Injury Prevention, Rehabilitation, and Compensation Amendment Bill

Thank you for the opportunity to speak on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. The National Party is opposing this bill, as it will make accident compensation less efficient, it will place a greater burden on the taxpayer, and it has been brought in in a deceptive and somewhat devious way. This bill represents Minister Dyson’s and the socialist Labour Government’s absolute ideological bent to stick with the Accident Compensation Corporation (ACC) monopoly at all costs, even though it will make accident compensation less efficient, even though it sends signals against, not for, workplace safety, even though it undermines the very successful accredited employers’ ACC Partnership Programme, and even though it makes it less likely that the accident compensation scheme will be fully funded by 2014, which is required in the legislation.

I look at the explanatory note of the bill with wonder, because it states: “This Bill continues the Government’s commitment to a fair and sustainable ACC scheme, by merging the Employers’ Account and the Self-Employed Work Account”. All one has to do is to look at the transitional provisions, and one will see that the Minister’s claim to fairness goes right out the door. It states that to achieve the merger by 1 April “the Bill provides for the usual consultation process on the 2007-08 regulations to be bypassed, as there is insufficient time to consult”. Ruth Dyson has the temerity to tell this House that she has a commitment to fairness, yet with this bill she legislates to bypass due process and consultation. That is classic, arrogant behaviour of the Labour Government, which now, after 7 years, actually goes to the lengths of legislating to signal that it is not listening. In fact, it legislates to say it is not prepared to listen. That is how far the Labour Government goes.

The other aspect Labour claims is that the scheme is sustainable. What does Mr Phil O’Reilly of Business New Zealand say about the merger? He says that not only will merging the two accounts mean that employers are subsidising accident compensation for the self-employed, but also that without experience rating, which rewards a good safety record and penalises a poor one, there are not strong incentives for companies to constantly improve their safety management.

Let us just look at the ACC annual report and its claims under Labour. We see that steadily, over the last 7 years, accident claims have been going up—year after year, despite this Labour Government claiming its monopoly model is so good. Severe and moderate injuries have also been going up, despite this Labour Government saying that it is putting more money into prevention. I do not know what the Minister is wittering away about there, but the fact is that if one looks in the annual report, one sees that claims are continuing to go up, despite what this Government suggested would happen. In 1999, when accident compensation was put out to competition and choice, claims went down. For the first time in many years the whole organisation became much, much more efficient. Case management became incredibly efficient, with early rehabilitation and people getting back to work much faster. The facts are there. It is a great worry that the Minister denies the facts.

But let me look at the other things the Minister says in the explanatory note of the bill. It states: “When workplace injury cover was returned to the ACC, the SEWA was retained as a separate Account from the Employers’ Account on the premise that self-employed people have a higher rate of serious injuries than employees.” That is absolutely correct. The explanatory note then states: “Further evidence now indicates that the higher average injury rate for self-employed people is mainly due to the clustering of self-employed people in particular high injury risk industries and occupations (such as forestry, fisheries, and farming).” That is absolute rubbish. I would like Minister Dyson and her union mates to produce the evidence to substantiate those claims.

For instance, I will look at the rate of entitlement claims per million dollars of payroll. The self-employed rate is 1.06 per million; the employers’ account is half that, at 0.525 per million. The average claims cost for self-employed people is $14,200; from the employers’ account it is $13,704. But what is really important is the fact that the claims per million dollars of payroll for the employers’ account are less than half those of the self-employed work account. Minister Dyson has absolutely no ability to substantiate what she has put in the general policy statement of the explanatory note.

The Government then has the gall to state in the explanatory note: “The merger will ensure that ACC levies paid by businesses are fairer, as they will be based on injury risk associated with activity undertaken, rather than business structure.” We agree with that. That is exactly what Business New Zealand has been saying for years and years. Risk rating actually works. But no, the Labour Government does not want to believe in simple common sense.

There is some mischief in this bill that Minister Dyson has not come clean about. Firstly, last year the Labour Government very quietly introduced an amendment to section 192(6) of the Act. It allows transfers of claims liability from the employers’ account to the residual account. One of the commentators believes that the transfer of claims liability from the employers’ account to the residual account under this scheme is the most significant change to the accident compensation scheme in the last 6 years. The impact of that on future levies has not been openly discussed or debated, nor have the potential ramifications been communicated to the stakeholders liable for funding that growing system. That is yet another example of the Minister failing to listen to those who are intimately involved with the scheme.

💬 Hon Ruth Dyson: Rubbish!

She says “Rubbish!”.

But what has also happened is that this is undermining the very successful accredited employers ACC Partnership Programme. That is a particularly sad thing, because under that programme there has been some very, very successful management in the private sector. For instance, one of the third-party administrators highlights how its focus on early return to work strategies has meant it has significantly outperformed ACC over many years. Its present average entitlement claim cost is $3,900 for the employers, against ACC’s average cost of $13,700. Its average entitlement claim loss days is 4, compared with ACC’s estimate of 35 days. That is how inefficient the ACC is. Minister Dyson hates the fact that under the ACC Partnership Programme, businesses are very effective and efficient in managing the scheme, and she want to curb it. That is of serious import.

By making these artificial changes to the employers’ levy, the Government is undermining the highly efficient Accredited Employers Programme.

It is interesting to follow that member over there, who obviously had to read from either his research unit notes or the notes of whoever writes the National Party speeches on accident compensation. It is probably the exact same people who supported National’s election campaign with the expectation that they would be sitting back up there in that gallery as they were when National privatised accident compensation in 1998.

