Injury Prevention, Rehabilitation,and Compensation Amendment Bill

, on behalf of the Minister for ACC: I move, That the Injury Prevention, Rehabilitation, and Compensation Amendment Bill be now read a second time. This bill performs a number of functions. Its primary focus is to establish an Accident Compensation Corporation petrol levy, and to provide for changes to that levy. Previously, an accident compensation “amount” was collected alongside the petrol excise duty, but it was not an Accident Compensation Corporation levy. Consequently, it was not possible to change the petrol amount without either making legislative amendments to the Customs and Excise Act or, alternatively, affecting Crown revenue.

The bill will enable changes to the rate of petrol levy without requiring further legislative amendments. It will also ensure that the fiscal impact of raising the petrol amount is not borne by the Crown. That change was to be introduced in the Injury Prevention, Rehabilitation, and Compensation Act. However, technical errors in the drafting of that Act meant that the intended changes were not given effect.

By establishing the petrol amount collected alongside the petrol excise duty as a petrol levy, the bill also sets the levy at 5.08 cents per litre. It enables the levy to be applied to petrol and any other category of fuel that may be prescribed by regulations, therefore providing for any future contingencies. It provides for the levy to be amended accordingly through regulations, and provides for regulations to be created to administer the refund of the petrol levy for off-road commercial uses of petrol, such as in farm vehicles, marine vehicles, and other machinery.

The last function the bill serves is unrelated to the Accident Compensation Corporation’s motor vehicle account. The bill reverses changes to the accident compensation appeal regime that came in by way of the District Courts Amendment Act 2002. The bill preserves the requirement under section 162 of the Injury, Prevention, Rehabilitation, and Compensation Act, and under section 165 of the Accident Insurance Act, that leave of the District Court is sought prior to an appeal to the High Court. The retention of that requirement to obtain the District Court’s leave ensures that a significant filtering mechanism remains in place, and that the costs associated with the appeals process can be managed in a practical way.

The Accident Compensation Corporation’s motor vehicle account covers the cost of all motor vehicle - related injuries. The motor vehicle account has recently faced a significant increase in costs. Those increases have resulted primarily from improved estimates of long-term rehabilitation costs for seriously injured claimants, and underlying cost increases. As the motor vehicle account has the highest proportion of serious injuries of all Accident Compensation Corporation accounts, the improved estimates affect the motor vehicle account disproportionately more than the corporation’s other accounts.

The Government considered the options on the best way to fund the Accident Compensation Corporation’s motor vehicle account in December last year, following public consultation. In recent years, any increases in the corporation’s motor vehicle account costs have been absorbed into the annual vehicle-licensing fee. The Government considered that the cost of vehicle licensing may have reached a point where further increases could lead to adverse social impacts. Some people already have difficulty in paying the licensing fee, resulting in a number of people not licensing their vehicles. Therefore, funding the increased costs through an accident compensation petrol levy is considered to be a fairer approach than increasing the licensing fee. People generally have greater choice over how much they drive and how much petrol they consume. That approach was also supported by a large number of New Zealanders during the Accident Compensation Corporation’s consultation on options for funding for its motor vehicle account. The Government also agreed with that approach and announced that for the 2004-05 levy year, the petrol amount would be raised from 2.3 cents per litre to 5.08 cents per litre.

These changes align with the Government’s intention to improve injury prevention through the development of the New Zealand injury prevention strategy. That includes reducing motor vehicle injuries as a priority. We have also developed the New Zealand transport strategy, which has a strong safety focus. Further work is also being undertaken on the long-term funding of the Accident Compensation Corporation’s motor vehicle account, in the light of the New Zealand transport strategy.

Section 162 of the Injury Prevention, Rehabilitation, and Compensation Act requires that appeals to the High Court are either by leave to appeal being granted by the District Court, or by special leave being granted by the High Court. When the District Courts Amendment Act comes into force, it will remove the requirement that leave be sought, so that people will be free to appeal to the High Court, regardless of the circumstances. The effect is that a significant filtering mechanism will be removed. Last year, for example, 25 of 40 attempts to appeal the Accident Compensation Corporation’s decisions to the High Court were refused leave by the District Court.

The High Court Rules Committee is concerned about the potential impact on the High Court’s workload as a consequence of the removal of that requirement. I am also concerned at the potential cost implications for the Accident Compensation Corporation. The Minister of Justice agrees that the amendment should be reversed. I believe that the retention of the current repeal requirements is a practical way to manage the costs of the appeals process. The bill therefore ensures that section 162 of the Injury Prevention, Rehabilitation, and Compensation Act, and section 165 of the Accident Insurance Act, which provides the same appeal process for appeals under that Act, are unaffected. As the District Courts Amendment Act will come into force by Order in Council, the bills’ reinstatement of the current appeal provisions is to be brought into effect by the passing of the Order in Council that brings the District Court Amendment Act into force.

The Transport and Industrial Relations Committee received and considered three submissions on the bill from interested groups. Two of those submissions were heard orally. The themes presented in the submissions to the committee on the bill were that all submitters supported the introduction of a dedicated Accident Compensation Corporation fuel levy to fund the corporation’s motor vehicle account. Submitters differed in their ideas of how the levy should be achieved with regard to the mix of licence-fee levy and fuel amount, with two submitters supporting the setting of the petrol levy at 5.08c per litre, and one submitter opposing that provision. A range of views on policy issues was raised, such as alternative options for risk-rating, and the full funding of the motor vehicle account.

