Accident Compensation Amendment Bill

It is a pleasure to take a call in the debate on the Accident Compensation Amendment Bill. How wonderful it is to have legislation that people can remember the name of and say what it is. The previous Opposition speaker was the Hon David Parker, and nothing distinguished more between National and Labour than what that speaker said and where National stands on accident compensation. The Hon David Parker apparently took the side of Graeme Burton. He is standing on the side of Graeme Burton. But members on this side of the House are so proud of our Minister for ACC, the Hon Nick Smith, who introduced legislation to remove lump-sum income compensation and non-essential rehabilitation for criminals. Members on this side of the House are very proud of our Minister for ACC, the Hon Nick Smith, who is standing on the side of law-abiding citizens having access to accident compensation, unlike the Hon David Parker who is standing on the side of Graeme Burton.

The reason why we are here today, passing this legislation, is the 9 long years of incompetent governance and financial monitoring of accident compensation by the previous Labour Government. Let me illustrate this with facts. In the year 2000 the Hon Michael Cullen came to the House and said that the Labour Cabinet had decided to set a levy for accident compensation in the years 2001 and 2002 at 31c, to make the scheme fully funded by 2014. The Hon Michael Cullen said that setting the levy for the residual liabilities at 31c would make the scheme fully funded by 2014, so he set the levy at 35c, and surely that would have made the scheme fully funded 2 or 3 years earlier. I, as an accountant, and most of the members in this House, probably get it now that according to the Hon Michael Cullen the accident compensation scheme should have been fully funded by next year, 2011. But here we are, in this House today, trying to pass legislation to extend the period before full funding, which Labour says it supports, and so it should. We are pushing back the year for full funding from 2014 to 2019. After 9 long years of Labour’s carefree attitude, when it simply extended the scheme, and the lack of due diligence monitoring of the accident compensation financial performance, a fully funded scheme has to be pushed back by another 5 years. The original date was 2014, and the Hon Michael Cullen said the scheme should have been fully funded by 2011. We do not need to hear any more lecturing in the speeches made by members on the Opposition benches.

I am looking forward to hearing from the former Ministers for ACC the Hon Ruth Dyson and the Hon Maryan Street whether they will take a call to explain to people why it is that once we used to have a world-class accident compensation scheme, but after 9 long years of the incompetent governance and incompetent financial monitoring of those two Ministers, we have been reduced to having to come to this House to push back full funding from 2014 to 2019, and the levy is going up; it is going through the sky. We are looking forward to see how those two former Ministers can explain why, over 9 long years, we have had to suffer and see the Accident Compensation Corporation (ACC) incur firstly a loss of $2.4 billion and then a loss of $4.8 billion. It is the largest loss ever incurred by any Government corporation. Those former Ministers have done something that I am not sure they should be proud of. We do not need to hear any lecturing from them, because after the 9 long years of their governance of accident compensation we have to sit under urgency today in this House to pass legislation firstly to extend the timetable for full funding from 2014 to 2019, and, secondly, to reverse what was done in the dying days of the previous Labour Government, when it pushed forward all these extensions without fully considering how those extensions were to be funded.

We are fortunate that we have a Minister for ACC, the Hon Nick Smith, who took up the issue and took a responsible position. He has taken the hard decision to make sure that accident compensation can continue to be sustainable for a long time. I believe that the debate in this House and the rationale for this legislation are plain for everybody to see. I just remind the Labour Opposition that a National Government introduced the accident compensation scheme into the country. We are the ones who take every pride and have every interest in keeping it sustainable. We did not need the 9 long years of an incompetent Labour Government to put the scheme at risk. I have pleasure in taking a call in this debate to support this legislation to once again restore accident compensation back to a sustainable scheme.

I would like to begin by saying that this legislation, from beginning to end, is a complete travesty. It is a complete abrogation of the responsibility that comes with a social contract, which is what accident compensation used to be and will be until, in about an hour’s time, this third reading is concluded. It has been a travesty from the very beginning with its title, with the amendment that the Minister wishes to pass to call it the Accident Compensation Amendment Bill. Funnily enough, he did not want to call it that at the introduction of the legislation. He did not want to call it that at the second reading of the legislation. It has been only in the Committee stage that he decided suddenly to call it the Accident Compensation Amendment Bill, and I wonder why that is. Taking out the words “injury prevention, rehabilitation, and compensation” from the title of this bill does not augur well.

First of all, it is an abrogation of those difficult bits—injury prevention that is successful, and injury prevention that is long-term and sustainable—across those six areas of critical injury prevention activity that Labour put in place in those 9 years that it was in Government, I say to Minister Wong. Injury prevention was beginning to take effect, and the abrogation of this Government’s responsibility in that respect will see us going backwards.

I want to recap on some of the principles of the scheme and talk about what Sir Owen Woodhouse and his fellow commissioners originally intended, and the kinds of principles upon which they built the scheme to begin with, some 40-odd years ago. The number of principles was about five, and the first one of these was community responsibility. Community responsibility meant that everybody paid a little, and everybody got a lot. Everybody put in something and everybody got a lot back as and when they needed it. That goes to the heart of the kind of scheme that the accident compensation scheme is. For me and for Labour, it goes to the heart of the kind of society we want. That is what the scheme was about. This Government is shifting the basis of it away from community responsibility towards privatisation faster than one can think of.

💬 Hon Dr Nick Smith: Where is that in the bill?

Just because the word is not there does not mean that privatisation is not on the agenda. The Government is preparing for that on the basis of a private insurance model. Nothing could be more different from a social contract. The scheme will not represent a social contract underpinned by community responsibility any more, and that is a tragedy.

