; it will steal from the levy reserves of employers and the self-employed in order to try to win another. But it will not work this time. Labour can steal but it will not win the election. 
This is another such case and the Minister for ACC Ruth Dyson has admitted to that in relation to the reserves. The Minister said in the second reading debate that if as some had requested all the excess reserves in the employers’ account were refunded to levy payers in 1 year then employers would experience significant increases in levy rates in years to come which would defeat the object of levy stability. The objective of levy stability is to get this Government through these 2 years—through another election campaign. Then it will rack up those rates. That is what the Minister was saying. She admitted that is what the Government intends to do. If people do not agree that is the case they should look at the numbers. 
Let us look at the numbers that have been presented. For example the levy in relation to shearing will go from $3.79 before the merger to $4.18 after the merger has gone through and all the rebates have been given out. That means that in 2 years’ time once all the rebates have been given out shearing employers will have to pay $4.18 when they pay $3.79 now. That is an increase. Let us look at the rate for ocean and coastal fishing which will go from $2.43 to $4.31. It will increase under this Government in 2 years’ time. After the election employers will have to pay the real rate that this Government wants them to pay. Here is another one: the rate in relation to timber dressing and wholesaling will increase from $1.13 to $2.74. That is a huge increase—more than double in 2 years—just so this Government can win an election. Let us keep going. Here is another one: the rate in relation to non-metallic minerals will rise from $1.58 to $1.74. Those increases in cost will all occur under this legislation. 
There is a provision in the legislation that states that levies cannot increase by more than 25 percent for a business in 1 year. Well that sounds all right but what kind of business would want to experience a 25 percent increase anyway year on year? None. The Government says that 8 percent of employers will have a levy increase of between 5 and 45 percent. A levy increase of 45 percent is huge and it is not being done in the best interests of New Zealand business. All of this is so that Labour can go into an election campaign saying that it has kept the levies down for employers—and then a year later it will whack them up again. At that point the reserves will be exhausted and employers will have to face the huge levy increases that this Government proposes. It is not only employers but some self-employed people as well who will have big levy increases with 17 to 20 percent increases in some cases. This is unfair legislation. It will increase the employer rates and the self-employed rates in some cases. For example the sports levy will increase by 17 percent the equestrian rate will go from $4.83 to $5.65 and the rugby league rate will go from 75c to $1.01. 
What then can we do about this legislation? New Zealand First correctly stated that after privatisation there was a 6-month trial period for the new legislation that National tried. New Zealand First said that legislation had worked better than anyone had expected and it did not want to change it. It wanted that trial to continue. Rodney Hide said that this Government has failed because it has stayed with its ideological position. It has not actually looked at what is good for the ACC or for employers or the self-employed. It has looked just at establishing what is a State-run monopoly for Labour and its supporters the unions. That is all this legislation is. It is a payback for the unions and it is another bribe going into an election year from this Government. 
This legislation was put through in an unusually short period of time. The reason is that when Labour goes into the next election campaign this legislation will be all up and running. The timing has nothing to do with consultation. This legislation is being passed so that next year Labour will go into the election campaign saying that it has reduced levies. This cynical Government is trying to use people’s own money for its own purposes; it has been proven to do that. It is a Government that once again is proving what it wants to use the ACC levy for. The ACC is just another cash cow for this Government to use to try to win an election. Shame on this Government! 
DARIEN FENTON (Labour) 
: 
 It is a great pleasure to rise in the Committee stage of the Injury Prevention Rehabilitation and Compensation Amendment Bill. The part we are discussing Part 1 is the core of the bill really. It is all about making Accident Compensation Corporation (ACC) levy rates fairer for the self-employed and the employed. I did notice in the last member’s speech that there was no mention of the people who actually do the work. He did talk an awful lot about employers and business but there was no mention of the workers. 
I think it is very interesting actually because I noticed in one of the many hysterical press releases put out by Paul Hutchison the former National Party spokesperson on ACC one particular quote that David Bennett has just repeated: “It is unfortunate that under Labour people in New Zealand do not have a choice of insurer when it comes to cover for personal injury. Instead the Labour Government and their union mates heavily influence a monopoly model that attempts to socialise insurance rather than apply basic principles.” Do members know what is interesting? The National leader John Key is meeting with the Council of Trade Unions next week. What will he be saying? He is seeking to be mates with the unions as well! I think that is just hilarious. Will he own up to them that the plan of the National Party is to re-privatise accident compensation? 
Getting back to the bill we see that it enables the merger of the ACC’s self-employed work account and its employers’ account which makes practical sense and creates a fair and sustainable accident compensation scheme that emphasises injury prevention while at the same time minimises the social and personal impact of injuries. As others have said the only reason the accounts were separated originally was privatisation. The self-employed work account was established to support the creation of the private insurance market for employer and self-employed workplace injury cover in 1999. 
I saw firsthand that failed experiment. As everybody knows I was a workers’ representative and I am very proud of that. There is nothing about the work I have done and the path I have chosen in the past that I am not proud of. I saw firsthand the impact on workers of that failed experiment. That is why it concerns me that the Opposition never ever talks about the workers in this situation. The National Government created a shambles and it created a situation whereby the only driver of the insurance scheme was profit for the private sector. It is no wonder really. Of course when Labour came into power it had to pick up the pieces. This Government has ensured that privatisation is not on the agenda any more and I thank this House for it. 
The privatisation of accident compensation did not work. It did not mean a better service. It did not work for workers and it did not work for employers. This bill builds on the changes the Government has made since it was elected in 1999. We have returned accident compensation to a full social insurance scheme—and we are proud to say those words “social insurance scheme”. [ 
Interruption 
] David Bennett should learn to spell them. We are rejecting the costly private insurance model introduced by National. 
 We have kept ACC levies down built a robust financial scheme and reintroduced lump-sum payments for permanent impairment. This Government has improved rehabilitation and launched partnership programmes with approved employers. It has rewarded employers with levy discounts for good injury-prevention practices and improved access to compensation for seasonal and casual workers and for people on paid parental leave. 
