Young Jonathan: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeYoung Jonathan: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — Second Reading[Sitting date: 17 September 2015. Volume:708;Page:6804. Text is incorporated into the Bound Volume.]JONATHAN YOUNG (National—New Plymouth): I am very pleased to stand and speak and respond to some of the comments of the previous speaker Sue Moroney. Business New Zealand made some comments when it submitted to the Transport and Industrial Relations Committee. One of the comments it made which that member is speaking about—whether we agree with it or not and I have no doubt that she would agree with it—was that the previous Labour Government also did what it said. It said it was across Governments. And it was not just Business New Zealand who said that; there was another submitter. That is their view—that is their view.Sue Moroney: No they didn’t. Be honest.JONATHAN YOUNG: Under Labour—if you go back and read those submissions you will find what I have said is true. Under Labour the cost of claims increased by 57 percent in 4 years. We know that there was a hole. Some of it was because of that and some of it was because of the volatility of funds that ACC managed. In fact the chair of ACC reported to the Transport and Industrial Relations Committee earlier this year and said that ACC’s equity position had worsened from negative $108 million on 30 June 2014 to negative $600 million by 31 December 2014. Then in January this year for reasons beyond ACC’s control the asset base diminished by $4 billion in that month and then bounced back by $2 billion in February.What we are identifying is that there is a lot of volatility in managing the asset base and the resource base of ACC which is what the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill is about. It is to smooth that out to ensure that it is not just the Government making decisions at the end of the process of ACC’s consultation but it is the Government setting policy frameworks at the beginning of that process in order to manage that volatility. That is what this is about. It is about good management and stabilising. Under Labour under its watch ACC’s long-term liabilities increased to $15 billion and that is in part the reason why Nick Smith had to do what he did. It is all a matter of being able to have a system of accident compensation and care and rehabilitation here in New Zealand that the taxpayers the levy payers the people of this country and even visitors who come to this country can rely on and that it is going to be there sustainable for the long term. All around the world people do acknowledge our ACC system and say that it is a great provision. This is why we are doing what we are doing.I want to thank the people who came and the entities that came to submit to the select committee: Business Central the Wellington Employers’ Chamber of Commerce Business New Zealand the Employers and Manufacturers Association Federated Farmers of New Zealand the Insurance Council of New Zealand the Meat Industry Association the New Zealand Association of Accredited Employers the New Zealand Council of Trade Unions the New Zealand Nurses Organisation the New Zealand Automobile Association and the Port of Tauranga. We had only 14 submitters but they represented large workforces. They were obviously very large levy payers. We came back with four recommendations for amendment and change. One of them was around the principles of financial responsibility. There are three principles. The first principle is to provide that levies should be set so as to meet the expected lifetime costs of claims the second principle requires levies to be set to ensure the long-term solvency of each levied account and the third principle provides that large changes in levies are to be avoided. This is intended to safeguard or reduce uncertainty for levy payers.A number of submitters spoke to us about that third principle and said they were concerned that there could be adverse circumstances that affect ACC’s asset base—whether they be natural disasters or economic crises like we have seen with the global financial crisis—and that we needed to balance that. That is where section 300 of the Act comes into play whereby the Minister must balance all of those aspects in terms of what is going to enable this fund to be sustainable long term for the benefit of all New Zealanders. We recommended that the bill should be amended to clarify the nature of the principles of financial responsibility in clause 5 and how they fit together. As the Minister for ACC said in her speech we also spoke about funding policy consultations. That is a measure that has been added in particularly in response to my colleague Kevin Hague’s request earlier on when he attended one of our meetings.The residual claims liability was one provision that went to the Regulations Review Committee—in fact it had the whole bill—and it came back with a recommendation that we could have some flexibility in this and instead of a decision in terms of when those residual levies stop being an Order in Council it would be decided by the Minister in an instrument published under the Legislation Act and gazetted. That does give some flexibility to that. We know that the New Zealand Association of Accredited Employers requested that. It said: “ACC has flexibility in the date when they decide to cease the payment of the residual levy. E.g. we must not have a situation of paying extra levies which would be the case if it was found to be funded in June 2016 and a full year’s levy had been paid through to March 2017.” It is good to see that flexibility in the way in which we can approach those residual levies in the bill. I am happy to commend this bill to the House.