Injury Prevention, Rehabilitation, and Compensation Amendment Bill

Kia ora, Mr Chairperson. New section 169, to be inserted in the Injury Prevention, Rehabilitation, and Compensation Act by Part 1 of this Injury Prevention, Rehabilitation, and Compensation Amendment Bill, talks about the level of levies. The levies for both the existing employers’ levy account and the self-employed levy account come from three sources, as is correctly stated in the bill. First of all, new section 169(1) provides that the levy is paid by an employer to the employer’s employee for that period, or is collected from private domestic workers, etc., and then it depends on the level of earnings deemed by regulation to be derived by a self-employed person. But new section 169(2) of the bill makes it very clear that the extent of the funds to be collected from the levies should be calculated “so that the cost of all claims under the Work Account is fully funded.” That account would be a merger between the employer levy and the self-employed levy.

But a strange situation is happening here. Members will remember that the legislation states that all these levies should be calculated so that the cost of all claims under the combined work account would be fully funded. But right now, before the merger, the employers’ account is showing a surplus of $688 million, which means that the liability is more than covered by the existing levy account. In the self-employed work account, there is a $60 million surplus. So the question I would ask the Minister in the chair, Ruth Dyson, is that, if both of those accounts have a surplus over those estimated liabilities, why should the Accident Compensation Corporation (ACC) continue to hold on to these surpluses? The estimated liabilities are already fully funded in both of those accounts.

It gets even more ridiculous. I will use the specific example from the Meat Industry Association. I would like the other parties—including New Zealand First and the Greens—to listen to this carefully, because I know that they are trying to look after the self-employed, and those parties will have a problem with that. By passing this legislation, they will punish those self-employed people. Let me demonstrate why. The Meat Industry Association has listed the following figures for its members. At the moment, the ACC levy rate for 2006-07 is $8.30. If there is no merger of those accounts, next year the levy will be $6.57 per $100, but if the merger goes ahead, those members will pay $8.83. It simply does not make sense to punish the self-employed by making them pay more under the merger situation. I would like the Minister to take a call on that issue and tell the Committee why that should happen.

The reason is that the ACC looks at the surplus situation in the employers’ levy account and sees that there is a margin of 63 percent, and it looks at the self-employed account and sees that there is a margin of 20 percent. The corporation adds the two together and arrives at a margin of 53 percent. So in the process it says it will rebate $100 million, because bringing the employers’ account down from a 63 percent margin to a 53 percent margin will mean the employers are entitled to a rebate of $100 million. The problem is that we are being told that the self-employed account, which sits on a 20 percent margin, has to go up to 53 percent. This means that the self-employed will have to come up with $100 million extra for the next 2 years.

It does not make sense, because the ACC states that it needs to work with a surplus of only 11 percent just in case the liability exceeds the funds, but it does not need to work with a margin of 53 percent. So the ACC has a policy of reducing those margins to 11 percent by 2010, but in the meantime, for the next 2 years, it wants the self-employed to pay $100 million extra.

So I would like the Minister in the chair to take a call on that issue. She needs to answer this question. She cannot say that she has not been asked about it, because the Meat Industry Association has written to her and asked her to please explain why she would want the self-employed members of the Meat Industry Association to pay $360,000 collectively to cover a claim cost of around $25,000.

This is all to do with the ACC being very conservative. It is concerned that it might get the calculation wrong. So even though the corporation thought it needed to work with a margin of 53 percent, I would say that no private enterprise, nobody who runs a business, can have the luxury of saying: “Well, I really want to cover my bases. A 10 percent profit is not enough. I want 53 percent.” Private industry does not have those luxuries. But the ACC, today, through Parliament, is seeking political parties’ support to increase a margin that it thinks is sufficient at 11 percent, to 53 percent.

I challenge parties like New Zealand First and the Greens to rethink their position of punishing the self-employed. I can assure them that for the next 2 years their offices will be flooded with letters of complaint from the self-employed, as soon as those notices hit the letterboxes. But I think, for a start, that if the Minister is so confident about this bill, then she should take a call to explain to the public why the ACC should want a margin of 53 percent, when its stated official policy is 11 percent. Why should the Minister not agree to be fair to the employers and rebate them, and also to not punish the self-employed? The ACC should work within the existing margin of the self-employed work account, which is 20 percent. Therefore, the self-employed would not have to face a hefty bill, up to the tune of $100 million, for the next 2 years. It might mean that in 3 years’ time, down the line, they would get a rebate.

Nobody has the luxury of asking people to pay money in advance, and not even pay interest on it. If people have overpaid their tax to the Inland Revenue Department, even the department would give them some interest because it has had the use of their money. I would say that the ACC is a monopoly organisation, and it is an outrage that it will charge the self-employed $100 million extra for the next 2 years. Members should think about it. How can we expect the self-employed to accept a position whereby they would have been levied at $6.57 per $100 if the merger did not go ahead, otherwise they will have to pay $8.83? I think that New Zealand First and the Greens will have to look at their position, because for the next 2 years they will have a lot of explaining to do if they do not support my amendment, which will come under Part 2, “Transitional provisions”.