The committee recommended that clause 4 of the bill be redrafted, so that it substitutes a new section 162 of the Injury Prevention, Rehabilitation, and Compensation Act in place of the version set out in the schedule of the District Courts Amendment Act. The committee also recommended that provisions be added to clause 4 to provide that appeals and reviews arising under Part 6 of the Accident Insurance Act, preserved by section 391 of the Injury Prevention, Rehabilitation, and Compensation Act, are subject to the new section 162. That will ensure that the requirements for obtaining leave to appeal are consistent in both Acts.

I support the amendments recommended by the committee. As I have outlined, there are a number of reasons that this bill should proceed. On behalf of the Minister for ACC, I commend the bill to the members of the House.

Perhaps the Government thought that by sending George Hawkins to the Chamber to speak for the Minister for ACC, the House and those who listen to it occasionally would become so bored, so stupefied, and so close to sleep that we would not notice what this bill is really all about. This bill shows clearly what a deceitful and incompetent Government this country currently has. Dressed up under the title of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, we have a tax bill. It is another tax bill from the Labour Government. Do members remember the big promise that there would be no more taxes? Well, what a joke those people have made of that! What a disgrace it is that we should have a tax bill with a name like that put on it.

All that this bill does is to empower the Minister, year after year, to reach into the pockets of New Zealanders and to take out as much as he or she likes to add to the cost of petrol. What price will we be paying for petrol by the end of the year? We already know that the 4c per litre we all contribute to Auckland’s roads will not come off. We now know today that another 5.5c per litre is to be added to the cost of petrol to cover accident compensation, and we hear that very shortly another 10c per litre will go on to cover regional roads. But, apparently, there are no new taxes!

The fact that this bill is a deceit can perhaps best be seen when New Zealanders realise that there is no way for them to know whether the costs of this motor vehicle account are reasonable. There is no competition for that type of insurance in New Zealand. There is one delivery agency, which does not have to monitor its costs and tell New Zealanders whether it is doing a good job—whether it can do its job a bit more cheaply for them, or whether it is managing its costs. The Accident Compensation Corporation can simply go to the Minister and say it has had a bad year and needs a few more bob. It can ask the Minister to stick a hand a bit deeper into the pockets of motorists—stick the petrol levy up a bit higher—and to give it a bit more money to play with.

Mr Hawkins said there was no real change, because this levy was always included in the vehicle-licensing fees. He went on to say that increasing those licensing fees might have an adverse social impact. I tell Mr Hawkins that during the time of the previous National Government, licensing fees regularly used to go down. In one particular year they were as low as—I think—$141, because the Accident Compensation Corporation was under some pressure, as privatisation was looming, to get its costs under control. The question now is whether, if the corporation does make improvements like that, the cost will go down.

💬 John Key: No, not a chance.

No, it will not. Because the levy will be included in the price of petrol, after a time everyone will become conditioned to it. The Government is relying on the fact that people may not notice the levy.

Here we have a very, very sneaky move by the Government to simply load the same cost on to the same people, by taking it off the licensing fee and putting it on to the price of petrol, raising that considerably. One pays a price for deceit at the end of the day, and this Government’s day of reckoning is not far away. When we start to look at the huge list of additional taxes the Government has imposed on this country in the last couple of years, we see it becomes a little frightening. Not only do we have this 5c per litre, or 14 percent, increase in the petrol price being inflicted on New Zealanders today, but we have also recently had the alcohol tax, the tobacco tax, the Accident Compensation Corporation’s employer and self-employed levies massively increasing, trust income for final tax payments for minors going from 19 percent to 33 percent—unless one is Māori, when one gets a special deal—and fringe benefit tax increasing from 49 percent to 64 percent. We all know that the number of New Zealanders now earning in excess of $60,000 means that almost 20 percent of the full-time workforce now pays tax at a much higher rate than previously.

💬 John Carter: How much? Twenty percent?

Twenty percent of the workforce—one in five workers with a full-time job in this country—pays tax at a rate of 39c in the dollar. So where is the value in the “credit card”? Where is the honesty in the “credit card”? It does not exist.

As I said at the outset, this bill is about deceit and incompetence. Where does the incompetence come in? First, I suggest it is incompetent for any Government to allow an agency to go completely unchecked when it comes to the costs it inflicts on the people it is empowered to levy. The Accident Compensation Corporation should be run as a business. It is a business. It is an insurer, and anyone who thinks it is anything else needs to reconsider the whole issue. At the end of the day a premium is charged one way or another, and a fixed benefit is delivered. It is an incompetent Government that does not try to reduce that cost for New Zealand, but simply comes to the House and demands legislation that allows it to continue, as I said before, to put its hand deep into the pockets of New Zealanders and to take their hard-earned dollars off them.