Real compensation was another principle that the Woodhouse report emphasised. Real compensation is offended against by clause 55 of the bill, which takes the earnings of casual workers and divides them not by the weeks they have worked in order to achieve fair compensation, but by 52 weeks in the year. That Minister comes from Nelson. I wish he would start to represent the people of Nelson, because he seems to be ignorant of the fact that some 76 percent of the earners in Nelson earn less than $40,000 a year, and therefore made nothing from the tax cuts that the National Government trumpeted so loudly last year—nothing, not a bean, not a brass razoo. He wants to calculate compensation like this. If somebody works 40 weeks—as is often the case if the person is picking apples, or trimming vines, or harvesting kiwifruit in Nelson—instead of dividing his or her earnings by the number of weeks worked, let us say 40 weeks, he now, under this legislation, is dividing those earnings by 52 weeks in the year. Everybody knows that that is a smaller amount, and when 80 percent of that becomes compensation, I tell the Minister that that inflicts hardship on people in his patch. That Minister needs to front up to those people and explain what he has done, instead of telling one story in Nelson and another story in Wellington.

Complete rehabilitation is another principle, and that has been offended against by this legislation, as well. Clause 4 of the bill now has rehabilitation back into work happening at 30 hours a week. Never mind what people used to earn or the kind of job they used to be in, now people will be assessed as being fit for work again if they can work 30 hours a week, regardless of the occupation they used to be in, or the salary they used to earn.

Comprehensive entitlement is another principle that is being infringed and offended against by this legislation. That is apparent in clause 6, where it says that a person has to have a 6 percent hearing loss now in order to qualify for some accident compensation entitlements. A 6 percent hearing loss is significant; that was demonstrated at the select committee. It is not now just a matter of having a 1, 2, 3, 4, or 5 percent hearing loss. If a person has that level of hearing loss, I am sorry, but that person does not qualify any more. Here we have levies going up and entitlements cut.

Administrative efficiency was the fifth of the principles underpinning the scheme. There was nothing wrong with the administrative efficiency of the scheme. In fact, PricewaterhouseCoopers of Australia determined that the scheme was run more efficiently than any other compensation scheme in the world.

💬 Hon Dr Nick Smith: They did not.

They did so. The amount that the Accident Compensation Corporation expended on administration was minimal compared with other schemes. I say that it is absolutely minimal compared with the profit that would need to be given to private insurance companies, which are poised and ready to swoop in at this Government’s behest.

I would like to say something about some of the half-truths that the Minister has been continually perpetuating in the course of the passage of this legislation. One of the half-truths is about $2.4 billion lost in about 2008. The point is that the investments of the scheme have been performing above the international benchmark for the last decade. In 2008 a recession began in financial institutions overseas. I am not sure whether the Minister is aware of that, but it did. It began to trickle through into the scheme’s investments. Instead of addressing that issue with the kind of hysteria that that Minister has been demonstrating from the beginning to the end of this process, he just needed to take a long view, and watch those investments begin to recover. Sure enough, what did we see? Now the earnings on the scheme’s investments, and on New Zealand superannuation investments, are fuelling the Government’s coffers and improving the Government’s accounts. What do we hear from that Minister? Half-truths.

I will talk about one other aspect about which the Minister has been less than fulsome, and that is injury rates. I will draw to the Minister’s attention in particular some things to do with motorcycles and motorcyclists, because some of those figures the Minister will never let the House know, but these are official figures. In 1973 there were something like 77,000 motorcycles on the road in New Zealand. By 2009 that figure had almost doubled. There were 114,000 motorcycles on the road in New Zealand. But per 10,000 motorcycles on the road, what we see over that period of time, from 1973 to 2009, is a complete falling away in the number of crashes, the number of injuries, and the number of fatalities. In 1973, per 10,000 motorcycles on the road, there were 511 crashes. In 2009 there were 122. The other figures bear that out. We have been fed a diet of half-truths by that Minister, and it is not sufficient. Something is being broken here, and it is a scheme that we—

💬 Dr Cam Calder: I raise a point of order, Mr Speaker. When I last heard about it, a half-truth was akin to a lie, and I do not think it is appropriate that anybody can suggest that a member is lying in the House.

The ASSISTANT SPEAKER (Eric Roy): I have been listening very carefully, and the test that the presiding officer applies in this case is whether such a statement is personalised. It is about the argument, rather than the individual. It is kind of just inside the boundary of where a member may go—only just.

This has been a world-class system, which other countries envy. It is affordable, it is sustainable, and, if the Minister had moved faster and put in the residual levies extension of date clause a year ago, he could have saved every motor vehicle owner in this country $80. There is something rotten in the state of this Government.

It is no secret, I guess, that the Green Party will be voting against the Accident Compensation Amendment Bill at its third reading. I will not repeat the arguments that I have made through the various stages of the legislation, but I will touch on them and build on that somewhat. In the Committee stage I spent most of my time working through the various ways in which this bill erodes the Woodhouse principles. I have to say that I agree with the analysis that Maryan Street has just presented on that. The bill certainly erodes the principles upon which our accident compensation scheme is based. It cuts back on entitlements, and, in my view, and in the view of Green members, it goes back on the deal that the Government made with the New Zealand population at the time that the right to sue was given up. That was the focus of my comments during the Committee stage.

In the second reading debate I focused on an area where the Greens have a different analysis, I think, from every other party in this House. That area is the issue of the funding basis for accident compensation. Other parties support full funding for accident compensation; the Green Party supports “pay as you go” funding. We ask why we would choose just this one area of Government activity, accident compensation, to fund in a full-funding way, when we fund all of the other areas—education, social welfare, and health—on a “pay as you go” basis.

If we look at the nature of the costs associated with accident compensation, rehabilitation, and injury prevention, we see that in the future the nature of those costs will not be different from the nature of the costs that will be faced in the health sector, for example. So there is no sound argument for using a different method for paying for this scheme—except one. This one rationale is the rationale that we believe the Government has chosen to use this approach to funding—that is, using full funding as a funding mechanism for this scheme makes the scheme more like a suite of insurance schemes or insurance policies. Doing that enables the product of accident compensation to be comparable to those of commercial insurance companies, and that will enable, first of all, competition from the private sector, then, ultimately, the privatisation of ACC. We believe that is the agenda.