But in Part 1 there is an issue of principle outlined, whereby the legislation shows that liabilities should be fully funded—but we want answers as to why a 53 percent margin over the fully funded position is supported in this Parliament by the Greens and by New Zealand First. I think that those parties have a lot of answering to do. For a start, the Minister might be able to help out those members if she would just take a call and explain why the ACC is demanding a 53 percent margin on the merged work account.

The purpose of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill was not obvious from the contribution of the member who spoke previously, so I would like to outline it.

The bill aims to do two things. The first is to amalgamate the two accounts that cover injuries incurred during a person’s work—the current self-employed work account and the employers’ account—and to rename the combined account the work account. It covers all injuries that occur at work. It may sound quite obvious that we have one account to cover all injuries that occur at work, and certainly some people have asked me over the last few months why we have two separate accounts. The reason is very clear, and it should be obvious to members who were in the House in the 1990s. That excludes the members who are currently interjecting; they may not know. In 1998, when the then National-led Government privatised accident compensation, its funding mates, the insurance industry of New Zealand, did not want to take on liability and responsibility for the self-employed, because there were too many of them to deal with in one go. So in order to have a compulsory privatisation of the employers’ account, National had to separate the self-employed work account and the employers’ account. That is why they were separated. It was for no principled reason but solely for the purpose of privatisation. The insurance industry did not want to cover the self-employed, because there are so many of them and it involves a lot of administration.

But would a self-employed plumber who is doing his or her job every day, on looking down the road and seeing a person who is employed as a plumber, reflect to himself or herself that the two people may be paying the same levies because they are exposed to the same risk? In fact, they may be doing literally the same job on the same site, but have a different business structure. The answer is overwhelmingly yes. This is a very basic issue of fairness. If two people are doing exactly the same job and are exposed to exactly the same amount of risk, why would they be insurance risked on the basis of their business structure rather than their literal exposure to risk? The answer is that they should not be, and this bill fixes that. We are calling it a work account because that is what it is. It would be very cumbersome to call it the employers’ and the self-employed work injury account, so we are calling it the work account. That is the first thing that this bill does.

The second thing is that the bill replaces the old term “medical misadventure” with “treatment injury”. I want to acknowledge the concerns raised by New Zealand First during the consideration of this bill. We have moved away from a system that in the past, under previous accident compensation legislation, required people who were injured at the hands of a health provider—at the doctor’s, at the chiropractor’s, at the physiotherapist’s, or in the surgery—either to show fault from the health provider or to demonstrate that their injury was both rare and severe. We changed that in the last amendment bill, but we did not change the name of the account. The name of the account, which is still the medical misadventure account, does not reflect the actual practice, which is to treat all injuries, regardless of where they occur, as injuries and to investigate their circumstances separately.

The concerns that New Zealand First raised, through Peter Brown, were that we must not, through this change of name in this amendment bill, lose the focus of the quality assurance contribution to the health system that the old medical misadventure system provided, and that the new treatment injury system is designed to ensure, as well. So I give the whole Committee, but particularly New Zealand First, my commitment that the change in clause 12 will not in any way undermine the quality assurance contribution that we need to make through being able to investigate the causes of injury at the hands of a health provider.

There are two amendments in the name of Dr Paul Hutchison to this part, and I would like to make a brief contribution in reference to them. Dr Hutchison is a very considerate and considering member, despite the fact that he represents the National Party. I have given what I consider to be serious consideration to his amendments. I regret to advise, upfront, that although I will not be recommending support of them, I do believe in the principle in them—he will persist in using the word “premiums” when the word is “levies”—and I have taken them very seriously.

Dr Hutchison’s first amendment proposes to insert in clause 11 a new section 175A, “Independent auditing of proposed premiums”. Independent auditing already occurs; it is available under the Official Information Act. It is my view that people should not have to go through that process, and that to have the very information the member is seeking made public would be a very valuable contribution. But I am not convinced, because the member did not discuss it with me—and that would have been a good and thoughtful move—that that needs to be provided for by an amendment to the legislation. A handwritten amendment with no consideration has still had good consideration from me. I give the member a commitment that that information will be available on the Accident Compensation Corporation website, and that he will not require his legislative change in order for that to be done. It is a thoughtful contribution, and I think it will help businesses—both the self-employed and people in different business structures—to assess how their levies were determined, and to look at their business planning. I am very keen on that.

In the same way, in relation to the member’s other recommended amendment to clause 11 to insert new section 175B, “Provision of forecast statement of financial performance”, I say that that information is currently provided to me, and I would like to consider some way in which we can better have a quality debate in the public arena, so that people do understand the basis on which their levies have been set. They might not wake up in the morning and say: “Yippee! I am very pleased that I have to pay this contribution for potential injuries.” But they will have a very in-depth understanding of the analysis that has gone on behind the setting of their levy and, hopefully, an understanding also of the main driver of this legislation, which is to lower their levies by lowering their injury rates. If they better understand the link between the injuries that are incurred and costs, then perhaps we will have a little more commitment to injury prevention.

On that basis, I regret that I will be recommending to my colleagues that Dr Hutcheson’s amendments are not supported. But he can take credit for the consideration behind them, and be assured that their intention will be implemented.

💬 David Bennett: Hollow words.

I raise a point of order, Madam Chairperson. I deeply resent the implication in David Bennett’s interjection. I take offence at it, and I ask that you ask him to withdraw and apologise.

