Woodhouse Michael: Urgent Debates — Accident Compensation Corporation—Removal of Chair of Board 
Woodhouse Michael: Urgent Debates — Accident Compensation Corporation—Removal of Chair of Board 
[Volume:652;Page:1776] 
MICHAEL WOODHOUSE (National) 
: 
 I find it very interesting that in a snap debate called by the Labour Opposition on the merits of the Minister for ACC’s decision to remove and replace the chair of the Accident Compensation Corporation (ACC) not a single member of the Labour Opposition has questioned the competence of the new chair. Not a single reference has been made to that in the debate. This debate is about the merits of the Minister’s decision. Instead the Leader of the Opposition introduced this debate by saying: “No good reason was given for that dismissal.” Well frankly I can think of over 10 billion good reasons and none of them are funded. 
We have had a total smokescreen over this scheme that has deflected attention from the abysmal performance of the previous Government over the last 4 years. Last week we had David Parker standing up here and saying in question time that the measurement of the unfunded liability was completely irrelevant. He said that as a percentage of the total liability the unfunded liability had gone down from 65 percent to 45 percent. Well frankly that is a nonsense for two reasons. The levy payers do not pay in percentages; they pay in dollars. Sixty-five percent of a mouse is a hell of a lot smaller than 45 percent of an elephant which is what this issue is about. 
This situation is the financial elephant that had been in the room of the previous Labour Government for several years. The Labour Government knew about it and in the face of diminishing returns and increasing costs it continued to load cost after cost on to the scheme. 
I can tell members that this National Government is very firmly cognisant and supportive of the Woodhouse principles—I know what they are; I have lived by them as a member of staff at ACC and I continue to do so—which are 24-hour no-fault cover that has community responsibility comprehensive entitlements complete rehabilitation real compensation and administrative efficiency. I ask those members on the other side of the House to tell me how it is responsible behaviour that a previous Minister who knew on 1 July last year that there was a $300 million blowout in the non-earners account did not disclose it which is in breach of the Public Finance Act. The fact is that either she knew and did not disclose it or she did not know and should have known. Either way it is a problem. Members can choose their poison. 
I will go back to another comment by the Leader of the Opposition in relation to comparisons made with similar schemes in Australia trumpeting the fact that the scheme here costs 78c per $100 against $2 per $100 in Australian schemes. The fact is he is not comparing like with like. He well knows that motor vehicle accidents that occur in the workplace setting are covered by the Australian scheme and over here they are not. Frankly the very obvious case is that this 78c in the $100 is not currently managing to cope with the costs of the scheme. 
The Leader of the Opposition said we have the best scheme in the world; it works it is cost competitive it has great rehab and it has great claims rates. Well my question is if it is so great if it is the envy of the Western world then why is nobody copying it? 
I will take back members to a time when the scheme was cost competitive when there was great rehab and early exits. I will tell members who was in charge of the corporation at that time. The person in charge of the corporation at that time—and he was appointed by a National Government—was a former Labour Minister of Finance. So I think members on the other side of the House should reflect on whether some political interference is at work here. 
At that time during the introduction of the residual claims fund the idea was to reduce the residual claims to zero by 2014 and to fully fund the other parts of the scheme. At that time over 26000 claims were still on ACC’s books and the number steadily reduced from 1998 to 2005—from 26000 to 15500 to 12500 and so on down to 4000. The fact is the number has not moved that much more which is probably to be expected because those are the tougher claims the longer claims that will have higher rehabilitation costs and higher scheme costs. 
The fact of the matter is that the majority of the unfunded liability is not in the residual claims account; it is in the “others” accounts which was never intended. So why is that? In the face of 9 years when we have had a huge investment in health and safety in injury prevention initiatives in workplace promotion in advertising and with safer cars and safer roads why do we continue to have claims rates increasing by 4 and 5 percent year on year since 2004? 
We had investment performance during that period that exceeded the market average sometimes up to 12 and 13 percent. Yes since 2008 there has been a downturn in the average claims rate but I note that in the Department of Labour’s recent report on ACC’s performance of the seven key performance indicators the department considered most important to the corporation’s financial state the only one that was met was investment returns which were continuing to exceed the market. What were not being met were key liability drivers the cost per treatment claim the cost per entitlement claim 3-month rehabilitation rates long-term claims pools and return-to-work rates—all missed. So why is that? 
It is very clear that claims numbers are increasing in the face of all that investment in injury prevention. Claims duration—the most material influencing factor on the costs of claims and total scheme costs—is going up. Three-month exit rates are down by 5 percent. Six-month exit rates are down. Twelve-month exit rates are down. Treatment costs are significantly up. We have already talked about physiotherapy costs but it is interesting that the highest intervention rate by physiotherapists in the Western world occurs in this jurisdiction. We have the highest number of physiotherapists as a percentage of the population anywhere in the world. 
Surgery costs are up. Ambulance costs are up. Vocational rehabilitation is up. Social rehabilitation is up. The fact is this scheme has been softened away from entitlements into benefits. The Leader of the Opposition in his opening debate used the term “benefit” four times. The scheme is an entitlement-based scheme which is focused on 24-hour no-fault cover and a relentless drive to a fast and lasting return to work and independence. Instead it has become a soft and socialised scheme. We need to have a discussion debate and dialogue with the public of this country about what kind of scheme they want. The fact is— 
Darien Fenton 
: Competition. 
MICHAEL WOODHOUSE 
: This has nothing to do with that. The fact is this issue is about what kind of scheme we want—a scheme that sets out very clearly what people can expect and what levies people can pay—and sets to work within that. 
I do not blame the very hard-working staff of ACC many of whom are known to me and who do a very good job in the circumstances but the fact is that expectations that have been put on them have changed from those that existed a few years ago and they should be turned round. A fast and lasting return to work and independence has to be the goal. 
Instead we have a corporation that has had expectations set for it that are outside of the parameters of the legislation. I am advised by staff who work at ACC that they have been encouraged not to follow the legislation but to adopt different policies for the acceptance of claims and the payment of weekly compensation which are outside the legislative framework and have caused no end of trouble when cases like that go to review because the reviewer has the legislative framework only to consider. 
We have to have that discussion about whether we want a social contract or a real contract with real levies and real entitlements. It is a scheme that is designed to cover people who have injuries and no more. The drift from the health sector to the non-earners account is consistent marked and increasing and boundaries have to be put on the scheme. The fact is that with any scheme that has entitlements that some people will qualify for and some will not there will be people who miss out. So let us have an intelligent discussion about that and say where those boundaries should be and what the costs of that scheme should be. 
The debate having concluded the motion lapsed.