Then the second part of this bill amends the legislation passed in 2002, by restricting the way that appeals against Accident Compensation Corporation decisions can progress to the courts. There are a number of issues around that. Some aspects of the proposal may be sensible, except that in New Zealand, if we have an accident, the body that deals with us is the same body that we go to if we are unhappy with the treatment we are receiving. We can go to the corporation, and say we are unhappy with the treatment it has been giving us and we want it to be reviewed. But if we do not like the findings of the review, we have to go back to the same organisation again and tell it we want to appeal that review. Now it would seem that if we are still not happy and want to progress to a court, we can only do so if that organisation says it is OK. That seems to me to be somewhat Stalinist in its approach. That is the sort of country that Helen Clark’s Government is rapidly driving us towards.

Where is the choice for New Zealanders in a bill like this? And how can the Government so openly deceive people into paying a higher level of tax in the name of injury prevention, rehabilitation, and compensation? Governments fall on that sort of thing. It has a cumulative effect. The “credit card” was put into the letterboxes of all New Zealanders before the 1999 election; it stated there would be no new taxes—other than for the 5 percent who earned over $60,000. Mr Hawkins smirks over there on the Government benches, because he knows that 4 years later 20 percent of the full-time workforce now pays that tax. One in five full-time workers now pays tax at the 39c in the dollar rate. We do not mind incomes growing. We are all for that; it is a great idea. But would we not have a great deal more investment in this economy if those hard workers who manage to get their incomes to maybe $61,000, $62,000, or $63,000 were able to keep the few lousy dollars in extra tax that the Government takes off them? Would we not have greater investment in this country if those people were able to hold those dollars themselves?

This bill indicates that the only solution this Government has to any problem is to tax people—just to tax them. We have seen that with the appalling electricity tax—$200 million a year on that one. This tax is worth $154 million. We have seen the Minister tell us today that if one owns sheep, cattle, horses, or any other animals that happen to be somewhat flatulent, then one will pay a tax on that, as well. He has conceded it is a tax. A Government that has no answer to any problem, other than to stick its head up and say it will tax people, is a Government that is dying on its feet.

I rise to support the second reading of this bill, and I say it is a privilege to follow the member for Ilam, Gerry Brownlee. This is an interesting time in the National Party, which has had two bad poll results in a week, and so has decided on a strategy of wheeling Mr Brownlee down to the House to speak in mock outrage. But the problem is that Mr Brownlee is very happy with the poor poll results, and it does not matter how much he tries to criticise the Labour Party on its result. For the member’s benefit, I have here—

💬 Gerry Brownlee: I raise a point of order, Mr Speaker. I am not ageist by any means—and I never have been—but when we have a silly speech that starts like that, then I think that perhaps 21-year-olds should not be allowed to take seats in this House. Furthermore, this is a second reading debate. It is certainly somewhat broad, but there is a need to relate one’s comments directly to the bill. Commenting on the polls is not within the orbit of this bill.

The ASSISTANT SPEAKER (H V Ross Robertson): Points of order should be terse and to the point. Under Speaker’s ruling 38/1, leeway is given for replying to a speech.

I thank the member for not being ageist. It is true that I have a soft spot for large people, as well, and I will never support a flatulence tax on front-benchers. Mention was made about the Labour Party’s commitment at the last general election, and I happen to have the “Next steps” commitment card, which states, “No rise in rates of income tax, GST, or company tax.” There is no way at all that any of those things will happen under this Government, because we are serious about keeping our word.

I would just like to say that Mr Brownlee did make a contribution to the debate, because, as members know, he was National’s accident compensation spokesperson until he was sacked from that role and replaced by the rising star, Dr Paul Hutchison. I understand the bitterness in the speech in that regard. I was very interested to see in TV3’s preferred Prime Minister poll that Mr Brownlee, the former shadow Minister for ACC, was a very consistent rater. He started out at zero in August 2000, and ended at zero in June 2003. Those rates are very important in terms of credibility in the second reading debate on this bill, which I firmly support.

I invite the member who has just resumed his seat to go out to his constituents and ask them whether they are aware that they will get a hike in their petrol prices, and whether they are aware of the title of the legislation that will do that. The title of this bill is very deceitful. There is no New Zealand motorist out there who knows that that is occurring—at least, very few of them do.

I have asked people in the Tauranga area, where I come from, whether they knew that there was likely to be an increase in accident compensation levies through their petrol charges, and they did not have a clue. When I told them the title of the bill that was doing it, they said: “Why don’t you call it the ‘Increasing the ACC Levy Bill’?” I said: “Well, that’s over to the Government. It is determined to do this. It wants to bring the legislation in overnight, without anybody really knowing about it.” It is actually very, very deceitful. If New Zealanders were made more aware of this measure, I guarantee that there would be more submissions to the select committee. We received only three submissions, and, as I recall, the most public of them all was the one from the Automobile Association. With due regard to the Automobile Association, even it has not told the world that this bill is coming to pass. The average motorist does not have a clue.

We will not be supporting this legislation—not because we do not agree that the Accident Compensation Corporation needs to address its commitment to full funding, but because it is not being done fairly. We would be much more receptive to this legislation if the increase from 2.3c to 5.08c came out of the 18.7c that is taken from the petrol motorist and just hoicked into the consolidated account. If the 18.7c per litre were being used to fund this increase, we would not have a problem. If even if part of it were being used to fund this increase, we would look upon this legislation with more sympathy. But to just impose it on top of what the petrol motorist is paying at the present time is neither fair nor practical. Petrol prices are going up almost weekly.

💬 Hon David Cunliffe: They are not.

