Parker David: Questions for Oral Answer — Questions to Ministers Questions to Members 
Parker David: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:658;Page:7173] 
6.  
Hon DAVID PARKER (Labour) 
 to the  
Minister for ACC 
: What is the proposed increase in ACC levy fees for a car and how much would it have been if the date for full funding of the motor vehicle account is not extended? 
Hon Dr NICK SMITH (Minister for ACC) 
: 
 The increase proposed by the Accident Compensation Corporation (ACC) board for the average motor vehicle is $130.28 but with the Government’s amendments to the scheme including pushing out the full funding date that figure is reduced to an increase of $30. This is complicated by the fact that the levy may be imposed on the fuel or on the licence fee that there are different models for extending the full funding date—and I note the differences between my own bill and the member’s which make a difference—and by the fact that there is also a relativity adjustment for different types of vehicles. 
Hon David Parker 
: I raise a point of order Mr Speaker. This is the second day I have put this question down on notice. What the question seeks to do is to separate out the effect on levies of extending the date for full funding; that is all the question seeks to do. Again the Minister has not answered the question. He has not told us what is the consequence on fees of extending the date for full funding and that is what the question asks. 
Mr SPEAKER 
: I would dearly like to help the honourable member but I am at something of a loss because I heard the Minister tell the House just now that under the status quo the increase would be I think he said $137 or something— 
Hon Dr NICK SMITH 
: $130. 
Mr SPEAKER 
: —$130—and that with the extension proposed the figure comes down to $30. I do not see what it is the member is seeking to have me try to achieve. I realise that the member has a real interest in this question and that it is on notice but it seems to me the Minister has answered. He has given us two figures that depend on those two factors. If there is some aspect that is escaping my notice the member has more supplementary questions to drill down into that. 
Hon David Parker 
: I seek leave to table an extract from the briefing to incoming Minister which shows that the extension of the full funding date to 2019 would be responsible for $83.70 of the lower increase. 
Mr SPEAKER 
: Leave is sought to table that briefing to incoming Minister. Is there any objection to that? There is no objection. 
Document by leave laid on the Table of the House. 
Hon David Parker 
: Why does the Minister not tell the Prime Minister that the majority of the lower increase in accident compensation registration and petrol levies is caused by the extension for full funding because the Prime Minister in answer to question No. 1 today said that it was only a small part of the solution? 
Hon Dr NICK SMITH 
: No the member is incorrect. It is true that a significant amount of the reduction in the motor vehicle account is from a full funding extension and I have said that quite consistently. The thing that members opposite do not seem to understand is that there is actually no real saving collectively from pushing out the full funding date. The only thing we change is when we pay—that is by pushing the full funding date out we have lower levies in the short term but higher levies in the long term. The point this Government makes is that if we want real savings we have to make real savings. That is what the Government’s programme is about doing. 
Michael Woodhouse 
: Why is it Government policy for the accident compensation scheme to be fully funded rather than to be a “pay as you go” scheme? 
Hon Dr NICK SMITH 
: The principle of full funding is that the accident compensation scheme should fund the full cost of accidents in the year in which they occur. The first reason for this policy is that it puts a proper focus on improving safety. If the costs are pushed out into the never-never there will never be the same incentives for reducing accidents. The second reason concerns the incentives that apply to governance and scheme managers. It is easy to promise extra entitlements when another Government in the future has to do the paying. Full funding puts a better focus on the trade-offs between the entitlements and the actual cost to levy payers. 
Hon David Parker 
: Does the Minister agree with John Key’s statement last week that an “honest conversation” is needed with New Zealanders about how to balance levies and the scope of cover; if so how can it be honest for his Government to cut accident compensation scheme cover before that conversation takes place? 
Hon Dr NICK SMITH 
: I think it is important for us to have an open discussion about the trade-offs for higher levies. What the Government and the country cannot have is the continuous argument from members opposite that we can have a whole lot of entitlements but nobody has to pay for them. That is irrational. 
Michael Woodhouse 
: What changes is the Government proposing in response to the ministerial inquiry into the accident compensation scheme’s blow-outs which concluded there was a breach by the previous Labour Government of the Public Finance Act in the 2008 Pre-election Fiscal Update over the finances of the scheme? 
Hon Dr NICK SMITH 
: The Government is making two important changes. First new provisions in our amendment bill will require the tabling of an actual report into the accident compensation scheme’s financial situation. I note that actuaries back in 2006 expressed concern when the ACC board made some quite bold assertions about ongoing investment returns but that never made it into the annual report that ACC tabled in Parliament. This change will ensure that that does not occur again. The second change we are making is around the timing of the budgetary process for the funding required for the non-earners account. We are shifting it to better fit into the overall budgetary process so that those errors are not repeated. 
Hon David Parker 
: Why has the Government ignored Labour’s offer to vote to extend the date for full funding which would take substantial pressure off levy increases while John Key’s “honest conversation” took place; and does his decision to proceed with cuts in the accident compensation scheme’s cover and investigations of privatisation not show that this was the real agenda all along? 
Hon Dr NICK SMITH 
: Again I make the point that Labour cannot continue the myth of being able to continuously extend the accident compensation scheme without it costing anybody anything. We do need to have a conversation about the extensions. I simply challenge the member to please explain why Labour made a whole lot of extensions to the scheme after the scheme returned an annual report of a $2.4 billion loss. That requires an explanation. 
Hon David Parker 
: How does the Minister reconcile his assurance last week that the legislative changes in his draft bill would provide a “one-off substantive fix” and that “only tinkering” would be required in the future with the secret plans leaked to the media in the weekend to charge claimants $100 per injury and the reduction of income compensation from 80 percent to 60 percent of earnings? 
Hon Dr NICK SMITH 
: There is nothing secret. What happened was that the board and I asked ACC officials to explore savings options. Some of those savings options were accepted and included in the bill. Some of them were rejected. I think that is a perfectly rational process for a Government that is trying to fix very difficult financial problems within the accident compensation scheme.