Lees-Galloway Iain: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — In CommitteeText is incorporated into the Bound VolumeLees-Galloway Iain: Accident Compensation (Financial Responsibility and Transparency) Amendment Bill — In Committee[Sitting date: 22 September 2015. Volume:709;Page:6839. Text is incorporated into the Bound Volume.]IAIN LEES-GALLOWAY (Labour—Palmerston North): I would like to—since this is the Committee stage—have a close look at Part 1 of the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill starting at clause 4. Actually this bill is before Parliament partly because we are coming to the end of the transition phase from the old pay-as-you-go system to the full funding system. I have heard a lot of politics from the Minister for ACC in her previous contribution but actually if we get down to it the reason we have this legislation is that we now have to address some of the matters that arise because we had a transition period where technically if you want to say it for close to 15 years—actually more than 15 years—ACC has been technically insolvent. But we are now coming to the end of that transition period where full funding is now just going to be the norm from here on in.So what clause 4 actually does is repeal the definition of “fully funded” in the interpretation section of the Accident Compensation Act. Actually a lot of the words that were in the interpretation section are now in new section 166A(1) inserted by clause 5: “The cost of all claims under the levied Accounts are to be fully funded by meeting the outstanding claims liability in respect of the claims by offsetting an adequate level of assets to fund the cost of those claims.” Rather than being a new concept or something that we have been aiming towards which we have been for 15 or 16 years this is now going to be the norm. Putting aside all the politics that I heard in the Minister’s contribution that is actually one of the reasons why we need this legislation and I acknowledge that.One of the other reasons we need this legislation is that for the last few years we have had an issue with the overcharging of levies. I heard the Minister say I think—and I am pleased that the Minister said it—that the Government is aiming for each account to be funded between 100 and 110 percent. That sounds good. Actually if anything I might have been prepared to be a little bit more flexible than that—maybe up to 120 percent. If we are going to make sure we have got stability over time actually 100 to 110 percent is a little tight and perhaps the consultation will come back and say that maybe we need room up to 120 percent.So I am comfortable with that but some of the accounts are funded over 140 percent. So the Minister says that the idea that—[Interruption] It is not wrong Minister. It is in the ACC’s annual report. So go and have a look at the annual report. If you have not read it Minister go and read the annual report and the Minister will find that some of the accounts are funded 140 percent. If the Minister needs evidence that the charges have been too high over the last few years there it is. The Minister herself says that the range should be 100 to 110 percent. I am prepared to be a little bit more flexible than that and say that maybe we should go to 120 percent but what it—[Interruption] The Minister is now advising members opposite so that the select committee chair has a response to this—that is interesting. Actually the evidence is there that there has been overcharging.We agree that we need under new section 166B(2)(a) in clause 5 a target level or band for funding of each account. Absolutely we do because that has been far too loose over the last few years. The upshot of that being too loose is that it has been too easy for the Government to set the levies much much higher than what they needed to be. That is where Sue Moroney’s proposed amendment on Supplementary Order Paper 123 comes in. What Sue Moroney is trying to achieve here we think is what the original intention of the legislation was. It is simply about making it absolutely clear that when considering the public good when setting the levies the public good means the public interest with regard to reducing injury and accidents.For the last couple of years anyway we have heard the argument made—Judith Collins made this argument in a Cabinet paper that is publicly available—that the public good includes getting the Government’s books into surplus. That is exactly the argument that has been made up until now. Although we appreciate that the mechanism under new section 166B(2)(a) will allow more transparency and it will require the Government and the corporation to focus on setting levies that are appropriate for the band that is set we think that if you put that hand in hand with the definition of “public good” that Sue Moroney sets out on her Supplementary Order Paper 123 it makes it absolutely clear. People and businesses can have absolute faith that the legislation that the Government and the corporation is working under is designed to ensure that nobody is paying importantly too much in their levies or for that matter that we are setting levies too low.We agree. We have to have a long-term approach to this. There is nothing about Sue Moroney’s Supplementary Order Paper that detracts from having a longer view or a mid-term view about what the financial performance of ACC might be. Yes absolutely it can be volatile. In fact the volatility and the fact that the global financial crisis affected ACC’s investments just as much as it affected everybody else’s investments helped create that supposed gap in the funding that the National Government played up so much. Yes there is volatility although the ACC is one of the best-performing investment operations in the country. It proves that the public sector can actually be very good financial managers—you know alongside the Superannuation Fund two of the best-performing funds in the country. But we agree with the Government on that.What we are saying is just make it a little bit stronger. Make it a little bit stronger so that we cannot possibly get into the situation—so that the Government cannot even be accused. If the Government thinks we are wrong remove the opportunity for anyone to accuse it of using the ACC to get the Government books back into surplus by including the definition of “public good” and the definition of “public interest” that would be added under a new clause 6D amending section 330 under Sue Moroney’s Supplementary Order Paper 123. So what we are actually trying to do is work with the Government here to make sure this legislation not only does what it is supposed to do but it is also seen to be doing what it is supposed to do and gives businesses and other levy payers confidence in the accident compensation system.What people expect is that they will pay a fair levy and in return they will get fair compensation and fair treatment. At the moment people feel like they are paying an unfair levy that they are paying far too much that they are being denied compensation and that they are being denied treatment as well. This is about ensuring that people have confidence and faith in ACC. I would have thought that would be something that both sides of the House would want to support.So I absolutely commend Sue Moroney’s Supplementary Order Paper to the Committee and I encourage members to support it. If members have any concerns about it I encourage them to raise them with us so that we can have that conversation through this Committee stage and actually alleviate any fears that Government members might have. We just want to make sure this bill does what it is supposed to do and that is give people confidence in the accident compensation scheme.