Dyson Ruth: Injury Prevention Rehabilitation and Compensation Amendment Bill — Third Reading 
Dyson Ruth: Injury Prevention Rehabilitation and Compensation Amendment Bill — Third Reading 
[Volume:637;Page:7780] 
Hon RUTH DYSON (Minister for ACC) 
: 
 I move  
That the Injury Prevention Rehabilitation and Compensation Amendment Bill be now read a third time 
. This bill merges the Accident Compensation Corporation’s (ACC) self-employed work account and the employers’ account into a single work account so that levies better reflect industry risk and are more stable. The bill also renames the medical misadventure account as the treatment injury account. 
Under the current ACC account structure the use of self-employment as a rating factor results in the different treatment of small businesses that carry out similar activities that entail similar risks. For example self-employed plumbers currently pay a different levy rate from that paid by sole-trading plumbers who have set themselves up in a company structure even though they face exactly the same risk of workplace injury. The basis for this unfairness lies in the failed privatisation attempt made by the previous National Government. The insurance industry did not want to insure all self-employed people because they knew that they would not be able to make enough money from them due to administration costs. So an arbitrary distinction was made based solely on business structure and the self-employed work account was thus created. 
With coverage for personal injury being renationalised the self-employed work account is no longer needed. The account merger will allow levies paid by businesses to be paid on the industry risk associated with their industry grouping rather than on their business structure. In its time the self-employed work account has been very unsuccessful. It has high volatility due to its small earnings combined with a high turnover of levy payers from year to year. Small businesses in the self-employed work account particularly have cited levy instability as having created problems for their business cost planning. 
Merging this account with the employers’ account will ensure that the levies are more stable for both the self-employed and employers. The merger will also improve the focus on reducing the risk of injury by encouraging industries to better coordinate health and safety across their workplaces regardless of their business structure. 
This merger is not intended to redistribute the excess reserves currently in the employers’ account to the self-employed. The bill therefore provides for a 3-year transition period for self-employed and employer levy rates in each industry or risk class and the relative funding positions of the employers’ account and the self-employed work account to be equalised. This provision enables the Government to ring-fence the difference in the funding contributions between the self-employed and employers—approximately $100 million of the excess reserves in the employers’ account—and reimburse these funds to employers through rebates during the transition period. 
I know that the Opposition will again try to pick out the businesses that may have a levy rate next year that has increased on this year and blame it on the bill. The fact is that the indicative average levy rate under the new merged work account has been calculated at 89c per $100 of liable earnings for employers and the self-employed. This rate is based on the same funding target that is currently set down for the separate accounts and is considered to be sustainable over 3 years. After the transition period is complete employers and self-employed people in the same industry or risk class will pay the same levy rate. 
The Government intends that the remaining overfunding in the merged account be returned to levy payers during the 2007-08 levy year and out-years. If as some have requested the entire excess reserve in the employers’ account were to be refunded to levy payers in one levy year employers would experience a significant increase in levy rates in years to come. That is because the ACC would not have any excess to fund the future cost of claims. What many—including the Opposition spokesperson—do not understand is that levies are collected each year in order to fund not only the cost of claims for that year but also what the claims would cost across the lifetime of the injury. If the excess in the account was fully refunded to employers next year levies would need to be dramatically increased in future years in order to pay for the ongoing cost of the claims that were made. 
Using the bill to destabilise levies from year to year would be totally inconsistent with the objective of levy stability which is a fundamental principle of both this bill and the Injury Prevention Rehabilitation and Compensation Act which it is amending. If the amount levied from employers was lowered significantly more than is planned ACC Partnership Programme employers would be more likely to exit the programme to take advantage of the rebate of the excess funding. That would obviously jeopardise the functioning of the programme and it would also give financial advantage to partnership programme employers who had not financially contributed to the account from which they were benefiting. 
This merger is also likely to have a positive impact on injury prevention in workplaces. By bringing self-employed people and employers together at the risk-class level the experiences of the respective groups would come to bear on the levy rates. This will incentivise a greater level of cooperation on injury reduction between employers and the self-employed within the industry groupings of the new work account. 
 As both of the accounts are projected to be adequately funded for 2007-08 merging the accounts to take effect from 1 April 2007 will make the transition to a single work account easier by reducing the impact of the merger on levy payers. During the 2007-08 levy round ACC provided levy payers with information on the proposed policy package including indicative levy rates for the merged work account to assist those seeking to understand the impact of the merger proposal. 
Following the levy consultation ACC published updated indicative levy rates on its website. The Department of Labour also wrote to each of the organisations that provided a submission on the bill and to those who had made submissions on the proposal during the levy consultation with further information on how the merger of accounts would be implemented. 
I note that the two amendments in the name of Dr Paul Hutchison the former National spokesperson on ACC were defeated in the Committee of the whole House. What Dr Hutchison was asking for in his amendments will be provided under my assurance to the House—and I repeat this in my third reading speech—on the ACC website. In my view the proposal was sensible but it does not need to be in the legislation. However it is something that I would be happy to reconsider in the future. 
As mentioned the bill also renames the medical misadventure account as the treatment injury account. This renaming of the account is appropriate as the terminology in the Act was changed from “medical misadventure” to “treatment injury” some time ago. The reason for leaving the name of the account at the time was to allow health professionals and health professional organisations to become familiar with the treatment injury regime. Now that a sufficient period has passed for these groups to come to terms with the new terminology the time is right to rename the account. 
This bill builds on the framework provided in the existing legislation by ensuring that our accident compensation scheme is funded in a fair and sustainable manner. I conclude by thanking all members of the Transport and Industrial Relations Committee for their careful consideration of the bill in a short time frame. I also thank the officials from both ACC and the Department of Labour for their fine work on the bill. I commend this bill to the House.