Parker David: Questions for Oral Answer — Questions to Ministers 
Parker David: Questions for Oral Answer — Questions to Ministers 
[Volume:652;Page:1693] 
1. Hon DAVID PARKER (Labour) 
 to the  
Minister for ACC 
: Will the Government support an urgent law change to extend the date for full funding of ACC accounts? 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 Yesterday I stated my intention to introduce legislation to push out the full funding date. The member is wrong to present the extension of full funding as a solution to the challenges facing accident compensation and the growth in levies. All it changes is when we pay and if costs double as they more than did under Labour’s tenure at some point levies must follow suit. 
Hon David Parker 
: Does the Minister accept that if the date for full funding is extended to 2019 then the big hikes in levies and registration fees that the Minister referred to yesterday will be substantially avoided? 
Hon Dr NICK SMITH 
: Yes if the full funding date is moved forward we can make a difference in some of the accounts but not all. I also note though that by pushing out the full funding date the solvency ratios in the accounts do not improve—in fact they deteriorate—and furthermore the debt goes on to the Crown balance sheet. The idea that simply pushing out the full funding date solves the problem in accident compensation in misleading and wrong. 
Michael Woodhouse 
: Is the Minister surprised by Labour’s proposals for deferring full funding in order to take pressure off the motor vehicle levy? 
Hon Dr NICK SMITH 
: Yes I am. Last July Labour increased the accident compensation motor vehicle licence and petrol tax levies by almost $50 at a time when the cost of petrol was over $2 a litre. Officials presented Labour with this option; it declined it then. How it changes its spots when in Opposition! 
Sue Bradford 
: Is it true that Business New Zealand and Treasury are currently the sole drafters of the terms of reference for a full Government review of accident compensation? 
Hon Dr NICK SMITH 
: No that is completely false. I have not had any discussions with either of those organisations about the changes that the Government will need to make in accident compensation nor have officials. I wish to reassure the member that this Government is absolutely determined to ensure that New Zealand has a 24/7 accident insurance scheme that is both affordable and sustainable in the long term. 
Michael Woodhouse 
: What other reports has the Minister received of misleading information about the accident compensation scheme’s financial position? 
Hon Dr NICK SMITH 
: Yesterday I noticed that Mr Parker was keen to focus on the solvency ratio in 1999. I note and the House will know that the decision to move to full funding was made in 1998. So 25 years of residual funding had to be taken into account at that time and the idea that somehow it would all be paid off in 1 year is simply absurd. 
Michael Woodhouse 
: Will deferring the full funding date resolve the costs facing families from the blowout in the accident compensation accounts? 
Hon Dr NICK SMITH 
: No. Of the $2400 increase in projected levies for families 73 percent of that will come from the earners account. The earners account has a very small residual component so extending out the full funding period will have a negligible effect. The average family would still face increases of over $2100— 
Hon Tony Ryall 
: How much? 
Hon Dr NICK SMITH 
: —$2100—even with the proposal being advanced by Mr Parker. 
Hon David Parker 
: Will the Government commit to extending the date for full funding in time to prevent the large and unnecessary increases in motor vehicle levies this July or will the Minister let them go up unnecessarily as he did with the employer levy before Christmas? 
Hon Dr NICK SMITH 
: I can assure the House that this Government is far more mindful of the costs of accident compensation on motor vehicle owners on households and on businesses than the previous Government ever was. Furthermore this Government is prepared to make the changes to secure the long-term future of accident compensation rather than to have it compromised by the sorts of policies that the previous Government had. 
Hon David Parker 
: I raise a point of order Mr Speaker. That question was really very simple: would the extension be in time for the July increases or not? Again we had a diatribe from the Minister. 
Mr SPEAKER 
: I accept the point that the member has made. I invite him to repeat his question because there was no mention of timing in the answer. 
