Estimates Debate — In Committee 
Estimates Debate — In Committee 
[Volume:656;Page:5568] 
Estimates Debate 
In Committee 
Debate resumed from 5 August. 
Vote Health ( 
continued 
)  
Dr JACKIE BLUE (National) 
: 
 In October 2008 National announced its policy to fund 12 months’ Herceptin treatment. That decision was not made lightly. We knew we would be accused of interfering politically in what should not be a political decision but we simply could not stand back. We were concerned that Pharmac’s decision to fund 9 weeks’ treatment was flawed as cancer specialists in New Zealand overwhelmingly backed 12 months’ treatment. Following the election the new National Government moved quickly to put into action its election promise. We knew there would be women who would have recently completed a publicly funded course of 9 weeks or recently discontinued a private 12-month course of Herceptin treatment and would be in limbo waiting for the National policy to be implemented. 
The New Zealand Breast Cancer Special Interest Group a group of independent experts considered a recent international review of the 12-month and 9-week data. That group considers that the update further confirms the validity of the 12 months while casting serious doubts on the 9-week treatment. 
Those experts also questioned the viability of the international Study of Letrozole Extension trial comparing 9 weeks’ treatment versus 12 months’ treatment. To date only 23 New Zealand women from two centres have elected to participate in the Study of Letrozole Extension trial with only a few hundred internationally. Two thousand women need to be recruited into the trial to get any meaningful data and I predict that is most unlikely to happen. The New Zealand Breast Cancer Special Interest Group is quite right to question the viability of that trial and the money we have sunk into it to date. I understand that from 2008 to the end of May 2009 135 women took a 12-month course. These women of course had the international standard of care. I am proud of my Government’s decision to fund 12 months of Herceptin treatment. 
One of the consequences of the Herceptin debate was that the spotlight went on the pharmaceutical budget which over the last several years had not kept up with inflation and the mechanism of how high-cost medicines were evaluated and funded. In May 2009 the National Government announced a total of $185 million in new funding for subsidised medicines over the next 4 years. Shortly afterwards the Government also announced a three-person panel to review access to highly specialised medicines to review funding mechanisms and to work with stakeholders to recommend ways to improve access— 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 Late last night as we were getting deep into the debate in the darkness of Wednesday night there was a scene that was almost like one from a horror film. Over where Mr Garrett is sitting a hole in the ground opened up. It was not there to swallow Mr Garrett much as I am sure he wishes it would at the moment. From that hole in the ground from out of the crypt came the Hon Sir Roger Douglas. He came out with his old mantra from the 1980s: “Privatise privatise privatise.” He levelled the accusation at what he called “socialised” health—Fox News’ favourite phrase: “socialised” health. If one can get oneself on TV and get one’s issue out there on  
Close Up 
 on  
Campbell Live 
 or on a similar programme one can get funding from the health system. That he said was the problem with “socialised” health. Unnervingly I find myself slightly agreeing with Sir Roger— 
Grant Robertson 
: It won’t last. 
IAIN LEES-GALLOWAY 
: It will not last. 
The problem is not “socialised” health; the problem is the way this Government spends its health money. With this Government it is about getting on TV it is about populist decisions and it is about putting money into things that have no evidence base whatsoever and do not have the support of the medical fraternity but do have the support of votes. It is all about buying votes. 
Where have we seen some examples of this? Dr Blue has just said how proud she was of the decision to undermine Pharmac—an independent body set up to ensure that politicians could not use the health dollar in this way—and fund a 12-month course of Herceptin. The Government quite callously and shamelessly used the emotions of women suffering from breast cancer and of the families of women suffering from breast cancer. It used the health dollar to buy votes and to undermine an organisation like Pharmac. I am sure the health Minister Tony Ryall would have liked to bully Pharmac in the same way he bullied the MidCentral District Health Board but he could not. He is not allowed to by legislation and long may that last. Instead of coming along with a “bully knows best” approach he managed to undermine Pharmac by directly funding something that was really a Pharmac decision. 