It is fascinating to me that in this debate the National members are showing so much concern for workplace injuries. When they had a chance to do something about workplace injuries they abolished workplace health and safety representatives and they changed the whole health and safety system so that the number of injuries went through the roof. Yes they are concerned today but what would they do? Everybody knows that if National ever got the chance it would privatise accident compensation throw health and safety to the market and throw workers to the wolves. 
Evidence now shows—and it is the reason for this bill—that self-employment as a business structure in and of itself does not have a significant bearing on risk when one compares like with like for example self-employed farmers with employee farmers. However I must say that I have never ever heard of a self-employed All Black or rugby player as a member referred to formerly. Self-employed injury claims tend to be similar to that of small and medium-sized enterprises. Under the current system levy payers are allocated to the work accounts on the basis of business structure which may result in differing levy rates for businesses carrying out similar activities that entail similar risks. 
Small businesses have often cited levy instability as creating problems in their business cost planning. The Labour-led Government has acknowledged this unfairness and the bill removes this inequity. Merging the accounts will ensure that ACC levies paid by businesses are fairer as they are based on injury risk associated with the activity undertaken rather than the business structure. It will remove the arbitrary distinction and corresponding levy differentials between self-employed people and employees in the levy risk group level. Merger will also allow greater focus on reducing the risk of injury based on industry and occupational type rather than on the business structure. It will provide a much clearer focus across industries and enterprises for injury prevention and health protection. 
This bill is consistent with the principles of fairness. It provides a more equitable system and a better focus on injury minimisation. Merging the accounts will also improve levy stability particularly for self-employed people as the cost of injuries will be spread over a larger and more stable earnings pool. This is a good bill and as a member of the Transport and Industrial Relations Committee I am proud it has come back to the House. 
Dr JONATHAN COLEMAN (National—Northcote) 
: 
 We have heard the Labour members talk a lot about fairness today and in that spirit I know they would like to acknowledge the landmark historic policy announced by John Key today whereby the 5 percent cap on charitable donations by private businesses is going to be lifted enabling companies to get in and do something about the underclass in this country. The Minister in the chair the Hon Ruth Dyson is a fair Minister and I know that she would want to acknowledge that. I would say that the Labour members opposite are probably a little bit disappointed that this policy has not been put forward by their somewhat tired Government. It is ironic that on the same day as this policy is announced the Government is trying to force through a bill that will punish the very businesses that employ people who under this policy will be in a position to give a higher level of donation to the charitable sector. That is the irony of what is happening here today. 
The irony too is that we have heard four or so speakers from the Labour side of the Chamber who have been very concerned about the rights of self-employed people but not one of those members has ever been self-employed. 
Darien Fenton 
: That’s not true. 
Dr JONATHAN COLEMAN 
: I am sorry Darien has been. We have a couple of freelance unionists on the other side! Getting back to the issue of fairness I point out that fundamentally this bill will punish employers. Employers will have the risk premium amounts they have paid in over the years cross-subsidising the pool of self-employed people. The Minister spoke about fairness. How can we say that is a fair situation? It flies in the face of actuarial common sense because actuarial sense tells us that insurance premiums are directly related to risk—the higher the risk the higher the premium. The Labour Government is telling us that self-employed people carry a higher risk than the employed as they tend to cluster in high-risk occupations. Frankly that shows just how out of touch the Labour Government is with the reality of self-employment in New Zealand today. The self-employed workforce is in the main made up of white-collar professionals—people in areas like information technology people who are behind desks people in the service industry— 
Hon Harry Duynhoven 
: General practitioners! 
Dr JONATHAN COLEMAN 
: General practitioners—not people who are in high-risk professions. This is antiquated out-of-touch thinking. 
At the core of the Labour Government’s pushing of this bill is that it wants to super-reinforce the Accident Compensation Corporation against any threat of competition in the future. I ask Government members what is so wrong about competition in accident compensation. Despite what Darien Fenton the list member and unionist said when National was in Government and accident compensation was privatised accident rates went down and premiums were lower. Competition was good for business; competition was good for everybody. 
Under this bill as David Bennett said we are in effect seeing an election bribe. One has only to look through the table to see that premiums will be kept down for about 18 months to 2 years—just until about the time of the next election—then they will soar up again. So the Government is trying to politically neutralise this as an issue. 
As Paul Hutchison said earlier the legislation provides for a blatant grab from the employers’ account. The Government should be paying back that $500 million to the employers. The employers are the people who are helping the workers; they are providing jobs and keeping the economy going. Why would we want to constantly punish employers through philosophy and the practical implications of policies such as this? 
The other thing this bill will do is make the Accredited Employers Programme extremely unattractive. We know there is a philosophical motive for that. We know that the Government knows—and it is what it wants to happen—that employers will opt out of the Accredited Employers Programme which will add more cost to the new merged accounts and even greater cost and liability to the residual account. 
So there we have it. In the interests of fairness the Minister did say that she was very impressed with Dr Hutchison’s amendments. Basically what is wrong with an amendment that asks for greater transparency in the audit programme? How could one possibly object to that? Employers and the self-employed have a right to know how their levies are set. We oppose this bill. It is bad and unfair legislation. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 Thank you Mr Chairperson for the opportunity to speak again on this very unfortunate Injury Prevention Rehabilitation and Compensation Amendment Bill brought up by the Labour Government. 
I want to point out a few things I was concerned about when I heard the list member Sue Moroney trying to put the record straight. Unfortunately she distorted the record. After all the situation is that in 1998 the employer and self-employed accounts were separated and the separate accounts came into being. What happened at that time was that injury rates went down. Workplace safety management increased dramatically early rehabilitation was cemented in as an absolutely vital part of the accident prevention system in New Zealand and premiums went down. 
