Hutchison Paul: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Hutchison Paul: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
[Sitting date: 27 February 2007. Volume:637;Page:7687. Text is incorporated into the Bound Volume.] 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 I am pleased to have the opportunity to speak on this very unfortunate Injury Prevention Rehabilitation and Compensation Amendment Bill—unfortunate because it is a blatant robbery of funds that employers have in good faith paid since 1999 to fully fund their account. It is a blatant grab by the Labour Government which is purely ramming through the ideology it has in terms of so-called social insurance and is disobeying the basic principles of insurance whereby those who are at higher risks should indeed have higher premiums. Merging the accounts undoubtedly acts in a directly opposite way to basic insurance principles and it is very regrettable that the Labour Government has just failed to see that unless we apply basic insurance principles to accident compensation it will never ever be efficient. That is of great worry. 
Here we have two accounts. The first is the employers’ account into which employers since 1999 have in good faith paid their premiums and accrued a substantial surplus yet the Labour Government has said that it wants that money to go to a merged account that will cross-subsidise the self-employed who unfortunately have higher risks and higher injury rates. It is sending exactly the wrong message from that which it should be sending. 
One of the things I am very concerned about is that in New Zealand we have had an increase in the incidence of moderate and severe accidents. Despite 6 years of this Labour Government— 
Darren Hughes 
: Seven. 
Dr PAUL HUTCHISON 
: Seven? Sadly 7 but it will not be much longer. Despite 7 long years of this Labour Government the incidence of moderate and serious accidents has gone up. But in this legislation the Government is trying to put in provisions that will give exactly the opposite message to the community out there in terms of accident prevention and of inputting safety measures within their organisations. 
The facts are that injury rates are lower on average in the employers’ account and that is by virtue of the fact that employers are better organised have better infrastructure in place and have worked very hard since National so appropriately privatised the account back in 1998. We saw a decrease in accidents a dramatic increase in safety procedures in the workplace and decreased premiums. That is the fact of what matters but in this bill we are seeing a blatant manipulation of the levies by the Labour Government. That has been brought about by the fact that substantial money is being transferred from the employers’ account to the residual account and the Labour Government is artificially putting down the levies. 
It thinks it can fool the public by this mechanism. But we should know that if a car driver out there has many accidents and they are his own fault he should pay a higher premium. That is a simple rule of basic insurance philosophy. Yet this Labour Government wants to go in a totally opposite way to that. It says that it wants to reward those in the self-employed group who have higher injury rates and higher risks. The Government is going to bring down their levies and give them some money to boot. That is the total lack of logic of this Labour Government. 
I do take seriously the fact that the Minister has said that she would support—only in principle—the two amendments I have brought in. I am deeply saddened she will not support them and I hope that the rest of the Committee will look at those amendments. They are thoughtful as the Minister said and I think they will contribute to the transparency we really need in this accident compensation debate. 
Firstly in relation to Part 1 clause 11 I propose that the following section section 175A is substituted: “Independent auditing of proposed premiums”. One of the major problems we have in this country is that the general public does not understand the levy setting in this country and in this amendment is a mechanism whereby “proposed premiums and the rationale for such premiums must be audited by independent third party actuaries yearly”. The Minister says that that happens but the difficulty is that we cannot get to them because of the Official Information Act. [ 
Interruption 
] Well that is what the Minister told us just a few minutes ago. 
Hon Ruth Dyson 
: I said that you can get to them because of the Official Information Act. 
Dr PAUL HUTCHISON 
: We can get to them but they are not open to the public. The Minister is saying that in good faith she will ensure that they are available to the public. If the Minister thinks that is a good idea why does she not support the amendment? I call on the Greens the Maori Party New Zealand First United Future and all the other parties in Parliament to support an amendment that the Minister herself has said is a highly sensible and thoughtful amendment. The same goes for— 
Darren Hughes 
: Huh! 
Dr PAUL HUTCHISON 
: Now we hear “Huh!” from Darren Hughes the member by a very very thin margin for Otaki. He should be adding a sensible contribution to this debate not by saying “Huh!” but by persuading his Minister that this is a very sensible amendment. 
Let us go on to clause 11 where I propose that a new section 175B is also substituted: “Provision of forecast statement of financial performance—ACC must provide yearly a forecast statement of financial performance for the next five years to allow levy funders to analyse current premium setting performance against projected outcomes.” Again the purpose of this amendment is to make the levy setting mechanisms as transparent as possible and hopefully as understandable as possible to all those who are involved. I am delighted to see that the Minister is nodding her head and I would appeal to her not only to say that she supports this idea without supporting the amendment but to formally support the amendment because I do believe that it is a serious contribution to this debate. We can see the National Government-in-waiting is ready to do all sorts of useful things to accident compensation and I am glad that the Minister is recognising them. 
 Finally I want to speak on the amendment put up by my colleague Pansy Wong. That is in the next part but let me foreshadow it. Again it is another very sensible amendment and it comes to the nub of the philosophy behind this unfortunate Labour Government bill. One would hope that in accident compensation and accident prevention good faith is demonstrated by whoever the Government is. The Government certainly in good faith required collection of levies from the employers and they have done that for the last 5 years. The employers in good faith have paid expecting that fund to be fully funded. Here clearly a surplus has accrued and sadly the Labour Government wants to grab it. This absolutely defies the principles of good faith as does its insistence against the idea of rating which it is so determined to object to. 
I think we will find in this debate that the Labour Government is in denial about the idea of relative risk rating. It will cite some very obscure literature from Europe and maybe North America that is irrelevant to the fact that people out there actually respond to financial signals. I agree that robust safety management practices have to be put in place within all businesses whether they are large or small—I absolutely agree with that. But clear financial incentives also should be in place and one of the major problems that this bill encompasses is that of merging the two accounts. It is directly opposite to all the basic principles. The Labour Government is saying it wants to reward those who take risks and who are not helping the New Zealand safety record. That is wrong.