We have seen it time and time again. Take PlunketLine. Stopping the funding for PlunketLine was not a decision that the Labour Government took lightly; it went through a very robust open and competitive tendering process—something that the members on the opposite side of the Chamber usually say is the best way to go about a funding process. It was robust it was open and it was transparent and this Government came in shamelessly using the brand of PlunketLine and shamelessly buying votes with the health dollar. This is not a sign that the Government is about finding efficient and productive ways to make the most of the health dollar; this simply says that the Government is looking for ways to buy as many votes as it possibly can. 
Another area where we have seen this is in the shift away from primary health and public health and into the hospitals. Why? Because the Government wants to find some short-term numbers. The Government has no interest whatsoever in improving health quality and health outcomes for New Zealanders over 20 years or being able to look back in 20 years’ time and see how many people it has managed to keep out of hospital. No it wants to get them into hospital and then in 3 years’ time it can point to the number of elective surgeries it has done. It does not matter what the case weighting was! It does not have to be brain surgery. It could be ingrown toenails for all the Government cares. The Government just wants to get the numbers. The Government wants to show off those numbers and make itself look as good as possible in 2011. 
This issue has been raised by Rahui Katene. She is in the Chamber this afternoon and I am very pleased she is here. She gave a long list of concerns that the Maori Party has about the way the health dollar is being spent. She said she was concerned about the loss of Fruit in Schools she was concerned about prevention in terms of public health and she was concerned that health funding would not be protected during the recession. She said that this was the most important time to protect health funding. I say to Ms Katene that Labour members could not agree with her more; we could not agree more with what Ms Katene said. We strongly desire that the Maori Party members find it in themselves to vote against the Vote Health estimates when the question is put shortly. Ms Katene made some very valid points and I cannot understand how the Maori Party can possibly support this Budget given all the points that she made. She made an excellent speech and I was very pleased to be in the Chamber to hear it. 
That is looking back. We need to look forward as well. I have in my hands a very important document—it is a pity that I am out of time. 
Vote agreed to. 
Vote State Services 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 Vote State Services is ground zero for the broken election promises of the National Government. Let us begin with the promise to cap but not cut public services. That is the promise John Key made when he spoke to the Public Service Association congress in October last year. In relation to this policy he was asked “So does that mean National will be cutting services?”. “Not at all.” said Mr Key. But that is not the record of this Government. When I stood in this Chamber and asked Gerry Brownlee what core public services were and what would not be cut do members know what he said? He said “It’s the bit that won’t be cut.” National members do not actually know. They do not have a definition. They went into the election with a policy that was fluff. It was designed to try to reassure the people who in 2005 knew that the real National Government agenda was to cut public services and that is the agenda we have seen put in place by this Government. 
We have seen cuts right throughout the Public Service. We have seen cuts in the Ministry of Social Development. It was a remarkable decision to cut jobs and services in the ministry that looks after the most vulnerable people the ministry that in a recession we would expect to be there providing those services. But we have seen hundreds of jobs go from the Ministry of Social Development including jobs within Child Youth and Family and including the jobs of people who work with people advising on child abuse. John Key stood in this Chamber and said that this Opposition side of Parliament did not care about child abuse. That was an outrageous statement! When Labour was in Government we continued to support the Ministry of Social Development to ensure that child abuse was reported and looked into but that Government over there has decided to cut back staff in that area. 
The Government has also cut back on other important front-line services. That is promise No. 2 broken. Front-line services were going to be the priority of State services within this Government but we have consistently seen front-line services cut. The Ministry of Agriculture and Forestry’s biosecurity division looks after our border but now 60 jobs have gone. One 55-year-old man from the division with 25 years’ experience asked us what he can do now and what will happen in the future. The reality is that when cargo volumes return that man’s experience will be required. Will we be able to get him back or will he come back as a consultant or a contractor as happened in the 1990s and will we see ourselves paying more for those services? That is a front-line service that has been cut by this Government. 
School library service advisers who spent their time in rural schools ensuring that children had access to good-quality information provided through the National Library budget have gone. That is another front-line service that has gone under this Government. We also have the example from the Department of Conservation of the East Coast Hawke’s Bay Conservation Board which has gone. Staff from the Department of Conservation have been cut at the front line. Front-line staff have been cut right across the board from the Ministry of Fisheries and the Tertiary Education Commission. People in the regions and in the communities representing the Government have had their jobs cut. I am quite sure that when the promise was made that resources would go to the front line and that there would be a capping of the core Government administration people expected that Government services and the Government presence in the regions would be continued but they have been cut. 