The CHAIRPERSON (Ann Hartley): The Minister has taken offence at the member’s words. I ask the member to withdraw them.

💬 David Bennett: I withdraw and apologise.

I am pleased to have the opportunity to speak on this very unfortunate Injury Prevention, Rehabilitation, and Compensation Amendment Bill—unfortunate, because it is a blatant robbery of funds that employers have in good faith paid since 1999 to fully fund their account. It is a blatant grab by the Labour Government, which is purely ramming through the ideology it has in terms of so-called social insurance, and is disobeying the basic principles of insurance, whereby those who are at higher risks should indeed have higher premiums. Merging the accounts undoubtedly acts in a directly opposite way to basic insurance principles, and it is very regrettable that the Labour Government has just failed to see that unless we apply basic insurance principles to accident compensation, it will never ever be efficient. That is of great worry.

Here we have two accounts. The first is the employers’ account, into which employers since 1999 have in good faith paid their premiums and accrued a substantial surplus, yet the Labour Government has said that it wants that money to go to a merged account that will cross-subsidise the self-employed, who, unfortunately, have higher risks and higher injury rates. It is sending exactly the wrong message from that which it should be sending.

One of the things I am very concerned about is that in New Zealand we have had an increase in the incidence of moderate and severe accidents. Despite 6 years of this Labour Government—

💬 Darren Hughes: Seven.

Seven? Sadly 7, but it will not be much longer. Despite 7 long years of this Labour Government, the incidence of moderate and serious accidents has gone up. But in this legislation the Government is trying to put in provisions that will give exactly the opposite message to the community out there in terms of accident prevention, and of inputting safety measures within their organisations.

The facts are that injury rates are lower, on average, in the employers’ account, and that is by virtue of the fact that employers are better organised, have better infrastructure in place, and have worked very hard since National so appropriately privatised the account back in 1998. We saw a decrease in accidents, a dramatic increase in safety procedures in the workplace, and decreased premiums. That is the fact of what matters, but in this bill we are seeing a blatant manipulation of the levies by the Labour Government. That has been brought about by the fact that substantial money is being transferred from the employers’ account to the residual account, and the Labour Government is artificially putting down the levies.

It thinks it can fool the public by this mechanism. But we should know that if a car driver out there has many accidents and they are his own fault, he should pay a higher premium. That is a simple rule of basic insurance philosophy. Yet this Labour Government wants to go in a totally opposite way to that. It says that it wants to reward those in the self-employed group, who have higher injury rates and higher risks. The Government is going to bring down their levies, and give them some money, to boot. That is the total lack of logic of this Labour Government.

I do take seriously the fact that the Minister has said that she would support—only in principle—the two amendments I have brought in. I am deeply saddened she will not support them, and I hope that the rest of the Committee will look at those amendments. They are thoughtful, as the Minister said, and I think they will contribute to the transparency we really need in this accident compensation debate.

Firstly, in relation to Part 1, clause 11, I propose that the following section, section 175A, is substituted: “Independent auditing of proposed premiums”. One of the major problems we have in this country is that the general public does not understand the levy setting in this country, and in this amendment is a mechanism whereby “proposed premiums and the rationale for such premiums must be audited by independent third party actuaries yearly,”. The Minister says that that happens, but the difficulty is that we cannot get to them because of the Official Information Act. [Interruption] Well, that is what the Minister told us just a few minutes ago.

💬 Hon Ruth Dyson: I said that you can get to them because of the Official Information Act.

We can get to them, but they are not open to the public. The Minister is saying that, in good faith, she will ensure that they are available to the public. If the Minister thinks that is a good idea, why does she not support the amendment? I call on the Greens, the Māori Party, New Zealand First, United Future, and all the other parties in Parliament to support an amendment that the Minister herself has said is a highly sensible and thoughtful amendment. The same goes for—

💬 Darren Hughes: Huh!

Now we hear “Huh!” from Darren Hughes, the member, by a very, very thin margin, for Otaki. He should be adding a sensible contribution to this debate, not by saying “Huh!” but by persuading his Minister that this is a very sensible amendment.

Let us go on to clause 11, where I propose that a new section 175B is also substituted: “Provision of forecast statement of financial performance—ACC must provide yearly, a forecast statement of financial performance for the next five years to allow levy funders to analyse current premium setting performance against projected outcomes.” Again, the purpose of this amendment is to make the levy setting mechanisms as transparent as possible, and hopefully as understandable as possible, to all those who are involved. I am delighted to see that the Minister is nodding her head, and I would appeal to her not only to say that she supports this idea without supporting the amendment but to formally support the amendment, because I do believe that it is a serious contribution to this debate. We can see the National Government-in-waiting is ready to do all sorts of useful things to accident compensation, and I am glad that the Minister is recognising them.

Finally, I want to speak on the amendment put up by my colleague Pansy Wong. That is in the next part but let me foreshadow it. Again, it is another very sensible amendment and it comes to the nub of the philosophy behind this unfortunate Labour Government bill. One would hope that in accident compensation and accident prevention good faith is demonstrated by whoever the Government is. The Government certainly, in good faith, required collection of levies from the employers and they have done that for the last 5 years. The employers, in good faith, have paid expecting that fund to be fully funded. Here, clearly, a surplus has accrued and, sadly, the Labour Government wants to grab it. This absolutely defies the principles of good faith, as does its insistence against the idea of rating, which it is so determined to object to.

