Boscawen John: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
Boscawen John: Injury Prevention Rehabilitation and Compensation Amendment Bill — In Committee 
[Volume:660;Page:9138] 
JOHN BOSCAWEN (ACT) 
: 
 It seems to me that this is a very fundamental debate. The one very fundamental issue driving this debate is that this country has an accident compensation scheme that we literally cannot afford. It comes down to that very basic fact. When we look at why we cannot afford it we see that in the last 4 years claims paid by the Accident Compensation Corporation (ACC) have increased from $2.2 billion to more than $3.5 billion. Claims have increased by 57 percent over 4 years and as we have heard that is five times the rate of inflation. 
What choices does the Government have? It can leave the scheme as it is currently and costs can go up next year the year after and the year after but what will happen eventually is there will be protests on the steps of Parliament as we had with the motorcyclists late last year. People will rise up in protest when what they are being asked to pay for the service that is being provided becomes too great. We see a parallel right now in Greece. That country is verging on bankruptcy and we see a Government there that has not made the hard decisions that are required. This Government is accepting the fact that we have a scheme that the country cannot afford. 
I ask myself what has driven the increases in the costs of claims and I break those issues into three areas. We have heard that the scope of the accident compensation scheme has been significantly widened since it was first introduced and after the Labour Party came into Government in 1999. 
Hon David Parker 
: 6 percent of the increase in liabilities; only 6 percent. 
JOHN BOSCAWEN 
: Mr Parker talks about 6 percent of the liabilities. I am not sure exactly what he is talking about but I read in the select committee report that the payments for claims paid out by ACC over the last 4 years have increased from $2.2 billion to $3.5 billion. What country can sustain a 57 percent increase over 4 years? If nothing is done about it we will end up in exactly the same situation as Greece now finds itself and Spain will likely find itself. That is right; that is exactly what we will find ourselves in. 
During its term the Labour Government obviously extended the scope of the scheme in many ways. We have heard this afternoon about extensions to cover suicide—compensation for members of a person’s deceased family. We have talked about the extension to physiotherapy services and the change from 30 hours to 35 and now the proposal to change it back to 30 hours. There have been a significant number of entitlement increases and that is one of the reasons that drive the cost of compensation increases. 
There have been demographic and technological changes. During the second reading debate Maryan Street talked about advances in medical science. She talked about the fact that 20 years ago people who had accidents and might have died now live and they live on at great cost. Life is precious but if we can save a person’s life and give them any sort of meaningful life then I support that. But that is a cost paid by society. We also heard from David Parker that as people age their bones become more brittle. I think he said that they break more easily. As our demographics change as our society grows older we will have bigger costs relating to accident compensation claims. Without any changes to entitlements but just from the simple ageing of society and through the development of medical technology the costs of those claims will increase. 
I believe there is a third reason why the costs of claims have blown out and I put the responsibility for this clearly back with the previous Labour Government. Yes entitlements are being reduced. There is a move in this bill to wind back entitlement. I put the claim fairly and squarely with the members of the previous Government who are sitting on the Opposition benches. 
One of the fundamental changes that the previous Labour Government made when it first came to power was to scrap choice in accident compensation cover. The previous National Government opened up the work account to competition. Five separate insurance companies were offering cover in addition to ACC. There was a choice in the provider and premiums dropped by some 30 percent. But more important when the account is opened up to competition the competing providers of accident compensation have a massive incentive to try to rehabilitate people to get them back to work. 
Darien Fenton 
: Utter rubbish. 
JOHN BOSCAWEN 
: So if you are an insurer in private business you would be happy to have the claim go on year after year? Let me explain. If you open up the work account to competition— 
The CHAIRPERSON (Lindsay Tisch) 
: The member cannot bring the Chair into the debate. 
JOHN BOSCAWEN 
: I apologise Mr Chair. The previous Labour Government closed down choice; it closed down competition. The tragedy of that is that we did not see the continued reduction in rehabilitation rates and prevention rates; we saw a blowout in increases. In fact the Minister in the chair the Hon Nick Smith spoke about the increasing rate of accidents. 
We can talk about the cost of compensation but what about the human cost? What about the cost to workers? What about the cost to ordinary New Zealanders who have accidents? What about the cost to ordinary workers who have accidents that could have been prevented whether or not they occurred in the workplace? The great tragedy of what happened in 2000 when the offer of choice and of competition was taken away by the previous Labour Government is that it resulted in an increase in accidents and a further contribution to the blowout in claims. 
There has been a huge blowout in the cost of claims. The reality is that the Government has to do something. We have a choice. Either we can continue to accept that accident compensation claims will go up by 12 or 13 percent per annum ad infinitum and take the consequences of that or we can seek to address it. I believe the National Government has done a very good job of trying to address the fundamental cause of accident compensation claims increasing at five times the rate of inflation in the way that they have. Thank you Mr Chair.