Sue Kedgley 
: Remember what Stephen Franks promised? 
GRANT ROBERTSON 
: That is right. My colleague Sue Kedgley reminds me that on the campaign trail the National Party’s Wellington Central candidate said that no jobs would go from the Public Service under National. Well we have seen up to 2000 jobs go from the Public Service—2000 New Zealanders are out of work as a result of the decisions of this National Government. We have heard all about the recession we have heard all about the effects of the recession but these are decisions made by the National Government to put hard-working New Zealanders out of work. 
The third broken promise was when John Key stood up at the Public Service Association congress and said that we would not have a radical reorganisation of the public sector. He said that it was easy to underestimate the amount of energy and inspiration soaked up by institutional change as well as the loss of personal and institutional knowledge. What a sensible thing to say! Why then do we hear from Bill English time and time again that we are in for a period of radical change in the Public Service? We hear that there will be big changes and that there will be job losses. This is a broken promise. The State services the public services that New Zealanders rely upon in their daily lives are being undermined on a day-by-day basis. This recession is being used as an excuse by National to undermine public services and to make the cut-backs it has always wanted to make to the Public Service. That is an outrage because New Zealanders rely on those services. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 As my colleague Grant Robertson has just pointed out it is becoming clearer as every day goes past that the National Party’s pre-election manifesto was not worth the paper it was written on. One of the cornerstones of its State sector manifesto was that it was going to protect the political neutrality of the Public Service. That is something that all New Zealanders should care about because the New Zealand Public Service is built on the idea that Governments can come and Governments can go but the Public Service will serve the Government of the day without fear or favour. It is incumbent on all of us on both sides of the Chamber to respect that distinction and to protect the political neutrality of the Public Service. 
It is not just a Government responsibility to protect the political neutrality of the Public Service; all members of Parliament have a responsibility to protect the political neutrality of the Public Service and to recognise that public servants have the same rights as individual citizens. For example a public servant is not disqualified from appearing before a select committee. A public servant is not disqualified from having an opinion on legislation. I think it is absolutely disgraceful for public servants who appear before a select committee—for example the Department of Corrections staff who appeared before the Law and Order Committee just recently—to be bullied and threatened by a member of this Parliament. I think that fundamentally undermines the nature of the New Zealand Public Service and it is disgraceful behaviour from this National-ACT Government. I am appalled that no Government Minister has expressed a concern that when members of the Public Service appeared before a select committee a member of Parliament supporting this Government threatened their jobs. I think that is absolutely disgraceful. 
I understand that the member who did it Mr Garrett does not limit his threats just to members of the Public Service. In fact I understand that he has taken to threatening other members of Parliament at select committees when he disagrees with them. 
The CHAIRPERSON (Eric Roy) 
: The member is transgressing the rules of the debate which I read out quite clearly when the debate commenced. I ask the member to return to the estimates. 
CHRIS HIPKINS 
: Thank you Mr Chairperson. I am talking about the importance of the political neutrality of the Public Service and I think that is covered under Vote State Services. In fact members will find references to it in the estimates report of the Government Administration Committee which is what we are discussing at the present time. I think that it is incumbent on all members of the House to protect the political neutrality of the Public Service regardless of which political party they are members of. All members of the Public Service are entitled to appear before a select committee for example and have a view as private citizens without fearing that they will be threatened— 
The CHAIRPERSON (Eric Roy) 
: The member must not talk about members threatening other members. All members are honourable members. 
CHRIS HIPKINS 
: Thank you Mr Chairperson. I was actually talking about members threatening members of the public which I believe you will find is in order. 
The CHAIRPERSON (Eric Roy) 
: No. 
CHRIS HIPKINS 
: Thank you Mr Chairperson. We should protect the political neutrality of the Public Service; I think all members of the House think that is very important. 
The State Services Commissioner actually has an important role in protecting the political neutrality of the Public Service. For example the State Services Commissioner may like to take an interest in the release by Government Ministers of private information held by Government departments. I think the State Services Commissioner should take an interest in that. When Paula Bennett releases the personal information of beneficiaries in order to bully them and silence her critics it has implications for the entire Public Service because it suggests that any personal information held by any Government department can be accessed by Ministers in order to bully and intimidate members of the public. 