I have to say that in the second reading debate it was heartening, on the one hand, to hear from the Māori Party that it will now be voting against this bill. It is heartening because the bill is a bad one and it should be opposed. On the other hand, it is a double-edged sword because given that the Māori Party is voting against the bill, the Government will now be relying on the ACT Party for its support. I think we all know in this House and outside the House what the price of that will be. National, which said in its campaign that there would be no privatisation and no competition in the first term of a National Government, will now be “reluctantly forced” to the point of saying that in order to get ACT’s support it will have to move on that competition now, instead. It is a double-edged sword, but I welcome the Māori Party to the righteous side of the issue.

I will draw a quick parallel with a couple of other areas. The health portfolio is one of mine, and I have pointed out in debates on health, for example, that the Government, in requiring district health boards to contract out more surgery to the private sector, is doing something that will draw specialised staff from the public sector into the private sector, thus undermining the capacity of the public sector and leading towards greater privatisation in the health sector. In the education sector, to draw a parallel with the United States, national standards are a precursor to vouchers, and vouchers presage privatisation in education.

So what we are seeing is a change from the Government’s first year of office. I think it is fair to say that from right across the community there were many criticisms of the Government. People were saying that this Government was just engaging in a grab bag of unconnected populist issues. That is what people were saying in the first year, and maybe that was a fair criticism. But now we start to see a programme. We start to see a programme that, right across the range of social services, sees a withdrawal of this Government from the role that the State has played. It is a Government that has an agenda of a smaller State, with a bigger role for the private sector.

It is no secret that the Green Party stands on the other side of the line on that debate, but I recognise that it is a legitimate political philosophy to say that the State should be minimal, and that social services should be provided by the private sector. If that is the philosophy that National wants to espouse, it should do so. My objection to that is that we are seeing that philosophy and that approach emerging by stealth here in the second year of National’s term. It is not the basis on which that party went to the population, and I say that it should be.

Now I want to draw on some comments from a former Prime Minister of this country, Michael Joseph Savage. When Savage was defending the Social Security Act across the House from attacks by opponents, he said this: “The honourable gentlemen”—in those days, of course, they were—“on the Opposition benches want to turn back the clocks. I want to know why people should not have security—why people should not have security in the evening of their days, or when they are invalided. What is there more important in Christianity than to be our brothers’ keepers in reality?”. I am not a Christian, as members of the House know, but I would substitute my own version of the latter part of that statement, and ask what is more important, in being part of society, than taking a collective social responsibility for one another? That was one of the principles upon which the accident compensation scheme had its origins—one of the bases on which New Zealanders gave up their right to sue—and I say that this bill, this approach to accident compensation, represents a fundamental derogation of the principles. I say that the Green Party stands, instead, for a fair go for all. Thank you.

When we started this debate the Minister for ACC, the Hon Nick Smith, set out a number of reasons why we need to pass this bill. He talked about the big increase in levies that would be necessary were it not for the passing of this bill. In particular he referred to the fact that a person on the average income will end up paying a further $300 a year into the earners account, through the earners levy.

He went on to talk about the cost increases that the accident compensation scheme has incurred and the escalating costs of claims. He said the cost of claims had increased by some 57 percent over the last 4 years, from $2.2 billion to $3.5 billion. He talked about the difference in the approach that both Labour and National were taking to full funding of the scheme’s ongoing liability.

It was interesting that immediately following Nick Smith’s speech we heard from the Hon David Parker, who accused the Minister of telling half-truths. In particular he said that the Labour Party’s policy on full funding of the liability to 2019 is well known and well documented. He said that Mr Smith was misrepresenting Labour’s position. He went on to say that it was a consequence of the delay of full funding that enabled those reductions in the levy—that if it were not for the delay in full funding, the levies would have to go up by $300. So he attempted to answer—quite reasonably, I thought—some of the comments made by Mr Smith.

But what was interesting about Mr Parker’s response was that he was absolutely silent on the issue of the increasing cost of claims. Mr Smith said that the cost of claims had gone up by 57 percent in 4 years—five times the rate of inflation. What was Mr Parker’s response to that? He was happy to respond to some of the other claims the Minister made, but he failed to respond to that. I take that deafening silence as an acknowledgment that Mr Parker knows full well that in the last 4 years the cost of claims has gone from $2.2 billion to $3.5 billion—a 57 percent increase.

Mr Smith also said that when the Hon Maryan Street signed off on the accounts to June 2008, she signed off on a loss of $2.4 billion, and I have not heard any denial of that. The Hon Maryan Street, quite reasonably in my opinion, has said that the year to June 2009 was impacted by the effect of the world financial crisis, and I think she has a very valid point. However, I note that the recovery in the world markets has not reversed that $4.5 billion loss. I also note that Mr Smith acknowledged the impact of the global financial crisis, but he also made the point that of the $2.4 billion loss in 2008, only $1 million was a consequence of those financial losses.

Why do we need this legislation? It must be patently obvious to anyone who has listened with an unbiased view to this debate that we need this legislation because the scheme has grown to such an extent that the country can no longer afford it. We cannot continue to live in a fool’s paradise where costs increase year after year by five times the rate of inflation. That model has been followed around the world. We see it in Turkey right now; we see it in Spain. We see developed countries in the Western World facing bankruptcy and not actually being able to go out into the world markets and raise money to pay for the running of those countries. Let us hope that New Zealand never comes to that situation.