I think we will find in this debate that the Labour Government is in denial about the idea of relative risk rating. It will cite some very obscure literature from Europe and maybe North America that is irrelevant to the fact that people out there actually respond to financial signals. I agree that robust safety management practices have to be put in place within all businesses, whether they are large or small—I absolutely agree with that. But clear financial incentives also should be in place and one of the major problems that this bill encompasses is that of merging the two accounts. It is directly opposite to all the basic principles. The Labour Government is saying it wants to reward those who take risks and who are not helping the New Zealand safety record. That is wrong.

It is my pleasure to speak to the Committee stage of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill—a very sensible bill that has come before this House. The last speaker, Dr Paul Hutchison, took some time to rewrite history and I want to make some comments on how we have come to consider this bill here today. The only thing that was increased by the National Government when it was in power and privatised the accident compensation system was donations to the National Party. That was the only thing National was able to increase by its privatisation agenda. Donations to the National Party did not do anyone who actually had an injury that needed treatment in this country any good, but those donations were all that it was able to increase. So I want to set the record right on that, to start off with.

It is time the member who just finished speaking, and his party, caught up with the rest of the world in applauding the accident compensation system we have. The no-fault system and the levy system we have in place are the envy of other countries. That is because Governments like the Labour one have stood up and said we are going to have a no-fault system, we are going to stick with a system that is fair and a system that is simple, and we are not going to sell out our policies to the highest bidder.

This bill sets right an artificial barrier that was brought in by the last National Government. It is some time ago since we had a National Government, and it is now time we put this artificial barrier right. In fact, these accounts were not separated to start off with, but during the 1990s they were separated for the purposes of privatisation by the National Government. It is quite an artificial barrier: the self-employed, working in exactly the same industry and doing the same occupations, have ended up in a separate account from the employed.

It was very well demonstrated when members of the Seafood Industry Council came before the Transport and Industrial Relations Committee that I sit on as a member. They made a very thoughtful submission and put the matter very clearly. They talked about coming forward with a submission where they could not necessarily support or oppose the bill in its entirety, because the members of their council fell into both of those groups. They worked in exactly the same industry, did exactly the same work, faced exactly the same risks, but ended up paying quite different levies and paid into different accounts and they could not see the logic of that.

They brought forward to us the very practical scenario of two people working on the back of a fishing boat, one being self-employed and contracting his or her services to the fishing company, and the other working directly for that fishing company. As they were hauling the nets in, those people faced exactly the same risks but they were on a completely different payment regime. The only reason for that was an artificial barrier based on the business structure that they were involved in. The reason behind that, of course, as I have already outlined, was an artificial barrier put in place by the last National Government to ensure that the insurance industry could pluck off the profitable bits of the Accident Compensation Corporation and leave the rest of it behind.

In my previous role before I came to Parliament I was actively involved in the issue of health and safety—training health and safety representatives in the workplace. Certainly my knowledge of working with people in the workplace, doing the work, and looking after workers’ interests in health and safety, is that they clearly understand that the risks faced by working people in the workplace are the same whether they are self-employed or directly employed by the company. People who are heavily involved in this work in the real world—in the workplace—understand the good sense of this bill that is before the House at the moment.

I want to take the opportunity to make a comment about probably the most worrying submission that came before the select committee when we were considering this bill.

💬 Darren Hughes: Who was that from?

The submissions I am concerned about came from those representing employers. They talked about the fact that the levies under this new regime would come down to such a low level that it would not be desirable for employers to go into the scheme set up by this Government. The new regime, with lower levies, actually gives employers an incentive to have certain health and safety systems in place. I felt that that was a very strange position to come from those purporting to represent employers. They were essentially telling us that even though they knew those very good programmes brought down the injury rate in their workplaces, and improved morale and attendance and productivity in their workplaces, because this bill brought in great stability and lower levels of levies they might choose to go off those programmes, even though they knew those programmes had a very positive spin-off for their workers and their workplace.

I think it is important we keep an accident compensation scheme in place. It is a fair scheme, it is a simple scheme, and it ensures that there is a clear link between injury prevention and the levies that are paid. This bill ensures that it makes a lot more sense. Irrespective of whether people are self-employed, or employed by others, the risks they face—because of the industry they are associated with—will be reflected in their levies.

The last thing I want to say in speaking in the Committee stage on this bill is this. In the select committee we got a lot of information from the officials on exactly how the legislation would work—there were pages, and pages, and pages. It was very interesting to note. What we got before us was exactly what industry would end up on what levy and how long it would take for the transition to go through. I was interested that all that the National Party members, particularly the one opposite who is interjecting a lot at the moment—David Bennett—really wanted to do was to go straight to the page that indicated the businesses they personally owned and to have a look at what the levies were for their personal businesses. They asked questions of the officials, based on the industry that they owned businesses in. They very quickly went fairly quiet, because they realised that this is good for them and that their own businesses will benefit from the reduction in levies that will happen under this bill. I finish on the note that the Labour members certainly took into account the effect this bill will have on all New Zealand workplaces, all employers, and all self-employed people. I commend this bill.