💬 Darren Hughes: They were morticians.

They were like a couple of morticians from HIH, and they were morticians, all right—they oversaw the death of a major amount of money in Australia that the poor old taxpayers, workers, and businesses of Australia had to fork out, because of the failed privatisation model that the previous National Government tried to impose upon New Zealand, and that this Government quite rightfully chucked out. This type of small legislation that we have signalled clearly to people just makes sense. That is something one could never accuse the National Party spokesperson on accident compensation of. As the third-party people who have designed National’s policy say, it is a pity Dr Hutchison, despite the best work of designing the National Party’s policy for them prior to the election, is not bright enough to know what accident compensation is about.

💬 Hon Ruth Dyson: That is what they are saying about him.

That is what they say about him—the people who are funding the National Party’s election campaigns in the expectation that they will get privatised accident compensation back—

💬 Hon Ruth Dyson: Have we got it in writing?

Oh yes, we have it in writing that he is a major disappointment to the industry that backs the National Party. But the industry will keep on forking the money over to the National Party because it knows there are huge profits if it gets National back in again to privatise accident compensation as it did last time. It was a disaster. One has only to look across the Tasman and check the levy rates. Of course the research unit of the National Party did not bother to do that. It tried to find some figures in the annual report, but poor old Dr Hutchison did not bother to check their work to find out that the figures he was quoting were wrong, because he was not talking about the accident rates in terms of the percentage against the size of the workforce—which, by the way, under this Government continues to grow and grow every year. As we get unemployment down to the lowest in the world, obviously we get a growth in the workforce, and if there is a growth in accident rates the correct figure to look at is the percentage against that workforce growth.

Poor old Dr Hutchison did not get his research unit to point that out to him in the annual report. However, when he comes to the select committee that will deal with this bill—a very good, hard-working, and sensible select committee—we will give him a bit of education. There are actually some good National Party members on that committee who actually do some work from time to time and they will help to educate him.

💬 Hon Ruth Dyson: Who?

Like Bob Clarkson, one of the great intellects of the National Party. He is on that committee with us. He will teach Dr Hutchison about this, because Bob knows all about hard work. He does not like the work he does here; he much prefers to go home and get on the digger every weekend—he said that that is real work, instead of coming down here and having to mix with the people over there. They have no intellectual grunt when it comes to understanding things like this.

💬 Anne Tolley: I raise a point of order, Madam Speaker. I have waited now for some 5 minutes for the speaker to actually address the bill. I ask you to bring him back to the bill before the House.

💬 Darren Hughes: First of all, it is impossible for Mark Gosche to have been doing that for 5 minutes, because he did not start his speech until 3 minutes ago, but, secondly, a fair amount of time is allowed for rebuttal on a first reading speech and I do not think he has done anything outside some of the outrageous claims made by the previous speaker; he is within his rights to spend part of his 10-minute call answering that.

The ASSISTANT SPEAKER (Ann Hartley): The member was addressing the bill generally and, as he said, the previous speaker raised a lot of general issues within the bill that the speaker was addressing.

Thank you, Madam Assistant Speaker. I was just about to ask National members whether their next speaker could explain why a plumber who is operating as a self-employed plumber should pay a different rate of accident compensation from somebody operating as, say, a sole trader who has set up a company doing exactly the same work with the same risk. National members say they are opposed to the measure. Why do they not go out there and tell small businesses why they are opposed to it? They should tell them why one plumber doing exactly the same job as another plumber, but whose business structure is X, should pay a different rate from a plumber whose business structure is Y. That is why that National Party is no longer seen as the party for business. It is because it has lost it. National members oppose simple, sensible measures such as this just for the sake of it.

It is just not good enough. One does not oppose things just for the sake of it. They should explain to two plumbers, one of whom is operating under a company structure and one of whom is self-employed, both with the same risk, why their levies should be so different. We are waiting for National’s intellectual grunt to answer that one. We will be waiting for a long time, because National members come to the House only to oppose and to dish up policy that somebody else has made up for them—like the privatisation of accident compensation that Dr Wayne Mapp will talk about next. He will talk about the fact that he wants to put up the levies for all New Zealand workers in businesses, by privatising, by getting the vultures from HIH who were in the gallery, like a couple of morticians, overseeing the death of accident compensation, but I am pleased to say that accident compensation is back as a State-provided wonderful system with low levies, and HIH is dead.

Well, we can certainly tell when Labour members think that not very many people are listening—they get up and talk about their hatred for business; they talk about their hatred for competition; and they talk about their arrogance in just passing legislation and steamrollering it through, irrespective of the economic reality of the situation, and irrespective of whether submissions are being made on the best way forward. This Government is putting legislation into the House before it has even heard submissions from the industry on the whole issue.

That is typical of this Government. It is just like last week when we had validation legislation dealt with in 24 hours, without listening to the public. Well, I have news for the Minister. The public have given their verdict and they hate this current Government. They want to see the end of it. They see this Government as an arrogant, hateful Government interested only in its continuation in power. The voters will get to make that judgment in 2 years’ time, and they will not forget.

This kind of legislation is exactly what we now expect from this Government. It hates competition. Mr Gosche was proud to say that Labour hated the competition of 1998 and 1999. That was the era where, for many businesses, the premium cost fell by as much as 80 percent. Why was that? It is a simple thing that Government members cannot get their heads around. It is the whole element of risk and reward, the rate of accidents and the level of premiums, and the incentives to get people back to work so that the cost of premiums can be reduced.