What has driven the significant cost increase? There has been an expansion of the scheme, and a significant number of new entitlements. We have talked about suicide. When the accident compensation legislation was first brought into the House there was no provision for suicide. As Mr Smith said, suicide is a tragedy—it is a real tragedy—but it is not an accident. He is absolutely right: it is not an accident, but it is a tragedy.

I come back to a point that the Hon Maryan Street made in her second reading speech, which I have already referred to twice in this debate. She quite rightly said that because of the advances in medical science, people who would have died in an accident 20 or 30 years ago can live today. That is one of the great things about medical science: people who in past circumstances would have died can today live. But there is a cost to that, and the community is prepared to pay that cost because life is precious. People who survive accidents may survive in a paralysed state, or they may be tetraplegics. As the Hon Maryan Street said, the cost of keeping a young person alive in that state for the rest of his or her life may go up to $20 million. I heard her talk to the Committee this morning about that cost.

As a society New Zealanders have been prepared to pay that cost because life is very precious. But we need to recognise that the cost to the country has been an increase in claims of 12 percent per annum—five times the rate of inflation—over the last 4 years. I think that is also important in terms of why we need to fund the costs as they fall. The ACT Party disagrees with the Green Party.

The reality is that when the scheme first came into existence, in 1972, medical science was such that people involved in major, serious accidents were more likely to die than to survive. But as time has gone on the number of survivors of what would otherwise have been fatal accidents has grown and grown. One might start, say, with five tetraplegics, and that number can balloon to 10, 20, 50, 100, or 200. Members can imagine the escalating cost. New Zealand society has been prepared to pay that cost, but it is a cost that falls when the accidents occur.

I note that the Green Party campaigned at the last election with an image of a young girl. Green members talked about her future. They said we had her future in our hands. Well, I ask Mr Hague why he would bequeath to young people the costs of the previous generation. He drew the distinction about fully funding education and health on a “pay as you go” model, but that is not how we fund superannuation, and it is certainly not how Labour would like us to fund superannuation. Labour’s plan, of course, was to have the Cullen fund—the Superannuation Fund. When the Government moved away from that model because it was not prepared to borrow to fund those investments we heard all sorts of criticism from Labour.

I come back to the issue of competition and privatisation. Let us not forget that in 1998 the National Government finally had the courage to open up the earners account to competition. As a consequence of that, premiums dropped by some 30 percent. The tragedy is that the National Government did not make that move 6 years earlier so that the benefits that flowed through from that could be well and truly embedded when Labour came to power in 1999, and so that Labour was not able to dispense with those huge benefits.

Finally, I come to the issue of privatisation. I know Mr Hague criticised privatisation earlier. Let us look at the situation with cataract operations. Life-restoring cataract operations give people the ability to see. The reality is that ophthalmologists working in public hospitals, as Mr Hague will well know, do three or four sight-restoring operations in a morning or an afternoon, whereas the output is eight operations when the same operation is done by the same surgeons in a private hospital. That is the benefit of private medicine. That is the benefit of incentivising a surgeon.

ACT members want to offer competition and choice, so we will be supporting this bill. We do so proudly, but we wish it had not been necessary. If National had had the courage to make the changes that were required in 1992 and 1993, the scheme would not be in the state of financial disrepair it is in today. Thank you.

The purpose of the Accident Compensation Amendment Bill is stated as seeking to improve flexibility in the accident compensation scheme. Flexibility is a wonderful thing. The definition of “flexibility” is “to increase movement with a bit of stretching”. Although physical flexibility may well be part of an effective accident compensation rehabilitation scheme, the only stretching this bill appears to indulge in is stretching the truth. For in improving flexibility, the bill is actually reducing entitlements and Crown costs, which will in turn decrease access to accident compensation cover and lower the compensation for vulnerable populations.

We in the Māori Party always say that our past informs our present. Two years ago, in 2008, the Māori Party supported the Injury Prevention, Rehabilitation, and Compensation Amendment Bill (No 2), which improved access and entitlements to compensation for some disenfranchised groups. These groups were itemised as seasonal casual workers, those in non-standard work, those mentally injured by trauma, those between work, and young people who are injured. The responsibility to support all of these groups of vulnerable citizens is repealed today in the third reading of this bill.

Although the context provided for the bill is to make accident compensation affordable and fair, the changes will disproportionately impact on vulnerable workers and low-income families, as the bill decreases access to cover and decreases the level of compensation to these claimants. We are on the record as supporting the right of all of these groups to receive entitlement to compensation and cover. We are hardly likely to turn round and renege on that support a couple of years on. But I think we cannot go any further into this debate without looking even further back into history, at the very foundations of the scheme. Submitters from the Human Rights Commission went to the select committee and reminded Parliament of the origins of accident compensation as “a form of social insurance”. They discussed the original scheme as being “a trade-off between the right to sue for compensatory damages and comprehensive, no-fault cover in the event of an accident.”

As other speakers have noted, the accident compensation scheme was established following a 1967 royal commission into workers’ compensation in New Zealand. The royal commission was established to address the inadequacy of workers’ compensation benefits, as well as other anomalies around coverage. The report produced by the commission, known as the Woodhouse report, recommended replacing tort liability for personal injury with a new, universal, 24-hour, no-fault approach to compensation and services to the injured. The Woodhouse principles remain important today: community responsibility, comprehensive entitlement, complete rehabilitation, fair and real compensation, and administrative efficiency. Some 40 years after the accident compensation scheme was introduced, it is impressive that a report by PricewaterhouseCoopers on a review of it concluded that “the current ACC scheme is consistent with the Woodhouse Principles”. But the report went even further. It suggested that the scheme adds considerable value to New Zealand society and the economy, and performs comparatively well internationally. In fact, in the last 10 years, the investment team of the Accident Compensation Corporation (ACC) has been one of the top performers, and has outperformed even the Cullen fund at far less the cost of fund managers.