I see the Minister in the chair the Hon Ruth Dyson is looking quite astounded. She should take note because these changes were the catalyst to make accident compensation much more efficient and it has worked. It has worked only because of the experience of 1998. It is now starting to deteriorate as under the Labour Government the Accident Compensation Corporation (ACC) monopoly gets fatter and lazier as one would utterly predict. It is very very important that Sue Moroney’s somewhat distorted history is exposed. It was the changes in 1998 that reversed some of the problems under the Accident Compensation Corporation into a virtuous cycle of change that has improved accident compensation over the last 5 to 6 years. 
It is now indeed time to resist a bill such as this. My colleague Dr Jonathan Coleman was absolutely correct in pointing out the dangers of the erosion to the affiliated providers or partnership programme. This is one of the most successful aspects of the accident compensation scheme in New Zealand and it is one aspect that does not happen to be about the monopoly. In this partnership programme businesses manage themselves and as I say it has been highly successful. 
However a deplorable aspect of this bill is that it manipulates the account so that the attractiveness of the partnership programme has been diluted. Substantial funds are being transferred across and the residual levies will go up punishing and penalising those who have gone into the most efficient aspect of accident compensation in New Zealand as we know it today. 
As well as that the Government has decided to increase the stop-loss margins from about 150 percent to 200 and 300 percent—another reason why the partnership programme is being eroded. Why is it being eroded? I believe it is because the Minister does not like the concept that individual businesses can manage their accidents better than the ACC monopoly. 
I would like the Minister to get up and explain to me why it is that third party administrators tell us that they are able to achieve much greater efficiencies than ACC. For instance one of them said it managed 1350 entitlement claims for a range of accredited employers with an average life cost of $5200. This compares with ACC’s average cost of $13700. Under this third party administrator the average time off work is about 4 to 5 days; under ACC the average time off work is over 30 days. 
Another third party administrator claims an even better record than that in the order of about $3500 compared with $30000 for the corporation and similarly much much less time off work than under the current ACC regime. 
It is regrettable that under this merger legislation the partnership programme is being eroded. This is happening because the Labour Government cannot bear the success of the private sector. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 After listening to that speech it is no wonder that the insurance industry fought so hard to get a new spokesperson for accident compensation. After all the money it paid and after writing National’s policy that is what the industry got—Dr Paul Hutchison. Now the industry will be thinking twice about that move and having said: “Oh he’s so hopeless that we have to get a new one.” because it now has Pansy Wong. 
The poor old insurance industry wrote all the National Party’s policy and it is a pretty simple policy—“Just privatise the lot give us all the cream and you keep the rubbish.” Anything that costs a lot of money the industry wants the State to look after and anything it can make a big profit out of it will have. One would have thought that Dr Paul Hutchison would at least be able to get up and espouse that sort of policy on behalf of the industry and do it with some sort of panache but no even the industry could see that it had an idiot on its hands. So the industry said: “Please” to whoever the leadership of the National Party was that day “give us another one.” And look what it got—it got Pansy Wong! 
So the poor old private insurance industry listening to this debate must be in despair at the quality of that sort of performance from the other side. Those members do not bother to read even the bill let alone any explanatory notes that are given to them. They do not bother to try to understand that it was their woeful attempts to privatise that set this account up in the first place. 
Dr Paul Hutchison has yet to explain why that professional rugby league player he was talking about in his speech should get a different premium when he runs on to the field dependent on whether he happens to be self-employed or a business person who set himself up as a company—an individual. Players are not tackled any less hard because they wear a jersey that reads: “I’m self-employed; please don’t tackle me hard.” They do not go on to the field with any less risk. Dr Paul Hutchison thinks that that is OK for those players on that field or in the case of people on the back of a fishing boat or a plumber or any other people—just because they happen to have a different business structure. Just because they decide to do it this way rather than the other the National Party says: “We don’t care about you you’re self-employed you pay more than people who’ve gone to the trouble of setting themselves up as a company.” 
Where is the logic in that? No wonder the private insurance industry is in despair! Those members cannot get through their thick heads that the risk is exactly the same for that rugby league player running out for the Warriors. It does not matter whether he is self-employed or a company in terms of the way in which he structures his affairs; he will still be tackled as hard and he is still going to get a broken leg if he happens to be tackled in the wrong way. So I ask Dr Hutchison who went to university for many years and obviously was an educated man once why that self-employed rugby league player should pay a higher premium than his mate playing next to him who passed him the ball if he happens to have set himself up with a company structure. 
Where is the logic in that? Where is the logic in that for the National Party? It is just plain ideological nonsense. It is just plain ideological nonsense that saw National privatise accident compensation in the first place. It said to the private insurance companies that were paying them to do this: “Oh OK that’s too much risk for you guys. We’ll take it off your hands and we’ll insure it for you as the State.” That is the truth of why this was set up. The National Party members can sit there and make all the silly speeches they like but they do not like to be reminded of their past and what they would do again in the future if they were ever let loose again on this side of the Chamber as a Government. 
They would do it again because they are saying so over and over again. They can come down and make speeches about having charity—I am not sure what 5 percent charity has got to do with accident compensation; maybe they are going to make all those self-employed people a charity as well as they did last time when they said to the insurance industry: “Take the profitable end of the business and we’ll look after this.” 
If those members had read the explanatory note before going to the select committee and coming to this Chamber they would see that the reason for the high injury rates was the jobs that people were doing—jobs such as forestry fisheries and farming—not because of the nature of the way in which they set themselves up as a private person on a self-employed basis rather than as a company. It was the job that one was doing. It was the risks people were confronting in those jobs. So poor old Dr Hutchison who was sacked from his job—and no wonder—has not figured that out yet. And there have been many many spokesperson’s roles along the way. 
