Key John: Injury Prevention Rehabilitation and Compensation Amendment Bill — Second Reading 
Text is incorporated into the Bound Volume 
Key John: Injury Prevention Rehabilitation and Compensation Amendment Bill — Second Reading 
[Sitting date: 19 June 2003. Volume:609;Page:6439. Text is incorporated into the Bound Volume.] 
JOHN KEY (NZ National—Helensville) 
: 
 National is opposed to the Injury Prevention Rehabilitation and Compensation Amendment Bill because we are worried about this legislation. We are worried the businesses of New Zealand are worried the taxpayers of New Zealand are worried—every New Zealander I have ever spoken to about this bill is worried. Every single New Zealander that I have had a conversation with in my own electorate of Helensville is worried. In that member’s electorate of New Lynn that I drove around in the car that will be taxed even more as a result of this legislation I had people waving me down and asking whether I as the honourable member for Helensville could do anything to stop the Injury Prevention Rehabilitation and Compensation Amendment Bill. I said to them that I would take their concerns to this House and debate them in a full and open manner. On behalf of the many New Zealanders who have complained to me about this legislation I will do my best and I stand proudly in this House to address the issue. 
Why are they worried? Why have they in their dozens from Kaitaia to Bluff sought the support of the New Zealand National Party to oppose this terrible piece of legislation? Why are they up in arms? This is the reason and it is a very simple one. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I just remind members that under Speaker’s ruling 51/5(3) running commentaries are out of order. If members wish to make a speech they have the opportunity to do so. 
JOHN KEY 
: Why are they worried? Why are they up in arms about this piece of legislation? It is very simple. This legislation will remove the tax to fund the motor vehicle account away from the excise tax to its own levy. When those people heard the word “levy” they instantly knew that there was a problem. Why did they know that there was a problem? Because the current Minister of Finance the Hon Dr Michael Cullen said himself in the House that levies were nothing more than back-door taxes. As those people foraged through their wallets they said to themselves: “Here’s my Labour Party ‘credit card’ that says ‘No more taxes’. It’s in front of me and I can read it in black and white—‘No more taxes’.” 
But no once again those people have been wronged by this Government and they will seek their revenge and be merciless on the kind of back-door stealth taxation that is robbing them of their pennies. Those are the very people who are now having one glass of port or sherry not two because they know what back-door taxes mean. They saw it hit their pension books when $18 million was robbed from them. Now as they get into their cars— 
John Carter 
: They don’t sleep well at night. 
JOHN KEY 
: They do not sleep well at night Mr Carter. As they sit on their beds in the mornings getting ready to drive to work their hearts are heavy because their taxes will be rising by 120 percent. No one told them to stop worrying about a 5 percent or 10 percent increase; we are talking about a 120 percent increase—from 2.3 percent to 5.08 percent. They are worried. They have come to my electorate office in droves and begged me to stand in the House and object to this legislation. 
That is not the only reason they are worried. They are worried— 
John Carter 
: What else? 
JOHN KEY 
: Because they have been so concerned about this legislation they have done their due diligence. They have hunted through the Parliamentary Library and  
Hansard 
 and they have read the first reading speech from the Hon Ruth Dyson the Minister for ACC. 
John Carter 
: What did she say? 
JOHN KEY 
: Let me quote for Mr Carter. She said: “This bill will enable changes to the rate of petrol levy”—in brackets back-door tax—“without requiring further legislative amendments.” 
John Carter 
: What? 
JOHN KEY 
: Exactly. What that means Mr Carter is that willy-nilly the Government can put it up any time it likes. I suppose the Government could put it down but we know that will not be happening. 
 They are worried. They are scared— 
John Carter 
: Is this the Labour Government ? 
JOHN KEY 
: This is the Labour Government that promised on its “credit card” “no more increases” and it is worried. Why is it worried? It is because this account is funded because of what is required to pay for accident compensation claimants. 
John Carter 
: Really? 
JOHN KEY 
: Absolutely. This is where the money comes from for accident compensation claimants. Why are they worried? Very simply the amount they are having to pay has gone up 120 percent. Why? Because the Labour Government in its infinite wisdom renationalised accident compensation. It took away competition; it took away the private sector; it said we know best. One big Government department would run this thing and run rings around the private sector that had to operate in a commercial environment. That is bound to be a winner! Unfortunately the  
New Zealand Herald  
did a bit of investigation and disagreed with the Government. It told the public of New Zealand in its fine publication that for medium and small businesses in New Zealand accident compensation levies have risen $25000. 
John Carter 
: $25000? 
JOHN KEY 
: That is right. The levy has gone up by $25000 for the average medium and small business in New Zealand. That is why it is going up 120 percent. 
The second concern—a real paradoxical issue if I might put it in such a way—is that the long-term claimants for accident compensation were at 28000 a number of years ago. Today that figure stands at 14000. 
John Carter 
: That’s half! 
JOHN KEY 
: That is half. One would imagine that the amount required to fund those claimants would be less. Is it less? One would think that this shiny new levy that the Minister is introducing for everyone to have a little play with like a domestic pet would be 120 percent less than the original—1.01 cent. But no it is 120 percent more. 
The second point the Government should be worrying about is what is happening to long-term claimants of accident compensation. 
John Carter 
: What? 
JOHN KEY 
: They are no longer going down in numbers. In fact they are 864 above the predictions by the Accident Compensation Corporation itself and they are on an incline. That is another very good reason why the Government should be worried. 
The Accident Compensation Corporation deserves some credit. It is a very fine manager of its funds and I say that in all sincerity. In June 2002 it had $3.6 billion under management and it earned a return of 3.5 percent. That was an outstanding return if one takes into consideration what happened in the markets at that time. In the 2001 period it earned $223 million on $3.4 billion for 6.5 percent. But all good things come to an end. If the corporation does not manage that money as well the levy will have to go up. What is more it is severely affected by the discount rate. It has billions of dollars sitting in bonds and when the value of those bonds falls—by every 0.1 percent of interest rates—the effect is a $75 million increase. Government stock in this country has a four handle on it now for the first time in a great many years. The bond rate on Government bonds is 4.98 percent. The amount required to fund the accident compensation levy is going up. The Minister has told us that 5.08 percent might be the amount required this year but it is going in one direction. It will not be going down; it will be going up. 
Peter Brown 
: What was the percentage invested in bonds? 
JOHN KEY 
: As they told us today the percentage investment in bonds was 55 percent with 45 percent in equities. 
In the early part of my address I said that thousands of New Zealanders had run out from their houses had flocked to their cars had come to see me and begged me to oppose the Injury Prevention Rehabilitation and Compensation Amendment Bill. They did so with very good reason.