Injury Prevention, Rehabilitation, and Compensation Amendment Bill

In this first call on Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill, I would like to address one of the changes that is made, in terms of the proposed deductions to earnings-related compensation. The bill proposes that where someone has holiday pay due at the time of his or her accident, that holiday pay is to be deducted from the earnings-related compensation paid to that person. Treasury, in one of the briefing papers that it gave to the Government in respect of this provision, pointed out that this particular provision does not save much money, and, more important, that Treasury was concerned about the principle. What this provision says is that people should have deduced from their post-accident earnings—earnings in the form of earnings-related compensation—their pre-accident earnings. Holiday pay that has accrued as at the date of an accident is due to employees as a consequence of their pre-accident earnings. It is an asset that is then theirs.

If we think about how this change applies in practice, we can see the inequity of it because of the arbitrary and inconsistent way in which it applies. If an employee was entitled to 4 weeks’ annual leave and had taken that annual leave just prior to having an accident, that employee would have no accrued holiday pay and therefore no deduction would be made from his or her earnings-related compensation. However, if an employee was soon to take his or her holiday, but had not yet taken it before suffering from an accident, the accrued holiday earnings would be deducted from the claimant’s earnings-related compensation in that case. That was the concern that Treasury noted. It said the principle of the accident compensation scheme is that people are compensated for their lost earnings, and there is no policy justification for deducting accrued holiday pay. Indeed, as I think I have illustrated, the effects of doing that are arbitrary and therefore unfair as between earners.

Again, I return to the underlying justification that the Government has used in support of these changes, which is one of the affordability of the scheme. I remind the Minister for ACC that the only information that we had as to cost comparisons between the New Zealand scheme and overseas schemes showed that the New Zealand costs for employers were considerably lower per $100 of earnings than those paid by Australian employees per $100 dollars of Australian workers’ earnings. We know that the administrative costs of the scheme in New Zealand are lower than Australia’s. We know that the cost of employer levies in New Zealand is considerably lower, and there is no justification for what I think is an inappropriate change to the scheme, which effectively takes from the injured employee pre-accident earnings in respect of his or her post-accident needs. It is just bad policy. It is wrong. It is not justified on a cost basis.

In the debate on Part 1 the Minister criticised the Opposition for not referring to costs in the non-earners account and in the earners account, which are another two accident compensation accounts. My response to that is that of course the Opposition does not have that information. It was not provided to the Transport and Industrial Relations Committee by the Government, so how we can be criticised for not referring to what the Government ought to have provided beats me. The best information that we have is in respect of the costs of other parts of the scheme. That is that the costs of the New Zealand scheme are lower by a considerable margin than the equivalent costs in Australia and, I believe, lower than those of schemes in most other parts of the world.

The Committee’s attention now moves to Part 2 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. There are many, many facts that the Opposition looks forward to regaling National with as we move into this debate, because this is an important part of the legislation. It sets out four or five separate areas that the Opposition looks forward to pursuing with the Government and the Minister in the chair in the morning, and we will not resile from the defence that Labour is making of the importance of making sure there is a 24-hour, 7-day-a-week, no-fault accident compensation scheme for the people of this country. That is what is at stake in this debate. It is what is at stake in Part 2. It is what will be at stake when we get to the debate on the title and commencement clauses, where it will become clear that the Government is changing the title of this law because it has no commitment to accident compensation in this country.

Sitting suspended from 10 p.m. to 9 a.m. (Wednesday)