Injury Prevention, Rehabilitation, and Compensation Amendment Bill (No 2)

Quite interestingly, the Accident Compensation Corporation (ACC) is trying to calm all submitters and to say that one of the changes introduced in Part 2, about the due date for levy payment, is only technical. Currently, the accident compensation legislation states that the due date for the self-employed, employers, and private domestic workers to pay their levy invoices cannot be more than 2 months after the invoice date, and that ACC will calculate and apply interest to any unpaid levy from the day after the day when payment is due. The change brought about is for the levy payment to be due 30 days from the date of the invoice, rather than 2 months. But according to ACC, the penalty would still not be incurred until after 2 months, so the corporation is trying to tell all those people affected that it is only a technical change. We all know that whenever we hear “technical change”, it spells problems. If there is indeed no change, why introduce the provision?

I want to share a heartfelt, real-life complaint that I received about the way in which ACC collects payment, and those words will send shivers down some people’s spines. A 12-year-old paper delivery girl was registered with ACC, because everybody has to pay accident compensation levies. On her registration form she put down that everything else was taken care of by her guardian. Apparently ACC sent her an invoice; she took one look at it, obviously did not comprehend the significance of it, and filed it away. Next minute the guardian, the parent, received a debt collector’s letter from Baycorp, chasing up a debt. The father approached the ACC office but he was asked to dial the 0800 number. Well, that complaint went nowhere so the family contacted their local MP, the Hon Steve Maharey, who said he would fix the problem. But the family received a second threatening letter from Baycorp and then approached my office. I sorted it out with ACC, and then ACC wrote a letter and said it was not the corporation’s fault and that Baycorp should have known better.

With that type of example, where the ACC cannot get even small issues right like noticing the word “guardian” or that a levy payer is only 12 years old, then I am not too sure about this technical change whereby the penalty will not kick in until after 2 months. If the penalty interest will not be calculated until 2 months after the date of the invoice, why bother bringing in a provision to change the due time from 60 days to 30 days? As any sensible business people know, if they get an invoice and there is no penalty incurred, why would they pay?

Ministers seem to have been very keen to take calls on Part 1, so I think that it is a very good idea for the Minister to take a call and explain to all those business people, the self-employed, and private domestic workers, the significance of the change to the due time from 60 days to 30 days, when there is no penalty interest and no penalty involved. Most people see the ACC levy as a tax, because they really do not have a choice in terms of the size, the package, or what they can insure for. They really see the levy as a tax payment where they have no choice. If there is no change to the penalty regime, one is at a loss to know why Parliament is taking time to debate this provision. I hope it is not just that officials have a tidy-mind concept and feel that everybody should adhere to the business practice of payment being due after 30 days, so why not just bring it in? But ACC says it is not going to penalise people; who will believe that?

Part 2 is very important because it sets out the time frame of when it actually applies—it denies retrospective claims. One of the key things that people saw when they came to the select committee was that the claims made were about injury that had been suffered in the past—the mental injury that people had suffered in their workplace. Those cases, such as the ones of the tanker driver and the train driver, brought a lot of concern to the people in the committee. But when we look at Part 2, we see that it says it applies only from the commencement date of this part of the legislation, effectively. It covers people from now on only—it does not cover people who engaged in work and had suffered mental injury and trauma in the past. That is a huge problem for this legislation, because if we are going to be so fair and almighty, in the sense of covering all kinds of injury, then how can we distinguish between injury that somebody has encountered in the past and something that will happen in the future? If we are to provide that cover, we should provide it for all people at all times. We should not make a distinction between those people who are affected now or will be in the future, and leave out all those poor people who came before the select committee and who were the examples that made this legislation a reality. Those people will not be covered. The people who came before the select committee will be left high and dry by Labour. Labour will not deliver for the people whom this legislation talks about and who have been used as examples. This is just another instance of Labour Party electioneering; that is all it is.

Labour wants to go into an election campaign saying that it has dealt with this issue and it has something on the table. Well, it is not retrospective—it does not cover the examples of people who have sustained mental injury who came before the select committee—and that is a major problem for all those submitters. They came and provided the heartfelt stories that the select committee had to listen to and engage with to see the problem, yet they will not be covered. They have been let down by the Government. They have been sold one story and then delivered another. They have been told that they will be part of a solution to this problem, yet there has been no solution that will have any impact on their daily lives. Labour has gone out there and said it is dealing with this issue, but then has not actually provided any solution for these people.

