Parker David: Estimates Debate — In Committee 
Parker David: Estimates Debate — In Committee 
[Volume:656;Page:5576] 
Hon DAVID PARKER (Labour) 
: 
 One thing that I can agree with National members on in terms of what they at least say about the accident compensation scheme is that it is a fundamentally important part of the New Zealand system. It is something that we are proud of. It has no-fault liability for accident claims on a 24-hour basis so people do not have to prove fault do not waste their money on legal bills and do not waste money on insurance company margins. Those things are very good. Therefore a more proactive approach funded out of the Accident Compensation Corporation (ACC) revenues can be taken to injury prevention than is typical of private insurers and the insurance-based private accident insurance market. 
But I take issue with some of the things that were said by the last two speakers the Hon Dr Nick Smith and Michael Woodhouse. There is still and there has been throughout the year exaggeration and rhetoric on the part of the National Government as to the underlying problems with the accident compensation scheme. I will give members a few examples. We heard Mr Woodhouse say that the unfunded portion of the accident compensation scheme liability has increased. It is true that in nominal terms it has—that is the proportion of the future cost of current claims and historic claims that has yet to be funded. That proportion has increased in nominal terms but decreased in proportionate terms. In 1999 it was largely unfunded. By 2008 when the new Government took over the proportion of the scheme that was pre-funded had increased. In 1999 ACC had $2.5 billion of investments to resort to for pre-funding the existent claims at that time. Now it has $12 billion of investments even after the sharp decline in world markets. Last year it took in $3.6 billion of levy income—that is excluding its revenue from investments—and it paid out $2.7 billion. So it went forward to the tune of $1 billion in its reserves. The unfunded proportion of the work account decreased from 64 percent to 45 percent. In other words in 1999 it was 36 percent pre-funded; now it is 55 percent pre-funded. 
We heard a very quick phrase from Michael Woodhouse who said we should not make and it would be difficult to make comparisons with Australia’s system because motor vehicle accident claims were treated in different pools. I agree that we have to equalise for that effect so that we are comparing apples with apples rather than different pools. I tell Mr Woodhouse that his Government needs to produce figures that show the proper comparisons— 
Hon Dr Nick Smith 
: That’s why we’re doing the stocktake. 
Hon DAVID PARKER 
: —before it can justify changes to the scope of the scheme. The Minister in the chair the Hon Nick Smith said: “That’s why we’re doing the stocktake.” Well why before the stocktake has the Government jumped to the conclusion that it can justify significant changes to the scope of the scheme? The Government has not yet made the case for change. 
Just today we heard on Radio New Zealand National an orthopaedic surgeon from Christchurch say that in the last 6 months operational changes had resulted in an increase in the rate of people being declined orthopaedic operations that were necessary as a consequence of accidents. The decline rate has gone up by 60 percent. 
Hon Dr Nick Smith 
: There’s no change in policy. 
Hon DAVID PARKER 
: The Minister says there is no change in policy but that is in direct disagreement with the orthopaedic surgeon who said that there has been a change in operational process concentrated in the last 6 months. 
There is always a need to look at cost centres that are getting out of control and I have been on the record as saying that I agree there have been necessary changes in respect of physiotherapy. But they should not be used as an excuse for wholesale changes to the scope of the scheme. The need for a reasonable part-charge should not be an excuse for an unnecessarily large part-charge. 
I will say something about the Australian system. The cost of accident compensation per $100 of earnings in Australia is a lot higher than New Zealand’s. Yes they earn more and therefore their total amount should be more but the rate per $100 of earnings in Australia is higher in New Zealand as well and this Government has not justified that change. 
I will also mention privatisation. We hear from the Government that privatisation is now not top of its agenda this term because it finds it has “other problems that are more pressing”. However we have not heard either in respect of accident compensation or elsewhere any resiling from the proposition that the Government favours privatisation and will return to that agenda after the next election. In fact the Government is almost starting to promise that that is what it will do. So it is incumbent upon me to point out how silly that would be in respect of accident compensation. The last time a National Government did that it caused increases in cost. 
Hon Maurice Williamson 
: No it didn’t. 
Hon DAVID PARKER 
: It did. It caused— 
Hon Maurice Williamson 
: It did not. 
Hon DAVID PARKER 
: It did not cause increases in accident compensation levies but it caused costs to be shifted from the accident compensation scheme to individuals. The costs overall to society did not go down. 
If the member talks to people even people from the Employers and Manufacturers Association (Northern) he will hear that they do not see any case for privatisation. They know that last time privatisation was a dog’s breakfast and it caused a host of problems. Let us consider the case under privatisation of someone who has an accident goes to the doctor and is referred to a physiotherapist. Before that person knows whether he or she can have treatment approval has to be obtained from a private insurer. There are a host of different private insurers and he or she does not know which one to go to. There is uncertainty for the individual who often does not know who the employer’s insurer is in respect of a work accident and cannot easily negotiate his or her way through the system. Under privatisation service providers were not paid on time. Some of them were never paid for work they did. Privatisation really did not work. The administrative costs of a State-owned monopoly are already demonstrably low by international standards and I say to the Government that there is no case to go to privatisation. 
The euphemism about the introduction of competition to the work account should be seen for the euphemism that it is. The accident compensation scheme is currently publicly owned and publicly administered. There are lots of private providers who provide services under the accident compensation scheme but there is a fundamental difference between that and the so-called introduction of competition into the work account. That effectively means moving from the State-owned efficient monopoly—which provides insurance cover and contracts private service providers to give physiotherapy operations and other treatments that people are entitled to under the accident compensation scheme—to contracting all of the scheme out to the private sector. 
I note one other point where the Minister for ACC has been caught out exaggerating. When the Transport and Industrial Relations Committee was examining the ACC estimates the Minister baldly said that the big employers who are effectively allowed to self-insure—the so-called accredited employers—have a better rehabilitation rate than those who are not. That is wrong and I hope that the Minister now acknowledges that the Accident Compensation Corporation— 
Hon Dr Nick Smith 
: No no. 
Hon DAVID PARKER 
: I have done questions and answers on it. We got on to this matter because we saw the chief executive officer of the Accident Compensation Corporation looking shocked when the Minister gave the answer. Then the chief executive officer was overheard outside to say: “We haven’t got any evidence to support that.” So we put written questions to the Minister that asked whether there was any support for that assertion made by him—and there was not because it is not true. Rehabilitation rates are going down by about 1 percent per annum. It is a problem and it is a problem around the world. Unfortunately I think the Government will approach that problem by kicking people off cover rather than appropriately dealing with the reality that as people get older they take longer to get better and they are more easily injured. Thank you. 
Vote agreed to.