Government members do not understand it; they hate it. Whenever they think the public is not looking they talk in hateful ways about competition and effectiveness. They seem to think that when National members talk about the value of competition and about the value of getting private sector competition into the provision of accident compensation, we have somehow lost it. The proof of 1998 and 1999 is completely lost on this Government. We are proud to say in this House that we will reintroduce competition. The one thing this Government has never really understood is what that competition was about. We still had 7-day, 24-hour cover based on 80 percent of earnings. That never changed. The only thing that changed was the range of options that businesses could choose from to provide that cover. There was a competitive-based premium approach, based on the level of accidents. The only way the Government got through its bill, back in 1999-2000, was to get some sort of synthetic approach from the accredited employers partnership.

This bill today sabotages that scheme. That is what this Minister is doing to that scheme. The one bright spot in its socialist nationalisation of the scheme in 1999 was the accredited employers partnership. The reason it worked is that there was at least some connection between risk, and cost of premiums, and self-management. That is why it was successful: there was that connection. Of course, the socialists hate that connection. They want a flat, uniform charge whenever possible. So there is a complete disconnection between the risk of accidents, and the levels of premiums They want that to be broken.

I have heard Labour members talk many, many times on all of these kinds of social insurance schemes. They want a total universal approach. They want a flat-fee approach. They want no connection between the level of accidents and the level of premiums for particular businesses. So they will always find devices and mechanisms that break that link, and that is because in their hearts—and I include the members sitting in the Chamber today, Mr Maharey, the Hon Ruth Dyson, the Hon Judith Tizard, and even, dare I say it, Darren Hughes—they are all socialists. They believe in socialisation, and whenever they think they can get away with it, that is what they will do.

I have news for those members—the 1950s have come and gone. The 1990s have come and gone. We are looking towards a 21st century where New Zealanders expect to pay in relation to a connection between risk and what they get. People know that in the modern world, and this Government has lost this truth.

I want to produce some evidence for the Government. A submission was made to this Government by an organisation called Wellnz, which is a private provider associated with the accredited employers scheme. This is what it had to say. It manages 4,000 claims per year within the accredited employers scheme. It is in its interests, and in the interests of the accredited employers, to reduce its costs, because that is how it reduces its premiums. How does it reduce costs? Basically, it is by rehabilitation. There is a real incentive for people to get better, because when people get better they go back to work and fall out of the accident compensation system as they have gone back to independence. Wellnz focuses on that, and this is what it achieved—I am quoting from its submission. It has an entitlement claim cost, measured over 4,000 claims, of $3,900. The Accident Compensation Corporation (ACC) average is $13,700. Another way of looking at that is to say that the ACC is four times less efficient than Wellnz at managing claims. Why is that? It is because the ACC is a bureaucracy, and bureaucracies and State socialists simply do not make the connection between the costs they incur, not for themselves, but for businesses. They think it is all just a cost-plus mentality.

That is the flaw in the ACC model as represented by Labour. As soon as there is any element of competition, any element of incentive, when there is a connection between the level of the premium and getting people back to work, there is a real incentive on the provider to go through the rehabilitation process and get people back to work.

The other interesting statistic is that the average entitlement claim lost days is only 4 days under Wellnz; under ACC it is 35 days. That is nine times more, simply because of the dead hand of bureaucracy over employers.

This bill summarises Labour’s philosophy: it hates competition, it hates efficiency, it has an arrogant approach to employers and employees, and believes in dependency; that is its hallmark and it will be judged on it. On this side of the House, National believes in competition, in rehabilitation, in people getting get back to work and making a contribution. It believes in independence as opposed to dependency. That is what New Zealanders are looking for, and in 2 years’ time, they will judge this Government as a failure.

I listened to Wayne Mapp with some interest because normally he comes out with some commonsense-type statements around bills of the nature of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, but I could not hear terribly many words about this bill. I say that with some sincerity because this bill is an attempt to have the level of the premium in line with the level of risk; that is what it is all about.

I think the honourable member should talk to some self-employed people. The Hon Mark Gosche asked why a self-employed plumber should be treated differently from a plumber who works under a company structure. I thought Wayne Mapp might answer that.

💬 Dr Wayne Mapp: It all depends on the risk.

It does not all depend on the risk. That plumber could change his structure overnight and pay a different premium. I have spoken to a number of self-employed people. They will tell members that the levies are all over the place, they go up and down far too frequently, and the level of compensation is most unclear and most unfair.

I was very interested in what the Hon Mark Gosche had to say. He recognised that there was growth in the accident rate as Dr Hutchison had outlined earlier, but he implied—I will not go so far as to say he stated—that it was far less than the growth in employment. If employment numbers go up, it is only logical that, to some degree, accident rates will go up.

New Zealand First will support this bill going to a select committee. We do not confuse the current regime with the previous regime, under the privatised workplace insurance scheme that National brought in. We actually supported it and would have liked it to have a longer trial, because in the 6 months it was in existence—and that was all it was in existence for—it seemed to be working pretty well. We would have liked it to have at least a 2-year trial and a thorough evaluation at the end of it. But that is not what we have. We have the Accident Compensation Corporation scheme now. It has been modified, it has been amended, and it has been improved. In fairness to the Government, we have to recognise that the scheme has been improved on what it was when it came in, in 2001 or 2000. Was it 2000?

💬 Dr Wayne Mapp: 2000.