Members of this Government seem very relaxed about bullying and intimidation when they are the ones doing it. When they are the ones doing the bullying and intimidation it is all OK. It is very much “Simon Says” from this Government. Simon says: “Do as I say not as I do.” Although members of this Government say they are opposed to violence and intimidation if they are the ones doing the bullying and the intimidation then they think it is perfectly acceptable and it is all right. It is a bit like their saying that they believe restraint in the Public Service is important except when it comes to them. 
Hon MAURICE WILLIAMSON (Minister for Building and Construction) 
: 
 There can be no other portfolio where the differences between National and Labour are more stark. Labour was about increasing the Public Service; National is about increasing services to the public. That is the major difference. I ask Labour members whether they have noticed something going on called the global recession. 
Hon Member 
: This has got nothing to do with that! 
Hon MAURICE WILLIAMSON 
: In this country there is not an individual there is not a family and there is not a business that has not had to change its circumstances or its modus operandi to cut back on its operation and to make changes. But somehow Labour thinks the Public Service should be completely protected from that and it does not matter. 
For example in my own portfolio of customs trade is down—sadly. Trade is down for both exports and imports. The number of people who are travelling—both leaving and coming to our country—is down. What does Labour want us to do: keep the same number of people who were required for the old levels or somehow make appropriate adjustments to cope and yes when the growth comes back yes when those volumes come back bring people back on to the payroll? 
I want to share with members my personal favourites when it comes to numbers. Listen to what happened to the Public Service under the Labour Government. In 9 long years—9 long bitter years—the Public Service grew by 50 percent. 
Chris Tremain 
: You’re joking! 
Hon MAURICE WILLIAMSON 
: No no. Members think I jest but it is true. Let me give the facts. In 1999 at the end of the National Government’s time there were 30702 people employed in the State Service bureaucracy—30000. Can members remember that? It is a nice round number—30000. By June 2008 not long before the last election the number was 45900. In fact the figure I like to give an audience—it is another one of my personal favourites—is that in the last 5 years of the Labour Government Public Service floor space in Wellington alone increased by 13.7 hectares. That is a fact—13.7 hectares. [ 
Interruption 
] Yes I have the numbers. Without question it increased by 13.7 hectares. 
I say to the Labour Opposition that these are tough times for everybody but if anything the Public Service is getting quite special and considered treatment. We are trying to redeploy people who are made redundant. We are trying to find them new jobs right across the Public Service so that we can accommodate their needs and requirements and we are being quite successful. 
But I repeat: it was Labour that was committed to increasing the Public Service and it is National that is committed to increasing services to the public. That is the difference. By the way people would imagine after hearing the whinging whining machine from the other side that Vote State Services must have been cut. I wondered whether that was the case. Hang on last year it was $216 million and this year it is $256 million. That is an 18 percent increase in Vote State Services. That is the Dreamtime we get from Labour members. They think money grows on trees out the back of Parliament— 
Hon Members 
: Where are the pixies? 
Hon MAURICE WILLIAMSON 
: Out where we will be sleeping from now on I understand. 
I tell members that I think National has done a sterling job of protecting most of the Public Service especially the front end from the sharp edges of the global downturn—and the edges have been very sharp for the private sector. We have been able to redeploy people move them around shift priorities and keep the cap of 38800 that the Prime Minister promised. 
Vote agreed to. 
Vote ACC 
MICHAEL WOODHOUSE (National) 
: 
 I want to talk about cause and effect. 
Grant Robertson 
: Why don’t you praise the Minister first and get it out of the way? 
MICHAEL WOODHOUSE 
: I tell the member that that will come. He should not worry; there is plenty of time in a 5-minute call to praise the Minister for ACC Nick Smith. Cause is about two related events where one event makes the other occur. First comes the cause and the event that follows is the effect. Nowhere is that phenomenon more apparent more obvious or more damaging to the Crown accounts and these estimates than Vote ACC. We have had not one not even a few but several policy and legislative changes that have had the effect of putting considerable financial strife on the accident compensation system the premium payers and the Crown. 