Part 2 is very important. Part 2 means that there is no retrospectivity to this legislation. The cases that came before the select committee will not be considered, in the sense that there would be cover for retrospective mental injury. That is a shame, especially when we consider that the legislation had the potential to provide for that. If Labour had stuck to its guns, and if there had been—as the Green Party indicated at the first and second readings that there should be—an inclusion of retrospectivity, then the policy analysis of this legislation would be fundamentally stronger. By not creating that retrospective nature, we are leaving a lot of the people who came and presented their cases before the select committee out of the loop. It is a real shame on the Labour Party and on this Government that it is considering legislation only for electioneering purposes, and not for the benefit of the people who raised their concerns before the select committee.

It is interesting that the previous speaker talked about electioneering. When I read through Part 2, I cannot see exactly where the so-called electioneering is. But I do note, of course, that Mr Key himself, when speaking to the Large Herds Association conference on 21 March 2007, said: “I want to confirm today that National’s policy is to re-establish a competitive market to provide accident insurance. This delivered more efficient accident coverage in the 1990s, and will do so again when National forms the government.” I wonder whether the submitters to the Transport and Industrial Relations Committee would necessarily have agreed with that; I wonder whether that would have been the case.

💬 Darien Fenton: Definitely not.

My good colleague says “Definitely not.” I also wonder whether we will see more of the National Party’s policy with regard to this bill and with regard to accident compensation. I wonder whether we will see the policy, or is the member for Coromandel, Sandra Goudie, still waiting for the Insurance Council to deliver the policy to her?

💬 Dr Paul Hutchison: I raise a point of order, Madam Chair. You earlier brought to the Committee’s attention the fact that it is important to stay close to the parts. I understand we are debating Part 2—

The CHAIRPERSON (Hon Marian Hobbs): I am well aware of that. I take the point.

💬 Dr Paul Hutchison: —and I challenge the speaker to explain what relevance whatsoever anything he said had to Part 2 or the schedules.

The CHAIRPERSON (Hon Marian Hobbs): I have taken the point. I would like to make this point in reply. I make notes of all that members say. The previous speaker, David Bennett, spent some time fairly widely on electioneering, and that was the member’s response. This is the last time. I ask the speaker now to turn to Part 2. He has had his chance to respond to David Bennett’s electioneering.

It is pretty obvious to me that the intent of the Labour members of this Committee is a commitment to ensuring the long-term viability of a no-fault, fair, and sustainable accident compensation scheme that also covers people with mental trauma, psychological illness, etc., and emphasises injury prevention and, of course, also tries to give them a fair go. It is relevant because I am very interested in the detail of the Insurance Council’s submission to the select committee. I am very interested, in the context of this hearing, in the relationship between the Insurance Council and the National members of the select committee. That is the issue that I think is very, very relevant in the context of this Committee stage tonight. I think it is very pertinent.

I acknowledge the constructive contribution that the Insurance Council made on a number of issues but I think in the context of this part, and in the context of this bill, we need to seek out the wider meaning and the wider nuance. It is very obvious that the members opposite have had more discussions on this part and on other parts of this bill than they are letting on tonight.

Before I call Dr Paul Hutchison, I will say that we have now had one and a half speeches off Part 2. I wonder whether we could now go back on to Part 2.

It is with great pleasure that I speak on Part 2 and the schedules of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill (No 2). I must say it was of great concern to hear the member for Hamilton West err and stray from Part 2.

💬 Hon Trevor Mallard: I raise a point of order, Madam Chair. I know the member is a relatively new member, but he should know he is not allowed to refer to a matter on which you have ruled. He is doing that now.

The CHAIRPERSON (Hon Marian Hobbs): Thank you. You are correct. I wonder whether we can now continue.

Indeed it is great to be brought to order by the former member for Hamilton West, but nevertheless—

The CHAIRPERSON (Hon Marian Hobbs): There’s something in the water in Hamilton.