PANSY WONG (National) 
: 
 The only reason I am taking this call is to raise some alarm about the chairperson of the Transport and Industrial Relations Committee who chaired the passage of this bill through that committee. It is no wonder that every other party apart from National has been hoodwinked by that person. Firstly he is lazy. Every time he stood up we got the same speech apart from the names. That is laziness. Secondly I want that member—the chairperson of the select committee—to take another call to explain whether he cares about the self-employed. How is he going to explain to the self-employed members of the Meat Industry Association that if the merger does not go ahead next year they will pay $6.50 to $7 per $100 but that if it does go ahead they will pay $8.83? But the situation gets even better. When the merger of the two accounts goes ahead—and we should remember this—the self-employed are to pay $8.83 but I ask members to guess how much the employer will pay. [ 
Interruption 
] I thought the member had read all the papers. The employer will pay $4.69. So the self-employed will pay almost double the amount that employers will pay. 
The lazy chairman of the select committee is trying to tell us that we did not study the papers. We studied the papers from top to bottom. It is no wonder that he and the Minister hoodwinked the whole Labour caucus; its members are so lazy that they never read a word of the papers. I would like that member to explain to the poor self-employed people why after the merger they will pay $130 million extra in total. If the merger goes ahead without a rebate employers will pay only $80 million. So for the next 2 years the poor self-employed people have to pay an extra $100 million. 
The National Party under the leadership of John Key is charitable. We need only to look at what our leader announced today about lifting the cap on donations. We are going to encourage people who are charitable. We will support them—unlike the Labour members on the other side of the Chamber. They will punish the hard-working self-employed people who in the next 2 years will pay $100 million extra in their levies—and the chairperson of the select committee got up and said that Labour looks after hard-working self-employed people! I would hate to think what would happen if it stopped looking after them; it would probably charge them an additional $500 million. 
So the challenge in terms of Part 1 is for New Zealand First and the Green Party to explain to their supporters why they should support the Labour Government’s move to impose a surcharge of $100 million on the self-employed for the next 2 years so that they can pay higher levies when compared with employers. I think it will be extremely interesting to see what this socialist Government will actually do to those vulnerable self-employed people for the next 2 years—$100 million. I think Labour members had better be prepared to front up and be answerable to all those irate self-employed people if this bill goes through. National will make sure for the next 2 years that they know who has punished them for being hard-working self-employed businesses. 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Noes 48 
New Zealand National 48. 
Motion agreed to. 
The question was put that the following amendment in the name of Dr Paul Hutchison to clause 11 be agreed to: 
to insert after section 175 in clause 11 the following new section: 
175AIndependent auditing of proposed premiums 
ACC proposed premiums and the rationale for such premiums must be audited by independent third party actuaries yearly (and the result made public) to ensure transparency in the premium-setting process. 
A party vote  was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 48. 
Noes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the following amendment in the name of Dr Paul Hutchison to clause 11 be agreed to: 
to insert after section 175 in clause 11 the following new section: 
175BProvision of forecast statement of financial performance 
ACC must provide yearly a forecast statement of financial performance for the next 5 years to allow levy funders to analyse current premium-setting performance against projected outcomes. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 48. 
Noes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Noes 48 
New Zealand National 48. 
Part 1 agreed to. 
Part 2 Transitional provisions 
PANSY WONG (National) 
: 
 In Part 1 we established that the law sets out very clearly that the Accident Compensation Corporation (ACC) would impose a levy to make sure that the employers’ account and the self-employed work account are fully funded. But the history of the employers’ levy account is that ever since 2003 the surplus in that account which started with $108 million increased. In 2004 it was $300 million in 2005 it went up to $500 million and in 2006 it was $757 million. I think that is a clear demonstration that the ACC has always played a conservative role in terms of the rate at which the levy was set at a point just in case it made a mistake in setting it. That was why my good hard-working intelligent colleague Dr Paul Hutchison asked for transparency and openness by getting an independent person to look at how the ACC set those levies. 
This part Part 2 is about the merging of the two accounts and combining the surpluses—estimated to be about $600 million in the employers’ account and about $60 million in the self-employed work account. Any person who thinks logically about ACC policy would eventually say that ACC will be quite comfortable to have a surplus margin of about 11 percent. But with the merging of these two accounts—one of which carries 63 percent surplus and the other 20 percent surplus—it says it would quite like a combined margin of 53 percent. 
The problem of simply adding those two together and arriving at this average would mean that for the next 2 years those who are self-employed will be penalised. They will have to come up with $100 million extra to bring the 20 percent margin up to 53 percent. Then the employers will also be penalised because they have a margin of 63 percent and the ACC refuses to bring it down to 11 percent. But the irony is stated in the official paper. By the year 2010 it would like to bring down the surplus to 11 percent. It would quite like the surplus sitting at a high amount just in case something happens in between and they might call on this high surplus. 
Firstly I encourage ACC management and officials to be confident of their ability. They have shown in the past 4 years that the surplus amount has kept growing. They should stop holding on to other people’s money and compounding the problem with a surcharge of $100 million for the self-employed for the next 2 years. Self-employed people—for example people in the meat industry—are saying that they will suddenly face a hefty bill in the next 2 years. As a small pool of people they have to front up with an extra $100 million while the ACC has every intention of reducing that surplus margin in about 4 years’ time. 
This legalised stealing simply does not make any sense. That is the practice I describe—legalised stealing of money that was paid in by the employer on behalf of their workers’ earnings or by the self-employed. So I have moved a very simple amendment that states that before the merger the surplus margin of the employer’s account should be adjusted down to 20 percent. The impact of this amendment would be that the self-employed would not be penalised by having to pay a surcharge of $100 million. Then—rightly so—the employers who have contributed on behalf of their workers’ earnings in the past— 
Hon RUTH DYSON (Minister for ACC) 
: 
 I speak to Part 2—as I believe we are required to Mr Chairperson by your instruction to the Committee of the whole House—unlike the member who just resumed her seat Pansy Wong. She might have been talking about something entirely different. 