I have mentioned some of those changes several times in this Chamber but I think it is necessary to restate just a few of them to illustrate the cause and effect of them on Vote ACC. They include a substantial broadening of the treatment of injury provisions in 2004 the flawed decision—about the same year I think—to expand the endorsed provider pilot to nearly every single physiotherapist in the country with no caps on spending and the significant broadening of the boundaries of the scheme with flimsy cost and premium impact estimates when the most recent changes by the previous Government had been made in the face of lower financial returns. Just last year there were 13 changes alone which cost about $75 million. There was the tacit endorsement by the previous Government of the corporation paying entitlements completely outside the boundaries of the legislation even in the face of court judgments that ruled out such activity. But the big kicker was the reduction of rehabilitation outcomes. Claims are up the duration of claims is up and scheme exit rates are down. I have no doubt that the corporation was influenced by previous Labour Ministers who were not nearly as interested in that goal as they were in softening and socialising activities even though a fast and lasting return to work or independence is a cornerstone of accident compensation. 
The effect of all of that is we now have the legacy of total liabilities having increased by over $11 billion in the last 4 years and the unfunded portion of those liabilities has gone up from about $3.5 billion to over $8 billion. Heaven knows what they will look like when the 2009 annual report is published. I tell members that $10 billion is the equivalent of an extra $5000 per household. If the previous Labour Government had spent as much time on righting the ship when it was so clearly heading off-course as it did on trying to cover up the mess then perhaps things would not have become nearly as bad as they have. 
I have no doubt that we will hear from Mr Parker Labour’s spokesperson on ACC who will say that it was unavoidable and an unforeseeable consequence of the economic downturn. Well that is absolute rubbish. The numbers were tanking well before the financial downturn and he knows it. Even the MartinJenkins report on the debacle confirmed that the deteriorating trends were in evidence since 2005. The report stated that the impact on the appropriations was a bit masked by their high investment returns but all that people had to do was to read the balance sheet to know that things were going bad. 
I think that banging on ad nauseam as that spokesman will do about how inexpensive the scheme is compared with for example Australian schemes is completely spurious. He knows that the comparisons are simply not able to be made. The cover conditions are all different. Work-related motor vehicle accidents go into the work account in New Zealand but they do not in Australia. In any event Australia has a fully funding scheme that is viable and we do not. We are paying for years of that situation and we probably will pay for years more. Those members opposite need to take a long look at themselves over accident compensation because unless they do some reflection and show a little bit of mea culpa they will be sitting on that side of the Chamber for a very very long time to come. Until they come to that realisation then that is exactly where they should stay. 
The Minister talked to the Transport and Industrial Relations Committee in the estimates hearing. He said that amending legislation would be coming in soon and that there would be a stocktake. We have not seen the terms of reference yet but perhaps the Minister will be able to explain them. I saw the pain on Carol Beaumont’s face when the Minister told her that the stocktake would not include a reflection of competition and choice in the work account. She looked so disappointed. She was badly needing to bag the Minister for having some kind of privatisation agenda—about which I am sure we will hear from Mr Parker—but that is simply not true in the next few years. Do members know why? Because we will have to spend all of that time sorting out the mess we have inherited. I am very glad that the Minister is taking this seriously because the members opposite do not seem to be doing so. Yet the liabilities continue to mount; unless we turn the ship around it will be bad news. 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 In speaking to the estimates for Vote ACC I will draw attention to the very ugly fiscal position that was to this Government by the previous administration. As the previous speaker Michael Woodhouse noted over the last 4 years the liabilities of the accident compensation system have grown by more than $10 billion. That is more than $5000 for every single New Zealand household. 
At the moment the corporation is preparing the figures for the annual report. The bad news is that when I had to advise the House in February that the liabilities had got to $21.9 billion I thought that they could not get worse. But I have to say that the preliminary figures I have for the end of June show that they have deteriorated further by billions. When we campaigned one of the things we said was that we had quite deep concerns about the way in which the accident compensation scheme was managed and we said that we wished to have a stocktake. Today I have announced the details of that stocktake which is provided for in the estimates and which was promised by the Government. 