I say in relation to the speech from that last member, whose implications were most dishonest and untrue, that this legislation is a scam for New Zealand business, a scam for employers, and a scam for the self-employed. Let us look at the average rates. The average rate for employers is about 86c; the average rate for self-employed people is $2.03. Those are the average rates. There is a difference between the rates for employers and the self-employed. There is a big difference; it a real difference.

The Government has put this bill together for one reason: so that it can hoodwink employers during the next election campaign. It is using this bill as a bribe, so that it can go into the next campaign saying that it has reduced Accident Compensation Corporation (ACC) levy payments for employers and, in some cases, for the self-employed, as well. That is all the Government is up to. This bill has nothing to do with being good for business and it is not about reforming the ACC; it is here so that the Government can go into the election saying that it has done this for business and for self-employed people. Should we expect that from this Government? Yes. It has stolen from us once in order to win an election; it will steal from the levy reserves of employers and the self-employed in order to try to win another. But it will not work this time. Labour can steal, but it will not win the election.

This is another such case, and the Minister for ACC, Ruth Dyson, has admitted to that in relation to the reserves. The Minister said in the second reading debate that if, as some had requested, all the excess reserves in the employers’ account were refunded to levy payers in 1 year, then employers would experience significant increases in levy rates in years to come, which would defeat the object of levy stability. The objective of levy stability is to get this Government through these 2 years—through another election campaign. Then it will rack up those rates. That is what the Minister was saying. She admitted that is what the Government intends to do. If people do not agree that is the case, they should look at the numbers.

Let us look at the numbers that have been presented. For example, the levy in relation to shearing will go from $3.79 before the merger to $4.18 after the merger has gone through and all the rebates have been given out. That means that in 2 years’ time, once all the rebates have been given out, shearing employers will have to pay $4.18, when they pay $3.79 now. That is an increase. Let us look at the rate for ocean and coastal fishing, which will go from $2.43 to $4.31. It will increase under this Government in 2 years’ time. After the election, employers will have to pay the real rate that this Government wants them to pay. Here is another one: the rate in relation to timber dressing and wholesaling will increase from $1.13 to $2.74. That is a huge increase—more than double in 2 years—just so this Government can win an election. Let us keep going. Here is another one: the rate in relation to non-metallic minerals will rise from $1.58 to $1.74. Those increases in cost will all occur under this legislation.

There is a provision in the legislation that states that levies cannot increase by more than 25 percent for a business in 1 year. Well, that sounds all right, but what kind of business would want to experience a 25 percent increase anyway, year on year? None. The Government says that 8 percent of employers will have a levy increase of between 5 and 45 percent. A levy increase of 45 percent is huge, and it is not being done in the best interests of New Zealand business. All of this is so that Labour can go into an election campaign saying that it has kept the levies down for employers—and then a year later it will whack them up again. At that point the reserves will be exhausted, and employers will have to face the huge levy increases that this Government proposes. It is not only employers but some self-employed people as well who will have big levy increases, with 17 to 20 percent increases in some cases. This is unfair legislation. It will increase the employer rates and the self-employed rates in some cases. For example, the sports levy will increase by 17 percent, the equestrian rate will go from $4.83 to $5.65, and the rugby league rate will go from 75c to $1.01.

What, then, can we do about this legislation? New Zealand First correctly stated that after privatisation there was a 6-month trial period for the new legislation that National tried. New Zealand First said that legislation had worked better than anyone had expected and it did not want to change it. It wanted that trial to continue. Rodney Hide said that this Government has failed because it has stayed with its ideological position. It has not actually looked at what is good for the ACC or for employers or the self-employed. It has looked just at establishing what is a State-run monopoly for Labour and its supporters, the unions. That is all this legislation is. It is a payback for the unions, and it is another bribe, going into an election year, from this Government.

This legislation was put through in an unusually short period of time. The reason is that when Labour goes into the next election campaign, this legislation will be all up and running. The timing has nothing to do with consultation. This legislation is being passed so that next year Labour will go into the election campaign saying that it has reduced levies. This cynical Government is trying to use people’s own money for its own purposes; it has been proven to do that. It is a Government that once again is proving what it wants to use the ACC levy for. The ACC is just another cash cow for this Government to use to try to win an election. Shame on this Government!

It is a great pleasure to rise in the Committee stage of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. The part we are discussing, Part 1, is the core of the bill, really. It is all about making Accident Compensation Corporation (ACC) levy rates fairer for the self-employed and the employed. I did notice in the last member’s speech that there was no mention of the people who actually do the work. He did talk an awful lot about employers and business, but there was no mention of the workers.

I think it is very interesting, actually, because I noticed in one of the many hysterical press releases put out by Paul Hutchison, the former National Party spokesperson on ACC, one particular quote that David Bennett has just repeated: “It is unfortunate that under Labour, people in New Zealand do not have a choice of insurer when it comes to cover for personal injury. Instead the Labour Government and their union mates heavily influence a monopoly model that attempts to socialise insurance rather than apply basic principles.” Do members know what is interesting? The National leader, John Key, is meeting with the Council of Trade Unions next week. What will he be saying? He is seeking to be mates with the unions, as well! I think that is just hilarious. Will he own up to them that the plan of the National Party is to re-privatise accident compensation?

