Woodhouse Michael: Financial Review Debate — In Committee 
Woodhouse Michael: Financial Review Debate — In Committee 
[Volume:653;Page:2469] 
MICHAEL WOODHOUSE (National) 
: 
 As we know the Department of Labour is funded through Vote Labour but its responsibilities are quite broad. They include responsibilities for Vote Immigration for Vote Employment and for the oversight of New Zealand’s accident insurance framework. It is on the last point that I will talk. One very important role of the Department of Labour is in managing expenditure on behalf of the Crown in Vote ACC. More than any other this vote represents the woeful mismanagement of Crown resources by the previous Labour Government on behalf of the people of New Zealand. 
I certainly do not blame the Department of Labour for the huge blowout in accident compensation costs. In times past the department was the Crown’s watchdog in respect of the non-earners account. It is sad to see the systematic disempowerment of the department to a mere conduit between the Accident Compensation Corporation and the Minister and more significantly between former Ministers and the corporation. Labour Ministers had a plan to soften and to socialise the scheme and no amount of advice from the department on the cost implications to the non-earners account was even listened to much less taken. 
Once a watchdog the department was debarked under the previous administration. The list of ill-conceived poorly planned badly managed policies in accident compensation is a long and sorry one. They include among many others the massive opening up of the medical misadventure provisions now called the treatment injury account and I do not believe it has made one bit of improvement to the prevention of adverse events in health. The Department of Labour warned that the cost estimates were materially understated and that the changes would open a Pandora’s box. That advice was ignored and a budget of $8.7 million was put in place. What do we have now? We have a budget of $87 million and it is climbing. 
What has been the cost of these changes to the New Zealand taxpayer? Well the non-earners account alone is facing a $300 million increase this year and a massive $1.5 billion increase over the next 3 years. According to the recently tabled MartinJenkins report the deteriorating trend had been evident since 2005. It was evident in December 2007 when the Department of Labour provided the then Minister for ACC and the then Minister of Finance with the revelation that Vote ACC would be woefully inadequate to manage the scheme’s cost blowout. It was also evident again in May 2008 again in July 2008 and again on 18 August 2008 when the corporation advised the Minister for ACC that it needed additional funding of—wait for it—$305654000 in the 2008-09 year. 
The Labour Cabinet decided that such information should not be included in the Pre-election Economic and Fiscal Update. Why was that? It said that it was because the information had not been subjected to sufficient detailed scrutiny. I wonder what the previous Government actually wanted from the department. Perhaps the Swedish rounding system was in place and the department had failed to round the estimate up to the nearest 10c. 
What was the previous Labour Government’s response to the revelation? Firstly there was denial. Labour members said that there was no problem here and that it was just a glitch; it was Treasury’s fault or it was the fault of a downturn in the economy. That is nonsense. Yes a portion of the increase in the unfunded liability has been the result of the downturn in investment returns and changes to discount rates. But Labour has used the downturn to mask its failure on accident compensation. High investment returns early in its term of Government masked poor performance and now it attempts to mask its woeful performance in the last 2 years by blaming the downturn. 
Does the previous Government even care? Well not if the comment by the Hon Ruth Dyson in a recent financial review is anything to go by. After a simple question on financial performance Ms Dyson asked me why I was so fixated on deficits. Well I tell that member that deficits are bad big deficits are really bad and accident compensation deficits are terrible. I am pleased to be part of a Government that understands that that will expect the Department of Labour to turn things round and that will change the softening policies of the previous administration. 
Hon Dr Jonathan Coleman 
: Mr Chairperson—