It was 2000. The Government has improved it gradually, bit by bit. New Zealand First considers that this bill makes another improvement, so we will support it. It is no good harping back on the privatised scheme. When National members get their shot at the Government benches, they will have the opportunity to do what they want, but now we have the obligation to make this legislation as fair and as reasonable as possible for the people it affects—not for us but for the people it affects. This legislation is a move in the right direction.

New Zealand First will support this bill going to a select committee, but we have one reservation. We do not think it is wise or fair to change the name medical misadventure account to treatment injury account. We will be interested in the public’s view on that. It might be just a small change, but a claim for medical misadventure puts shivers down the spines of doctors—and there are two doctors over there. “Treatment injury account” sounds nice and woolly-woolly and fuzzy-fuzzy, and we are not terribly happy about that. We are keen to hear what the public has to say on it.

Nevertheless, New Zealand First will take an objective view. We are keen to see the bill go to a select committee, and we will work through it diligently and conscientiously to ensure that we get the best legislation, not for ourselves but for the public of New Zealand, particularly the self-employed. Thank you.

The Green Party will be supporting the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. I would like to make a few comments on behalf of my colleague Sue Bradford, who is our spokesperson on this area. The Green Party welcomes the introduction of the bill. The new bill is short and unusually simple for anything related to accident compensation. It corrects two glaring anomalies in the current legislative framework. We are pleased to support the bill going to a select committee, and through all its stages.

The most significant provisions are contained in clauses 4 to 11, which have the effect of combining the employers’ account and the self-employed work account into one account to be called the work account. This is an undoubtedly sensible move. The existence of these two systems side by side has created anomalies in that people carrying out what are essentially the same business activities have their accident compensation levies based not just on the injury risk of those activities but on the structure of their business. For example, there is no good reason why a self-employed builder pays an accident compensation levy different from that paid by a company established by another builder that employs him or her as its sole employee—the injury risks are the same. That type of discrepancy is the sort of inequity that was inherent in the National Government’s misguided workplace injury insurance privatisation experiment of the late 1990s.

It is unfortunate that we have had to wait 6 years to see this particular inconsistency rectified. I can certainly understand the Government’s wish to address the anomaly promptly now to ensure it does not carry forward into the 2007-08 tax year. However, I question why it has taken so long to introduce this simple bill. The delay has meant that a transitional provision is now required, in clause 15, to bypass the consultation process required by section 331 of the Injury Prevention, Rehabilitation, and Compensation Act in setting the work account levies for 2007 and 2008. Appropriate decision-making involves consultation with stakeholders, and section 331 reflects recognition by Parliament of this principle. Under clause 15, no consultation with employers and self-employed people will be required in setting the 2007-08 work account levies. That is a direct and unfortunate consequence of the belated introduction of this bill. That said, the Green Party does not wish to see the anomaly continue into a further tax year, so, despite our reservations regarding the transitional provision dispensing with consultation over levy setting, we support the commencement date of 1 April 2007 proposed for this bill.

The second major feature of this bill is clause 12. This clause renames the medical misadventure account the treatment injury account. Medical misadventure cover was replaced by treatment injury cover under a previous amendment effective from 1 July last year. Because Sue Bradford did not sit on the select committee dealing with that bill at the time, the Greens are somewhat unsure as to why the account was not renamed then. We imagine it was a drafting error. However, better late than never, and the Green Party supports this issue being rectified, especially now that health-care providers are familiar with the new system.

One of the aspects of the new bill we are most pleased about is the fact that many of New Zealand’s around 250,000 self-employed people should have their accident compensation costs cut as a result of the merger of the employers’ account and the self-employed account. When Sue Bradford was involved in the two initial accident compensation reforms bills back in 2000, the Green Party had a strong position of seeking to make sure that the interests of the self-employed, including farmers, were represented in that legislation. In July this year self-employed people were subject to a 10 percent increase in their levies, taking them to $3.54 for the first $100 of earnings. This happened at the same time that the employers levy remained at $1.21 for each $100 of payroll. In an agricultural society, for example, livestock farm employees pay about $2.56 for each $100 of employee income, while self-employed livestock farmers pay between $3.93 and $4.66 per $100. The gap between what the self-employed pay and what employers pay has continued to widen, assisted by the fact that the pool of self-employed people is decreasing, which means their levies keep rising exponentially. This is why merging the accounts will be a big help in equalising and lowering costs for the self-employed. They will also have the option of taking out CoverPlus Extra, if they want the additional protection that that provides.

I acknowledge that levies will go up for some—for example, those working with chemical products, in aged care, or in ambulance services—but I am relieved by reassurances that the number of self-employed people affected is not large, and that the Accident Compensation Corporation will smooth and cap any increases at 25 percent a year.

The Green Party is pleased that we are removing what has become today an anachronistic separation between the employers’ account and the self-employed account, and that what appears to be a drafting error—the misnaming of the medical misadventure account—will be corrected. Many changes of a far more substantive nature could and should be made to the administration of the accident compensation system in this country, but meanwhile the Green Party supports the small steps forward in this bill.

Tēnā koe, Madam Assistant Speaker, tēnā tātou katoa. I was pleased to see in the explanatory note of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill that the Government states that it has a commitment to a fair and sustainable accident compensation system, and I commend the Minister for ACC, Ruth Dyson, for her willingness to consider strategies that work in the accident compensation system to respond to the priorities for tangata whenua. Tēnā koe, Ruth.

There are two key issues we want to raise about this bill. It is a bill to discuss the merging together of two accounts—if you like, balancing the books. It is also a bill that provides an opportunity to discuss access, which, it must be said, the bill does not address well. A fair and sustainable accident compensation system must address the inequities that have been identified for so many Māori who do not access accident compensation or whose claims are denied. A fair and sustainable accident compensation system must address the lack of cultural fit.