Getting back to the bill, we see that it enables the merger of the ACC’s self-employed work account and its employers’ account, which makes practical sense and creates a fair and sustainable accident compensation scheme that emphasises injury prevention while at the same time minimises the social and personal impact of injuries. As others have said, the only reason the accounts were separated originally was privatisation. The self-employed work account was established to support the creation of the private insurance market for employer and self-employed workplace injury cover in 1999.

I saw firsthand that failed experiment. As everybody knows, I was a workers’ representative, and I am very proud of that. There is nothing about the work I have done and the path I have chosen in the past that I am not proud of. I saw firsthand the impact on workers of that failed experiment. That is why it concerns me that the Opposition never ever talks about the workers in this situation. The National Government created a shambles, and it created a situation whereby the only driver of the insurance scheme was profit for the private sector. It is no wonder, really. Of course, when Labour came into power it had to pick up the pieces. This Government has ensured that privatisation is not on the agenda any more, and I thank this House for it.

The privatisation of accident compensation did not work. It did not mean a better service. It did not work for workers and it did not work for employers. This bill builds on the changes the Government has made since it was elected in 1999. We have returned accident compensation to a full social insurance scheme—and we are proud to say those words, “social insurance scheme”. [Interruption] David Bennett should learn to spell them. We are rejecting the costly private insurance model introduced by National.

We have kept ACC levies down, built a robust financial scheme, and reintroduced lump-sum payments for permanent impairment. This Government has improved rehabilitation and launched partnership programmes with approved employers. It has rewarded employers with levy discounts for good injury-prevention practices and improved access to compensation for seasonal and casual workers and for people on paid parental leave.

It is fascinating to me that in this debate the National members are showing so much concern for workplace injuries. When they had a chance to do something about workplace injuries they abolished workplace health and safety representatives and they changed the whole health and safety system so that the number of injuries went through the roof. Yes, they are concerned today, but what would they do? Everybody knows that if National ever got the chance, it would privatise accident compensation, throw health and safety to the market, and throw workers to the wolves.

Evidence now shows—and it is the reason for this bill—that self-employment as a business structure in and of itself does not have a significant bearing on risk when one compares like with like, for example, self-employed farmers with employee farmers. However, I must say that I have never ever heard of a self-employed All Black or rugby player, as a member referred to formerly. Self-employed injury claims tend to be similar to that of small and medium-sized enterprises. Under the current system, levy payers are allocated to the work accounts on the basis of business structure, which may result in differing levy rates for businesses carrying out similar activities that entail similar risks.

Small businesses have often cited levy instability as creating problems in their business cost planning. The Labour-led Government has acknowledged this unfairness and the bill removes this inequity. Merging the accounts will ensure that ACC levies paid by businesses are fairer as they are based on injury risk associated with the activity undertaken rather than the business structure. It will remove the arbitrary distinction and corresponding levy differentials between self-employed people and employees in the levy risk group level. Merger will also allow greater focus on reducing the risk of injury, based on industry and occupational type rather than on the business structure. It will provide a much clearer focus across industries and enterprises for injury prevention and health protection.

This bill is consistent with the principles of fairness. It provides a more equitable system and a better focus on injury minimisation. Merging the accounts will also improve levy stability, particularly for self-employed people, as the cost of injuries will be spread over a larger and more stable earnings pool. This is a good bill, and as a member of the Transport and Industrial Relations Committee I am proud it has come back to the House.

We have heard the Labour members talk a lot about fairness today, and in that spirit I know they would like to acknowledge the landmark, historic policy announced by John Key today whereby the 5 percent cap on charitable donations by private businesses is going to be lifted, enabling companies to get in and do something about the underclass in this country. The Minister in the chair, the Hon Ruth Dyson, is a fair Minister and I know that she would want to acknowledge that. I would say that the Labour members opposite are probably a little bit disappointed that this policy has not been put forward by their somewhat tired Government. It is ironic that on the same day as this policy is announced the Government is trying to force through a bill that will punish the very businesses that employ people who, under this policy, will be in a position to give a higher level of donation to the charitable sector. That is the irony of what is happening here today.

The irony too is that we have heard four or so speakers from the Labour side of the Chamber who have been very concerned about the rights of self-employed people, but not one of those members has ever been self-employed.

💬 Darien Fenton: That’s not true.

I am sorry, Darien has been. We have a couple of freelance unionists on the other side! Getting back to the issue of fairness, I point out that fundamentally this bill will punish employers. Employers will have the risk premium amounts they have paid in over the years cross-subsidising the pool of self-employed people. The Minister spoke about fairness. How can we say that is a fair situation? It flies in the face of actuarial common sense because actuarial sense tells us that insurance premiums are directly related to risk—the higher the risk the higher the premium. The Labour Government is telling us that self-employed people carry a higher risk than the employed as they tend to cluster in high-risk occupations. Frankly, that shows just how out of touch the Labour Government is with the reality of self-employment in New Zealand today. The self-employed workforce is, in the main, made up of white-collar professionals—people in areas like information technology, people who are behind desks, people in the service industry—

💬 Hon Harry Duynhoven: General practitioners!

