Adams Amy: Questions for Oral Answer — Questions to Ministers 
Adams Amy: Questions for Oral Answer — Questions to Ministers 
[Volume:658;Page:7373] 
2.  
AMY ADAMS (National—Selwyn) 
 to the  
Minister of Finance 
: What are the financial challenges currently facing this Government? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 One of the more significant challenges that the Government has to deal with is the deep-seated financial problems of accident compensation. Vote ACC reflects the way that the Labour Government dealt with wider public expenditure. Expenditure has been rising rapidly and now that New Zealand has had a recession New Zealanders are having to pay through greater accident compensation levies for the mistakes made by the previous Government. However we are focused on fixing this mess and taking a balanced approach to ensure that accident compensation is both sustainable and affordable. 
Amy Adams 
: What specific financial problems did the Government inherit in respect of accident compensation? 
Hon BILL ENGLISH 
: One in particular is worth mentioning. Prior to the last election the previous Government presented accounts as if the scheme were in good order. Shortly after we became the Government it became clear that there was a $300 million per year shortfall in the non-earners account. Since then a full appraisal of that account has made it clear that the shortfall is $420 million per year which means that over the next 4 years this Government has to find something like $1.6 billion simply to fill the hole in one accident compensation account. 
Hon David Cunliffe 
: Can he confirm that an independent inquiry found that the fault in respect of the Pre-election Economic and Fiscal Update numbers for the accident compensation scheme was entirely that of Treasury and that Treasury has since apologised; and can he clarify whether he would welcome a similar inquiry into his own affairs? 
Hon BILL ENGLISH 
: That inquiry confirmed at the time a $300 million shortfall in the non-earners account that was not revealed before the election. Since then the number has increased to a $420 million per year shortfall in one account. That is $420 million we cannot spend on pay increases where they are warranted or more services where they are needed. 
Amy Adams 
: What other financial problems did the Government inherit in respect of accident compensation? 
Hon BILL ENGLISH 
: The problem I have adverted to is the problem for the Government as a levy payer—because the Government pays the levies for the non-earners account—but there are much larger problems for the wider group of New Zealanders who pay levies. This month we learnt that the accident compensation scheme made a $4.8 billion loss in the latest year on top of the $2.4 billion loss the previous year. Under Labour the scheme’s liabilities ballooned from $9 billion to $24 billion in just the last 4 years. 
Hon David Cunliffe 
: Can he confirm that in the last year the accident compensation scheme made a cash surplus of around $2 billion and that the only reason he is able to make the trumped-up claim of a crisis is firstly because the new chairman has marching orders to read every number according to the most conservative assumptions and secondly because it is an ideological agenda of this Government to create a crisis in order to prepare the Accident Compensation Corporation for sale? 
Hon BILL ENGLISH 
: The Opposition cannot have it both ways. It quotes the PricewaterhouseCoopers’ report—on which the Labour Government spent $4 million—as a report that says the accident compensation scheme is fine. The same PricewaterhouseCoopers firm has independently valued the liabilities now at just under $24 billion. 
Dr Russel Norman 
: In light of the growing debt being carried by his Government how is it responsible to make changes to the emissions trading scheme that Treasury says will result in “a cumulative increase in Government debt of around 6 to 8 percent of GDP by 2050”? 
Hon BILL ENGLISH 
: The Government is taking a balanced view about the need to accumulate some debt while we deal with the problems of a recession and some policy challenges like the emissions trading scheme. We are willing to accumulate some debt but not to the point where it becomes too big a burden for future workers. 
Amy Adams 
: What is underpinning the Government’s approach to addressing the financial problems of accident compensation? 
Hon BILL ENGLISH 
: We are endeavouring to make sure that all the problems with accident compensation are out on the table. The Accident Compensation Corporation board has proposed some fairly drastic levy increases which the public will be consulted on and then the Government will make a practical decision about what accident compensation levies are bearable given that the economy is just recovering from a recession.