They are—they went up last week.

💬 Hon David Cunliffe: The exchange rate is knocking them down.

Mr Cunliffe goes about in a Crown car—he would not have a ruddy clue what is going on out there. He sits there on his inflated salary, then gets into a Crown car. He should have a look at the prices at the petrol station. Prices went up in the last few weeks. I can remember when the Hon Jim Anderton used to come into this House and raise merry Cain about the prices going up. As I recall, at that time the prices were around 80c a litre. We never hear anything from Jim Anderton on that sort of thing now.

💬 Hon David Cunliffe: I can remember when the member was young.

I am still a young member.

💬 Darren Hughes: You can’t mislead the House like that.

It is the heart that counts—not the grey hairs on one’s head. I am still very much a young member.

💬 John Carter: Absolutely.

Absolutely. This legislation shows no imagination. For example, there is no provision for operating a car safely. If the Government had a mind to, it could have reduced the proportion that the motorist pays in his or her registration fee—and I should perhaps add that that is $141.10 every year a car is registered—if he or she has an accident-free record. There is no provision at all for safe driving in this legislation. The Government had an opportunity to use some imagination and be a bit innovative.

We recognise that in terms of accident claims the Accident Compensation Corporation has liabilities in the vicinity of $8.5 billion—give or take the nearest million. I believe it has approximately $4 billion in reserve, which it invests. This bill will get through only with the support of the Greens, yet only a week or so ago the Greens kicked up bobsy-die because the Accident Compensation Corporation invests in breweries. More of this money will go into investment, and into breweries. The Greens might not mind about that now, but they raised merry hell a few weeks ago.

New Zealand First is not too comfortable with the Accident Compensation Corporation taking all that money and investing in breweries. On the other hand, it is investing in “booze buses”, and trying to scale down people’s drinking. It is certainly a firm advocate of controlling drinking and driving, and we applaud that. But to get an increase in money and then invest it in breweries does not sit comfortably with us. I know it does not sit comfortably with the Greens, but they will vote for this bill. They will push it through and add another 3c, plus GST, to the poor old motorist. This is “slug the motorist bigtime”.

If there were a bit more imagination and innovation, we could address the problems that the Accident Compensation Corporation has quite easily, but to just say that it needs more money and that that will be put on the motorist, come hell or high water, is not acceptable to New Zealand First. We are not prepared to support this legislation.

Mr Key has to leave early, and we have arranged with all the parties—with the exception of New Zealand First, as I did not manage to speak to the “young” member, Mr Peter Brown—that Mr Key takes the next slot and every one else drop down. I seek leave for that to happen.

The ASSISTANT SPEAKER (H V Ross Robertson): Is there any objection to that course of action being taken? There appears to be none.

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.

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.

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?

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?

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?

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 ?

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?

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 $25,000.

💬 John Carter: $25,000?

That is right. The levy has gone up by $25,000 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 28,000 a number of years ago. Today that figure stands at 14,000.

💬 John Carter: That’s half!

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?

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?

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.

The purpose of this bill is to bring into effect announced changes in the petrol levy. Because petrol usage takes into account the amount of time the vehicle is being driven, it roughly corresponds to the consequent degree of exposure to risk of injury. The Government announced in December 2002 that for the 2004-05 levy year the petrol amount will be raised from 2.3c per litre to 5.08c per litre. The reason for the increase is that the Accident Compensation Corporation motor vehicle account has recently faced a significant cost increase, and the Government is legally required to collect enough levy to meet those costs. Although the number of fatalities has declined, this has had the perverse effect of increasing the medical and rehabilitation costs for those who survive but sustain serious injuries. United Future supports meeting those costs for those who have suffered serious injuries, and in no way wishes to deny them the best quality of life they can have.

The other practical option for raising the necessary levy is to increase the annual vehicle licensing fee. However, the Government considers that this has already reached a level whereby any further increase could have adverse social consequences. In the Government’s view, the only practical and equitable solution is to increase the petrol levy.

United Future does not fault the Government’s reasoning. We accept that the increasing costs faced by the Accident Compensation Corporation need to be met. As I have said, we support giving quality care to those who suffer from accidents. We also accept that the increase in the petrol levy is the most equitable way of achieving this. However, this runs counter to United Future’s view of the wider transport policy. Our view has been expressed many times by myself and my colleagues in this House. United Future cannot condone a further unnecessary increase in the tax burden already borne by New Zealand motorists. We already pay more than $1.7 billion in petrol excise duties, road-user charges, and motor vehicle licensing fees. Too much of this is siphoned straight back into the consolidated account. It is not spent on accident compensation and rehabilitation, roads, or anything else that is directly transport related.

If one looks at the petrol excise duty alone, one sees that the 18.5c per litre collected from the motorist at the pump goes straight back into the Government’s coffers, with all other revenue. Currently, 2.3c per litre is collected for accident compensation, and is given directly to the Accident Compensation Corporation. The Government wants to increase this amount to 5.08c. That is fair enough. We like the idea that a tax is used in such a direct way, for the purpose for which it was collected.