I remind the House of our policy position on accident compensation. The Māori Party supports the right of employees to be treated fairly and with dignity, and their right to a safe and healthy workplace. Our interest is in holding employers accountable for preventable workplace-related deaths and injury. Indeed, one of the members’ bills we have developed is a corporate manslaughter bill. This bill is based on similar innovative legislation in the United Kingdom, the Corporate Manslaughter and Corporate Homicide Act 2007, which has been described as a landmark in law. In the UK, companies and organisations can now be found guilty of corporate manslaughter as a result of serious management failures resulting in a gross breach of the duty of care.

Why would we put up such a bill? Quite frankly, there has been a widespread acknowledgment in recent years that New Zealand has a serious problem to deal with. New Zealand sits in the 23rd position in the league table of fatal accident rates, with much higher rates than the best countries. In fact, in a 2005 survey of the annual reports of 100 large companies for the Department of Labour, the following deficiencies were noted, despite 13 years since the enactment of the Health and Safety in Employment Act 1992. Only 30 percent of companies reported having arrangements for consulting employees on health and safety, and only 15 percent of the companies mentioned setting targets in health and safety. So there are big issues around the very concept of injury prevention that need to be addressed.

Of course, a major one for the Māori Party is the fact that access for Māori has been consistently lower than for other groups. The data available demonstrates that Māori receive treatment at a lower level than non-Māori, and where services are accessed, they are accessed later and programmes are exited earlier. Even though ACC undertook initiatives to improve access through information programmes and better engagement with Māori communities, these programmes have not demonstrated sufficient success to close the delivery gap.

We have raised previously the fact that Māori are disproportionately involved in very dangerous occupations such as forestry, roadworks, construction, etc. Our biggest fear about the possibility of privatisation is that private insurance companies would make the insurance premium higher than the current accident compensation levies, especially for dangerous jobs, because of the high possibility of getting hurt. The insurance premium would more than likely be too high for Māori to be motivated to take out that insurance. Then there is the problem of going to court, as insurance companies continually try to go to court to try to resist making insurance payouts. The changes will then place the onus on the taxpayer to go out and find an insurance policy that will meet their particular needs—a change that I think would not be at all beneficial for the Māori community. In short, transforming the levy into a premium will simply not give us, as the advertisements say, the peace of mind.

Finally, the Māori Party came to this bill conscious of a large range of concerns that had come in from our constituents. We were approached about opposition to increased levies, especially from motorcyclists, to sexual abuse compensation rules, and to a threshold of 6 percent hearing loss before people are entitled to assistance with hearing aids. There were also concerns over privatisation and reduced coverage. Although many changes might seem to be minor, the cumulative effect will undermine the concept of accident compensation as it is currently understood. Over and above all these changes, we know that injury is the leading cause of death for Māori for the first three decades of life. Māori are over-represented in injury statistics across all age groups and in employment and sports. Most of these injuries are preventable. As Dr John Broughton reported in his 1999 report Injury to Maori: Does it really have to be like this?: “Although the frond will eventually die, it need not wither or die so soon or before its time.” There are far too many issues associated with a full and comprehensive injury prevention scheme to approve the changes put forward in this bill. We must oppose this third reading.

I will not take long on the Accident Compensation Amendment Bill. I think we have canvassed a lot of the issues already during the last day or so. I thank members of the Transport and Industrial Relations Committee, who worked very well to get this legislation through the committee in a timely fashion. I also thank all those who have taken an active role and interest in seeing the New Zealand accident compensation system become the best system it can be and one that will survive into the future. When we look at it, we see that is at the heart of what the Government is doing here. We want to see the scheme survive, and we want to see it be there for people. We want to maintain a system that gives New Zealanders the comfort that they expect and have seen in their accident compensation system for generations now. By doing what we are today, we are allowing New Zealanders to have the security of knowing that accident compensation will be there for them in the future. I think the key thing that people in this House need to understand is that this bill is about saving the scheme. It is about making it sustainable over the long term. It has nothing to do with what the Labour Opposition members have been saying over the last day or so.

I will go through two things, but first of all I say there has been an abuse of process in this House today. The constant amendments that were put up, when there was a particular issue there that is in the best interests of New Zealand, are a tactic that Labour Party members need to reflect upon. The public out there will not want to see this House waste its time and resources, when we are trying to do something good for the New Zealand people. Putting up frivolous amendments all day does not really endear the Labour members to the New Zealand public. That is something the Labour Party might want to take on board for future circumstances.

Two very important things came out of today. The first one is that we heard a constant barrage from the Opposition members about the Woodhouse principles. They say the bill is contrary to the principles that were first adopted in accident compensation, and that it takes away the principles that were there. I say we should look at that in a historical context: we had the Woodhouse report, the accident compensation system, and, in the last term of the previous Labour Government, the changes to the system. Those changes were not based on the Woodhouse principles but on the political whim of that Government. We are not reversing the Woodhouse principles. The Woodhouse principles set up the accident compensation system. What we are looking at are some of the changes that were made in recent years to the system, and the legislation does not affect the Woodhouse principles. I think the public out there needs to be very much aware that the Woodhouse principles are intact, that the accident compensation system is intact, and that the National Government has made sure that is the case. We have not dealt with the Woodhouse principles in the way that the Labour Party has contended over the last day or so.

The second very important thing that came out of the last day or so is the idea of full funding. The National Party is committed to that. We have extended the time frame in order to enable that to happen. The Labour Party started this debate not knowing where it stood on that. We looked at Maryan Street’s face during the debate. When she was asked whether she supported full funding, she was deliberately quiet. She did not want to commit herself to supporting full funding. But what happened today? David Parker sat down beside her today, and in response to a speech during the Committee stage, he said the Labour Party was committed to full funding. That is what the Labour Party policy is, and Labour members were backing this legislation, but they could not vote for it. Labour backed this legislation, but would not vote for something that was in the best interests of what New Zealanders wanted. That shows the state that the Labour Party is in at the moment. The Labour members do not know what they stand for, and when they do know what they stand for they are not willing to stand up for it. That is the problem with the Labour Party. That is why it is polling so badly and why the public will see great credit in what National has done to retain the accident compensation system, and will not be listening to the arguments that have been put up against this legislation today.

