Young Jonathan: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — First ReadingText is incorporated into the Bound VolumeYoung Jonathan: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — First Reading[Sitting date: 02 June 2015. Volume:706;Page:4203. Text is incorporated into the Bound Volume.]JONATHAN YOUNG (National—New Plymouth):Well just to colour in perhaps the historical picture that the previous speaker Mr Little spoke about when he referred to for example the global financial crisis and the effect that may have had in creating the $4.2 billion hole the other side of that story is that under Labour the cost of claims increased by 57 percent in 4 years. So there was an opening up of the floodgates of people who came and used that scheme. It was used as a welfare programme rather than an insurance scheme. That is what happened and that was what contributed largely to the hole that we inherited as a Government.If we can do all that Mr Little says we can do right now why is it that voices out there in the business community are saying that this piece of legislation will become a breakthrough for ACC in this country? Let me just read out a quote from the chief executive of Business New Zealand Phil O’Reilly who said: “While BusinessNZ welcomes the $500 million proposed cuts in premiums to be announced in the Budget 2015 which is positive for businesses employees and motor vehicle owners the more important issue is the proposed new ACC Financial Responsibility and Transparency Amendment Bill. This will ensure levies reflect sound insurance principles”—there it is: not welfare but sound insurance principles—“ and is a major breakthrough …”.So if we could always do what Mr Little said we can do why is it that people who look from outside in the business world into what happens here in the House of Parliament and look at legislation call it a major breakthrough that ACC levies will now reflect sound insurance principles? So although yes we know that the ACC fund can be at times affected by what is happening out there in the equity world we also know that there needs to be strong principles in order to bring stability to that fund.He went on to say: “BusinessNZ hopes the bill will receive cross-party support as it proceeds through Parliament to ensure the public has faith in the principles of the ACC scheme.” I believe everyone in this House believes that ACC is a good thing. In order to ensure that it is stable and continues to offer New Zealanders what it intends to offer in the future it is important to have stability around that fund. We know what would have happened immediately if Labour had been in power. Yes it would have taken $350 million out of the levies. We know that that sort of short-term pay-as-you-go attitude is going to contribute to instability. It is important for us to have a long-term view so that we can take an actuarial approach to ACC.We know and some members on the opposite side know that when ACC came to the Transport and Industrial Relations Committee at the beginning of this year to do its annual review as ACC discussed its equity position it said that it worsened from negative $108 million on 30 June 2014 to negative $600 million by 31 December 2014. And in January this year for reasons beyond ACC’s control the asset base diminished by $4 billion and then bounced back by $2 billion in February. Short-term volatility exists around the assets of ACC. We are very thankful for the fine managers of that fund because they work hard for the benefit and interests of all New Zealanders. But we understand that even beyond a global financial crisis there are factors that affect this fund and therefore we need to take a prudent careful and yes a transparent but stable approach to how we manage and set those levies. It is very important.Due to short-term volatility in both the asset value and the outstanding claims for liability the Government’s approach is that a longer view is essential when it comes to levy-setting. This is what this bill is about. It is good to hear people like Phil O’Reilly who understands that and calls this bill a major breakthrough.If I could also read out what Kim Campbell chief executive officer of the Employers and Manufacturers Association said: “the $500 million reduction over two years comes at the right time following ACC’s sound financial performance and the solid footing which has the scheme now fully funded.” He says further: “We also like the fact there will be a more transparent levy-setting framework in the future and the Minister’s assurance around more stable levies in the future.” Let me just read his shout-out to the Minister: “We’re also pleased to see that as a new Minister to the ACC portfolio the Hon Nikki Kaye has quickly come to terms with the issues and made such a positive step in the proposed Accident Compensation Financial Responsibility and Transparency Amendment Bill.” That is worth saying as well. I think we are pleased to see the way that the Minister is very ably handling a very complex portfolio. I think it is good for all New Zealanders.I believe there are many components around that that makes ACC stable and strong. When the cost of claims increases by 57 percent in 4 years you wonder how much sicker we were how many more injuries we have had over that period of time and how many more accidents have occurred in our country. I think at that point in time Labour lost ACC’s proper focus on getting claimants back to independence—the independence that they deserve. There seemed to be such a huge flow of increased claims. I believe that over that period of time ACC suffered a $7.2 billion loss in 2 years and levy-setting was divorced from the reality of ACC’s burgeoning costs at that point. ACC’s long-term liabilities over that period of time increased by $15 billion.Yes it was hard work and yes it was at times controversial but getting this scheme back into the strength that it presently has is very very important for what it offers New Zealanders. It is a 24-hour no-fault scheme that is the envy of many countries in the world. It is really important for us to have cross-party work on this because it is such an important scheme for New Zealanders.By way of background in 1999 ACC moved to a system of fully funding the lifetime costs of an injury claim. Before this levies covered only the current costs of a claim—that is the Government looked at the current costs to ACC and set the levy to meet those costs as they currently occurred. What this scheme now offers is the ability to fund a person for the entirety of their claim. There are residual levies that are paid because of those claims that happened prior to 1999. But as those claims are finally paid out there is obviously not a need for those residual levies. What this bill does is enable the timing for the cessation of that to be determined closer to the mark when we come to that point.I have got to say one more thing before I finish my speech. Next month New Zealanders are going to see a significant reduction in the registration costs of their vehicles. I had a look at mine today. I have to say I have the oldest car in my street but it is a good old car—a 2006 Holden Calais. My registration cost is going to reduce by 50 percent. Is it not fantastic that this Government has got ACC under control fully funded strong and stable and that people right across our country are going to receive the benefit of that in their back pocket?I am very happy to commend this bill to the House.