It goes all the way down to Lower Hutt these days. Nevertheless, I would like to speak on clause 43 of schedule 1 of the principal Act, “Weekly earnings if employment ended before commencement of incapacity”. Once again, this is covered in Part 2. The problem here is that this proposed change will allow an employee to cease employment without having reported an accident, and without any symptoms of injury, and to then present a medical certificate from a medical practitioner 28 days later, showing an incapacity. This is quite absurd. This, indeed, widens the current loophole whereby a disgruntled employee can lay a claim for ongoing weekly compensation entitlements 28 days after the employment relationship has ceased. It also provides, again, a perverse incentive for a former employee who cannot find other employment, to make a claim to sustain his or her ongoing income. So once again we see a perverse incentive that is being encouraged by the Labour Government in this very untidy legislation.

The other point I would like to make is that these schedules do allow further slow process conditions and diseases to be added, I understand by Order in Council. Once again, the end of this is pretty well infinite. It could go on and on forever. The Labour Government, once again in its expansive determination to be there first, like the lemming over the cliff, has decided to make these schedules reasonably easy to alter. That, of course, is a particular worry given the fact that this legislation brings in the reversal of proof, from the employee or the person who had the accident having to show or demonstrate that he or she has indeed had the injury, to the employer having to disprove that that person did not suffer an injury. As many of the legal fraternity know, this becomes almost impossible when there is not the ability to invade someone’s privacy to ask, for instance, a person who has suffered a hearing injury, whether it occurred because that person worked in a noisy atmosphere or because the employee had the propensity to go home, turn on the stereo, and play his or her favourite music at very loud decibels for very long times. It is absolutely impossible to prove, yet this reversal of proof is exactly what the Labour Government is trying to do with this legislation. There is also the ability in the schedules to add on further slow process conditions and diseases.

I would also like to talk about clause 51 of schedule 1 in the principal Act, “Abatement of compensation”. By removing the abatement of earnings from partial hours, the incentive to obtain a fully fit medical certificate is removed. Once again we have a perverse incentive—the sort of incentive or perverse situation that the Labour Government consistently wants to encourage and is the reason that this Labour Government has failed and is managing New Zealand so badly. The abatement of compensation means that any employee returning to work on partial hours will receive his or her 100 percent pre-injury earnings rate after working fewer than 8 hours per week, so there is an incentive for claimants to influence their medical practitioners to certify them fit to work for 8 hours or fewer per week.

We have heard story after story over the last few months of doctor-bullying by accident compensation claimants. This is the very classic example in clause 51. Should a claimant be required to work more than this, then that person will not earn any additional income until he or she becomes fully fit and returns to normal duties. So the 80 percent and minimum weekly compensation rates have been long-established mechanisms to ensure injured workers have an income stream protected and maintained. Abated compensation for partial hours provides a stepped incentive to increasing working hours, and the removal of abated compensation will be a retrograde step in positive rehabilitation.

So we have three instances within Part 2 and the schedule where perverse incentives are being encouraged by the legislation, and where dire consequences will occur both to the affordability of the scheme and, indeed, to the individuals involved with it—that is, the weekly earnings of an employee’s employment ended before commencement of incapacity, the abatement of compensation, and, of course, the ability to add more long-term work-related injuries to the schedule without a legislation change. This continues to be the reason why the National Party is deeply concerned about this legislation, and is opposing it.

Although Part 2 looks just a small part, it is—as my very learned, intelligent, hard-working colleagues David Bennett and Dr Paul Hutchison have pointed out—a very, very important part. I am just so glad that Hamilton East is serviced by such an intelligent, hard-working member of Parliament as David Bennett, because his speech was in great contrast with that of the member for Hamilton West, who did not seem to be able to even read Part 2. It is a very small part and he could not even comprehend it.

We all have a lot of respect for my colleague Dr Paul Hutchison. He is a real medical doctor, and that is why I listened carefully to his dissertation on the amendments to schedule 1 of the Injury Prevention, Rehabilitation, and Compensation Act, which are outlined in Part 2 of the bill. I listened particularly to the point about whether the Accident Compensation Corporation is supposed to fulfil the objective of this legislation, which is to introduce the scheme’s provisions on sustainable grounds. Although we may have well-meaning, good intentions, we have to be very careful about the way we relax and simply increase the number of the types of claims, types of covers, and types of diseases, because, after all, I would say that the Labour Government continues to damage the ability of the corporation to operate on sustainable grounds.

