Woodhouse Michael: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
Text is incorporated into the Bound Volume 
Woodhouse Michael: Debate on Crown Entities Public Organisations and State Enterprises — In Committee 
[Sitting date: 29 June 2010. Volume:664;Page:12257. Text is incorporated into the Bound Volume.] 
MICHAEL WOODHOUSE (National) 
: 
 I think I observed the same glint in the eye of the Opposition spokesperson for ACC David Parker as he had last week at the estimates review of the accident compensation scheme when he heard that it had started to turn the corner financially and may have improved its financial performance to about a $2 billion surplus. It did not seem to me that Mr Parker’s enthusiasm at that news was genuine applause for what I think has been an excellent turn-round in the scheme; it is more an indication to him and his colleagues that somehow it is now OK to take the foot off the pedal for the scheme’s performance and that some of the steps this Government has taken were not necessary. Well nothing could be further from the truth. It is worth remembering that at the time Mr Parker was last involved in a Government that oversaw a result where the scheme had $2 billion in it it was a $2.4 billion deficit. The previous Government’s response was to make the scheme even more flaccid particularly in respect of rehabilitation rates. The result for the following year was a $4.8 billion deficit. So although I am really encouraged that the scheme seems to be in the process of a turn-round plan even if it is something like $2 billion in surplus it needs to be weighed up in the context of the previous 2 years which showed an audited and signed-off result of $7.2 billion of deficit. The vast majority of that was overseen by the previous Labour Government. 
Mr Parker talked about the Government using unreasonable assumptions to inflate the unfunded liability. I will give members one example of where those assumptions were particularly unreasonable under the previous Labour Government: despite medical and rehabilitation inflation going well above the consumer price index the consumer price index was the only thing used to measure cost increases. That severely dampened down the unfunded liability and it just could not continue. The chickens came home to roost when the revaluation occurred and we saw a blowout of about $10 billion in a couple of years. So no one who knows about the accident compensation scheme can place any sort of credence on the assertions by Labour and Mr Parker that the scheme’s financial position over the last few years has been anything other than very tenuous and that it did require the sort of remedial action that this Government has put in place. 
I am delighted to see in such a short period of time the message about improvements in performance not only being received and understood but actively and enthusiastically supported by the staff who administer the scheme. The most pleasing aspects of the sorts of performance indicators that the Minister for ACC the Hon Nick Smith talked about in the estimates review last week were in respect of rehabilitation performance. He gave us an update for 11 of the last 12 months. We saw some tanking performance in terms of outcomes in rehabilitation from 2008-09. The 10-week exit rate was below 65 percent. Those administering the scheme set themselves a quite ambitious target of 69 percent. They are now tracking at about 71 percent well ahead of their target. For the 9-month exit rate they were down to as low as 89 percent I think. They set a target of 91.5 percent and they are now at 93 percent. What does that mean? It means that far fewer people are going into long-term claims. The rehabilitation performance for long-term claims has dropped by about 14700 claims to 13500 claims. Those sorts of numbers have a very very significant impact on the corporation’s financial performance. 
Investment performance has been talked about a lot. The scheme has consistently performed above the benchmarks for the market. Even when it made losses in the 2008 year it was still performing well ahead of the general average and against its budgets so it simply is not true to say that this massive dip in the scheme’s financial performance in 2008-09 was somehow the result of the dip in investment performance. Yes there was a little bit of that but it certainly was not the material factor. I think that the warning bell should be sounded in respect of the fact that the Minister advised the committee that although it is looking pretty strong over the year there was about a $150 million dip in returns in the last reported month. So that recovery in terms of investment performance is still pretty lumpy. 
Overall I think this is a very very good news story. People should not be fooled by the smoke screen that Labour continues to throw up in respect of accident compensation performance under its tenure. There is a long way to go before we can achieve the sorts of stability that accident compensation deserves. I look forward to that occurring.