Injury Prevention, Rehabilitation,and Compensation Amendment Bill

I am thankful for the opportunity to speak on Part 1 of the so-called Injury Prevention, Rehabilitation, and Compensation Amendment Bill. I note regarding the commencement date that the major part of the bill is due to come into force on 1 July 2003. I think that the first reading of this bill was held under urgency on 7 April 2003, which reflects the untimely haste with which this Labour Government loves to bring in more taxes. It brought this tax grab in under urgency only about 6 weeks ago. As we reflect again on the importance of the original Act, I suggest that, surely, more consideration was given to its commencement date than has been given to that of this untimely tax grab that we see this rapacious Labour Government presenting before us today. I compare it with the local government legislation on dog control, for instance, which the Government let languish for 4 years while there were 760 significant hospitalisations, 60 percent of which involved children under the age of 18. Yet here the Government is after the money in a short 6 weeks, or as fast as it can possibly get it.

I guess that the important part of this bill is reflected in the purpose clause. The Government quite unashamedly states: “The purpose of this Act is to—(a) establish … a levy”. What is the difference between a tax and a levy? I think Colin James provided the answer for us in this morning’s New Zealand Herald, where he states: “ ‘A levy is a tax,’ former Labour leader and Prime Minister Mike Moore used to say …”. That is what the Labour Government used to say, but now the tables are turned. Labour is in Government, and every possible moment where it can choose to collect yet another levy, it does so. That is described absolutely clearly in the purpose clause of this bill, which states: “The purpose of this Act is to—(a) establish as a levy under the principal Act the portion of excise and excise-equivalent duty payable on motor spirit that is paid to the Motor Vehicle account;”.

But one of the other things that is clearly missing from this purpose is whether it is an equitable levy or a fair tax. There is nothing whatsoever to suggest that element of it. Surely, from this so-called reforming Labour Government we would expect some degree of social conscience about this, but there is none. This is an unashamed, barefaced tax grab on the motorists of New Zealand.

One might think a little bit further about the submissions. Very few submissions were put before the select committee. Both the Automobile Association and Business New Zealand made the very important point that the Labour Government just ignores the question of whether a tax is an equitable or fair tax. In fact, Business New Zealand said, more fundamentally, that setting a motor vehicle levy solely on the type of vehicle and the amount of fuel consumed is a poor substitute for a system that takes account of all risk parameters. It stated that the Accident Compensation Corporation and the Government should therefore investigate alternative options for setting premiums for the motor vehicle account that would take into account all aspects of risk, including driver, vehicle, and road characteristics, in accordance with commercial actuarial practice.

This is just classic Labour Government doubletalk. On the one hand there is to be no increase in taxes. A former Prime Minister of a Labour Government, Mike Moore, clearly equates a levy with a tax. Here is the Government, once again unashamedly grabbing taxes in a matter of a few weeks.

I have listened with some interest to the contributions made by members on the Opposition side of the Chamber. Although I do not profess to be—

💬 Rodney Hide: What part was the best part?

I think that probably Ken Shirley’s airbrush comments were the best part, if I look back historically over those points. I have just finished listening to Dr Paul Hutchison.

The one thing that leaps out for me with regard to the purpose clause is the fact that through this bill the Accident Compensation Corporation is able to take this action at all. The fact that the corporation is in a position to ask the Government for this, or that the Government can make a decision to do this at all, leads to what I consider to be probably the most subversive message in this bill—that is, when one has a State monopoly, one can do what one likes. It does not matter what the market says, it does not matter whether motorists are travelling safely, and it does not matter that it is probably the very people whom Labour purports to represent who will suffer the most from this increased tax. Those same people now pay more for sherry and cigarettes, and, if this Government has its way, they will not now be able to have a durry in the Returned Services Association. That is an outrage. This Government is busy telling us that it looks after the working people of New Zealand, when all that it is about to do in this legislation is to tax them more for getting from A to B while trying to earn a decent living and make a contribution to society.

It astounds me that this Government has not got the message that when one gives an organisation monopoly rights, abuse inevitably follows. If we had competition there would be no need to increase the levies, at all. This is a tax grab, and the Government is simply putting its hand up and saying it will use this mechanism to redistribute money between the peoples of this country. This bill will affect mostly the people whom this Government purports to represent.