The schedule could easily be extended to state what would happen, for example, if the Government were not to try to ban smoking and drinking. These substances cause harm to people’s health. If, on the one hand, we started to go down this track and state that the accident compensation scheme is aimed at minimising and preventing injuries, but, on the other hand, we will allow substances such as tobacco, drugs, etc., which might cause ill health to those who use them, then where does it end? All these substances can be harmful. If individuals continue to indulge in smoking cigarettes, drinking excessively, or taking drugs and they then injure themselves in the workplace, then, according to Parts 1 and 2 of this bill, that injury could fall into the category of a gradual process injury. So where does one stop?

This accident compensation scheme started off as an objective, comprehensive, 24-hour, no-fault scheme, but Labour members continue to forget that the reason we have this compensation for victims is that victims have forgone the ability to sue the offenders—it is the forgoing of the ability to sue. Now, in this bill, we have started to introduce types of injuries that could be self-inflicted. How can people sue someone else if they have injured themselves? Why are the provisions on self-harm and self-injury being brought into the legislation? People cannot sue themselves for injuring themselves; that goes against the original principles of the accident compensation scheme.

We are very concerned about Part 2 in terms of the relaxation and the ease with which the different types of causes and cover are being introduced to this legislation. The more cover and the more subjective provisions that are introduced to accident compensation legislation, the more often that long-term doubts will be raised about the corporation’s ability to provide the scheme. At the moment we already know that the accident compensation scheme has $3.4 billion in unfunded liability, and it is supposed to be fully funded by 2014. I doubt very much that that can be fulfilled under this legislation.

I rise to take a short call on Part 2, having entered the Chamber after being elsewhere. I listened to Dr Hutchison’s comments, and also to those of Pansy Wong. I will address Part 2, especially in terms of the commencement date—of course, those people do not want it to commence on 1 July or 1 August 2008.

I listened to the bleatings of Dr Hutchison and Pansy Wong, who were standing up for people on accident compensation and lamenting the old system. I ask those members whether it was their party, when it was in Government, that effectively flogged off the Accident Compensation Corporation (ACC), privatised it, and did away with it. I ask those members whether they will make a commitment: I challenge Dr Hutchison, Mr Power, Pansy Wong, and old “cue ball” over there—I cannot remember his name—to announce a policy tonight to make a commitment that National will not do what it did pre-1999, which was to privatise the ACC and flog it off. Do we have a commitment? Do we have half a commitment? Do we have a quarter of a commitment?

💬 Hon Trevor Mallard: No, not a word.

Not a word.

I will address Part 2, especially in terms of the commencement date that National members do not want. I say to those members that in 1999, when I became a member of Parliament, Labour members would have spent at least 12 months, possibly 2 years, as Government members of Parliament—as would those Opposition members who actually saw a constituent occasionally—dealing with the carnage that was visited upon people who were forced out into the private sector solution that National proposed. Those people were forced out of a no-fault system, and they still dealt with it. People were pressured by the private sector providers, and we know that National did a deal with the Insurance Council to push that one through before the election.

As we look at Part 2 we know that that deal must be live today, because having asked National members whether they would do it again—and I ask them again whether they would revisit their policy—there is no answer, no commitment. They would do it again. I can recall constituents in my electorate office in Kaiapoi in tears because of the treatment that they had received at the hands of some of those private providers who, in using a pure market model, had done everything they could to dispatch people out of their care as soon as they possibly could. Members should ask physiotherapists and others in my area what they think of National’s accident compensation proposal, then and now.

That member over there, who gave a particularly sour speech, rabbited on about legal issues and about people suing each other. Well, I say to her that we have a world-class accident compensation system. A world-class accident compensation system means that if one has an accident, one is looked after. From time to time, some may pull the wool over the system. I have people coming to me and saying that the ACC is at them because it wants to help them, rehabilitate them, and get them back to work. One or two pull the wool, and one or two actually complain because the ACC keeps ringing them up, giving them options, giving them retraining, and getting them medical attention. Even if people have a substantial injury, those people who really want to get back to work will pursue those options.

💬 Dr Paul Hutchison: I raise a point of order, Mr Chairperson. The previous Chairperson made it very clear that it was most important that members from both sides of the Chamber stuck to Part 2 and the schedules. Unfortunately, I have not heard anything relating to Part 2 or the schedules from the present speaker. [Interruption]

The CHAIRPERSON (Hon Clem Simich): The member was on a point of order, Mr Cosgrove. The member speaking has been doing a fair bit of rebuttal, but debate on the schedule makes the debate a lot wider than just a glance at Part 2 would suggest. But I ask the member to have regard to Part 2.