I commend this bill to the House, and I look forward to it being enacted tonight. I thank all those involved in the process, especially members of the select committee and the officials involved. Thank you.

The member who just resumed his seat, David Bennett, talked about ensuring that accident compensation will be there for injured New Zealanders. That is a good aspiration, and I am pleased that the member spoke about that. What the member did not add to his great vision for the security of accident compensation in the future was “except if people have a work-induced hearing loss of less than 6 percent”, because that is now a “gone-burger”.

If workers are injured before they have used up all their holidays, their holiday pay is a “gone-burger”. This bill takes away support for seasonal workers who make the foolish mistake of getting injured early in the season instead of later in the season. The same is true for part-time workers and those in middle or high income jobs who are injured and want the dignity of returning to a job where they can earn about the same as they used to. Their support is gone under this legislation. If one is a family member of someone who is so inconsiderate that he or she takes their own life, then support for that family has gone as well.

This Parliament, in the third reading of this bill, doctored by Dr Nick Smith, will now make a moral judgment that the family of a person who dies in a plane crash, a train crash, or on the road, or from any other injury, is more worthy of support than the family member of someone who takes his or her own life. It will make a moral judgment about the value to that family of a person’s life. The person is still dead. The family still has to pay for the funeral. The family will not have that income coming into their home. The person is dead.

The fact that the person took his or her own life actually makes it harder for the family. Most members in this House will know a family where one member has taken his or her own life. Most of us will have had that sort of experience. The family is often overwhelmed with grief, as well as guilt, because, on a daily basis, they think that something they may have done differently could have altered the decision of that person to take his or her own life. But let us not worry about that, says David Bennett. Let us punish them again by not giving them any support for the funeral and not giving them any support for the lost income. So the wonderful words—

💬 Hon Sir Roger Douglas: Have you calculated the $9 million for physiotherapy?

What was that noise from the grave? Oh, sorry, it was Sir Roger Douglas—the ghost of a lot of things past is still giving the same speeches.

It is very interesting to hear all the scaremongering that goes on about how much money the accident compensation scheme has lost, how much money it needs, and how the rate of claimants’ costs has exploded. But Nick Smith never once mentioned the substantial change in the funding need, the substantial levy reductions that would be caused by one alteration—that is, extending the date for full funding.

One alteration was actually all that was needed. David Parker had a member’s bill before the House. The Government could have adopted David Parker’s member’s bill and we would not have needed to slash the entitlement of people who have hearing loss, people who have saved up their holidays, people who are seasonal workers, and people who are family members of someone who has taken his or her own life. None of that would have been necessary.

The Minister has been caught out so many times with his half-truths about the accident compensation scheme being broke, bankrupt, and unsustainable that nobody believes it any more. He was also caught out when he said that motorcycle injury numbers have ballooned. Apparently, just about everyone in New Zealand who rode a motorcycle was falling off and breaking something. Apparently, they were all damaging themselves.

At the end of my speech I will seek leave to table those figures, but I tell the House that despite the increase in the number of motorcycles between 1973 and 2009—an increase of half again—the number of injuries between those dates went from 551 in 1973 to 86 in 2009, per 10,000 on-road motorcycles. Those are the numbers: 551 in 1973 and 86 in 2009. The Minister looks as though he is trying to swallow his tongue; he has gone suddenly quiet. The number of fatalities went from 17 in 1973 to just under 4½. How can those numbers justify what Dr Smith told motorbike riders around the country?

Those are the facts—as opposed to what Dr Smith was telling people—in the same way that the select committee report on the bill gives us facts about the comparative costs with the accident compensation equivalent in Australia. The figures have been adjusted to look at the differences in the schemes—what the cover is. So these are apples with apples comparisons. The South Australian cost per $100 in Australian earnings is $3.14, in New South Wales it is $1.94, and in Western Australia it is $1.51. The Australian average—an apples with apples comparison—as reported back by the Transport and Industrial Relations Committee, including the National members—

💬 Hon Dr Nick Smith: What year?

The year 2006-07. The Minister should have read the report. The Australian average is $1.72, and what is the New Zealand rate? It is 94c. PricewaterhouseCoopers, a reasonably well-regarded organisation, said that the New Zealand scheme was more efficient than any other scheme in the world. So the system is not broke.

So what do we have in this legislation to consider? We have a bill that means people will now be paying more in their levies—employers and individuals—and they will get less, because this bill is about cuts. We now have a new threshold that people have to reach for hearing loss in their workplace before they will get any accident compensation cover and support. A hearing loss of 6 percent is a big hearing loss, actually. It does not mean that someone can hear 94 percent of things. It is a significant loss, as the select committee heard and described to the House. But if someone has a hearing loss of 6 percent or less, that is bad luck. So it is now all right for employers to injure their workers just a little bit, as long as it is not more than 6 percent. This is an arbitrary figure and it is crazy.

The vocational independence work capacity test has been absolutely gutted. There is no consideration of the person’s pre-injury earning capacity, no consideration that the person needs to be able to work 35 hours a week rather than 30, and no consideration of the fact that he or she should have a real job to go to. The person who has been injured should have the dignity of a real job entitlement.

Seasonal workers need to plan for their injury to occur during the later part of the season because if they get injured at the beginning, then their non-work time, prior to their starting the job, is counted—no earnings, less money. That is just a disgrace. It is bad luck for people who get injured and have holidays owing to them. If they have not taken some holidays and were looking forward to taking them in 3 or 4 months time, it is bad luck for them. They will have to use up their holiday pay before they are entitled to accident compensation.