In fact, this is the point that United Future has been trying to make for some time: these taxes should be transparent and should be used for the purpose for which they were raised. Why can we not apply this same logic to the rest of the excise duty? It is supposed to be used for transport-related costs, such as roads. For the purposes of this bill, why can the Government not take this increase in the accident compensation levy from the 18.5c per litre that it already takes from the motorist at the petrol pump and diverts into the consolidated account? The Government should do that particularly in the light of the huge Budget surpluses it is currently running. Why not simply reduce the amount diverted into the consolidated account from 18.5c to 15.7c?

Perhaps this could even be a precursor to our returning to the motorist, in the form of transport-related benefits, all the funding currently collected at the pump. That would be a policy that United Future could support. The Minister of Finance has indicated recently, in answer to questions in the House, that some work is being done—by Treasury, I imagine—on trying to justify this money being taken from the fuel excise tax and put into the consolidated account. I have to say that United Future is open-minded about looking at the results of the research that is being done; if there is a good case for some of that money being taken and used in general expenditure by the Government, we will be willing to accept that. But I do doubt seriously that it can justify the 18.5c being siphoned off into the consolidated account.

At a time when New Zealand’s economy is said to be under pressure from external factors and from national infrastructure deficiencies, is this really a good time to siphon an extra $75 million off the regions? Because that is what this bill does. Based on average levels of fuel consumption, it will cost Canterbury an extra $10 million per year, the Bay of Plenty $7 million, Otago $4 million, Wellington over $8 million, the Waikato $10 million, and Auckland $8 million. And all the time the Government is running Budget surpluses. Where is the sense in that?

Jeanette Fitzsimons, a co-leader of the Green Party, in her first reading speech—after Peter Brown from New Zealand First and I had made this argument about money being siphoned off the regional economies—claimed that that was a very poor debate. I think that is what she said. I shall quote: “It goes back to the people who work in the treatment and rehabilitation systems in the regions, and that provides economic development in the regions. Roads and motoring are not the only things that boost the economy. All the other services, such as health services, and care and rehabilitation, also boost the economy, and it is a completely shallow argument”—that is what she said—“to say that this money is being siphoned off somewhere, never to appear again, and never to play any useful role in the economy.”

Well, I would be the first to admit that these service industries—health services and care and rehabilitation—do play an important part in our communities and, to some extent, in our economies, but that comment of Jeanette Fitzsimons reveals how little she understands about how the economy works, and the importance of the producers in the economy, and of service industries. Roads and motoring play a very, very important part in the economic base of our industries, of our businesses across this country. Having efficient and safe roads for them to operate on and for our freight to move around on is a key ingredient in gross domestic growth in this country. It is not the same as hospitals and health services, and care and rehabilitation. If we take money away from those who are providing economic growth, and give it to those who are simply providing services, our economy will begin to shrink. So I do not accept her comment that it is a shallow argument; it is a very good argument to make, and I believe that it is one that we need to continue to make until this Government acknowledges the desperate need we have to improve our roading infrastructure.

Jeanette Fitzsimons mentioned in her speech, in defence of the Government’s siphoning money off the excise tax, that virtually every developed country in the world taxes fuel and motoring for general revenue. That may be true, but I suggest that virtually every developed country already has a very well-developed roading network throughout its country. If our roads were in tip-top shape, if our transport was running around without congestion problems, then perhaps using some of the tax revenue from fuel excise for other purposes might be justified. But it is not justified to do so when we have such a huge transport deficit in this nation. We have been underspending on our roading network for the past 20 years, and that is why we are in the current situation.

In conclusion, I shall make one further comment about Jeanette Fitzsimon’s speech. She said, at the time that the Greens gave support to this bill on its first reading: “We hope that we will make some improvements at the select committee to take the bill further in some directions where it has started in a small way, but not gone far enough. One simply cannot avoid a levy on fuel. People either buy fuel or they do not. So we are disappointed that we have taken only a small step in that direction.” At that point, I looked forward with some confidence and some expectation that when the bill was reported back from the select committee, there would be a number of changes—that there might be a reduction in the cost of registration, in exchange for what is being put on at the petrol pump. But as I look at the bill today, I find there are no changes like that, at all. The Greens have continued to give their support for this increased tax on the motorists of New Zealand without their getting any of the changes they said they were hoping to gain. Therefore, I am disappointed that the Greens are supporting a tax on the motorist—and this tax is being put on simply because of the Greens' support. United Future makes it clear that we do not support further taxes on the motorists of New Zealand until our roading network is improved.

It is a pleasure for the Green Party to follow the speech of Larry Baldock, who has challenged us on a few points. The Greens will be supporting this bill because we think it is right that road users, through this additional fuel tax, do help cover the cost of road accidents. As we understand the bill, it is not just a tax on petrol that is proposed; there is provision in the bill for that tax to be extended to other fuels such as diesel, which I think is very important because trucks, which use a lot of diesel, are disproportionate contributors to road accidents—very much so, if one looks at the statistics. So it is right that the tax is extended to diesel. I hope that, in our implementing this law, that will occur.

I think incentives will result from fuel taxes being increased. It means that there will be a move towards a more level playing field between road transport and, for example, rail transport. At the moment, rail operators have to pay the entire costs of the operation—the infrastructural cost of the rails as well as the operational costs of running trains and carriages over those rails. As for road users, it is true, as the last speaker said, that money is put into the consolidated account. But if one adds up the money—the 18c referred to and the other taxes—it still does not add up to the real costs to the community of the roading infrastructure and what are sometimes called the externalities. One does not look at just the costs of building and upkeeping roads; one has to look at all the other costs to the community.