The steering group will consist of the former chair of the Accident Compensation Corporation a person who has done considerable work for both Governments in respect of the Electricity Commission and a person who in my view has a deep level of knowledge of New Zealand’s accident compensation system the Hon David Caygill. We will also include on the steering group firstly an academic in public policy for whom I have huge respect. He is Professor Neil Quigley of Victoria University. I note that both of those gentlemen by being respectively on the Electricity Commission and at Victoria University are effectively already doing work for the Government for which they are drawing a salary from the Public Service. But they have said that they will do the new work without additional charge and I acknowledge that in this Committee. 
The third person on the steering group is Gordon Smith. Gordon Smith is from Havelock North and he has extensive experience in the insurance industry. He has been chief executive of the Farmers’ Mutual Group for the past 7 years. He alongside officials from the Department of the Prime Minister and Cabinet from Treasury and from the Department of Labour as well as the new chair of the corporation John Judge will oversee this very important piece of work. 
It is about a thorough examination of each of the accident compensation scheme accounts covering the motor vehicle account the earners account the employers’ account the non-earners account the treatment injury account and the residual claims account. It will look at alternative options both for service provision and for funding. It is the view of the new Government that experience-rating is the sort of initiative that we need to take in respect of the accident compensation scheme. We also want to look at the monitoring of the accident compensation scheme and also the oversight and governance of the $10 billion investment fund of the Accident Compensation Corporation. 
I have said quite publicly that the scale of the problems that we have within the accident compensation scheme the sorts of levy hikes that we are potentially looking at if we do not make significant change are such that we do need to have this stocktake group do its work but it will not include work on investigating whether the work account is opened up to competition simply because the scale of the issues that we are facing is so huge. Quite frankly the work account is in better shape; the problem is with the earners account and the motor vehicle account. 
I also want to make it plain that key stakeholders like the New Zealand Council of Trade Unions and Business New Zealand will have the opportunity for input into that important stocktake process. The stocktake group’s work programme is to be completed by June of next year. My expectation is that we will require a bill reforming the accident compensation scheme in the latter part of this year as well as one flowing on from this important work next year. 
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. 
Vote Climate Change 
NICKY WAGNER (National) 
: 
 The National Government has increased its funding for environmental priorities in Budget 2009. Funding for Vote Climate Change is over $502 million. The Government’s priorities in Vote Climate Change are firstly the redesign and implementation of the New Zealand emissions trading scheme and secondly to present our climate change case in international negotiations. 
Climate change is one of the most important issues of our time and one of the most complex and challenging. New Zealand has a unique position. We are a developed annex 1 country with a developing world emissions profile. Our two major industries agriculture and tourism rely on our management of our natural resources in a clean green sustainable way. As customers become more environmentally discerning we need to ensure that our agricultural processes can provide food that is considered safe and to honour our “100% Pure New Zealand” tourist brand we need to show that we understand sustainability and care for our environment. How successfully we deal with climate change will reflect on these important industries. 
The Emissions Trading Scheme Review Committee is finalising its work and will report back in a matter of weeks. After that decisions will be made about amending New Zealand’s emissions trading scheme. The Government intends that amendments will be broadly in line with our 2008 policy. We want to create a pragmatic durable scheme that will ultimately create more business certainty. The Government will take into account the impacts of the global recession when considering amendments. We are also working with Australia to ensure that New Zealand’s emissions trading scheme is harmonised as far as possible with Australia’s carbon reduction scheme. However the longer New Zealand delays implementing policies the more difficult it will be to meet the more stringent targets that are likely under future global agreements. Earlier action will allow a smoother transition and will better prepare the New Zealand economy to compete in a carbon-constrained world. 
The international negotiations under the United Nations Framework Convention on Climate Change are headed towards a crucial meeting in Copenhagen this December. It is hoped that the main points of the future treaty will be agreed there. The Government’s intention is to announce New Zealand’s 2020 target prior to the beginning of the next negotiating meeting in Bonn on 10 August. All other developed countries have announced their 2020 targets. Australia has announced targets equivalent to reducing its emissions to below 1990 levels by 4 percent unilaterally or by 14 or 24 percent depending on the strength of global agreement. The European Union has announced a unilateral target of 20 percent below 1990 levels and 30 percent in the context of an ambitious international agreement. The US administration’s target is to return to 1990 levels by 2020 but more ambitious targets are still under consideration by the United States Congress. 