Part 2 has just three clauses which cover the transitional provisions. There are two amendments to clauses 14 and 15 proposed by the current Opposition spokesperson on ACC Pansy Wong on her Supplementary Order Paper. If one were to go back to the primary purpose of the Injury Prevention Rehabilitation and Compensation Amendment Bill one would understand the transitional provisions. The purpose of this bill is to ensure that people in the paid workforce have their risk assessment based on their exposure to risk rather than on the company structure or business arrangements they happen to be set into. To ensure that the merger of the accounts that is required to achieve that fairness—so that two people doing exactly the same job have their levy assessed on the basis of their exposure to risk rather than on their company structure—is a smooth amalgamation we have the transition periods outlined in clauses 14 15 and 16. So unless one believes that people should be assessed for risk on the basis of their company structure—which is what I presume Pansy Wong might be trying to say although it was not really clear—then I think people should support these three clauses unamended. 
I just want to refer briefly to the comment that Pansy Wong made in her final contribution in her last speech which was in reference to Paul Hutchison’s amendments. Frankly if information is available under the Official Information Act then I would recommend to the current and former—recently dumped—Opposition spokespersons on ACC that they should use its provisions. When I held that spokesmanship in Opposition I used Official Information Act provisions a lot and they were very worthwhile. I do not think I will give them as much pleasure as Murray McCully gave me but I would recommend they use the provisions of the Official Information Act. That information is available. 
My final point is in response to Pansy Wong’s Supplementary Order Paper containing the two proposed amendments to these clauses. Firstly she should recognise that the volatility of levies is something the entire House should be anxious about. Business people—whatever their company structure—like to have some certainty. That is why I think the information about the levy setting is important and it was a valuable contribution to the debate. But if we have no smoothing policy at all then we will get back to the good old bad days when people had no idea from one year to another what their levy was likely to be. That is a totally unsatisfactory situation. 
Mention has been made of the Accredited Employers Programme. I challenge the National Party to front up before the end of this debate in the Committee stage to what its actual policy is on the Accredited Employers Programme. In my view it is a good programme. We put it into the 2000 legislation because we believed it was a good programme. It gives opportunities for employers and unions to work together in genuine partnership as outlined in the legislation to reduce injury incidents within the workplace and to work together to improve safety in the workplace. Paul Hutchison said it was the best thing since sliced bread. I do not think it is as good as that actually but I think it is very good despite the concerns I have. 
David Bennett—I think he is a list member from the Waikato—said the Accredited Employers Programme was a sham. That is an outrage. If accredited employers do not know that that was what he said—although it is on the record now that David Bennett from Waikato said the Accredited Employers Programme was a sham—then I will make sure they understand that that is his view. 
David Bennett 
: I raise a point of order Mr Chairperson. The member is misrepresenting what I said. 
The CHAIRPERSON (H V Ross Robertson) 
: I would like the member to have a look at Speakers’ ruling 36/5. When it comes to misrepresentation you do not raise points of order now. You raise them at the end of the speech. 
Hon RUTH DYSON 
: So with those concluding comments I thank the members for their contribution over the next little while on these three single clauses. I urge members to vote against Pansy Wong’s Supplementary Order Paper. 
PANSY WONG (National) 
: 
 That is a real concern is it not? I gave the Minister plenty of notice when we were debating Part 1 of my specific concern about the reserve margin and of an amendment to adjust it. I will give her the benefit of the doubt and assume that she actually understands what the issue is all about but refuses to debate it. It would be worse if she was hoodwinked by the officials and did not even attempt to address it. The Minister had no answer and then resorted to personal attacks on my hard-working colleague from Hamilton—the hard-working diligent David Bennett—who won the seat and is absolutely loved by the people of Hamilton. Good on him! We are very proud of him. 
The Minister resorted to personal attacks but that will not deter me from asking her to look at her own official’s paper which stated categorically that the 150 percent margin of the work account as at 1 April 2007 would be progressively reduced in 2008 2009 and 2010 towards the target of 111 percent. That is the stated position of her officials. Yet at the same time the Minister is asking all the other parties to support her in imposing a surcharge on self-employed people that will increase their margin from 20 percent to 53 percent. It simply does not make sense for the Government to impose a surcharge of an additional $100 million and then in a few years’ time to bring the rate down again. That defies logic. 
First of all let me acknowledge United Future’s support for my amendment. It is a sensible party that can exercise its own independent thoughts and it is on the side of the self-employed. I will make sure the self-employed are aware of United Future’s support for the amendment. New Zealand First and the Green Party will just have to face up to self-employed people who will be irate when they receive their bills in the next 2 years. 
Second I propose the amendment because we feel outrage particularly at this point about the legislation the Government wants to pass to do away with consultation. Actually that is telling. The Minister says that if anybody wants information he or she can make a request under the Official Information Act. But why should anybody have to make a request under the Act? Why can the Minister not simply make the information available as public information? I thought the Labour Party believed in open government and consultation. What is happening is that the Government is legislating to do away with consultation. It does not want to hear from self-employed people because it knows what would happen. Labour members know that those people will be outraged when they are asked to pay a surcharge of an additional $100 million. Labour members do not seem to understand that hard work produces the incomes of those people. They think nothing about penalising people to pay that money to a monopoly organisation “just in case something happens”. We have bad news for the Labour Government: self-employed people understand what the Government is trying to do to them. They know it will penalise them in the next 2 years for $100 million without consultation. That will add insult to injury. 
Once again I acknowledge that United Future is the only party so far that has indicated it will exercise its own independent thinking and support my amendments. It believes it is a party that stands up for the self-employed and it does not think the Government should penalise those people with a surcharge amounting to $100 million for the next 2 years just so that a monopoly organisation can feel good. We want the self-employed hard workers and employers to feel good about themselves not a monopoly organisation. 
GORDON COPELAND (United Future) 
: 
 I rise to take a call on the amendment in the name of Pansy Wong to clause 14. I do so with some experience of risk management ratios from my business background. The facts of this matter are fairly straightforward. The Accident Compensation Corporation (ACC) has set itself a risk management ratio of 111 percent. In other words its assets at any given point in time will exceed its liabilities by 111 percent. However the present situation according to figures supplied by ACC is that the employers’ account presently has a cover of 163 percent. In doing the sums quickly in our mind we find that this is 52 percent higher than the risk ratio established by the corporation. Pansy Wong’s amendment very reasonably suggests that 163 percent ratio figure could be reduced by way of a refund to a ratio of 120 percent which is still 9 percent higher than the self-imposed risk ratio that the board of ACC itself adopted. 