So this bill is full of cuts, despite the fact that all of us are facing accident compensation levy hikes this year. This is absolutely about paying more and getting less. The reason I am so angry about this legislation is twofold. First of all, it is not necessary. The Minister has misrepresented the facts of the situation in order to justify major changes to entitlements. But the stronger reason for me is that this is about real people. It is about real people who have been injured.

During the Committee stage I talked about one of my constituents whose family I have worked with a lot, and I know that they will be devastated by this. The constituent I mentioned earlier in the debate was Jason Gibson, who was a 29-year-old spray painter. He loved his job, he loved his wife, he loved his parents, and he loved his little daughter. He went to his parents’ home one day, and said he had hay fever - like symptoms and had had a nosebleed the day before. His father recommended that he have a blood test, because as a painter he might have lead poisoning. Six days later, Jason died from leukaemia caused by inhaling the solvents at his work. Injury prevention, high-quality rehabilitation and compensation should be the focus, not cuts.

I am grateful for a brief opportunity to promote this measure in its final stages through the House. It will be patently obvious to viewers and listeners around the country that we have been treated to some barefaced and shameful rewriting of history by members opposite during the various stages of this bill, but the public is not fooled and will not be fooled by the spin, because the substance is there for everybody to see. The substance is Labour’s legacy, and it is an appalling one. The loss of $4.8 billion, as reported in the 2008-09 annual report, should leave all members of the previous Government collectively hanging their heads in shame.

I commend this Minister for ACC and this Government for confronting the appalling problems that Labour not only ignored but also exacerbated during the latter period of its time in office. The options the Minister has confronted were unpalatable but unavoidable. The Minister is charting a prudent and responsible course to rescue and secure a vitally important aspect of our nation’s social infrastructure. New Zealanders will have every reason to be grateful for this measure in the years ahead. I urge all responsible members of this House to give it their full support.

I want—

💬 Carol Beaumont: Two minutes on such an important issue.

—well, I do not think it was 2 minutes—to talk about what all New Zealanders hold dear; that is, the accident compensation legislation, which is historic in this country. Under the Woodhouse report in 1974 it was about a social contract that delivered us a comprehensive scheme for looking after all who were injured, whether it be at work, in an accident, at home, on a sports field, on the road, or in special circumstances such as a victim of crime, or in rare but tragic circumstance of suicide or sexual abuse.

I say to Nick Smith that in the complex world we live in, there have been changes to the scheme. Some were for good under Labour and some were for bad under National. Nick Smith wants to take us back 3 decades. The broad principles were a fair deal for all—the many, not the few—and the fundamental belief in a society that believes in looking after everyone in hard times. But, no, the National Government wants to take us to the market model, so that means that it is not fair. It means that we will pay more and get less.

💬 Chris Hipkins: You can say privatisation.

Well, preparing it for privatisation. What did Woodhouse see in his report? He saw a New Zealand where the delivery of support and justice to all New Zealanders who were injured in any way was not left to the market, with the only winners being lawyers and those who could afford to pay. Woodhouse said that in circumstances of injury, disability, death, no matter how compelling or tragic, it could not be left to the market. There would be minimal justice in that circumstance, and certainly none for those who could not pay. We are seeing now in this House a National Government that is throwing away those principles, that is demeaning any progress that has been made on the Woodhouse recommendations and on the original legislation, and that is wanting to go backwards.

Who will be the losers under National’s changes to accident compensation? They will be low-paid workers, disabled people, and predominantly women workers. My colleague Ruth Dyson talked about those with less than 6 percent hearing loss. Those people do not get any assistance with a hearing aid under National’s proposal. Who will be able to afford that? It is not about the 94 percent hearing that those people have; it is about professional people assessing the disability of clients, and to drive in a 6 percent mandatory rule that no client will get assistance for hearing aids is nothing short of ridiculous. It is absolutely ridiculous.

Who will win out of that situation? The only people who will win are those who can afford to sue, because otherwise there is no support. Or people languish on the system that we have under the National Government at the moment to wait for some help from the Ministry of Health, and those people will probably wait for up to a year, at least. New Zealand legislated for a no-fault scheme. There was a very small levy across all New Zealanders. Whether they were employers, business people, sportspeople, or workers, it delivered justice for all in this country. It was not a matter of whether people could afford it; they received the support that they needed and deserved.

It was the envy of the world. It put New Zealand completely on the map. It was never ever about choice, which is what we hear so often from members on that side of the House, especially the ACT members. It was never about selling our scheme off to the highest bidder, which is what happened under the previous National Government. It was about a country that wanted to ensure a fair deal for all, and for all New Zealand citizens to receive the support that they needed if they were injured. The National Government and the “Voucher Party”—the ACT Party—take advantage and say: “Let us work with the market.” Now we see that they are cutting into the rights—not privileges; they are rights—that every New Zealander pays for.

These are their rights under our accident compensation scheme. The principles of that social contract of accident compensation were about social justice for all who suffered injury. It came down to an investment. New Zealanders gave up something. They gave up their right to sue for this scheme. New Zealanders collectively gave up their right to sue on the realisation that, to have an effective scheme both socially and economically—avoiding accidents, getting people back into work, and all those things that are part of a progressive scheme—it would come at a cost. They could not get into the market that the ACT Party promotes about going to the highest bidder or employing lawyers and being able to sue. Through the electoral cycles we have seen what is so predictable. It happens every time we have a National Government.

I have to ask Nick Smith this time why he is not going for the full monty and going for cutting lump-sum payments. Why is he not doing that? I ask why Nick Smith is not saying that he will cut lump-sum payments, because that is what is in National’s heart. It is about privatisation. I will tell all National members that as long as you have lump-sum payments, no matter how much you denigrate the rights that are entrenched in the accident compensation scheme, which you are doing tonight in this House, your agenda of privatisation—

💬 Mr DEPUTY SPEAKER: The member continues to bring me into the debate, and I know that she knows she should not be doing that.