Hon David Parker 
: Will the Government commit to extending the date for full funding in time to prevent the large and unnecessarily large increases in motor vehicle levies this July or will the Minister let them go up unnecessarily as he did with the employer levy before Christmas? 
Hon Gerry Brownlee 
: I raise a point of order Mr Speaker. I ask you later today to consider very carefully the transcript of the answer given by Dr Nick Smith in answer to the question that was first asked. If we are going to have to answer questions on the basis of supposition in the question then I think we are in some trouble. 
Mr SPEAKER 
: The part of the question that involved supposition did not require an answer. The bit that was very clear in that question related to the timing of a decision and the Minister made no attempt to address that in any shape or form. That is why I invited the member to repeat the question and the Minister for ACC— 
Hon Dr NICK SMITH 
: I raise a point of order Mr Speaker. The change in legislation in respect of motor vehicle levies will not be necessary for this Government to provide for a lesser level of levy increases than those proposed by officials. 
Mr SPEAKER 
: What the Minister has just said is not a matter of order. The Minister may choose to incorporate that in an answer to the member but the member’s question was very clear. I invite the Minister to answer it. 
Hon Dr NICK SMITH 
: I raise a point of order Mr Speaker. The member’s question was based on the supposition that the only way I can limit the cost of the motor vehicle levy increase is to change the legislation. That is not correct and that is why it is possible for the Government to make a lesser levy increase. 
Mr SPEAKER 
: The Minister is attempting to answer the question to me; it is the honourable member’s question and I invite him to answer it. He is giving a perfectly good answer now. If he had only done that previously then everything would have been in order. I have invited the Minister to answer the member’s question. He does not have to if he does not wish to. 
Hon Dr NICK SMITH 
: I thought I had. I will answer again. The member’s supposition— 
Mr SPEAKER 
: The Minister was trying to answer the question by way of a point of order. He cannot do that because it is not a matter of order. He just needs to answer the question not raise a point of order. 
Hon Dr NICK SMITH 
: The supposition in the member’s question that the only way in which I can contain the levy increases on motor vehicle owners is a change in the legislation is not correct. The Government’s move to push out the full funding date will be in legislation that I intend to introduce into the House this year so that it can be taken into account in the levy increases at the end of this year. 
Hon David Parker 
: Does the Minister accept that the PricewaterhouseCoopers report showed that $1.8 billion of the $2.5 billion increase in accident compensation liabilities is the result of decreasing investment returns caused by the global economic crisis and is not caused by generous entitlements as he claims? 
Hon Dr NICK SMITH 
: The decrease in investment returns is actually quite small. The key factor in the latest report that has increased the liabilities has actually been a reduction in the discount rate. 
Hon Dr Michael Cullen 
: Exactly—cyclical. 
Hon Dr NICK SMITH 
: Exactly! Even Dr Cullen is agreeing with me. The discount rate went up in 2005 and 2006 and as the report that was presented to the House on Tuesday made plain the underlying reason for the huge increase in liabilities is the fact that the cost of the scheme had more than doubled per year. 
Hon David Parker 
: What does the Minister say to former train driver Terry Bristowe who would again be denied coverage for his lost earnings if he was off work having had his train run over people and to people who suffer medical misadventure and lose their earnings and is he willing to assure them that they will remain covered after his changes to accident compensation coverage? 
Hon Dr NICK SMITH 
: The new National Government will not be making any retrospective changes but it is true that Labour made extensions to the scheme that were not funded. We have the simple choice either to increase the levies by $2400 per average household per year or to review some of the changes that have been made. It is the view of the Government that we need to save the scheme and to make it affordable as well as efficient. 
Hon David Parker 
: I raise a point of order Mr Speaker. Once again we had the Minister making a speech. Very little of that answer was relevant to the question that was asked and I ask that you bring the Minister to order. 
Mr SPEAKER 
: I believe I have been very fair in giving the member the chance to restate a question and obtain an answer on it. I do not believe that that point of order was remotely reasonable.