Dyson Ruth: Injury Prevention Rehabilitation and  Compensation Amendment Bill — Second Reading 
Dyson Ruth: Injury Prevention Rehabilitation and  Compensation Amendment Bill — Second Reading 
[Volume:637;Page:7517] 
Hon RUTH DYSON (Minister for ACC) 
: 
 I move  
That the Injury Prevention Rehabilitation and Compensation Amendment Bill be now read a second time 
. This bill builds on the framework provided for in the existing legislation by ensuring that the accident compensation scheme is funded in a fair and sustainable manner. The primary purpose of the bill is to merge the self-employed work account and the employers’ account of the Accident Compensation Corporation (ACC) into a single work account so that levies are more stable and better reflect industry risk. The account merger will allow levies paid by businesses to be based on the industry risk associated with their industry grouping rather than on their business structure. The bill also renames the medical misadventure account. 
Some submissions to the Transport and Industrial Relations Committee expressed concern that the merger would be contradictory to the basic insurance principle of grouping industries on the basis of discernible risk factors. The merged work account will continue to group enterprises on the basis of discernible risk factors but it will not group enterprises according to their business structure. The use of self-employment as a rating factor results in the different treatment of small businesses that carry out similar—or even the same—activities with similar risks. For example a self-employed plumber currently pays a different levy rate from a sole-trading plumber operating within a company structure even though he or she faces the same risk of workplace injury. 
The self-employed work account has had a high degree of volatility due to its small earnings combined with a high turnover of levy payers from year to year. Small businesses particularly have cited levy instability as creating problems for their business-cost planning. The account merger will ensure that levies are more stable for both the self-employed and employers. It will also encourage 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 transition period of 3 years provided for in the bill will allow the self-employed and employer levy rates in each industry or risk class and the relative funding positions of the employers’ and self-employed work accounts to be equalised. The Government is proposing to ring-fence approximately $100 million of reserves in the employers’ account and to reimburse those funds to employers through rebates during the transition period. Also during that period levy rates for classification units will be able to either increase or decrease only by up to 25 percent in relation to the previous year’s levy for those units. After the transition period employers and the self-employed in the same industry or risk class will pay the same levy rate. If as some had requested the entire excess reserves in the employers’ account were to be refunded to levy payers in one year then employers would experience significant increases in levy rates in years to come which would defeat the objective of levy stability. ACC Partnership Programme employers would be more likely to exit the programme to take advantage of the rebate of the excess funding to which they have contributed little and that would also jeopardise the functioning of the programme. 
The proposed commencement date for this merger to take effect is 1 April this year. Because both accounts are projected to be adequately funded for the 2007-08 year that will make the transition to a single work account easier by reducing the impact of the merger on levy payers. The public was informed of the proposal to merge the accounts during the 2007-08 levy round. ACC provided information about the proposed policy package and indicative levy rates for the merged work account. In November of last year ACC also published updated indicative levy rates on its website to assist those seeking to understand the levy impact of the merger proposal. Furthermore the Department of Labour wrote to everyone who made submissions on this bill and on the proposal during the levy consultation with information as to how the proposed rebates would be funded. 
As I mentioned earlier the bill also renames the medical misadventure account as the treatment injury account. The Injury Prevention Rehabilitation and Compensation Amendment Act (No. 2) 2005 replaced the “medical error” and “medical mishap” definitions with a definition of “treatment injury”. That bill also removed the necessity to find fault in order to obtain cover for treatment injuries and the new provisions were implemented on 1 June 2005. Health professionals and health organisations are now familiar with the new systems terms and cover provisions. It is appropriate that the medical misadventure account now be renamed the treatment injury account. 
The bill returns to the House unchanged. However the Transport and Industrial Relations Committee—to which I give my thanks—has recommended that a few minor corrective amendments should be made during the Committee stage. I will release a Supplementary Order Paper to make the minor corrective amendments recommended by the committee. 
I conclude by thanking the select committee for its consideration of this bill and commending the progress of the bill to the House.