The other night I was reading the classic health resource Mauri Ora: The Dynamics of Māori Health. In it, Professor Mason Durie stated his theory on cultural fit, and I quote: “The degree of comfort individuals feel with seeking health services impacts on their use of services and, in turn, health outcomes. … The delivery of care in a culturally appropriate manner is an important element in determining both the willingness of people to access services and the success of any treatment or care then delivered.”

The Māori Party comes to the Injury Prevention, Rehabilitation, and Compensation Amendment Bill thus thinking about these challenges. What degree of comfort do Māori have with the accident compensation system? What health outcomes do they achieve? How effective is the delivery of culturally appropriate care? And the results are not good news. Despite the fact that tangata whenua have a higher injury rate across the board, they are significantly less likely to make an accident compensation claim and they are more likely to be declined cover. In other words, application and take-up rate of accident compensation by Māori is significantly lower than it is by non-Māori. Although Māori made up 14 percent of the working age population in the 2005-06 year, Māori were 11.3 percent of new claimants and 9.8 percent of ongoing claimants, while being overrepresented in injury statistics across all age groups and in employment and in sport. What is interesting is that there is an even higher proportion of Māori claimants being declined accident compensation support.

This data, however, is probably still an understatement of the real situation for Māori. It is by anyone’s account a depressing story. Indeed, when we look at Māori in the peak fitness age—the 24 to 34-year-old age group—we find that injury is the leading cause of death, accounting for 52 percent of deaths of Māori at this age. It is obvious from statistics about workplaces for Māori that they are overrepresented in high-risk industries. Māori aged 25 to 64, particularly men, are more likely to be injured at work than non-Māori, and this reflects the types of occupations in which Māori men are overrepresented, such as manual and trade occupations. But there is also the bizarre fact that Māori are under-represented in accident compensation claims and entitlements. For the 2005 calendar year the claim rate per 1,000 New Zealand Europeans was 361 per 1,000 compared with 289 Māori. It is not a trick question, but what explanation can there possibly be to respond to the fact that all the reports state that Māori have greater need, but then Accident Compensation Corporation (ACC) reports less access to treatment?

Dr Peter Jansen’s recent research on Māori consumer use and experience of accident compensation services reveals that Māori are currently not receiving entitlements to care, rehabilitation, and compensation at a level comparable to the proportion of Māori in the population. His research identifies four key barriers to care. The first is the cost of care. The cost of a general practitioner visit often discourages Māori from seeking assistance. Other perceived costs including prescriptions and travel expenses are also barriers. Many also express concern at the loss of their job, believing that the 80 percent of previous income that accident compensation covers will not be adequate to cover their household expenses. Eighty percent of an already low income just will not pay the bills.

The second barrier is communication, including difficulty navigating the system or perhaps a lack of awareness of accident compensation entitlements. Out of the 651 participants in the survey, only 56 percent said that the general practitioner had given them everything they needed to know about accident compensation entitlements.

The third barrier is structural. Structural barriers may be created by consumers living some distance from the general practitioner or by their not being able to make appointments on time. The fourth barrier is cultural fit. Dr Jansen’s research reported consumer experiences where they felt there was no respect for Māori, they could not trust the general practitioner, or they perceived a level of racism. Other comments reported the discomfort that consumers felt at not being able to have their whānau with them.

I have taken some time to share these results with the House today because I believe that the real and significant disparities between Māori and non-Māori’s accessing of accident compensation must be addressed if we are to ever achieve a fair and sustainable system. Auckland general practitioner Dr David Jansen confirms that disparities exist between Māori and non-Māori even when poverty is taken out of the equation. Fewer diagnostic tests are ordered for Māori, Māori make fewer accident compensation claims, and they die at an average of up to 10 years earlier than non-Māori.

The Māori Party is disappointed that this bill—far from addressing these inequalities—may actually, by an accident of its design, exacerbate even further the inequities experienced by Māori. For, in merging the employers’ account and the self-employed work account into a single work account, the concern is that there will be disproportionate impacts on the self-employed, an increasing number of whom are Māori, as levies will almost certainly increase.

There will be levy rate increases for self-employed people in high-risk industries like fishing, farming, and forestry. Of course, those are three areas—fishing, farming, and forestry—where tangata whenua will be particularly effective. This is where our antennae really shot up. This bill will create another increased cost that the Māori fisheries industry will need to absorb, in addition to the increased wages of the workers on foreign fishing vessels—an issue we have been rigorously opposing over the last month.

We are also aware that costs will be increased for new businesses and those who are newly self-employed, as the ACC requires the next year’s levy in advance. In a practical sense, that means that 2 years’ worth of payments have to paid upfront. The possible consequences of these high levies might be that self-employed small businesses are faced with difficult choices, like cutting back on health and safety equipment, thus setting them up for future accidents. Given the high propensity for Māori to be involved in both high-risk and low-paid occupations, the risk of compromises being made on occupational health and safety is just far too great.

To return again to the concept of accident compensation as a fair and sustainable system, I point out that an issue that sticks out is the redistribution of $96 million of levy reserves from the employers’ account to the self-employed work account. Although there is a $400 million surplus in the employers’ account, the self-employed work account is in deficit. Employers have thus questioned the justice in transferring the surplus for use by groups that have not contributed to it. Employers are saying it is not right that their levies have been used to prop up the self-employed without due and informed consultation with all parties. One has to ask why the Government could not come to the party and prop up the self-employed work account.