As my colleague Peter Brown has just whispered to me—and I will give him credit for this, because it is not bad line—if people can insure a car privately, why can they not insure the inhabitants of the car privately? That is a very, very fair point. Let me just run through Mr Brown’s contribution again, before he gets to his feet and, no doubt, makes a contribution in a much more eloquent way than I could. If members of the public can insure their cars privately, why can we not see the occupiers of those cars insured privately? There is no good reason for this Government to allow the Accident Compensation Corporation under this legislation to get away with this type of blatant use of monopoly rights in a certain part of the insurance market.

💬 Rodney Hide: It’s theft!

There is no question about that. If this Government understood half of what is involved in the model of competition in these areas of law, it would have understood that these types of increases in levies are absolutely indigestible to the public of New Zealand. It is only because of the monopoly rights of the Accident Compensation Corporation that the Government is able to pass legislation like this. That will all change. When there is a change of Government all that will change, because there is no way that we will allow levies to be increased under this type of legislation by virtue of the monopoly status of various Government departments.

I listened carefully to Ken Shirley and various other members talk about the fact that this is a stealth tax. It is worth just spending a couple of moments on that. The original pre-election credit card that we all saw bandied around the country, with that person on the front of it who is unrecognisable to most people as they walk around the street—

💬 Rodney Hide: She looked like a Hollywood starlet.

She did not look like that when I saw her. That card specifically stated that there would be no more taxes other than the increase in income tax that this Government put through at the end of 1999. What have we seen? We have seen this Government put through a range of stealth taxes, and this bill is just yet another example of how this Government blindingly disadvantages the people it purports to represent.

I challenge the Minister of Māori Affairs, Parekura Horomia, to take a call to explain in English or in Māori–we can get a translation, so it does not matter which language he uses—the difference between a levy and a tax. I challenge the Minister of Māori Affairs, Parekura Horomia, to rise to his feet and show us what he is made of. He should take the call, for the sake of what Parliament is about, and make that explanation. He should explain why Ngāti Porou has to pay an increased accident compensation levy for its motor vehicles, and why the Māori people whom he represents have to pay more money on their vehicles. Is it because that is supposed to prevent injuries? Is it because it is supposed to help with people’s rehabilitation, and therefore they have to pay the Government more money? I do not remember Labour promising that at the last election. I do not remember the Minister of Māori Affairs standing up on marae around the country to explain that. I do not remember the “Minister in charge of Te Kuni Porkery” explaining that that would be paid for by more taxes.

What do we hear from this Government? We hear a deafening silence. Government members are not even prepared to come down to this Chamber to talk to Part 1, the purpose of this bill. Did we hear the Minister in the chair speak to it? No. Did we hear the Minister of Māori Affairs speak to it? Did we hear any back-bencher try to sharpen up his or her practice in Parliament, by speaking to this bill? Did we hear any one of those members stand up in this Committee and say this is not a tax but a levy? Not once did we hear that. I say to David Parker, who is trying to interject, that he should take the next call to explain that. He will say that when a cow blows off we can put a levy on that, and it is not a tax. We can ask this great farming nation of ours who would have believed that? Do members remember the jokes that used to go around about what Labour would tax next? I do not remember anyone saying that there would be a tax on cows and sheep blowing off, but this Labour Government is doing that and calling it a levy.

I look forward to the Minister of Māori Affairs, who is in charge of “Te Kuni Porkery”, being ready to take the call. With Brian Edwards’ haircut, and all the media training, will he take the call and explain to Māori people why they have to pay more on their vehicles, because of “improved estimates of long-term rehabilitation costs”? What is improved about them if people have to pay more money, I ask the Minister? How can the Minister go onto marae and say the Government has improved accident compensation, so therefore people have to pay more? I say to the Minister that in the real world, when one improves something the price stays the same.

💬 Hon Parekura Horomia: It’ll pay for your salary.

The Minister wants to whack my salary. I am the man who is doing his job! I am the man who is doing his job, and he stands up and tells the House that I am doing his job. I am the man who is finding out what is happening in his portfolio, and he stands up in the House and tells us that. And when he gets stuck, whom does he call on for help? The National Party’s former vice president! That is who is bailing that Minister out. I say: “Good on him.” I am very pleased that the Minister of Māori Affairs is being consistent, and has stood up in this House and said people should vote National, because that is the only way to get a Minister of Māori Affairs who will do the business.

I say to that Minster that he should stand up, because the Minister in the chair cannot and none of the Government back-benchers can, either. I ask Minister Parekura Horomia to stand up and tell us the difference between a tax and a levy. The Minister should tell us why the Māori people have to pay more money on their cars, and why this Government calls that an improvement. He should tell us why this Government and he, in particular, did not listen to the submissions that said this would happen. He sits still and does not take the call. Let the record reflect that.

