Lees-Galloway Iain: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — First ReadingText is incorporated into the Bound VolumeLees-Galloway Iain: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — First Reading[Sitting date: 02 June 2015. Volume:706;Page:4217. Text is incorporated into the Bound Volume.]IAIN LEES-GALLOWAY (Labour—Palmerston North):This bill is an admission by the National Government that it cannot be trusted. All the instruments that this bill introduces are actually available to the Government right now. It could use any of the measures it is legislating for in this bill right now as a Government. What it is doing by bringing this bill in is requiring itself to meet the provisions in this legislation.So Government members know they cannot be trusted to plan ahead to set levies appropriately and to not overcharge people on their ACC levies. They know they cannot be trusted just to do that as a Government as a matter of course so now they are having to legislate to do it. It is no wonder that the public apparently are overjoyed at this. I do not know where the National Party gets its information about the public being overjoyed. I think that the public probably have absolutely no idea that this legislation is going through but certainly Phil O’Reilly has said he is pleased and I bet Phil O’Reilly is pleased because he is probably sick of the organisations the businesses that he represents being overcharged on ACC levies by this Government. So it is an admission by the Government that it cannot be trusted on ACC levies.I have heard a lot about how we need to have a levy-setting process that takes into account the volatility of the market place the volatility that can impact ACC’s investments. That is not an argument to be taken lightly. It is an argument that is valid and worth considering. If our ACC accounts particularly the work account and the earners account were only 100 percent funded then there might be some validity in the argument that the Government is making because we could see those accounts drop below 100 percent and we could see them rise up above 100 percent.The volatility that can occur would certainly be something that we would need to worry about if the accounts were only 100 percent funded. But they are not. These two accounts are more like 140 percent funded. Therefore the volatility that may cause them to go up or down is going to cause them to go down to maybe 120 percent funded or up over 150 percent funded. We are not talking about whether or not we have enough money in the bank to meet the full lifetime costs of the claims we are talking about how overfunded those accounts actually are.I reject the argument from the National Party that this legislation is required or even that that volatility and the long-term viability of the accounts have not been taken into account by ACC. In fact members opposite have told the House that we on the Transport and Industrial Relations Committee have heard from ACC that when it makes its recommendations about where the levies should be set it takes into account the long-term costs and the volatility that can occur over time. That is happening right now.What I find most bizarre is that the Government has been trumpeting the fact that the account that is having its levies reduced the most is the motor vehicle account. That is actually the one account where we do need to increase the reserves because the motor vehicle account is barely fully funded. In fact the volatility that members opposite have talked about has impacted the motor vehicle account and pulled it back down below 100 percent funding at times. In fact it has very rarely been at 100 percent funding. There is more work that needs to be done on the motor vehicle account but bizarrely that is the account where the Government is cutting levies the most. You might wonder why that is. I think there is a pretty straightforward reason—it is just pure politics. There is nothing fiscally responsible about this at all. It is pure politics.The fact is that most people pay their motor vehicle account through their vehicle registration. So they actually have to go along to New Zealand Post and make a payment. They notice that money coming out of their bank account whereas the earners account levy in particular comes out of your account before you even see the money. It comes out of your pay before you even see the money so people do not notice that as readily as they do the motor vehicle account.So this is just pure politics. The Government has cut the levy that people will notice the most even though it is the levy that actually least requires cutting out of all of them. Others probably could be cut a lot more. The work account and the earners account certainly could be cut more. This Government is overcharging workers and employers by $350 million a year yet that is not where it makes the cuts. It makes the cuts where they will have the most political impact not where they actually make the most sensible and responsible impact.We have heard a lot about the supposed $4.8 billion hole that existed in ACC some 6 years ago. Well the fact is that ACC’s reserves are invested and just like every other major investor ACC suffered in the global financial crisis. Yes its accounts fell and the amount that it had in reserves was much less than it required for full funding but actually at that point ACC had never met full funding because the process of achieving full funding was something that was being undertaken by successive Governments and had been under way for about 9 years at that point. It was something that was started in 1999 and was carried on—David Bennett: Your policy was to remove it.IAIN LEES-GALLOWAY: Oh David Bennett says that our policy was to remove it but here are the facts David Bennett. The process towards full funding carried on right through the entire period that the last Labour Government was in Government. That was what occurred.David Bennett: Tell the truth.The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!IAIN LEES-GALLOWAY: David Bennett can say whatever he likes. He just needs to look at the facts—David Bennett: Tell the truth.The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!IAIN LEES-GALLOWAY: —and see that what happened was—[Interruption]David Bennett: Tell the truth.The ASSISTANT SPEAKER (Hon Trevor Mallard): I regret that I have to interrupt the member Iain Lees-Galloway. I did warn Mr Bennett twice—I called him to order twice. He will desist.IAIN LEES-GALLOWAY: The member is encouraging me to tell the truth. I am talking about the facts. I am talking about straight facts. Those might be a foreign concept to the member David Bennett over there but I am talking about the straight facts.In 2009 the Government seized on this supposed hole in the ACC accounts to do what—to push ACC levies up. There was one purpose for that and it was to make the private insurance companies that the Government wanted to use to privatise the work account and other accounts able to compete with ACC because those private insurers simply would not have been able to compete with ACC when its levies were set at a reasonable level.The result of shoving up those levies was twofold. One was that we have reached full funding much faster than was originally envisaged by overcharging New Zealanders. The whole idea of the progress towards full funding was that it would be done in a measured fashion that would not overcharge New Zealanders. We have reached full funding and I note that the removal of the residual levies is one aspect of this legislation because full funding has been reached far earlier than was ever originally envisaged.The other thing of course is that the Government soon realised that this additional income that was coming in was very helpful for it in its attempts to reach a surplus so it maintained its levies at an artificially high level in an effort to reach surplus which it still has not done. It is overcharging New Zealanders by $350 million which is far more than the surplus that is budgeted for in this year’s Budget. So in the absence of that overcharging of levies for ACC there would be no budgeted surplus as unlikely as it is that the Government will hit its budgeted surplus just like it failed to meet it this year.There needs to be some honesty from the Government about the way it has treated ACC and what is behind this legislation. The truth is there is nothing in this bill that the Government cannot do right now. What it is doing with this bill is demonstrating to business that even if it cannot be trusted as a Government to operate ACC appropriately and to set levies appropriately it is going to put it into legislation. But actually really it is smoke and mirrors because even with this legislation in place it will still be able to overcharge on ACC levies.We will support this legislation because it does not appear to do any harm but also because we think that further down the track it is a vehicle through which we can propose amendments that might actually make some real difference. We are looking forward to the select committee process and we are looking forward to the progress of this bill but in its current state it ain’t going to do much.