Infrastructure Auckland funds different infrastructural projects in Auckland with money from Ports of Auckland etc. It published a study on these externalities a few years back, and it estimated that if one added up all the externalities, including the health costs of the fumes from road transport, one would find that the cost was about $2.5 billion a year. It is estimated by the Auckland Regional Council that about 400 deaths a year in Auckland are caused by the pollution put into the air by road transport. That figure is equal to the number of people who die annually in road accidents. The health costs go beyond that. There are the costs of the effect on health of the stress felt by people using road transport as against other forms of transport, and the costs of the effects of traffic noise, particularly in urban areas and on big highways. There are also the costs to the environment in terms of the use of fossil fuels, which are obviously in short supply, and in terms of the contribution of greenhouse gases to global warming. If one adds up these and other externalities, as Infrastructure Auckland did in its research project, one finds that they add up to a lot of money. Even with this tax, the road users will not be fully covering the costs of their use of the roads.

So, at least, this legislation provides an incentive for the community to move towards fewer accidents, a better transport structure, and, possibly, if we do reduce the accident rate very substantially, less tax in this regard. It is also an incentive, I think, to move freight from road to rail transport. One of the aims of the Government, supported by the Greens, is to have more freight and passenger transport moved by rail as opposed to road. If we are giving an incentive for road users or freight operators to say: “It’s getting a bit more expensive to use the roads, because of this tax. Perhaps we’ll send more of our freight by rail.”, that will be for the good of the community. This legislation is also an incentive for commuters who drive their cars to work, in the big cities in particular, to say: “It’s going to cost me more to take my car. I have to look at the cost of going by public transport.” I think this tax will encourage commuters to use different modes of commuting, whether rail, ferry, or bus, or other alternatives such as cycing or walking, or a combination of those different modes.

It is also an incentive for local government and central government to do something to decrease the rate of accidents, so that there is less of them and they are not so bad. Both local government and central government can do that, by various means, including by improving roading—making sure there are good cycle lanes so that cyclists are not in danger, and making sure there are proper pedestrian facilities so that fewer pedestrians are killed. Improvement of road design is one thing that this measure could encourage.

We can look at the question of enforcement of the laws. I think that would reduce road accidents substantially. The police could deal more effectively with some of the things that I notice, like cars following too closely. People who do that could be penalised a little more, in order to make our roads a bit safer. The police could penalise people for overtaking in very dangerous circumstances, which I think is a major contributor to road accidents, particularly on highways.

In addition to that, this measure will encourage Government and local bodies to provide more education on road safety. More could be done in that direction. I have had a driver’s licence for many, many years, and I cannot see that there has been a lot of pressure on me to take up educational opportunities such as defensive-driving courses. There is a lot of room for greater community education of existing drivers, and also new drivers, to decrease the frequency of accidents.

Within this discussion we are having on road safety and how to fund the accident compensation component of it, we also need to look at the question of our not having longer or heavier trucks on the roads. I know there was a proposal to increase the allowable length of trucks on the roads, and the weight of those trucks. There was much discussion on that a couple of years ago. The Greens got a huge amount of public support via letters, emails, and telephone calls, because we opposed any increase in the size and length of trucks. Hopefully, this sort of discussion we are having now will encourage the Government not to go ahead with that. It is a big issue. Travellers on the roads already have to face the fact that there are a lot of big trucks going round corners and making things very difficult for them. I talked to a resident of Gisborne recently who is very scared to travel from Gisborne to Wairoa, because logging truck after logging truck goes along that very narrow road. Again, that is an argument for pushing more freight, such as the logs coming on stream from places like Gisborne, on to the rail sytem, rather than increasing the number of logging trucks and other trucks, or increasing their length or weight. That would only create more accidents and put a greater burden on the accident compensation system.

I am glad that when the Minister made the introduction he referred to the land transport strategy, which the Greens were involved in. That strategy is to develop alternatives to road use across the range, from a strategy for more people to be walking and cycling, to the development of public transport in all its forms, to promoting innovative things like the walking bus system, which was referred to in yesterday’s New Zealand Herald. That system is developing both in Auckland and around the country. Parents get together to take their kids to school in a walking bus, rather than a whole of lot individual cars going to school, and resulting in a crush of traffic around the school that makes things more dangerous for the children. A whole lot of innovative solutions are coming out of that land transport strategy, and are being implemented.

I am pleased to rise to support this bill. It is an unfortunate fact of life that people get badly hurt in motor vehicle accidents. The costs of remedying those injuries and caring for those people over a long time are high, and, in line with the escalating costs of health care, those costs are rising faster than inflation. That leaves the Crown with a difficult issue. We have a legal requirement to collect enough levy to fully fund the motor vehicle account. The question, then, is not whether we pay for it but how we pay for it. Our contention is that this bill is the fairest way. It is fairest because those of lowest risk will pay the least, and because prorating the cost against petrol, which is broadly correlated with risk on the road, avoids an increasing lump-sum payment through vehicle licensing. We note that the alternative, which is higher lump-sum payments, would be regressive in the sense that those least able to afford sharp, one-off costs would still face them. Very briefly, in principle this bill is necessary, it is fair, and it is timely.