There needs to be more consultation and dialogue on the issue. The bill is rather evasive, suggesting that the usual consultation process on the 2007-08 regulations should be bypassed so that there will be insufficient time to consult. The Māori Party simply ask that the questions that have arisen, even in our brief analysis, warrant making time available—time to consider why providers are seeming to give lesser and lower quality to indigenous people, time to consider how Māori can identify when it is appropriate to seek treatment for injury, time to consider how Māori with injury differ in expectations from other consumers, and time to consider the degree of comfort, the cultural fit, and the health outcomes, in order to ensure that future generations of Māori have an opportunity to live their full lives to their potential.

We will support the Injury Prevention, Rehabilitation, and Compensation Amendment Bill through to the select committee, in order to provide the time and opportunity for these questions to be heard. Tēnā koutou katoa.

I rise on behalf of United Future to speak to the first reading of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. United Future will be supporting the bill going through to the select committee. However, we are not averse to some of the provisions that were originally in the Accident Insurance Act of 1998, which National Party members hark back to; we suspect that the opportunity to engage with the private sector was never given enough time to bed down, and that some opportunities in that area have been lost to us. But we recognise that this amendment bill is about addressing current problems with the current system. It is an opportunity to bring in some much-needed fairness, and that is what we have focused our support on. We do not think that hand-wringing and looking back will make any measurable difference to, particularly, self-employed people, who are currently faced with a lack of certainty over their accident compensation levies.

I want to deal firstly with a comment made by the New Zealand First speaker regarding the renaming of the medical misadventure account to the treatment injury account. We all agreed that under the old system, which was changed in a previous amendment bill—and I am pretty sure New Zealand First supported the change—when medical misadventure happened, a considerable amount of time had to be taken to prove it had happened, before the person who had suffered medical misadventure could get the compensation and help that he or she needed and was looking for. A person would have to prove that medical misadventure had happened. There was a complete shift in thinking around that issue, to an approach that acknowledged that a treatment injury had happened and that left the issue of blame to the professional bodies that dealt with that and got on with the job of making sure the person in need of support and compensation received them in a timely way—hence the change of name from the medical misadventure account to the treatment injury account. The need to change the name of the account, as the Green member suggested, was overlooked during the passage of the previous amendment bill, and we are tidying that up right now.

It is really good that we are making work-related injuries more clearly defined, and that the levies are set according to the risk posed by the activity that is intended to be undertaken, rather than according to what has proved, apparently, to be the flawed approach of thinking that self-employed workers were particularly high-risk people just by virtue of being self-employed. Evidence has now been amassed to suggest that that is not true. Although it is true that there seems to be some clustering of self-employed people around particular high-risk industries and occupations, such as forestry, fisheries, and farming, being self-employed in itself does not pose a higher risk. The Hon Mark Gosche rightly asked whether a self-employed plumber should have to pay more in accident compensation levies than a plumber who works for a company pays. Obviously, the risks in those situations are identical, and it therefore seems that that inconsistency does not make sense.

However, a Māori Party member raised a question that I also noticed, as I was scrolling through the commentary on the bill. I hope this question can be answered in the select committee process. It seems that those who currently contribute to the employers’ account will now be propping up those who currently contribute to the self-employed account. I think that that situation is of concern and has a potential downside for one half of the equation. We need to look very seriously at that situation, to make sure that what we set up is truly equitable and truly fairer—certainly, that is the intention of the bill, and we support that.

I also think that questions raised by the National Party beg an answer, and I am hopeful that the select committee process will explore those questions. I note that National members have talked about their concern that this legislation will somehow undermine prevention provisions that are currently in place. They are also concerned that its provisions will be less efficient than the current system, and they picked up on some concerns that there will be less clarity in respect of funding than the bill purports to provide.

United Future has one other concern—and it is probably our No. 1 concern—that we really want to hear some advice back from the select committee on, and I imagine there will be some submissions around this issue. Our concern is about the transitional provisions that are intended so that the provision can take effect from 1 April 2007. The bill provides for the usual consultation process on the 2007-08 regulations to be bypassed, because of insufficient time to consult on the regulations. We have a huge warning signal sounding that we would be bypassing a process that has always been robust and able to highlight any difficulties that may be unwittingly proposed. So we would like to hear some feedback on that particular issue. We think that measure is slightly alarming, if not very alarming, and I imagine that people who make submissions to the select committee will pick up on that issue and make some recommendations. I hope the select committee can find a way to weed-whack its way through that little problem and come up with an alternative approach, so that we can move ahead with the very noble intention of improving the current provision of accident compensation, as it exists right now—not what we might want the scheme to look like, and what our policy may prefer it to look like—so that it is completely fair for all those who participate in the business community and are currently very disturbed at the lack of fairness that they experience on a day-to-day basis.

United Future is happy to support the first reading of the bill.

I rise to speak to the first reading of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill on behalf of ACT New Zealand. We will be opposing this bill, and I will go on to explain why. The bill, as the explanatory note states, covers two issues. The first is quite large and concerns the merging of the employers’ account and the self-employed work account. ACT vigorously opposes that merger. The second issue concerns the renaming of the medical misadventure account as the treatment injury account. I will address that issue first, as it is much smaller and much more technical in nature, but there is quite a principle at stake.

In 2005 another accident compensation amendment bill was introduced in this House, and I listened to the submissions in the Health Committee. That amendment bill removed the necessity to find fault to obtain cover for treatment injuries, amongst other things, and removed “error”and “rare and severe” as definitions of medical mishap.

