Roy Heather: Injury Prevention Rehabilitation and Compensation Amendment Bill — First Reading 
Roy Heather: Injury Prevention Rehabilitation and Compensation Amendment Bill — First Reading 
[Volume:634;Page:6016] 
HEATHER ROY (Deputy Leader—ACT) 
: 
 I rise to speak to the first reading of the Injury Prevention Rehabilitation and Compensation Amendment Bill on behalf of ACT New Zealand. We will be opposing this bill and I will go on to explain why. The bill as the explanatory note states covers two issues. The first is quite large and concerns the merging of the employers’ account and the self-employed work account. ACT vigorously opposes that merger. The second issue concerns the renaming of the medical misadventure account as the treatment injury account. I will address that issue first as it is much smaller and much more technical in nature but there is quite a principle at stake. 
In 2005 another accident compensation amendment bill was introduced in this House and I listened to the submissions in the Health Committee. That amendment bill removed the necessity to find fault to obtain cover for treatment injuries amongst other things and removed “error”and “rare and severe” as definitions of medical mishap. 
At that time ACT vigorously opposed the amendment bill pointing out many of the injustices that arise when fault does not have to be found. We will oppose that part of the current amendment bill as vigorously as we opposed the previous legislation given that we did not agree with the principle in the first place. 
With that out of the way we can address the primary reason for bringing this bill to the House—that is to merge the employers’ account and the self-employed work account. Other members have talked about the fact that the National Party’s speeches have harked back to the 1999 amendments and I suppose the privatisation of the account which allowed for competition and choice. It is not a harking back; it is in fact a relooking at very sensible changes made to accident compensation which improved the operating of accident compensation completely. Despite those changes being in place for only 9 months there was a decrease in the number of injuries and a decrease in the levies that employers the self-employed and others paid. 
It saw competition and choice introduced into the running of the accident compensation scheme and that was a very good thing. The sooner we move back to that system the better despite the fact that it was tried for only a very short time. It should have been trialled for much longer; the advantages would have been much more visible had that been the case and it was a very backward step for this nation indeed that those provisions were removed. 
There are some very good things about the Accident Compensation Corporation (ACC). I recently asked a written question of the Minister about what percentage of accident compensation surgery was done in private hospitals. The answer came back that the updated figure was 83 percent. ACC has managed to get that absolutely right—that is the contracting-out of surgery to the private hospitals that are able to do that most efficiently and very important as taxpayers are footing the bill very cost-effectively. 
Unfortunately the health system generally has not learnt its lesson in that respect. Again that is a very backward step for the taxpayers of this country. However in this instance the policy in this bill today will not be of benefit to taxpayers or to employers and the self-employed. Despite the speaker from New Zealand First seeming to miss this point completely accident compensation is an insurance-based scheme and as such is based on risk. Unfortunately we have a monopoly insurer and I have addressed that point already saying we should go back to having competition and choice which would see significant improvement in the system. Certainly that is what the ACT party wants to happen. But one size does not fit all and the proposal to merge the two accounts is a one-size-fits-all solution to a problem that involves insuring those in the workplace where it should be based on risk. 
We hear much about improving workplace safety. This bill unfortunately will not do that. It will not see the incentivisation of safety and that has been pointed out by groups like Business New Zealand. The first point to be made is that the employers’ account is significantly overfunded compared with the self-employed account. We need to look at these two accounts very carefully just to see the state of them at the moment. 
If we look at some forward forecasting the employers’ account is forecast to be overfunded to the tune of about $341 million as at 30 June 2007—an overfunding of around 27.2 percent. In contrast the self-employed account which is a much smaller account given the nature of the employment type is forecast to be in a deficit position to the tune of $33.5 million as at 30 June 2007. That represents an underfunding of around 11 percent. So the two accounts are in significantly different positions. 
That is important because as a result we will see a significant cross-subsidisation by the employers’ account of the self-employed account. Some people probably think that that has absolutely no significance at all but it has. It means that employers will be paying a lot more than the self-employed. So they will be subsidising that group when in fact the risk is significantly different. 
I turn to my second point. The United Future member highlighted a point but I think came to the wrong conclusion. She used the example of a plumber as many others have. The plumber example I suppose is a good one but again the wrong conclusion has been reached by just about everybody who has used it. Why should a self-employed plumber be paying a levy different from somebody who is employed as a plumber and the employer is paying the levy on that person’s behalf? 
The problem is that not all workplaces are equal and what needs to happen is that workplaces need to be assessed. They are at the moment; they are audited for workplace safety management practices. That leads to an experience-rating so those workplaces that have a good safety record pay less than those that do not have a good safety record. The plumber example is a good example of how this should not work. In fact the workplaces that are safe should be rewarded for providing a safe workplace—presumably they take better safety precautions realising fewer injuries in their final outcome. That is what should be in place. So groups should receive the benefit for a good safety record and those that do not provide one should be penalised. 
ACT will oppose this bill for a number of reasons. The differences between the employers’ account at the moment and the self-employed work account resulting in cross-subsidisation is a concept we find unacceptable. The levy rates should be based on experience. The two accounts are not funded to the same tune at the moment so that is a real difficulty for the future. The other thing we object to is that this planned legislation does not show a commitment to fairness and sustainability when it will—and the transition provisions in the bill highlight this—bypass the usual levy consultation process for the 2007-08 year. This too is totally unacceptable particularly from a Government that claims that consultation is important and that everybody should have his or her say. So for those reasons ACT will oppose this bill.