I am grateful, Mr Chairperson, for your learned and precise rulings. [Interruption] He is learned. That genius over there might want to clean his lugs out—maybe he needs some accident compensation help with that—and listen to what is said. I am entitled to rebut the piffle from that member, and also the piffle from “cue ball” over there. I have referred many times to a number of commencement dates, the first being in Part 2—1 July and 1 August—which National members do not want.

I am delighted to follow the speech of the Minister Clayton Cosgrove. I cannot come anywhere near to his level of rhetoric or enthusiasm, but I have decided to take a more analytical approach, as one is wont to do on subjects such as this one. I was particularly prompted into taking that approach by the speech of David Bennett from Hamilton, who spoke about wanting to bring in retrospective legislation. As he was debating Part 2 I looked to see which part could become retrospective, and looking at the bill led me on an interesting journey. What he wants to do is to impose retrospective levies on employers. I was thinking about how appropriate it is in this age for a right-wing party to want to bring in retrospective levies and penalty payments on employers. How did I get to that? Let us look at the bill itself, which would be a refreshing change in this debate.

Clause 34A starts out by stating: “Transitional provision for payment of levies and payment of penalties and interest due for unpaid levies”. Mr Bennett from Hamilton says that the payment of levies and the penalties for unpaid levies should be retrospective. Retrospectivity means that we date something back to a time before the start of the legislation. Mr Bennett is advocating the charging of levies in arrears, so that levies that were not previously entitled to be charged could now be charged back to some uncertain date in the past. I was thinking about what that really means. What is Mr Bennett really saying? Is he saying that workers should be penalised as such, as he is often wont to say in this House? No, he does not say that, because the levies referred to in this clause relate to sections 21 to 23 of the principal Act. So we go to clauses 21 to 23 of Part 1 of the bill in order to see which party they relate to—the worker or the employer. Clause 21, which Mr Bennett wants to make retrospective, states: “Employers to pay levies”. So Mr Bennett’s speech, which I presume has the authority of the leader of the National Party, says that employers in this country should be liable for retrospective levies.

That is a new policy. That is not in the list of National policies announced on 9 June at Fieldays, where new policies were listed. No mention of that is made in the documentation, so that clearly is a new policy that has slipped out from this member on his feet in the Chamber tonight, in the Committee stage. So the National Party’s new way of raising money to pay for tax cuts is to bring in the concept of retrospective levies paid by employers. Either that is the case or Mr Bennett was speaking outside his party’s policy and therefore not addressing the Committee honestly on the matters before him tonight. We must assume that he is an honourable member and is acting on instructions from his leader to advance National Party policy in a debate on a matter as important as this is.

Clause 34A does not address just clause 21; it also addresses clause 22, which states: “Private domestic workers to pay levies”. What does that tell us? The member for Hamilton East, Mr Bennett, not only wants to bring in retrospective levies on employers; he wants to get at domestic workers, as well.

Does it stop there? No, clause 34A also refers to section 23, which relates to self-employed people having to pay levies, and so on.

Essentially, the National Party is advancing tonight an argument not of backdating taxes but of imposing levies that did not exist before this bill was introduced. If that is the attitude of the National members, then they must come clean. Perhaps that is why the National members voted against the tax cuts for business that came in this year. Perhaps it is because they have an agenda not yet declared. Perhaps they are not yet prepared to declare their policy on business, because it would be so unpopular—it includes not giving tax cuts to business, and imposing retrospective levies on businesses. This is new policy. This is absolutely, stunningly appalling policy if one is interested in increasing the productivity of this good country. Part 2 of this bill makes what Mr Bennett was talking about crystal clear.

I say once again—one needs to run through it in one’s head several times, because the concept is so staggering—that Mr Bennett, on behalf of the National Party, is advocating the retrospective charging of levies under the accident compensation provisions. These matters will be taken up by many business interests throughout the country, no doubt. No doubt the Insurance Council and the firm Mr Gallagher referred to—which may have had a big influence on Mr Bennett tonight—will not be taking issue with that, but employers around the country will be concerned that they will have to pay retrospective levies. It is appalling.