When this matter was brought to my attention by the member Pansy Wong I was quite staggered. I have done the sums. The reduction that Pansy Wong is seeking amounts to $468 million. The plain fact is that employers have been already overcharged that amount and more. I find that absolutely outrageous. The employers of this country have been overcharged levies by an amount way over $500 million. That money should never have been collected in the first place because the risk management ratio was already satisfied and this figure is well in excess. Therefore the only just thing to do in those circumstances is to give the money back. The money does not belong to the ACC; it belongs to the ACC only if it comes within the corporation’s own defined policy of risk management. 
I heard briefly the statement made by the Minister in the chair Ruth Dyson about ebbs and flows and I can understand that. But I say to the Minister that it is more than an ebb and flow when the ratio goes from 111 percent to 163 percent and when the corporation is collecting more than $500 million extra. That is not an ebb and flow. That in my opinion amounts to a deliberate concerted campaign of overcharging employers over an extended period of time. It is wrong. It should stop. The money should be given back. It does not morally belong to the Government in the first place. It belongs back in the pockets of those employers. 
Therefore as a caucus we had little hesitation in agreeing to support Pansy Wong’s amendment because it is the right thing to do. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 It is indeed salutary to hear Gordon Copeland from a party that supplies confidence to the Government point out that the Government should give this substantial amount of money back based on principle. He points out that the Accident Compensation Corporation (ACC) has recommended a risk margin of 111 percent and that at present it is 163 percent. My colleague Pansy Wong has an eminently sensible amendment in that she suggests a risk margin of 120 percent which is above that recommended by ACC. Gordon Copeland quite rightly suggests that the Labour Government should give this money back to the employers. The employers have paid it in good faith. They have paid it thinking that the employers’ account would be fully funded but it has gone well over that level. 
It is unfortunate that this particular phrase “give the money back” has such a familiar ring when it is applied to the Labour Government. I will not go back to the credit card again but let us just say for the record here again we have this mischievous Labour Government taking money from employers in the private sector and using it for the Government’s own purposes and for its own ideology. 
It is absolutely appropriate that we speak about the principles of this particular issue. We heard the Hon Mark Gosche talking about a rugby team and how one person should not have a premium different from another person’s. I absolutely agree with that. Premiums should be risk rated individually. This Government wants to pool the lot of them defying basic principles of insurance. It is unfortunate we cannot get it into the thick skulls of this Labour Government including the chairman of the select committee. This is the chairman who insisted that submissions to the select committee close after 2 weeks. He is the man who might talk about democracy but no he wanted to rush the submissions through quickly. In fact the time for submissions might have been even less than 2 weeks. There is absolutely no question that a lot of employers out there very much wanted to submit on this bill but Mark Gosche the chairman of the Transport and Industrial Relations Committee prevented them from doing so by instructing that submissions would close so fast. 
One other principle is extremely worrying about this bill and that is the transitional provisions. They are ominous and unprecedented. In the Labour Government’s hurry to get this legislation through the levy consultations for 2007 and 2008 will be bypassed. The Labour Government says: “To hell with the levy consultations! Forget about democracy and forget about listening to the employers and the self-employed. We will just bypass the levy consultation process for the convenience of merging these two accounts.” Talk about principles! 
I say to the Hon Mark Gosche the chairman of the Transport and Industrial Relations Committee that he has certainly not displayed principles in terms of allowing time for submissions to be heard in a democratic way through this process. Certainly when we come to the levy consultation process we see that he has bypassed normal precedent. 
Hon RUTH DYSON (Minister for ACC) 
: 
 I will take just a brief call in response to some of the comments made by Gordon Copeland who without exception makes well-considered contributions to debates. In my view he has omitted quite a major consideration in his deliberation of and support for Pansy Wong’s Supplementary Order Paper 91. In any one of the accounts there will be a considerable investment opportunity because the amount of money that is required to be collected in levies each year is not just to cover the cost of a claim for that year; it is to cover the cost of a claim for the life of the claim. We know that with some serious injuries tragically the life of that claim could be 30 or 40 years. So more money is collected in levies in the accounts in any 1 year than is required to fund the cost of the injuries in that year and that money is invested. 
So what should the money that has been acquired from sensible—or indeed wise—investment be used for? Should that money go back to the levy payers in that account? Or would it be better used for future investment in order to reduce the overall levy in that account because of the return from the investment? Or indeed should it be used for increased investment generally so as to give advantages to the scheme in areas such as injury prevention? 
Although the member’s comments were cute and might be quite good in a debate about a number of other areas that we have debated in this Chamber I believe that the member is doing the debate his party and this Committee a disservice by saying that it is an outrage that the employers’ account should not have that money paid back without his giving in the debate any consideration of or recognition to the amount that has been accrued to that account and all the other accounts from wise investment. In my view first of all to take away a large percentage of that money from employers’ liability now for the possible increased cost of claims that have already been incurred by the scheme and secondly to reduce the investment opportunity would be to do the entire scheme a disservice. 
The other implication of the amendment from Pansy Wong’s Supplementary Order Paper would be the lack of parity between the Accredited Employers Programme and the employers’ account and that should be a major concern to every member in the Chamber. If the levies for employers were artificially dropped because of a combination of overfunding from the amount that has been accrued and the returns from investment and the employers’ account became very attractive to accredited employers because there was no disadvantage financially to them they could join the employers’ scheme which would mean we had an increased number of employees being covered by the employers’ account without any contribution being made by accredited employers to that account at all. So not only are the potential advantages to the scheme of the investment money that would accrue from that amount being left in being ignored but an opportunity is also being provided for the current accredited employers who have made no contribution to the employers’ account to benefit from a one-off windfall. In my view that is not a fully considered position and I say that with the greatest of respect to the member whom I believe has given Pansy Wong’s Supplementary Order Paper some consideration—but in my view not full consideration. It would do a disservice to the overall levy stability it would do a disservice to future employers and employees because of the lack of opportunity for investment returns and it would give a windfall opportunity to accredited employers who frankly on this occasion do not deserve it. 