It comes as quite a surprise that Rodney Hide would want Parekura Horomia to address the Committee on this particular issue, a tax, when Mr Horomia is not very coherent on his own portfolio. How could he ever be expected to speak about the Injury, Prevention, Rehabilitation, and Compensation Amendment Bill? I would have thought that Mr Hide would go straight to the Minister of Health, who is in the chair, and ask her to explain to us the difference between a tax and a levy. I know that the Minister of Health is taking an interest in this bill only because she is enthusiastic about introducing a health tax. She is interested in introducing a health tax—a health levy. She has floated that idea; she simply wants to see how this accident compensation levy goes through. She wants to learn from the mistakes of the Minister who is in charge of this bill, because she wants to introduce a health tax.

I am also surprised about the commencement dates in the bill. This Government is so enthusiastic to boost up its coffers that I am surprised that this whole bill, every clause of it, does not commence immediately, or, as it states in the bill, when it receives the royal assent. I am surprised that this Minister and the Labour Government are not trying to get this money in the coffers as soon as possible. I am delighted that the Government is not doing that; I wish the Government would put that off for ever. But I am surprised it has not done that, because this bill is simply a money-collecting exercise.

Clause 3(b) concerns me. It states that the purpose of this Act is to “avoid the need for an amending Act to consequentially adjust the rates of excise duty and excise-equivalent duty on the relevant fuel … whenever the levy changes;”. In other words, this bill gives this Government an opportunity to change the levy at any time, at a moment’s notice, without warning the public, before any general election, and to slap another tax on the people of New Zealand who jump in their cars or ride their bikes. That is what it does. This bill simply breaks down the walls, so that this Labour Government can tax and levy at will—and this is what the bill states: “to avoid the need for an amending Act”, so that the Government can act quickly. The purpose of this bill makes it clear that this Government is enthusiastic to levy and tax New Zealanders. The Government is so enthusiastic that it is making it easy for itself to do so.

Clause 6 refers to the rate of the levies. It adds subsection (4) to section 214 of the principal Act, and that subsection states: “The levy payable … is payable—(a) at the rate or rates per litre or other unit prescribed by regulations … ”—as one might expect. But then it states: “(b) in the absence of regulations for the time being in force for the purpose … at the rate of 5.08 cents …’’. And, of course, it also states that the rate can be changed at any moment—at a moment’s notice.

So we can add this tax to the flatulence tax, which we have heard about, and to the tax that has already gone on Northland roads. I think it was 4.7c a litre, was it not? I ask John Carter whether he has seen Northland roads improve since that tax was brought in.

💬 John Carter: It’s taking a long time.

It is taking an awfully long time to see Northland roads improve since that tax was brought in. We can add this tax to the tax put on the elderly of New Zealand every time they just want to have a quick glass of sherry, to the tax on Northland—the tax on road-users—and the tax on cows and sheep. If we add all those taxes, we have a formula for this Minister in the chair, Annette King, to introduce a health tax on every New Zealander. That is what we will see next. We will see the promised health tax.

💬 Hon Brian Donnelly: It will be a levy.

Yes, it will be a levy. The member who hails from the north, although we do not see him up there very much, is quite right. It will be called a levy, but it will actually be a tax. So there we have it: a road tax, a petrol tax, a tax on sherry, a tax on flatulence, this tax, and a health tax.

I am delighted to engage in this debate during what is drive time for most New Zealanders, as they go home. I am delighted that they will hear the shocking news—and this will be the first time they hear it, if they have not caught up with the news already—that another levy is coming their way. How did Dr Michael Cullen, the Minister of Finance, once describe levies to the public, in this House? He described them as back-door taxes. That is what the Minister said.

💬 Rodney Hide: I don’t believe it!

Absolutely! He described them as back-door taxes. There is not much “back-door” about this tax. This tax is right out front—5.08c.

But what is of such great concern is not so much the levy itself, although that is concerning because it is up 120 percent. What is really concerning is clause 3(b), which my colleague Phil Heatley referred to. In effect, the Government will have the ability to change the levy whenever that is required. Why is that important? Why is clause 3(b) so crucial to this legislation? Let me explain to the Committee.

The first reason is that this levy has to cover the amount owing. Why is it 5.08c a litre, not less? Because this Government chose to renationalise accident compensation. The Government said that it did not want competition, that it did not want the ability to have competing firms, which would drive down the costs for New Zealand motorists. The Government said that competition is not a good idea. It said it would renationalise accident compensation, and bring in all the inefficiency that one gets with a monopoly—unless one socks it to the poor, hard-working motorists of New Zealand, who are going home to their families in drive time. That inefficiency will come back to roost year after year, as people pay greater increases in their levies.

