Kaye Nikki: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeKaye Nikki: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — Second Reading[Sitting date: 17 September 2015. Volume:708;Page:6800. Text is incorporated into the Bound Volume.]Hon NIKKI KAYE (Minister for ACC): I move That the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill be now read a second time. This bill amends the Accident Compensation Act 2001 by making important amendments to the existing approach to funding ACC’s levied accounts. In particular the bill strengthens the stability of the accident compensation scheme by creating a more financially responsible and transparent approach to setting levies and enabling more sustainable and stable levy reductions in the longer term.ACC has become a critical part of New Zealand’s economic and social fabric providing no-fault cover for all New Zealand residents and visitors covering motor vehicle non-work and workplace injuries. In 2008 this Government inherited a $4.8 billion hole in the ACC accounts. The Government and ACC have worked hard over the last 6 years to improve the scheme’s finances and the way we treat injured people. The bill before the House achieves this through its objectives by making two key changes to the ACC scheme. The first change is to introduce a more principled and transparent approach to setting levies. This is achieved through Part 1 of the bill which proposes three core measures. First the bill consolidates and clarifies important principles of financial responsibility that will underlie the levy-setting process. These principles signal the importance of setting levies to meet the expected lifetime costs of claims ensuring the long-term solvency of each account and avoiding large changes in levies.Second the bill requires the Government to set the overarching funding policy through the publication of a funding policy statement and in turn requires ACC to give effect to this funding policy statement. The statement will set out the target level for the funding of each account an approach to managing deviations from this target any limits on annual levy changes and any circumstances in which levy changes are not required. As such the funding policy statement will provide the Government with a suitable method of expressing its funding preferences. It will support a closer match between the levies that ACC consults on and recommends and the final decisions on the levy rates made by the Government. Levies are significant compulsory charges and it is important that the role of the Government in setting levies be reflected from the very beginning of the levy-setting process not just at the end.Third the bill increases the reporting requirements for ACC so that the public is better informed about the impacts that the new levy rates will have on future levy rates and other aspects of ACC’s funding. This will help to ensure that emerging pressures are fully transparent and can be managed.The second change in the bill is set out in Part 2. This part helps to ensure that residual levies are not over-collected by allowing for their collection to be discontinued sooner than is currently required in legislation. Recent evaluations suggest that the residual liabilities are now lower than the amounts specified in the Accident Compensation Act. Since 2009 there has been a significant improvement in ACC’s claims management regulatory changes reducing the cost of claims changes to discount rates and continuing excellence in the performance of the ACC investment portfolio.I turn now to thank the Transport and Industrial Relations Committee for its consideration of this bill. During the select committee process the committee received a number of submissions on this bill. Submitters generally expressed support for the reform although they held different views on the best way to effect change. As a result of the select committee process the bill returns to the House with a number of amendments that support the bill’s core objectives of promoting increased financial responsibility and transparency.An important change to Part 1 of the bill is that the Minister for ACC will now be required to consult such persons or organisations as the Minister considers appropriate before issuing the funding policy statement. This requirement to undertake targeted consultation will complement the public consultation on levy rates that already takes place and that is an integral part of the levy-setting process providing key stakeholders with an opportunity to present their views on the overarching approach to funding ACC’s levied accounts. This will help to enhance the transparency of the funding process and the accountability of the Government to levy payers.Following on from this the Minister for ACC will be required to issue a funding policy statement within 12 months of the passage of the bill rather than 3 months. This will ensure that sufficient time is allowed for consultation and to ensure the introduction of the funding policy statement occurs before a levy round and not part-way through. A further important amendment made following the select committee process is to ensure that it is clear that the principles of financial responsibility in the bill are balanced against each other and alongside the public interest under section 300 of the Accident Compensation Act 2001.The select committee also agreed to some important amendments to Part 2 of the bill. The first change is a consequence of a recommendation from the Regulations Review Committee. The committee recommended a change in approach to removing the residual levy provisions in order to reduce the complexity of these provisions. Rather than setting the date for removing the residual levy provisions by an Order in Council the bill now provides for the Minister for ACC to set this date by notice in the Gazette.I thank the Regulations Review Committee for its contribution to the bill. I want to personally acknowledge the chair of the Transport and Industrial Relations Committee Jonathan Young for the good work that has been done on this bill and all of the other members of the committee. I welcome their report. I also appreciate the contribution of the Regulations Review Committee and I thank all those who made submissions on the bill.The Government has delivered a significant reform and improvements to the ACC scheme and more than $1.5 billion of levy reductions with more planned over the next few years. As I have noted in 2008 this Government inherited a $4.8 billion hole in the accounts. The Government and ACC have worked hard over the last 6 years to improve the finances and the way we treat injured people. Now that the scheme is finally in a position where it is essentially fully funded this bill will enable successive Governments to make funding and levy decisions in a more principled and equitable way and to smooth out the effect of economic shocks over time. This means more stable and certain levies for all New Zealanders. I commend the bill’s progress to the House.