Radhakrishnan PriyancaHon PRIYANCA RADHAKRISHNAN (Labour): Thank you Madam Speaker. Look it is a pleasure to take a call on the Accident Compensation (Interest on Instalment Plans) Amendment Bill and I say that because the Accident Compensation Corporation (ACC) which has been in place of course for over 50 years now and was put in place by a previous Labour Government is one that is unique to us it's world leading it was revolutionary at the time and I think remains so. It of course provides accident insurance cover for accidental injuries to virtually everyone: New Zealand citizens residents and even temporary visitors and I think that's what makes it incredibly special.I do want to acknowledge the fact that work on this technical bill began under previous Ministers as well both the Hon Peeni Henare and the Hon Carmel Sepuloni who were also intending to rebalance the Act and well did rebalance the Act to an extent by extending cover to parents giving birth and by also reviewing the Accredited Employers Programme. There was a new framework that came into play sometime back—from memory—that would be used to review Schedule 2 of the Accident Compensation Act 2001 to look at what other occupational injuries or diseases could be covered in the future as well. Those sorts of pieces of work were truly revolutionary in terms of extending ACC and what it could achieve. This bill that we're here to debate in the House today is really just a technical fix not quite that revolutionary but important nonetheless.Just a little bit of context as to why we're here today: the cost of the cover of injuries that I mentioned previously—which is of course the primary benefit of ACC—is funded from five accounts. Now three of those accounts—work earners and motor vehicle accounts—are funded solely through levies that are charged to employers to earners and to motorists. Most businesses I understand or at least a large number of them do make their levy payment in one single payment on the annual deadline that is stipulated by legislation. But I also understand that there are many businesses largely small businesses—and bearing in mind that about 97 percent of businesses in New Zealand are small to medium sized enterprise there are some who then use the instalment plan that the ACC Act allows for as well. And therein lies a little bit of the issue and why we're here today.This bill as I mentioned is pretty technical. It will allow the Accident Compensation Corporation to charge debit interest when an employer or self-employed levy payer pays levies using the instalment plan and there are a few different instalment plans that are allowed for; from memory there are three-month six-month and 10-monthly plans. It will also validate ACC's past and continuing practice of charging debit interest in some cases where these levies are paid by instalment. And I will go into a little bit of that because it was quite interesting to see in the regulatory impact statement (RIS) that the Ministry of Business Innovation and Employment (MBIE) and ACC had slightly differing views on the interpretation of the legislation and so I will go into that a little bit.What is the problem definition? What are we here to fix? Why are we here with the debate on this bill? It's basically that there are strong policy reasons; so there is quite a strong rationale for ACC to be able to collect an appropriate charge particularly on the longer instalment plans as well just to make sure that there is equity between levy payers. If this wasn't in place from the reading of both the RIS and the bill my understanding is that if the instalment plans weren't an option then it would lead to some issues particularly with smaller businesses perhaps being forced to take on unsecured involuntary debt whether it's through alternative finance means bank cards overdrafts and so on and so forth. Which would then mean that they incur typically a higher rate of interest than they would have been charged if they had paid through the instalment plan with the debit interest component.So it is important that we are able through the ACC Act to allow for this as an option—for instalment plans as an option for businesses particularly smaller businesses. So as a result of this it's more likely that businesses that are currently using that 10-month instalment plan are potentially better off financially than if they were not offered this instalment plan option and had to go down the pathway of a bank loan or an overdraft or things like that. So this is necessary.Now what's the problem here? One of the issues as I alluded to previously was the fact that MBIE and ACC have had a slightly differing view on the interpretation of this legislation. There are two parts of the problem as the regulatory impact statement lays out as well. So firstly ensuring that ACC's levy collection power is I guess fit for purpose and then addressing the risk that potentially and this is where the retrospectivity of this bill comes into play—ensuring that what ACC has been doing for approximately 20 years or so no longer incurs a legislative risk to the Government. So now the power for ACC to accept that payment—that levy payment particularly—is provided for in the ACC Act as I mentioned and I'll just read the bit that is related to it. It says ACC may charge a reasonable fee to recover its costs of collecting any levy by instalments."—that's section 234(2) of the Act. The empowering provision provides that regulations may prescribe and I quote "the matters in respect of which fees or charges are payable under this Act including any administration fee payable in respect of levies paid in instalments:"—that's section 333 (1)(b)(i).So apparently when the two sections that I've just mentioned are read together there is a discrepancy between the two agencies' views—between MBIE and ACC. MBIE doesn't consider that the " 'reasonable fee to recover its cost of collecting' and an 'administration fee' provide the basis for ACC" to be able to charge the debit interest payment. So therein lies the issue here. And I do take the point that there is a legislative risk. There was a rationale provided in the RIS for this bill to go through this House under urgency. I will however also point to the fact again laid out in the RIS that putting this bill through or passing this bill through all stages under urgency has meant that there's a limited amount of time for formal advice to have been provided by the Legislation Design and Advisory Committee (LDAC). So there is an issue there. The time frames they have said in the RIS "short timeframes to support this bill being passed under urgency" has meant that there was no possibility for formal advice to be provided. However from the reading of it MBIE has considered the LDAC guidelines as best as they can and provided that this legislation is necessary it is important and this is the most appropriate way according to them to be able to achieve the policy objectives of this bill.I will also make mention of new Part 5 inserted into Schedule 1AA by clause 6 and that is the fact that nothing really changes in terms of rates for business owners for those using the instalment plans as a result of this bill passing—which it will given that both National and Labour are supporting it. So currently there is no amount of levy that's collected on the three-month or the six-month instalment plans. The 2.73 percent is only collected on the 10-month instalment plan. That will not change as a result of this bill. I am really pleased to see that it is sort of baked into legislation that ACC must consult levy payers to ensure that the rates that are finally set through regulations are ones that are fair. That is important because while ACC does need to recover some of the costs or charge the debit interest fee for the reasons that I've outlined previously it does need to be set at a rate that is fair—one that isn't too high and one that isn't too low. And the risks of both are laid out quite well in the regulatory impact statement as well.So while consultation could not be conducted because of the fact that this bill is passing through the House under urgency through all stages it is a good thing that consultation will need to occur before the rates are set to ensure that the rates that are finally set are fair. Thank you Madam Speaker."