ACT New Zealand opposes this legislation because it is not, as the Labour Government has tried to tell us, a fair way to raise revenue for accident compensation. It is an unnecessary tax from the Government that campaigned on promising no new taxes. No matter how much Mr Hughes stands there and waves his “credit card” around, it is obvious that he does not know what a tax is. The Government promised no new taxes, and here we have yet another one. So far we have had the fringe benefit tax, the tobacco tax, other petrol taxes, diesel and road-user charges, driver's licence fees—

💬 Hon Jim Anderton: Richard Prebble introduced the fringe benefit tax.

I am glad that Mr Anderton is joining in here, because let us not forget the sherry, port, and Madeira tax.

I first became acquainted with the proposal for the increase to the accident compensation levy when I received an invitation from the Ulysses Club, a group of older motorcyclists. They wrote to invite me to join them on the steps of Parliament last Labour weekend. They were very concerned that any levy would be added to their registration fee. So down I came to join them, and who should turn up for the Government but the Hon Rick Barker. He was there in his full set of leathers, and what a fine figure he cut in them, too. I was not as confident as Mr Barker that I had the figure to carry off the full set of leathers, so I came along in my jeans and a jacket.

He turned up on behalf of the Minister and read out the set piece. It was obvious at that point that the Minister was veering towards the rise in the registration fee. The thousand motorcyclists were not at all happy. They had travelled the length and breadth of the country to come to Wellington on their long weekend. Rick Barker read out the set piece proposing the rise in the registration fee. Once he had read the speech, in his full set of leathers, he took a step to the left, or actually it could have been to the right, and said: “Now I’m going to speak to you biker to biker, and what I actually favour is the rise in petrol tax. We’ll put the levy on petrol.” On 8 April, when this legislation was brought to the House, we saw that he had in fact got his way.

Timing is very important in politics, as we all know. The Government announced this decision in the first instance—when it decided whether to go with the registration fee or the petrol levy—on 18 December. It announced its decision to put the levy as a petrol tax on 18 December, while most of the country was out doing its shopping for Christmas and would not notice. Labour’s Christmas present to motorists was the news that petrol prices would rise to cover an increase in the accident compensation motor vehicle levy.

This is nothing more, as we have heard this afternoon from this side of the House, than a revenue rort that does not withstand close scrutiny. Increased revenue from petrol tax will, supposedly, pay for the rising costs of road injuries and deaths, such as hospital and rehabilitation costs. However, when we look at it closely, we see that it does not add up. The number of weekly accident compensation claimants drawing from the motor vehicle account has dropped by more than 1,000 in the past 5 years, following a recent claimant purge.

The Accident Compensation Corporation’s motor vehicle account has run underlying net surpluses of more than $100 million a year, before claim revaluation adjustments and changes in accounting treatments. Government members say that the increase is a way to cover rising health costs—and we have just heard them at it again—for road accident victims. Labour Party polling shows that this is the most acceptable excuse, yet my questions to the Minister reveal that those costs are not rising as significantly as the Labour Government claims.

It is interesting, too, to look at the corporation’s annual accounts. They show that the corporation’s problems are actually due to the revaluation of the future cost of social rehabilitation, which, over the next 30 years, will be $858 million rather than $696 million. The accounts show that this is an estimate of future costs based on assumptions that social rehabilitation costs will rise by 20 percent annually. This just is not the case. The resulting difference in future social costs of $162 million has simply been deducted from this year’s operating surplus, to provide a convenient deficit and an excuse to raise petrol tax. A change in accounting treatment increased this deficit by a further $50 million. It is amazing what can be done with figures.

The Government has hiked the bill for taxpayers without providing any good reason. Either Labour is inept in going along with the corporation’s purported need for more money—and this is entirely possible, I suppose—or perhaps the Government’s plan has always been to increase petrol tax, thus making the consultation merely cosmetic.

On 8 April the legislation was introduced into Parliament. If passed, it will create the third unnecessary increase in petrol levies since the Labour Party came to power. The bill will increase the petrol levy used to fund accident compensation from 2.3c to 5.08c—an increase of 2.78c, or 120 percent. Labour hoped that motorists would not notice its blatant tax grab, because at the time the conflict in Iraq was occurring, and there was a huge variation in the price of oil. Petrol prices reflected that.

This increase of just over 5 percent per litre came on top of the 1 July 2001 Crown revenue petroleum excise tax increase, and the 1 March 2002 National Roads Fund petrol tax hike. Like the previous two increases, this tax hike is totally unnecessary—as I and other members on this side of the House have said today. What injury prevention are we talking about? The rate of serious injury and death has steadily fallen by 30 percent over the past decade, while, at the same time, the number of registered cars has increased by 30 percent. The Government has inflated the estimate of future accident compensation claimant costs, so that it can justify getting even more out of the back pocket of today’s motorists. The result is that this Labour Government can build up a fund. It is just the same as Dr Cullen’s fiddle with income taxes; he overtaxes workers so that he can achieve a surplus.

Let us look at the Budget surplus of $4 billion. We have just reached a population of 4 million. If the surplus were to be divided amongst the population of New Zealand, each person would receive back $1,000. Dr Cullen had the perfect opportunity in the Budget to reduce incoming personal and company taxes with this surplus, but, of course, he did not do it. He would much rather raise the taxes of New Zealanders, in particular the New Zealand motorist.

