Hutchison Paul: Injury Prevention Rehabilitation and Compensation Amendment Bill — Third Reading 
Hutchison Paul: Injury Prevention Rehabilitation and Compensation Amendment Bill — Third Reading 
[Volume:637;Page:7784] 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 The Injury Prevention Rehabilitation and Compensation Amendment Bill is a very unfortunate bill in that it cements in the dull monopoly of the State’s Accident Compensation Corporation (ACC) which unfortunately is becoming less and less efficient as we go on. We have heard the Minister speak about the changes in 1998 that galvanised the ACC monopoly into action. Privatisation was associated with a rapid number of changes which included early rehabilitation much better safety procedures and efforts within the workforce a lowering of the levies and more important than anything else a lowering of accidents in the workplace. The changes galvanised the ACC and it has benefited from them over the last 5 to 6 years. It is only now that we are starting to see the slowing down of ACC and the typical monopoly reactions and this bill absolutely epitomises them. 
In the title debate I suggested that the bill be called “The Labour Government (Defy Commonsense) Bill” which is what it does by rewarding those at high risk and penalising those at low risk. It could also include a grab of over $400 million from employers who paid that money in good faith believing that their account was fully funded and I say that money should be given back. The merging of the accounts is directly the opposite of the basic insurance principle of matching premiums with risks. In this bill the employers’ account which is associated with lower risks lower claims and lower accident rates will be merged with the self-employed work account which is associated with higher accident rates and higher claims. The Labour Government intent on its socialisation of the insurance system is merging those two accounts to the detriment of the efficiency of ACC and to the detriment of the direct signals and incentives to improve behaviour. 
The Labour Government is in complete denial over the value of experience-rating. We heard that the other night when the Hon Mark Gosche was talking about insurance. He just wants it all to be pooled—all with the same sorts of premiums. That is sheer madness in terms of human behaviour and the behaviour that we know— 
Dr Jonathan Coleman 
: Actuarial madness. 
Dr PAUL HUTCHISON 
: It is actuarial madness as my colleague Dr Jonathan Coleman calls it; he is absolutely right. One of the particularly concerning things about the last 6 to 7 years under the Labour Government is that moderate and severe accident rates have gone up in this country. There have been hundreds of thousands of accidents and the Labour Government through this bill is sending the wrong signals. It should be doing the direct opposite of what it is doing and making sure that those who are at higher risk do pay higher premiums. That is the particular madness about this bill. 
The other thing that has occurred with the merging of the accounts is that the Labour Government has totally broken faith with employers. They have been paying their levies in good faith thinking that their account would be fully funded and they have accumulated a surplus in the order of $570 million or something like that where the risk margin has risen to 163 percent. I say good on Gordon Copeland from United Future for pointing out how silly the Labour Government has been. ACC itself recommends a risk margin of 111 percent. My colleague Pansy Wong suggested the very sensible amendment that the risk margin should go to 120 percent and that the money grabbed by this Labour Government should be given back to employers—where it came from. But no what is the Government going to do? It is to go ahead with a risk margin that is way over that recommended by ACC itself. That absolutely defies principle and it absolutely defies common sense. I say good on Gordon Copeland for pointing that out. 
There is no doubt that a lot of other things are wrong with this bill but I was prepared to put in two very sensible amendments that would at least have brought transparency into the auditing process of ACC so that both the public and levy payers could understand it. I was glad that the Minister said those amendments were intelligent and constructive but then she turned round and did not support them going into the legislation. At least she has said she will ensure the information is put on the ACC website and we will hold her to account on that. But it shows the contrariness of the Labour Government that when it accepts that an amendment is constructive and intelligent it then turns round and does not vote for it. 
Finally I would like to point out another thing that just cements in how Labour has broken faith with the process one would expect from ACC. In the transitional provisions of this bill the Government has said that the levy consultation process for 2007 and 2008 will be bypassed. That is an absolute travesty. It is ominous and unprecedented and it goes in line with the grab of $468 million that the Government has taken from employers. 
This bill absolutely reflects just how badly the Labour Government understands the basic principle of accident insurance. It reflects that the Government is not prepared to put incentives in place to reduce the number of accidents in New Zealand and it reflects the Government’s inability to be able to stick with the time-honoured process that all levy players expect. It has done away with the consultation process for 2007 and 2008—and that is shocking.