The question was put that the amendment set out on Supplementary Order Paper 91 in the name of Pansy Wong to clause 14 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 51 
New Zealand National 48; United Future 3. 
Noes 68 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; Progressive 1; Independent: Field. 
Amendment not agreed to. 
The question was put that the amendment set out on Supplementary Order Paper 91 in the name of Pansy Wong to clause 15 be agreed to. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 48. 
Noes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Noes 48 
New Zealand National 48. 
Part 2 agreed to. 
Schedule 
The question was put that the amendments set out on Supplementary Order Paper 89 in the name of the Hon Ruth Dyson to the schedule be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to. 
Ayes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Noes 48 
New Zealand National 48. 
Amendments agreed to. 
A party vote was called for on the question  
That the schedule as amended be agreed to. 
Ayes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Noes 48 
New Zealand National 48. 
Schedule as amended agreed to. 
Clauses 1 to 3 
DAVID BENNETT (National—Hamilton East) 
: 
 Today we have heard a series of statements made by the Minister in the chair the Hon Ruth Dyson in which she indicated a complete faith in the comments made by individuals—Paul Hutchison and Gordon Copeland—and in which at the same time she rejected their concerns. That has also been the situation with the legislation we are debating today. The Government has gone about saying how this is good for New Zealand how it is about equality and treating employed and self-employed people together and how employers have nothing to fear from this legislation. But the reality is that this legislation will have a dramatic effect on many employers and some self-employed people. It will increase many of their costs of doing business through the increase in the levy amounts. It is part of a plan that this Government has had all the way of treating everything as being equal. It thinks that there is no difference between business entities—there is no difference in the reasons why people go into self-employment or into employment relationships. We are seeing that through other parts of the employment law legislation as well with the intention to treat contractors the same as employees. 
That is all part of the mentality of this Government. It talks of removing the employers’ account and the self-employed work account and inserting a definition of a work account by omitting all references to the employers’ account and the self-employed work account and replacing them with references to a work account. We see that all through Part 2 “Transitional provisions”. That shows an intention by this Government to try to make everything the same—its kind of level playing field. The Government believes that everything is the same in this world. The reality is that it is not all the same. There are different business interests and there are different ways of structuring one’s business because people take different actions and have different responsibilities. 
Some of the implications of what the Government is doing in this grand vision of equality will have a major effect on many businesses. Businesses have paid a large sum of money into these accounts over a number of years. The employers’ account has reserves of over $500 million and in the self-employed work account there are reserves of over $115 million. These people have paid money into these accounts under the genuine understanding that this money would be used for the purposes for which they paid it. Employers did not pay that $500 million on the basis that it would be put together at some place and point in time as part of some grand plan for equality thought up by a Government that believes it knows best. Employers paid that money in over time because they were doing what they thought was the right thing under their legislative requirements. They expect that a Government would also repay that money if over time it was needed. This Government has not shown the good faith that the employers have shown. Instead it has used that money for its own ulterior motives. It has taken away the element of good faith that is essential for business to grow and prosper. 
This Government has no intention of looking after the self-employed or the employed. When the business community whether self-employed or employed has made submissions to this Government they have been pretty well ignored and dressed up. The Government has said: “Oh we’ll look at them as part of some review at some point in the future.” This is one of those kinds of reviews and it has been shoved under the radar in a very short period of time. The Government has not given people the time to adjust to make submissions and to see what the Government is doing in this case. All it is doing is pushing this through in a very short period of time with the intention of taking away the hard-earned money that employers have put into that account over a number of years. 
That will hurt employers. It will also hurt the self-employed. Some large self-employed revenue rate increases that we have seen in the documents provided to the select committee include increases for the police. If their 2006-07 rate of $1.03 were separate it would be 73c for 2007-08 but under the merged ratio they are paying $1.08 in 2007-08. That is a percentage change of 48 percent from having a separate account to having a merged account. The police are going through a pretty tough time at the moment with this Government which will not resource them. It is a Government that will not stand by the police in time of need and a Government that blames them for any driving infractions that may happen if travelling from Timaru to a game of rugby in Christchurch. But at the same time the Government is willing to shaft the police by putting up their levies. 
PANSY WONG (National) 
: 
 I am proposing a very sensible amendment to this part of the debate. It is to defer the implementation of this bill until 1 April 2009. It is the only sensible thing to do. Judging from what some of the political parties sitting in this House—the Greens the Maori Party and New Zealand First—have said I do not think they have had an opportunity to understand the implications of the passage of this bill on the supporters whom they claim to represent the self-employed. I want to look after these party political colleagues. I do not want them or their electorate offices to be facing outraged self-employed people in the next 2 years. So I am seeking their support to make sure that this bill is deferred for 2 years so they can have time to think about the implications. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
PANSY WONG 
: I am seeking for the sensible parties in this Parliament to support a very sensible amendment—to delay the commencement of this bill to 1 April 2009 for a very good reason. National will then be in Government and when I become the Minister for ACC I will not be an apologist for the Accident Compensation Corporation (ACC). I will not put myself up there and tell the self-employed that they have to front up with $100 million extra. I will not confiscate the $500 million in the employers’ account so that ACC can feel good smooth the levy and not forego the opportunity to invest. According to the Minister in the chair the Hon Ruth Dyson she is the apologist for ACC. 