I am sorry, Mr Deputy Speaker. I know that you are blameless in this and I do apologise.

💬 Mr DEPUTY SPEAKER: And I am not part of The Full Monty, either!

I think that was directed! But if we look at the agenda of the cost cutting and the lump-sum payments of the previous Government, we know we are up for a lot of cuts in the future. Members on this side of the House put up amendments and I think those amendments were very sensible. We said we should have a review to check how much devastation has happened. But it goes round and round.

💬 Hon Steve Chadwick: Wait until next term.

The member is right. But what will we see, and where will we see it? We will see cuts, cuts, and more cuts. We will see that for workers, instead of a requirement to return work for 35 hours a week, it will be for 30 hours a week. The Government wants to reduce the return-to-work level to 30 hours a week. That is 30 hours a week when times are hard, in a recession, and when it is very hard to find work. What is this Government’s answer? It is to reduce people’s ability to get back into work. Apart from that, it is for people to use their holiday pay. Holiday pay is actually a right. All New Zealand workers earn their right to holiday pay. They earn it. I tell members on the other side of the House that when people injure themselves at work, it is not a holiday. I say to Nick Smith that it is not a holiday to sit there with a damaged back so one cannot spend time with one’s family.

This has been a long journey. It is not one that started with the introduction of this legislation into the House; it started back in 2005, I think, when the financial performance of the Accident Compensation Corporation (ACC) began to deteriorate. In late 2007 the Department of Labour told the previous Labour Government that Vote ACC was not sufficient by a long chalk to meet the dozen or more extensions to the scheme that that Government planned to put in place. Three times the previous Labour Government was told in 2008 of the well-costed problems that the Department of Labour said would cost $305 million in that year alone, and then $1.5 billion in the out-years. In breach of the Public Finance Act, the previous Labour Government remained silent about that; it failed to put that into the Pre-election Economic and Fiscal Update.

The principal finance change denier, the former Minister for ACC, Maryan Street, had the audacity to suggest that it was she who sent the officials to Nelson after the election to inform the new Minister of the financial crisis. Well, it was too late then. Of all the ranting we have heard from that member, the one thing we have not heard from her, and the one thing that this House and the people of New Zealand are owed, is a single word: sorry. The second principal finance change denier, Mr Parker, challenged the Minister and had the audacity to challenge him on the financial justification for the changes made in this legislation. It is a pity his party did not hold itself to the same high standards of accountability that the member seems to demand of this Government. I simply reject the suggestion that those changes have not been rigorously costed—they have. They are inputted into the proposed levies for 2010-11, and thank goodness they are!

Let me share the positive impacts of this Accident Compensation Amendment Bill on those levies. Without this legislation, a worker on the average wage would have faced a $550 per annum increase in accident compensation levies. With it, a worker will face a $150 a year increase. Car registrations would have gone up by $103 a year, but with this legislation the increase will be $30 a year. Employer levies would have gone up by 44 percent without this legislation, but with it the increase will be 12 percent. I find it absolutely amazing that in the over 100 calls that we had in the Committee stage of this bill, not a single Opposition member once mentioned the levy payers. In fact, Ms Dyson just mentioned them in her speech, but there was no other mention of them. The Labour members cannot even bring themselves to use the word “employer”. When I was at ACC and the previous administration was in power, it was called the employer account. Labour could not even bring itself to use the term “employer”; it had to change the name to the work account, such is its animosity towards employers.

There has always been a black, a white, and a grey area when it comes to accident compensation. There are those who suffer mishap due to medical conditions, and there are those who clearly suffer the effects of an accident. There is always a grey bit in the middle. I hope you can hear me, Mr Deputy Speaker; there is a really bad buzzing in my ear. Over the last 5 years that grey area has become thicker and thicker. It has become more and more difficult for the corporation to manage that grey area, and I applaud these changes, which bring clarity to the entitlements that every New Zealander has under this scheme.

My final comment is to the staff of ACC. It has been a tough year for them. I encourage them to continue the good work that they do for the 1.8 million New Zealanders who are injured every year, the vast majority of whom are cared for well, are rehabilitated in a timely manner, and enjoy a fast and lasting return to work or independence. But I also encourage them to continue to improve that rehabilitation effort and not to resile from the goal of rehabilitating claimants, even when that goal is tough—tough for the claimant; tough for the staff. The Woodhouse report said it was necessary to have a bit of tough love from time to time. But that can be done with compassion, to a high quality, with clear communication, and, above all, with consistency so that claimants from Kaitāia to the Bluff can expect to have the same level of service, the same decisions being made, and the same good-quality care from the corporation.

I think this bill makes a very important change that will restore the scheme to its rightful place as a world-leading accident compensation scheme. I applaud it and I commend it to the House.

I seek the leave of the House to table a document from the Ministry of Transport, outlining the annual motorcycle numbers and injury and fatality statistics between 1973 and 2009—the facts of the situation.

💬 Mr DEPUTY SPEAKER: When was this document released? On which date?

In 2009, by the Ministry of Transport.

💬 Mr DEPUTY SPEAKER: Is this document already in the public arena? [Interruption] Yes, it is a point of order. Leave is sought to table this document? Is there any objection? There is objection.

I seek the leave of the House to table the report received by me as Minister on physiotherapy costs and the disaster that Ruth Dyson brought upon ACC—

💬 Mr DEPUTY SPEAKER: No, we are not getting—

—in respect of—

💬 Mr DEPUTY SPEAKER: We are not getting into debate. The Minister has sought leave to table a document. Is there any objection to that course of action? There is no objection.

Document, by leave, laid on the Table of the House.