At that time, ACT vigorously opposed the amendment bill, pointing out many of the injustices that arise when fault does not have to be found. We will oppose that part of the current amendment bill as vigorously as we opposed the previous legislation, given that we did not agree with the principle in the first place.

With that out of the way, we can address the primary reason for bringing this bill to the House—that is, to merge the employers’ account and the self-employed work account. Other members have talked about the fact that the National Party’s speeches have harked back to the 1999 amendments, and, I suppose, the privatisation of the account, which allowed for competition and choice. It is not a harking back; it is in fact a relooking at very sensible changes made to accident compensation, which improved the operating of accident compensation completely. Despite those changes being in place for only 9 months, there was a decrease in the number of injuries and a decrease in the levies that employers, the self-employed, and others paid.

It saw competition and choice introduced into the running of the accident compensation scheme, and that was a very good thing. The sooner we move back to that system, the better, despite the fact that it was tried for only a very short time. It should have been trialled for much longer; the advantages would have been much more visible, had that been the case, and it was a very backward step for this nation, indeed, that those provisions were removed.

There are some very good things about the Accident Compensation Corporation (ACC). I recently asked a written question of the Minister about what percentage of accident compensation surgery was done in private hospitals. The answer came back that the updated figure was 83 percent. ACC has managed to get that absolutely right—that is, the contracting-out of surgery to the private hospitals that are able to do that most efficiently, and, very important, as taxpayers are footing the bill, very cost-effectively.

Unfortunately, the health system generally has not learnt its lesson in that respect. Again, that is a very backward step for the taxpayers of this country. However, in this instance the policy in this bill today will not be of benefit to taxpayers, or to employers and the self-employed. Despite the speaker from New Zealand First seeming to miss this point completely, accident compensation is an insurance-based scheme, and as such is based on risk. Unfortunately, we have a monopoly insurer, and I have addressed that point already, saying we should go back to having competition and choice, which would see significant improvement in the system. Certainly, that is what the ACT party wants to happen. But one size does not fit all, and the proposal to merge the two accounts is a one-size-fits-all solution to a problem that involves insuring those in the workplace, where it should be based on risk.

We hear much about improving workplace safety. This bill, unfortunately, will not do that. It will not see the incentivisation of safety, and that has been pointed out by groups like Business New Zealand. The first point to be made is that the employers’ account is significantly overfunded, compared with the self-employed account. We need to look at these two accounts very carefully, just to see the state of them at the moment.

If we look at some forward forecasting, the employers’ account is forecast to be overfunded to the tune of about $341 million as at 30 June 2007—an overfunding of around 27.2 percent. In contrast, the self-employed account, which is a much smaller account, given the nature of the employment type, is forecast to be in a deficit position to the tune of $33.5 million as at 30 June 2007. That represents an underfunding of around 11 percent. So the two accounts are in significantly different positions.

That is important, because, as a result, we will see a significant cross-subsidisation by the employers’ account of the self-employed account. Some people probably think that that has absolutely no significance at all, but it has. It means that employers will be paying a lot more than the self-employed. So they will be subsidising that group when, in fact, the risk is significantly different.

I turn to my second point. The United Future member highlighted a point, but I think came to the wrong conclusion. She used the example of a plumber, as many others have. The plumber example, I suppose, is a good one but again the wrong conclusion has been reached by just about everybody who has used it. Why should a self-employed plumber be paying a levy different from somebody who is employed as a plumber and the employer is paying the levy on that person’s behalf?

The problem is that not all workplaces are equal, and what needs to happen is that workplaces need to be assessed. They are at the moment; they are audited for workplace safety management practices. That leads to an experience-rating, so those workplaces that have a good safety record pay less than those that do not have a good safety record. The plumber example is a good example of how this should not work. In fact, the workplaces that are safe should be rewarded for providing a safe workplace—presumably they take better safety precautions, realising fewer injuries in their final outcome. That is what should be in place. So groups should receive the benefit for a good safety record, and those that do not provide one should be penalised.

ACT will oppose this bill for a number of reasons. The differences between the employers’ account at the moment and the self-employed work account, resulting in cross-subsidisation, is a concept we find unacceptable. The levy rates should be based on experience. The two accounts are not funded to the same tune at the moment, so that is a real difficulty for the future. The other thing we object to is that this planned legislation does not show a commitment to fairness and sustainability when it will—and the transition provisions in the bill highlight this—bypass the usual levy consultation process for the 2007-08 year. This, too, is totally unacceptable, particularly from a Government that claims that consultation is important and that everybody should have his or her say. So for those reasons ACT will oppose this bill.

It is a pleasure to speak in opposition to the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. I must say that I think the arguments against it have been very well canvassed by my colleagues Dr Paul Hutchison and Dr Wayne Mapp, and also by Heather Roy.

I think that fundamentally we have a situation that encapsulates some of the philosophical differences between Labour and parties that are of a centre-right persuasion. On the one hand, the Labour Party wants to put forward this legislation that will make accident compensation less efficient. Labour will undermine workplace safety and it will try to impose a one-size-fits-all solution on everyone in the workplace. We know from experience that that will not work. On the other hand, National and ACT are advocating for more competition in accident compensation. We believe that the changes in 1999, although they were in place for only a very brief period, made some real differences in accident compensation and in the workplace. The premiums were lower, there were incentives for people to look at workplace safety, and the system was working more efficiently than previously. The reality, when looking at insurance, is that if we do not have incentives, people will not ensure that workplaces are safe. Everyone will be paying one high premium to a monopoly provider—the situation that we have now—and there will be no incentive for competition in the sector and for enhanced safety in the workplace.