It is typical of a Labour Government that it will not trust the self-employed to invest their own money. It will not trust employers and workers to know how better to spend their own money. But the contempt of this Minister towards employers was evident when she said that the employers did not deserve their rebate. She blatantly said that they did not deserve it; I am not too sure what they have done to upset the Minister. We will be very clear when we become the Government that ACC will serve the people it is set up for. ACC will not turn around and use its monopolistic position to basically tax people keep the surplus of $600 million just so that it can feel secure if it makes any calculation of premiums incorrectly. When we think of it we remember that last week in the House we were told by the Minister that that monopoly agency ACC was spending $5.1 million just to market itself in a branding exercise. Yet it is a monopolistic agency; people have no choice of going somewhere else or through various sources to pay their premiums. 
So I am seeking the support of the other parties in Parliament because after the previous debate—or lack of debate—it seems they might not be clear that the passage of this bill will actually impose $100 million worth of surcharge in the next 2 years for self-employed people. So when all those self-employed people come knocking on the doors of New Zealand First the Green Party and the Maori Party I hope those parties will be able to tell them some good reasons why they supported a bill that has imposed $100 million extra on those self-employed in order to bring the surplus on the reserve to a margin of 53 percent although ACC has indicated all the time that an 11 percent margin would have been sufficient. The law stated very clearly that all the account had to achieve was to be self-funding. At the moment the reserve accounts are showing surpluses of 20 percent and 63 percent yet this Labour Government is trying to push through a bill without consultation to impose $100 million extra on self-employed people. Members should try to explain to some of the people in the meat industry why they should pay for that. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 I am pleased to have the opportunity to speak on the “Title” “Commencement” and “Principal Act amended” clauses of this Injury Prevention Rehabilitation and Compensation Amendment Bill. 
R Doug Woolerton 
: This man should be the Opposition spokesperson on health—wonderful man. 
Dr PAUL HUTCHISON 
: Despite the excellent remark from my colleague over there from Hamilton I believe that the title of the bill is clearly quite inept. I have a few suggested alternative titles that would be appropriate—for instance “The Labour Government Defies Common Sense by Rewarding Those at High Risk and Penalising Those at Low Risk Bill”. Then we might go to the Minister herself for “The Hon Ruth Dyson and”—we will add in—“the Hon Mark Gosche Denial of Basic Insurance Principles Bill”. We have heard those members tonight absolutely denying the concept of risk rating. But they love the idea of merging things and pooling them together of socialising and of taking all the common-sense incentives—the time-honoured principles—that belong to insurance away from that industry. Or perhaps we could call this bill “The Labour Government’s Let’s Break Faith with Employers and Take a Few Hundred Million Dollars for Redistribution Bill” because that is exactly what the Government has done. 
I think it was very salutary to hear Gordon Copeland from United Future the party that is partly responsible for keeping this Government in power say that what the Government was doing was daft and to hear the Minister first praise Gordon Copeland for his insight and intelligence but then say she was not going to follow his common sense. Mr Copeland said that the risk margin at present is 163 percent but that the Accident Compensation Corporation (ACC) itself suggested a risk margin of only 111 percent. Even if that margin were increased to 120 percent as Gordon Copeland suggested $468 million would still be stolen from employers—$468 million that should be given back. 
What else could the title most aptly be? Well let us call the bill “The Hon Ruth Dyson Let’s Erode the Accredited Employers’ Scheme Because it is Working Too Well Bill” because that is the fact of the matter. I outlined earlier in the debate just how well the partnership programme is working—how there is a situation whereby 25 percent of employers are not under direct control of the Government monopoly and how they do very well. In fact they do so well that their costs are about one-third of those of the ACC and on average they get employees back to work in about one-quarter of the time taken by the ACC. I believe that it is because of that that the Government is systematically trying to erode the programme by changing money over to the residual account so that the levies of that account will go up. It is manipulating the employers’ and self-employed workers’ levies and is artificially keeping them down so that most people out there—who do not really understand this—will think: “Aha! They have kept them down.” But the Government is only fooling itself; it will be found out sooner or later. 
Perhaps the other suggestion for this title could be “The Labour Government’s Let Fiddle the Levies Bill” because indeed that is what the Government is doing. It is a great shame that the Minister was firstly prepared to say that the amendments I suggested to clause 11 were useful and it was helpful to have transparency but then said—having gone through all the amendments I wanted to make to Part 1 and suggested that it would be helpful for people to understand how the levy process worked and to make it transparent—she was sorry but she was not prepared to vote for it. She did however say she was prepared to ensure that this information would be available—and I very much hope she does keep to her word in that respect. I was delighted that she did see some intelligence and insightfulness in the speaker’s amendment and I too recognise her for her insightfulness in that respect. 
I guess that the other title for this bill could be “The Labour Government’s Let’s Fiddle the Residual Account Bill”. I just want to finish off the six alternative titles that would aptly replace the title we have now. Indeed the title “The Labour Government’s Let’s Fiddle The Residual Account Bill” is quite appropriate. We know that by legislation the ACC should be fully funded by I think 2014 yet under this Labour Government there has been no improvement in the position over the last 4 to 5 years. That is hugely hugely concerning. 
Finally I reiterate my colleague Pansy Wong’s plea that it would be very helpful if her amendment to delete the commencement date of 1 April 2007 and replace it with 1 April 2009 was supported. By that time there will be a National Government in place and we will bring sense to New Zealand’s accident compensation scheme. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Noes 48 
New Zealand National 48. 
Clause 1 agreed to. 
The question was put that the following amendment in the name of Pansy Wong to clause 2 be agreed to: 
to omit “1 April 2007” and substitute “1 April 2009”. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 48 
New Zealand National 48. 
Noes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Amendment not agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Noes 48 
New Zealand National 48. 
Clause 2 agreed to. 
A party vote was called for on the question  
That clause 3 be agreed to. 
Ayes 71 
New Zealand Labour 49; New Zealand First 7; Green Party 6; Maori Party 4; United Future 3; Progressive 1; Independent: Field. 
Noes 48 
New Zealand National 48. 
Clause 3 agreed to. 
Bill to be reported with amendment presently.