In short, this is an anti-motorist, nonsensical tax hike that will hit every New Zealander in the back pocket. For this reason, ACT New Zealand strongly opposes this bill.

This is a good start. I am delighted to rise in support of this legislation.

LINDSAY TISCH (NZ National—Piako): That was the shortest debate I have heard from someone who is trying to impress upon the country that we will have taxation increases. The member stood up and said he supported the legislation. I would have thought he would get up and pound his chest, saying that this measure is good for the country and is what we should be doing. But what did he do? He stood up—

💬 Peter Brown: He convinced me.

💬 LINDSAY TISCH: He did not convince me. This issue is very serious. It is another serious attack on middle New Zealanders and on those in business. This is an attack from a Government whose members said we should read their lips when they said there would be no increases in taxation. That is what Government members said.

Well, I want to canvass some of the things that National is concerned about in this bill. We will not be supporting this bill. If we look at the number of long-term claimants for accident compensation, we see that the number is reducing. It has gone down from 28,000 to about 14,000. But there will be a tail, and that tail may well increase. That is how the Government would justify increasing the tax by 120 percent. That is what this tax is about; it is about a 120 percent increase.

One of the issues I take great offence at is what the Minister said in the first reading debate on 10 April—and I will quote from the Hansard. She said that this bill “will enable changes to the rate of petrol levy without requiring further legislative amendments”. Do members know what that means? It means there will be an endless increase in taxes, with absolutely no scrutiny by this Parliament. Under the regulations, if the Accident Compensation Corporation wants to increase its levies—or its taxes, which is what they are—it can do so, because there will be absolutely no need to come back to Parliament for scrutiny. I find that quite unacceptable.

The Minister also went on to say in her speech that funding the increase through a petrol levy is seen to be fairer. On whom is it fairer? What about the professional drivers? What about those people who make a living out of driving—the long-haul transport operators, the courier operators, and the taxi operators? Those people do not have the accidents. They have a very good safety record. Yet those people will be hit, because the Minister said that that would be “fairer”. In my view, it is not fair. Under the bill, the more that people drive, the more tax they will have to pay. People who are in business will have to carry the can on this. This legislation is absolutely anti-business. The bill does not include diesel. However, the Green member said in his dissertation that diesel should be included. [Interruption] The Government can bring diesel in at any time, because under this legislation it will not have to come back to the House to discuss that. That can be done by regulation.

This increase is more than the total of the old levy. In fact, it is 2.78c per litre more than that. The levy will go from 2.3c per litre to 5.08c per litre, and that is an increase of 120 percent. An increase of 3c per litre will go through because the minority Labour-led Government has done away with competition. When there was competition with regard to accident compensation, the Accident Compensation Corporation had to scrutinise what it did. It had to make its investments work, but under this legislation there is absolutely no competition. Of course, we are the people who will carry the can for that.

I remind this Government of its pledge at the last election about taxation increases, which was that there would be no more taxation increases. Since November 1999 we have seen an income tax increase. The taxation rate for those who earn $60,000 plus went from 33 percent to 39 percent. That is what happened. We saw the rate of fringe benefit tax increase from 49 percent to 64 percent, and the rate of trust income tax increase from 19.5 percent to 33 percent. We saw a tobacco excise tax come in that went from $7.20 to $8.20. We have seen petrol and road-user charges go up enormously, with road-user charges going up by over 30 percent. The accident compensation levy on petrol that we are debating today will put a huge compliance cost on business.

And what about the night when we sat here until 5 to 5 in the morning because the taxes on sherry and port were being put up? Do members remember that night? Not many Government members were actually here in the House. They were not here; they had gone home to bye-byes. We were here in the House, saying that that was a straight-out tax on port and sherry. The Government’s view was that it had to stop binge drinking and it had to hit those people who would be drinking port and sherry. Of course, what happened? The Government put up that tax.

We have seen accident compensation levies increase in other areas. I am the Opposition spokesperson on racing, which has had a huge increase of 52 percent in the accident compensation levies on trainers. What did we see in Parliament today after yesterday’s announcement of the flatulence tax on farmers? David Carter made a very good point in Parliament today that a flatulence tax of $8 million would hit farmers. That is what this Government is about. It has a hidden agenda. It may call the increases levies or charges, but then the Minister, Pete Hodgson, said members could call the flatulence tax what they liked, and they could call it a tax if they liked. I am saying that any tax, any charge, or any levy—whatever members want to call it—is a burden on the community, and is a compliance cost that we are opposed to.

Finally, I congratulate the Accident Compensation Corporation on having been able to maintain its investments over the last couple of years, despite the very turbulent market conditions. However, the point I make here is that as the climate changes, as the market changes overseas, and as investment strategies change, we will probably see an erosion in those investments. This Government now has a situation whereby accident compensation is a monopoly and is not open to competition, and it will be able to increase the charges by way of regulation without the scrutiny of this House.

It is quite clear that National is for business. This legislation is anti-business. It will hit the small people and the people who drive cars. I would have thought that most of those people were a constituency of this Labour Government. However, the Government is hitting its people, our people, and businesses. This legislation is anti-business; it is a tax. There is no other name for it, and National is opposed to it.