One of the really concerning things about this legislation is the way it is being rushed through. There is a normally accepted period of 3 months for consultation on changes to accident compensation levies, yet twice in the space of a couple of weeks legislation is being rushed through without the normally accepted consultation period. It is legislation that will not be in the best interests of the country.

I think there is quite a parallel between this bill and the revalidation legislation that was before the House last week. A tired, deceitful Government was pushing through legislation to make the illegal legal. I can say that if any of the Labour members have been out in their electorates—those who have them—over the weekend, they will know that the revalidation legislation is going down very poorly out there. It will be the nail in the coffin for a lot of the Labour members who sit in the Chamber today. It is striking a very negative chord in the heart of New Zealand society. People are not happy about it. They are seeing this Government as an arrogant, tired Government that is trying to absolutely run over the will of the people. I also believe that a lot of the members of the Labour caucus are not very happy about what we have seen in the past week in this House. It has been disgraceful. It has been unprecedented in the history of the New Zealand Parliament, and the people of New Zealand will not stand for it.

It is not very surprising that New Zealand First is supporting the Government on the bill that is before us today. Last week New Zealand First was very happy to support totally undemocratic legislation that made the illegal legal. It was an unprecedented move, and that party will be out of this Parliament in 2008. It will disappear.

R Doug Woolerton: We’ll be here.

Mr Woolerton will not be here, reading his newspaper and snoring away on the cross benches. He will be gone, as well as some of the Labour members.

I come back to the bill. The Government’s proposal to merge the two accounts will result in the socialisation of costs and the benefits of accident compensation. It reflects a move away from the clear incentives that are provided by an insurance-based approach. We in the National Party are clearly very opposed to that. In 2008, when we are back in Government, we will reintroduce the privatisation of accident compensation and reintroduce competition to the sector, because we know that when that was the case in 1999, both premiums and accident rates fell. Labour wants to take a flat approach; Labour wants it to be cost-plus. It does not see the connection between risk and premium. Labour does not recognise that if someone works in a high-risk occupation, that person should pay a higher premium than someone who does not.

It was interesting that when the Minister spoke—she took the first call—she talked about self-employed people. I think it really illustrates how little the Labour Party really understands about self-employment. She says in the explanatory note of the bill that self-employed people are clustered “in particular high injury risk industries and occupations (such as forestry, fisheries, and farming).” That might have been the case 40 years ago, but I can tell members that time has moved on. That sort of thinking takes no account of the fact that many self-employed people now work in fields such as catering, the professions, and information technology. In fact, thousands of people in this country are employed in information technology. Why should people who are employed in low-risk professions like information technology or catering pay the same premium as people who are foresters or fishers? That just does not make sense.

This bill also shows us that Labour is fundamentally anti-business. It does not want to see any differentiation between people who are putting themselves out there, running a business, and taking all the risks. It wants to see them pay exactly the same premium as people who are not putting themselves at risk. There will be cross-subsidisation, and no strong incentives. This law will not reflect the degree of risk that individuals are taking.

It is sad that under Labour, New Zealanders do not have a choice of insurer when it comes to cover for personal injury. Labour and its union mates want to have a monopoly model in this sector, and they want that to continue. They have socialised insurance, rather than following basic insurance principles. We have to ask ourselves why, after 7 long years in Government, Labour is so eager to rush this legislation through in the space of just a few short months—there is a 3-month period before it comes into effect—without giving the New Zealand public the right to be heard on the matter. The unpalatable fact and the unpalatable answer are that this legislation is all about preparing accident compensation for life under a National Government. It will set up an environment whereby it will be a lot more difficult for private insurers to enter the market in 2008 and to make it work.

Is not this bill all about the Accident Compensation Corporation (ACC) positioning itself for the potential competitive environment, once the electorate has finally rejected this tired, worn-out Government, this deceitful Government, this Government that, frankly, people have had enough of? How, exactly, will ACC be preparing itself for that change in 2008? Basically, ACC will move as many claims as possible to the residual account, which it can control now and, it believes, well into the future. The corporation and the Government do not believe in, and will not accept, the residual account ever being put out to competition. They will greatly reduce the number of claims under the employers’ account management framework, and that will take claims away from the management of employers who are presently within the ACC Partnership Programme. Finally, they will reduce the rating structure by a number of means. They will move claims to the residual account, discount the rate now and then progressively increase it over the following years, and they will remove the rate stability level. They will transfer the liability to the residual account, but not the collected premium, and there is something deeply wrong with that. All of that will result in fewer claims and a lower rate in the employers’ account, and thereby a reduced premium pool. The upshot of it all is that it will be a lot more difficult for private insurers to enter the new market, and to make it work, when National becomes the Government in 2008.

So there we have it. A clear philosophical difference between the two major parties surrounds this bill. Members of the Labour Party do not believe in competition. They want everyone to be the same. They believe in a cost-plus mentality, and they do not want competition in insurance. The National Party and ACT want to see competition in accident compensation and we will make sure that come 2008, with the change of Government, that is exactly what happens.

I move, That the Injury Prevention, Rehabilitation, and Compensation Amendment Bill be referred to the Transport and Industrial Relations Committee for consideration, that the committee report the bill on or before 18 December 2006, and that the committee have authority to meet at any time while the House is sitting, except during oral questions, during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 192 and 195(1)(b) and (c).