In setting a target for New Zealand the Government is considering scientific economic foreign affairs environmental and other factors including the findings of the Intergovernmental Panel on Climate Change and recent statements by the G8 and the Major Economies Forum on Energy and Climate in support of limiting global warming to 2 degrees centigrade. We are also taking into account public input from a series of meetings attended by over 1600 people an online panel discussion a national hui meetings with business people and over 150 written submissions. Recurring themes from the public input include the need to focus on the environmental and economic consequences of action or inaction New Zealand’s clean green image and the effects on international competitiveness. As well as making a fair contribution to global emission reduction New Zealand is also actively involved in getting right the shape and form of a future climate change agreement. It is a difficult challenge but New Zealand is up for it. 
CHARLES CHAUVEL (Labour) 
: 
 I was disappointed by that contribution from Nicky Wagner because she sits on the Emissions Trading Scheme Review Committee and has made a thoughtful contribution on that committee. I was hoping we would hear from her today some further reflection on the work of the committee the design of the scheme and the question of targets. Instead we heard her read out a speech written by a research unit. That really is disappointing in this debate. 
In this brief contribution I will say that people are growing tired of the delay we have experienced in getting finality in this vital area of policy. We need to take it seriously. In my view there has been too much misleading talk about the balance between economic and environmental considerations. I think we are coming to a head when we come to the question of what carbon pollution reduction targets have to be set. It is embarrassing that we are one of the last developed countries to do this and it is just another indication of the risk we face in falling behind the rest of the world. Looking at the countries we like to compare ourselves with we see that President Obama has announced his Green New Deal with a major emphasis on how the US will transition to clean energy; in the United Kingdom Ed Miliband the Secretary of State for Energy and Climate Change has announced major reforms of the electricity sector in order to encourage investment in renewable energy resources; and our nearest neighbour Australia has developed the $4.5 billion Clean Energy Initiative to provide investment in the development of low-pollution technologies. The rest of the world is doing something. It was interesting to hear the previous speaker talk about the need to avoid a longer delay. We do not need to be in delay mode; we need to get on with it. We need to make sure that the actions we take will be beneficial. There is just too much at stake not to do so. 
Let us talk about the targets Nicky Wagner mentioned. The figures that have come out as far as Government studies are concerned—the analysis from the New Zealand Institute of Economic Research and Infometrics—are misleading. We need to have a good look at them. The studies cite a carbon price of $200 a tonne which is completely out of touch with international consensus. The price of carbon internationally in the medium range is much more likely to be about half that amount at $100 a tonne. The suggestion that there will be a price of $3000 per household per year is grossly inflated. If we look at the assumptions in the report we see that it is much more likely that if we adopt a target of zero then there will be about $1000 cost if there is a 15 percent reduction then the cost per New Zealander will be more like $1350 and for a 40 percent reduction there will be around $1900 cost which is 36 percent lower than the figure in the analysis that has been released. 
The modelling also assumes a lack of international competition in the carbon market. This is a major omission. It assumes no forestry planting which would result from the gradual increase in carbon prices. The US$25-a-tonne modelling by the Greenhouse Policy Coalition shows that forestry plantings would provide for 9 million tonnes after 10 years. This would make a huge different to meeting our target. Why not be bold? Why not look at the sorts of targets that are being advocated overseas in jurisdictions we like to compare ourselves with? I ask why we are instead mucking around with numbers that will not make a difference in the long run and that certainly will not get us to a satisfactory level of reduction by 2050 which everybody agrees we need to do. 
It is interesting to think about the hiatus that we are in. Nick Main the chairman of the New Zealand Business Council for Sustainable Development told the Emissions Trading Scheme Review Committee that indecision in this area is costing huge amounts of forgone investment. He said: “investment blight was affecting hundreds of millions worth of … investments in forestry clean energy and biotech and also holding up decisions on reinvestment and new investment in emission intensive industries”. 
The time to be bold is now. It is the time to show leadership. That is what New Zealanders want from the Government. We really need to see that leadership and we need to see it from the Minister for Climate Change Issues in respect of targets. 
Debate interrupted.