Parker David: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
Parker David: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
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Hon DAVID PARKER (Labour) 
: 
 The Minister who has just resumed his seat has misrepresented the Labour Party position in a number of ways. I do not in this first call have a chance to respond to all of the accusations he made as to the Labour Party position that were incorrect. I think history shows that through the more than 30 years that we have had the accident compensation system in New Zealand Labour has consistently stood by the principles that lay behind its foundation because those principles are fair—and we continue to do so. The Minister made it clear that his justification for the changes that are made to the scheme is that it costs too much as it is and therefore cannot be afforded. Yet not one submitter—or the department in its original submission—presented any evidence to the select committee to show that it is more expensive for employers in New Zealand than it is for employers in overseas schemes. Indeed it took the Opposition’s questions of officials to get some information as to cost comparisons. We would think that if cost was being used as the basis of the justification for drastically reducing the entitlements that people have and need following an accident in New Zealand robust information would be provided to the select committee. It was not. 
I was also disappointed that neither business submitters like Business New Zealand—and I name Business New Zealand not to be pejorative; I value its submission to the select committee—nor any other business representative who made submissions gave us any information as to comparative costs. That surprised and saddened me. Amongst its members are multinational companies that operate not just in New Zealand but also in Australia Canada and other jurisdictions around the world. Those submitters would have had had they desired to get it through their contacts information on the relative costs in New Zealand and overseas. From their failure to do so we cannot conclude anything other than that the New Zealand scheme even in its present state is cheaper than alternatives overseas. 
We explored that a bit through the officials. They provided us with the best information they had as to comparisons with Australia. This came from information that was presented to the Workplace Relations Ministers Council in 2008 which I understand is a meeting between Australian and New Zealand officials. It showed that the cost per $100 of earnings was significantly higher in Australia in 2006-07 than in New Zealand. That year was chosen because I think it was the last date for which they had comparable information. The average for Australia was $1.73 per $100 of earnings whereas in New Zealand it is 94c per $100 of earnings. 
Hon Dr Nick Smith 
: And what does it exclude? 
Hon DAVID PARKER 
: That excludes motor vehicle accidents on both sides of the Tasman. In terms of the advice that officials gave us it was full costing for the year of claims in the 2006-07 year. It excluded the tail— 
Hon Dr Nick Smith 
: Oh! 
Hon DAVID PARKER 
: I say to Dr Smith if he does not already understand this—and as he says “Oh!” using the microphone to his advantage as he is not meant to do as the Minister in the chair—that it excludes the historic tail because of course the historic tail is a different pool to be funded. In terms of the full cost of 2006-07 accidents they were meant to be fully paid in New Zealand at 94c and the comparative cost was $1.73 per $100 of earnings. So where is the justification for reducing entitlements compared with Australia? 
We hear from the Government that New Zealand is always a poor performer compared with Australia. In some areas that is true but in the area of accident compensation it is not. We have a more efficient scheme. It is cheaper to administer. We know from the PricewaterhouseCoopers report—and again the select committee had this information—that the administrative costs of the accident compensation scheme are amongst the lowest if not the lowest in the world. That is one of the reasons why levies are lower compared with the service that is provided than is the case in overseas jurisdictions. 
We know that at least currently it does not make a profit. At present the Government-owned Accident Compensation Corporation (ACC) is the provider of cover for risk. It does not make a profit. It covers its costs including the full costs of accidents. There is a problem in New Zealand with a declining rate of rehabilitation. That is a matter the Minister referred to and I acknowledge it. Rehabilitation rates for long-term injuries have declined at approximately 1 percent per annum over recent years. That is a trend that is also true in overseas jurisdictions. We know that it is in part a consequence of aging populations. As people age they both break more easily and take longer to recover after they are injured. Both of those things are realities. That does not mean to say that we should not strive to do even better in terms of achieving better rehabilitation rates. Labour certainly does not oppose measures to improve rehabilitation rates. 
None the less it remains true that costs for employers are significantly lower per $100 of earnings in New Zealand than in Australia. Of course Australians earn higher wages as well but I am not making a comparison on total wages. I am making it for that reason on the basis of per $100 of earnings. Even on that basis rates are lower for New Zealand employers. I ask the Minister how it can be justified to decrease further the rates for New Zealand employers effectively at the cost of injured people and the State. We already know that even under existing rules many of the people who are exited from the accident compensation scheme end up on unemployment benefits at a cost to taxpayers rather than employers. We already know that many of the people who are exited from the scheme do not get back into work and are left languishing on benefits. 
No system is perfect. We readily acknowledge that there are always ways in which the scheme can be improved but there is no justification for changing the threshold from 35 hours per week to 30 hours per week. That is the number of hours at which people will be deemed to be work-ready for full-time work. Currently they have to be able to work 35 hours a week; that will go down to 30 hours per week. This will be amplified by other contributions later in concert with the fact that now accident compensation will not have to have regard to pre-accident earnings. 
Effectively someone could be earning quite a good income on a salary. The example given by a submitter was a bank teller who might suffer an occupational overuse injury and cannot work for some period. If the bank needs someone to fill that person’s role and he or she is effectively laid off work so becoming reliant on accident compensation that person can be pushed off the scheme when deemed to be work-ready because he or she can work for 30 hours per week even if he or she was working 40 hours per week previously—and ACC will no longer have to have regard to that person’s pre-accident earnings. So effectively such a person could be forced off the scheme when he or she is able to be a shelf-stacker at a supermarket or something like that working for the minimum wage. Of course the levies will go down for the employer but the level of compensation received by the injured worker will be completely inadequate and that is unjustified.