General practitioners—not people who are in high-risk professions. This is antiquated, out-of-touch thinking.

At the core of the Labour Government’s pushing of this bill is that it wants to super-reinforce the Accident Compensation Corporation against any threat of competition in the future. I ask Government members what is so wrong about competition in accident compensation. Despite what Darien Fenton, the list member and unionist, said, when National was in Government and accident compensation was privatised, accident rates went down and premiums were lower. Competition was good for business; competition was good for everybody.

Under this bill, as David Bennett said, we are in effect seeing an election bribe. One has only to look through the table to see that premiums will be kept down for about 18 months to 2 years—just until about the time of the next election—then they will soar up again. So the Government is trying to politically neutralise this as an issue.

As Paul Hutchison said earlier, the legislation provides for a blatant grab from the employers’ account. The Government should be paying back that $500 million to the employers. The employers are the people who are helping the workers; they are providing jobs and keeping the economy going. Why would we want to constantly punish employers through philosophy and the practical implications of policies such as this?

The other thing this bill will do is make the Accredited Employers Programme extremely unattractive. We know there is a philosophical motive for that. We know that the Government knows—and it is what it wants to happen—that employers will opt out of the Accredited Employers Programme, which will add more cost to the new merged accounts and even greater cost and liability to the residual account.

So there we have it. In the interests of fairness, the Minister did say that she was very impressed with Dr Hutchison’s amendments. Basically, what is wrong with an amendment that asks for greater transparency in the audit programme? How could one possibly object to that? Employers and the self-employed have a right to know how their levies are set. We oppose this bill. It is bad and unfair legislation.

Thank you, Mr Chairperson, for the opportunity to speak again on this very unfortunate Injury Prevention, Rehabilitation, and Compensation Amendment Bill brought up by the Labour Government.

I want to point out a few things I was concerned about when I heard the list member Sue Moroney trying to put the record straight. Unfortunately, she distorted the record. After all, the situation is that in 1998 the employer and self-employed accounts were separated and the separate accounts came into being. What happened at that time was that injury rates went down. Workplace safety management increased dramatically, early rehabilitation was cemented in as an absolutely vital part of the accident prevention system in New Zealand, and premiums went down.

I see the Minister in the chair, the Hon Ruth Dyson, is looking quite astounded. She should take note, because these changes were the catalyst to make accident compensation much more efficient, and it has worked. It has worked only because of the experience of 1998. It is now starting to deteriorate as, under the Labour Government, the Accident Compensation Corporation (ACC) monopoly gets fatter and lazier, as one would utterly predict. It is very, very important that Sue Moroney’s somewhat distorted history is exposed. It was the changes in 1998 that reversed some of the problems under the Accident Compensation Corporation into a virtuous cycle of change that has improved accident compensation over the last 5 to 6 years.

It is now, indeed, time to resist a bill such as this. My colleague Dr Jonathan Coleman was absolutely correct in pointing out the dangers of the erosion to the affiliated providers or partnership programme. This is one of the most successful aspects of the accident compensation scheme in New Zealand, and it is one aspect that does not happen to be about the monopoly. In this partnership programme businesses manage themselves, and, as I say, it has been highly successful.

However, a deplorable aspect of this bill is that it manipulates the account so that the attractiveness of the partnership programme has been diluted. Substantial funds are being transferred across and the residual levies will go up, punishing and penalising those who have gone into the most efficient aspect of accident compensation in New Zealand as we know it today.

As well as that, the Government has decided to increase the stop-loss margins from about 150 percent to 200 and 300 percent—another reason why the partnership programme is being eroded. Why is it being eroded? I believe it is because the Minister does not like the concept that individual businesses can manage their accidents better than the ACC monopoly.

I would like the Minister to get up and explain to me why it is that third party administrators tell us that they are able to achieve much greater efficiencies than ACC. For instance, one of them said it managed 1,350 entitlement claims for a range of accredited employers with an average life cost of $5,200. This compares with ACC’s average cost of $13,700. Under this third party administrator the average time off work is about 4 to 5 days; under ACC the average time off work is over 30 days.

Another third party administrator claims an even better record than that in the order of about $3,500 compared with $30,000 for the corporation, and, similarly, much, much less time off work than under the current ACC regime.

It is regrettable that under this merger legislation the partnership programme is being eroded. This is happening because the Labour Government cannot bear the success of the private sector.

After listening to that speech it is no wonder that the insurance industry fought so hard to get a new spokesperson for accident compensation. After all the money it paid, and after writing National’s policy, that is what the industry got—Dr Paul Hutchison. Now the industry will be thinking twice about that move, and having said: “Oh, he’s so hopeless that we have to get a new one.”, because it now has Pansy Wong.

The poor old insurance industry wrote all the National Party’s policy, and it is a pretty simple policy—“Just privatise the lot, give us all the cream and you keep the rubbish.” Anything that costs a lot of money, the industry wants the State to look after, and anything it can make a big profit out of it will have. One would have thought that Dr Paul Hutchison would at least be able to get up and espouse that sort of policy on behalf of the industry and do it with some sort of panache, but no, even the industry could see that it had an idiot on its hands. So the industry said: “Please,” to whoever the leadership of the National Party was that day, “give us another one.” And look what it got—it got Pansy Wong!

