Woodhouse Michael: Estimates Debate — In Committee 
Woodhouse Michael: Estimates Debate — In Committee 
[Volume:656;Page:5573] 
MICHAEL WOODHOUSE (National) 
: 
 I want to talk about cause and effect. 
Grant Robertson 
: Why don’t you praise the Minister first and get it out of the way? 
MICHAEL WOODHOUSE 
: I tell the member that that will come. He should not worry; there is plenty of time in a 5-minute call to praise the Minister for ACC Nick Smith. Cause is about two related events where one event makes the other occur. First comes the cause and the event that follows is the effect. Nowhere is that phenomenon more apparent more obvious or more damaging to the Crown accounts and these estimates than Vote ACC. We have had not one not even a few but several policy and legislative changes that have had the effect of putting considerable financial strife on the accident compensation system the premium payers and the Crown. 
I have mentioned some of those changes several times in this Chamber but I think it is necessary to restate just a few of them to illustrate the cause and effect of them on Vote ACC. They include a substantial broadening of the treatment of injury provisions in 2004 the flawed decision—about the same year I think—to expand the endorsed provider pilot to nearly every single physiotherapist in the country with no caps on spending and the significant broadening of the boundaries of the scheme with flimsy cost and premium impact estimates when the most recent changes by the previous Government had been made in the face of lower financial returns. Just last year there were 13 changes alone which cost about $75 million. There was the tacit endorsement by the previous Government of the corporation paying entitlements completely outside the boundaries of the legislation even in the face of court judgments that ruled out such activity. But the big kicker was the reduction of rehabilitation outcomes. Claims are up the duration of claims is up and scheme exit rates are down. I have no doubt that the corporation was influenced by previous Labour Ministers who were not nearly as interested in that goal as they were in softening and socialising activities even though a fast and lasting return to work or independence is a cornerstone of accident compensation. 
The effect of all of that is we now have the legacy of total liabilities having increased by over $11 billion in the last 4 years and the unfunded portion of those liabilities has gone up from about $3.5 billion to over $8 billion. Heaven knows what they will look like when the 2009 annual report is published. I tell members that $10 billion is the equivalent of an extra $5000 per household. If the previous Labour Government had spent as much time on righting the ship when it was so clearly heading off-course as it did on trying to cover up the mess then perhaps things would not have become nearly as bad as they have. 
I have no doubt that we will hear from Mr Parker Labour’s spokesperson on ACC who will say that it was unavoidable and an unforeseeable consequence of the economic downturn. Well that is absolute rubbish. The numbers were tanking well before the financial downturn and he knows it. Even the MartinJenkins report on the debacle confirmed that the deteriorating trends were in evidence since 2005. The report stated that the impact on the appropriations was a bit masked by their high investment returns but all that people had to do was to read the balance sheet to know that things were going bad. 
I think that banging on ad nauseam as that spokesman will do about how inexpensive the scheme is compared with for example Australian schemes is completely spurious. He knows that the comparisons are simply not able to be made. The cover conditions are all different. Work-related motor vehicle accidents go into the work account in New Zealand but they do not in Australia. In any event Australia has a fully funding scheme that is viable and we do not. We are paying for years of that situation and we probably will pay for years more. Those members opposite need to take a long look at themselves over accident compensation because unless they do some reflection and show a little bit of mea culpa they will be sitting on that side of the Chamber for a very very long time to come. Until they come to that realisation then that is exactly where they should stay. 
The Minister talked to the Transport and Industrial Relations Committee in the estimates hearing. He said that amending legislation would be coming in soon and that there would be a stocktake. We have not seen the terms of reference yet but perhaps the Minister will be able to explain them. I saw the pain on Carol Beaumont’s face when the Minister told her that the stocktake would not include a reflection of competition and choice in the work account. She looked so disappointed. She was badly needing to bag the Minister for having some kind of privatisation agenda—about which I am sure we will hear from Mr Parker—but that is simply not true in the next few years. Do members know why? Because we will have to spend all of that time sorting out the mess we have inherited. I am very glad that the Minister is taking this seriously because the members opposite do not seem to be doing so. Yet the liabilities continue to mount; unless we turn the ship around it will be bad news.