That is not the only concern. The second and probably most alarming concern is that the rate of long-term claimants, which had been falling dramatically, has stopped falling.

💬 Clayton Cosgrove: Why?

I will be happy to tell Mr Cosgrove. As the number of long-term claimants rises—

💬 Phil Heatley: Darren Hughes is on his knees to Annette King.

Darren Hughes is on his knees proposing to the Minister in the chair, the Minister of Health. This is ground-breaking stuff. I feel like an anchorman for one of those television shows—breaking the news to the country. I could be Paul Holmes breaking news. No wonder the member is blushing.

💬 Brian Connell: I raise a point of order, Madam Chairperson. I am sorry to interrupt my colleague. I was wondering whether the Committee could have the Minister’s answer!

Why is it important that the number of long-term claimants is rising? It is because the levy—the back-door tax being socked to the hard-working motorists of New Zealand—will increase if the number of complainants goes up and the cost to the commission goes up. That is a fact of life. If the number of long-term complainants rises, and it is rising as we speak—

💬 Brian Connell: Why is that?

Because we are back into a monopoly—

💬 Brian Connell: No competition.

That is absolutely correct. So that is of great concern. But equally of great concern, and in this respect I give a backhanded compliment to the ministry, is the outstanding job it has done of managing the reserves—$3.6 billion worth. Last year the ministry earned 3.6 percent return on those investments. That is a tremendous return, if we take into consideration the very poor investment conditions. Can such a stellar performance by the ministry continue?

💬 Dr Paul Hutchison: Unlikely.

There is silence from the Government, and an “unlikely” from the Opposition benches. I say it is very unlikely indeed. If that return is poorer than it has been in recent years, there will be less money to pump up the levy, less money to help those wonderful New Zealanders who are, in drive time, going home to their families, and less opportunity for them to defray the costs.

There are a couple of important issues that have been alluded to but they need to be cemented in, to be sheeted home. One of the things that—

💬 John Key: Did the Minister say “Yes” or “No”?

💬 Hon Annette King: I said “Maybe”.

What is more, the young fellow is blushing in anticipation. He is going to ring his mother to see if it is all right.

💬 John Key: She has broken a lot of hearts in her time.

Yes, he will have to watch that. It happens to all us young people! Shall we focus on the bill for a while? I have been listening closely, and there is one issue that concerns me.

💬 Rodney Hide: Just one!

No, there are a number, but there is one that has not been mentioned yet, and that we need to talk about in the context of this new levy. We have talked about the alcohol tax that was passed. We have talked about the flatulence tax, which is coming up shortly. I think there is possibly the imposition of a levy on power.

💬 Brian Connell: Yes.

There is something along those lines. Then we have the levy in this bill.

💬 Phil Heatley: In Northland.

Not just in Northland but across New Zealand—4c extra. But members should not forget that there is a new one going on, as well—the 10c regional tax. I wonder whether the Minister in the chair could stand and tell us what all these taxes mean for New Zealanders, in dollars and cents terms. The levy in this bill is a quite significant tax for New Zealanders, in dollars and cents terms. It is all very well for members in this Parliament to talk about levies and adjusting the rates of excise duty, etc., but people listening to their crystal sets will want to know what that means in terms of their pocket. This is where we need the Minister in charge of this bill—the Minister of Health, who is filling in for the Minister in charge—to take a call and just explain in dollars and cents terms what the levy means per litre of petrol, or diesel, or whatever fuel people use in their vehicles. Most people do not understand excise duty; they are not sure what it means. They just talk about an excise duty. We have a responsibility to explain to people the impact on their pocket. I want to hear somebody—

💬 Dr Paul Hutchison: This Government doesn’t worry about that.

That is the problem. That is why I urge the Minister to take a call and tell the people of New Zealand what it will cost. A lot of them will be listening to their radios, as they are driving home in the congestion in Auckland. As they are sitting in their cars on the motorway, they will be wondering how this levy is going to impact on their pocket.

💬 John Key: It’s well over a dollar every time they fill up a medium-sized car.

This is the problem. The good member John Key is happy to have this information made available.

💬 Phil Heatley: He’s done the work.

He has done the work, but the Minister in the chair should be doing this work and telling people that it is likely to cost them a dollar a tank of gas for an average-sized car, every time they fill up.

💬 John Key: What about the boat?