So the poor old private insurance industry listening to this debate must be in despair at the quality of that sort of performance from the other side. Those members do not bother to read even the bill, let alone any explanatory notes that are given to them. They do not bother to try to understand that it was their woeful attempts to privatise that set this account up in the first place.

Dr Paul Hutchison has yet to explain why that professional rugby league player he was talking about in his speech should get a different premium when he runs on to the field, dependent on whether he happens to be self-employed, or a business person who set himself up as a company—an individual. Players are not tackled any less hard because they wear a jersey that reads: “I’m self-employed; please don’t tackle me hard.” They do not go on to the field with any less risk. Dr Paul Hutchison thinks that that is OK for those players on that field, or in the case of people on the back of a fishing boat, or a plumber, or any other people—just because they happen to have a different business structure. Just because they decide to do it this way rather than the other, the National Party says: “We don’t care about you, you’re self-employed, you pay more than people who’ve gone to the trouble of setting themselves up as a company.”

Where is the logic in that? No wonder the private insurance industry is in despair! Those members cannot get through their thick heads that the risk is exactly the same for that rugby league player running out for the Warriors. It does not matter whether he is self-employed or a company in terms of the way in which he structures his affairs; he will still be tackled as hard, and he is still going to get a broken leg if he happens to be tackled in the wrong way. So I ask Dr Hutchison, who went to university for many years, and obviously was an educated man once, why that self-employed rugby league player should pay a higher premium than his mate playing next to him who passed him the ball, if he happens to have set himself up with a company structure.

Where is the logic in that? Where is the logic in that for the National Party? It is just plain ideological nonsense. It is just plain ideological nonsense that saw National privatise accident compensation in the first place. It said to the private insurance companies that were paying them to do this: “Oh, OK, that’s too much risk for you guys. We’ll take it off your hands, and we’ll insure it for you as the State.” That is the truth of why this was set up. The National Party members can sit there and make all the silly speeches they like, but they do not like to be reminded of their past and what they would do again in the future if they were ever let loose again on this side of the Chamber as a Government.

They would do it again, because they are saying so, over and over again. They can come down and make speeches about having charity—I am not sure what 5 percent charity has got to do with accident compensation; maybe they are going to make all those self-employed people a charity as well, as they did last time when they said to the insurance industry: “Take the profitable end of the business and we’ll look after this.”

If those members had read the explanatory note before going to the select committee and coming to this Chamber, they would see that the reason for the high injury rates was the jobs that people were doing—jobs such as forestry, fisheries, and farming—not because of the nature of the way in which they set themselves up, as a private person on a self-employed basis rather than as a company. It was the job that one was doing. It was the risks people were confronting in those jobs. So poor old Dr Hutchison, who was sacked from his job—and no wonder—has not figured that out yet. And there have been many, many spokesperson’s roles along the way.

The only reason I am taking this call is to raise some alarm about the chairperson of the Transport and Industrial Relations Committee, who chaired the passage of this bill through that committee. It is no wonder that every other party, apart from National, has been hoodwinked by that person. Firstly, he is lazy. Every time he stood up we got the same speech, apart from the names. That is laziness. Secondly, I want that member—the chairperson of the select committee—to take another call to explain whether he cares about the self-employed. How is he going to explain to the self-employed members of the Meat Industry Association that if the merger does not go ahead next year, they will pay $6.50 to $7 per $100 but that if it does go ahead, they will pay $8.83? But the situation gets even better. When the merger of the two accounts goes ahead—and we should remember this—the self-employed are to pay $8.83, but I ask members to guess how much the employer will pay. [Interruption] I thought the member had read all the papers. The employer will pay $4.69. So the self-employed will pay almost double the amount that employers will pay.

The lazy chairman of the select committee is trying to tell us that we did not study the papers. We studied the papers from top to bottom. It is no wonder that he and the Minister hoodwinked the whole Labour caucus; its members are so lazy that they never read a word of the papers. I would like that member to explain to the poor self-employed people why, after the merger, they will pay $130 million extra in total. If the merger goes ahead without a rebate, employers will pay only $80 million. So for the next 2 years, the poor self-employed people have to pay an extra $100 million.

The National Party, under the leadership of John Key, is charitable. We need only to look at what our leader announced today about lifting the cap on donations. We are going to encourage people who are charitable. We will support them—unlike the Labour members on the other side of the Chamber. They will punish the hard-working self-employed people, who in the next 2 years will pay $100 million extra in their levies—and the chairperson of the select committee got up and said that Labour looks after hard-working, self-employed people! I would hate to think what would happen if it stopped looking after them; it would probably charge them an additional $500 million.

So the challenge in terms of Part 1 is for New Zealand First and the Green Party to explain to their supporters why they should support the Labour Government’s move to impose a surcharge of $100 million on the self-employed for the next 2 years, so that they can pay higher levies when compared with employers. I think it will be extremely interesting to see what this socialist Government will actually do to those vulnerable self-employed people for the next 2 years—$100 million. I think Labour members had better be prepared to front up and be answerable to all those irate self-employed people if this bill goes through. National will make sure for the next 2 years that they know who has punished them for being hard-working, self-employed businesses.

I move, That the question be now put.