Parker David: Questions for Oral Answer — Questions to Ministers 
Parker David: Questions for Oral Answer — Questions to Ministers 
[Volume:653;Page:1968] 
7.  
Hon DAVID PARKER (Labour) 
 to the  
Minister for ACC 
: Does he stand by his statements that “if ACC was an insurance company it would be insolvent” and that “we need to get costs back under control.”? 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 Yes I do. The dictionary defines insolvency as “liabilities exceeding assets”. The accident compensation scheme has liabilities of $22 billion and assets of $10 billion. The scheme’s costs have more than doubled from $1.5 billion a year in 2000 to $3.2 billion this year. 
Hon David Parker 
: Has the Minister seen reports from Brian Fallow that the Government’s “shrill scaremongering and scapegoating is gratuitous” and from Rod Oram that “there is a huge gap between the rhetoric of John Key and Smith and reality” and will he now concede that his exaggerations around accident compensation were irresponsible? 
Hon Dr NICK SMITH 
: I note that there have been other commentators who have been very critical of the financial state of the accident compensation scheme. I simply say to members opposite that if all is well with the scheme why did the Government need to bail it out for $300 million this financial year? 
Michael Woodhouse 
: What has happened to the solvency of the accident compensation scheme over recent years? 
Hon Dr NICK SMITH 
: The solvency ratios of the accident compensation scheme have been in decline over the last 3 years. The decline pre-dates the financial crisis and has arisen because costs have been rising at three times the rate of inflation—three times the rate of inflation. I also note that the scheme’s liabilities increased rapidly by more than $2 billion in 2004 2005 2006 and 2007 which was well before the financial crisis was anywhere near New Zealand. 
Hon David Parker 
: Has the Minister seen the report by Fran O’Sullivan in the  
New Zealand Herald  
on Saturday where John Key was quoted as having no room for “phone throwers” or “temper tantrums at the top” and has the Prime Minister spoken to the Minister about his performance at the select committee on the Thursday before last? 
Hon Dr NICK SMITH 
: Yes I have seen the piece and I also have to say that I read Bill Ralston’s piece. He stated that it was high time for a Government to start taking into account the levy payers in the scheme and ensuring the scheme is viable long term. 
Michael Woodhouse 
: How does the Minister reconcile the claim made by the Opposition that the corporation does not have financial problems with the fact that the non-earners account alone required a $300 million bail-out this financial year and will need another $900 million over the next 3 years just to keep it afloat? 
Hon Dr NICK SMITH 
: The member makes a good point. The $300 million bail-out exceeds the total of the incoming Government’s spending commitments on Herceptin PlunketLine ReStart the 9-day fortnight voluntary bonding and the student loan discount all combined together. Of course that covers the problems in the non-earners account only not in the other four accounts. We on this side of the House are grumpy because we went to great effort to be fiscally responsible and we were blindsided by a problem in the scheme costing over $300 million for this financial year. 
Hon David Parker 
: Is the Minister still proposing to make cuts to the scope of the scheme’s cover and the privatisation of parts of the scheme when his main justifications have been demolished by the media and does he agree with Fran O’Sullivan that there is a fine line between using the worldwide recession to force radical change and downright chicanery? 
Hon Dr NICK SMITH 
: The facts about the scheme’s finances speak for themselves. The reality is that the organisation had to be bailed out by more than $300 million that huge levy increases will be required if we do not make changes and that this Government is committed to securing the future of the accident compensation scheme by improving its financial management. We will look at reviewing the scheme to ensure it is affordable for ordinary New Zealanders.