We will not get into that. We will just talk about the motorist with an average-sized family car. When the motorist pulls into the gas station and fills up the tank, another dollar will be added. The problem is what impact it will have on the ability of parents to give their schoolchildren money for their schoolbooks, for example. People probably fill up their tank about two or three times a week, on average. So that is $2 or $3 extra a week, and maybe $5 extra. That all adds up. In dollar terms, in terms of how it affects their pocket, where will they get this extra money? The extra cost will outstrip the increase those people get in their wages.

It concerns me that, on legislation like this, the Minister in the chair does not seem inclined to take a call. That is a pity. The only response she has given to anyone was to Darren Hughes, when he was on his knees in front of her—and she still has a smile on her face; I am sure the people of New Zealand will want to know about that. But I am worried about the impact this levy is going to have.

I move, That the question be now put.

It is a pleasure to rise to make a contribution to this debate. I shall concentrate on paragraphs (a) and (b) of clause 3, “Purpose”. Paragraph (a) establishes as a levy “the portion of excise and excise-equivalent duty payable on motor spirit that is paid to the Motor Vehicle Account;”. We have already decided that a levy is a tax, and we actually have had that confirmed by Mickey Cullen, so I do not think we need to debate exactly what is intended. Paragraph (b) is to “avoid the need for an amending Act to consequentially adjust the rates of excise duty and excise-equivalent duty” whenever the levy changes. We need to ask ourselves why the Government would want to do that. I suggest it is because the rate will change, and the Government will not want the fuss of having to amend the legislation every time. It is my confident suspicion that the rate will go up, not down. That is what happened to that temporary petrol/roading tax. That was the temporary tax we were going to have for 18 months. It seems that it has now been extended.

If I had been able to take a call in the debate on the title, I would have suggested that it be “Injury Prevention, Compensation, and Pilfering Pockets of Petrol-users Amendment Bill”. I would have omitted the word “Rehabilitation” because the bill does not mention it. The motorists of Auckland who are listening to this as they drive home, as they sit in traffic queues, will have heard John Carter and John Key make the point that motorists will now be paying more for their petrol, because what happened with the last petrol hike, the road-user charge, was the money went straight into the consolidated account. It did not go into roading. I challenge members of this House to tell me of one project that has been started to decongest Auckland roads, or South Island roads for that matter. Maybe one of the members from the South Island could enlighten me as to what is happening in that regard.

This is simply just another tax; it is the worst type of deception. Do members remember the words of the credit card promises?

💬 John Carter: What are they?

There will be no more taxes.

💬 John Carter: Levies are not taxes, though.

Well, according to Michael Cullen they are.

💬 John Carter: Are they?

Oh, absolutely, He said that levies are just a back-door way to introduce taxes. That is what he said. Mickey Cullen has been here longer than me, so if he says it I assume it is right.

💬 John Carter: What did they say on their credit card?

Well, on the credit card Labour said there would be no more taxes.

The CHAIRPERSON (Ann Hartley): The member should use the correct name for members.

Oh, I apologise. Do you want me to take “Mickey” out?

The CHAIRPERSON (Ann Hartley): The member should use correct names.

I thank the Chair for that advice. Michael Cullen said that levies were taxes. That is a fact. They are back-door taxes.

💬 John Carter: And this is a levy?

This is a levy. So I do not think there is any argument about that. It is almost Bill Clintonish, is it not? “There will be no more taxes.” He was not telling the truth.

💬 John Carter: Is that what he said?

Well, he did not quite say that. I think he said something like: “I did not [something] with that woman!”. But my point is: would one believe him? Would one believe this Government when it says there will be no more taxes? Listen to this: in the last few months this Government has introduced a flatulence tax, and that stinks; a reserved generational electricity tax; a petrol tax; and an accident compensation levy tax. For the farming community around Rakaia and, I am sure, across the rest of the country, taxes have gone up by between 30 and 40 percent. Road-user charges have already been talked about. Drivers’ licences fees have increased. And we have heard about the sherry tax. Those poor old folks, who were going to have a cold winter as it was, could not even reach for a bottle of sherry without being slugged. A customs tax was introduced. Remember, we were told there would be no more taxes! Fringe benefit tax went from 49c to 64c. “Corporations can carry that, no problem at all.”, said the Minister of Finance. This Government has an insatiable appetite for tax.

This particular tax would not be necessary if there was competition in accident compensation. This Government has renationalised accident compensation. It was not necessary. It is a very clear market fact that if one does not have competition, then there is no market leveller and prices simply go up.

I move, That the question be now put.