Estimates Debate — Vote ACC

As we all know, ACC is a very vital institution to the well-being and the livelihood of this great country of ours. It contributes enormously, and it is a key part of the productivity of this country. Every wage and salary earner contributes to it, every business contributes to it, and every owner of a motor vehicle contributes to it. It is a very vital institution in this country. This House appropriates around about $1 billion a year for it, in this current financial year, both for the non-earners account and also to fund the work of what was the Department of Labour, which is now a division of the ministry of various other things, under Steven Joyce, in terms of the support work it does on ACC policy. Because of the importance of ACC in New Zealand, the need for careful stewardship cannot be understated or underestimated. So the question has to be asked: why is it that this Government has made such an almighty hash of this vital institution?

We all know it started with the previous Minister for ACC, who will go down in New Zealand’s history as the worst Minister for ACC in the entirety of the life of that institution. He ran it in such a way that he has fleeced New Zealanders of $5 billion, or more, over 3 years. He ran down the quality of the service of ACC and led a culture of disentitlement that the present Minister has now had to try to fix up. The question now, looking ahead, will be: is this Minister for ACC, and the measures that she has put in place, up to the job of restoring confidence in ACC?

Until now we have had the massive levies that had to be cut, because this Government was so embarrassed about the size of them.

The number of reviews and appeals being applied for by claimants has shot up. The proportion of cases lost by ACC has shot up, because the truth is that the previous Minister for ACC and the previous administration could not care less about what happened to ACC claimants, until Bronwyn Pullar came along. Then the previous Minister showed an interest in ACC that hitherto had not been shown. It was his old mate, Bronwyn Pullar. The Minister intervened. It was a bit like an episode of Undercover Boss, where in a large organisation the boss descends from on high, finds one problem with one person, and fixes that problem, but forgets that there are systemic problems throughout the organisation. So he did such a fantastic job that when the Government was re-elected, he had to resign as a consequence. That is the successful performance of the previous Minister for ACC with this institution.

But the truth is that that privacy breach—that massive privacy breach—was symptomatic of much deeper problems in ACC. There was a total failure of service and support to so many claimants, particularly those who were long-term claimants who had serious conditions and who needed the attention of ACC. It has led to a meltdown of catastrophic proportions. What have we seen? We have seen a chair of ACC go. We have seen the chief executive officer go. We have seen three directors of ACC—and it does not have that many—go. We now have three separate inquiries, two by the Privacy Commissioner and one by the Auditor-General, into this once-fine institution. Public confidence in ACC has been totally shattered, and it is entirely because of the failure of political leadership.

The fact that so many people at the governance level have left ACC is, in my view, a stunning vote of no confidence in this Minister. But let us give her the benefit of the doubt. She has set out a new plan. There is a new service and purchase agreement with this Minister, which she herself signed last month. Let us just have a look at it. “Priority 1:”—for ACC in the period ahead—is “Improved Trust and Confidence”. Then let us have a look at the detail of that. Improved trust and confidence—a demand for a culture change. It says: “ACC will invest in ensuring quality leadership of the Corporation through increasing management capability and training. The investment will aim to facilitate a real culture change within ACC resulting in better management of relationships …”.

What is the measure for this improvement? What is the measure for this lifting of public trust and confidence? “Quality leadership will be measured by an increase in the number of managers who participate in management and leadership training modules.” That is the measure. It is not about the number of complaints that go to ACC’s internal complaints office. It is not about the number of reviews and appeals that it faces because people have had bad decisions made about them. It is about the number of training exercises that management have been on.

So what is the answer going to be to a claimant who is deprived of their just entitlements in the scheme? “We have declined you, but, goodness me, don’t complain, because the person who declined you went on a management training regime just recently.” Well, that is not an answer. That is not about lifting quality. There is no measure in the service and purchase agreement that is about measuring what actually matters to people who use ACC, and that is the quality of support and service that they are getting.

What else have we got? Vocational rehabilitation and home care—under this Minister a whole new arrangement has been entered into, a procurement arrangement, for rehabilitation and home care. A contract has been let for the management and coordination of vocational rehabilitation. The largest contract has gone to, would you believe it, an Australian company to manage ACC vocational rehabilitation. This is another Australian company—30 percent of ACC’s vocational rehabilitation is now going to be managed by an Australian company.

The way it works is this. ACC decided that 12 percent of the cost of vocational rehabilitation is tied up in management, so ACC is going to give that to the Australian contractor—at least the 30 percent of the business that it has got. That is going to come out of the back pockets of the service providers, who are stressed enough as it is, and ultimately the price will be paid by those who look to ACC for vocational rehabilitation. It will be paid through fewer visits and less service and support by those providers. So much for the culture change. So much for improving public trust and confidence in ACC.

What else have we got? We have got the Cabinet decision made in October last year, on the eve of the election, to expand the Accredited Employers Programme. This is the private part of ACC, but we do not hear much about it. It has got its own problems. But under this Minister we have a plan by this Government to expand it. The complaints we are getting about the Accredited Employers Programme are that HR managers are intervening in decisions about health care, treatment, and rehabilitation, which are properly the province of medical providers.

What else have we got? Spending on injury prevention has been going down steadily under this Government, and is expected to go down more in the year ahead.

Then, what about this? ACC—more than $20 billion of funds under management—is expected to have an ethical investment regime. What do we see it investing in? ACC is a 30 percent investor in the private company now set up to build and run Wiri Prison. ACC is an investor in the Wiri Prison. How is it that an institution that is set up to provide care and support for those who are injured, those who are victims of accidents, finds itself investing in locking up people, removing their liberty, and penalising and punishing them? That is not part of ACC’s remit. That is not part of its mandate.

I say to this Committee that if the current plan is anything to go by, this Minister, who is called upon to restore public trust and confidence, is simply not capable of doing it. Restoring public trust and confidence is not going to be measured by what we know is written in the plans for ACC in the year and years ahead. That is the appalling thing about it.

The challenge for this Government is to restore this institution to what it once was—an institution that was about giving people the support and assistance, the medical care, the medical treatment, and the vocational rehabilitation that sometimes are needed for those who are victims of accidents. That is what ACC was set up for, as part of a community partnership between people, wage and salary earners, business, and the Government—not as an investor in prisons, and not about cutting vocational rehabilitation and making it worse for those who need it, but as an institution that we can look to again to be proud of and to do the job that we expect of it.

Just listening to the previous speaker, Andrew Little, my mind drifted to an old Elton John song—remember the one from the 1970s or 1980s—that went something like this: “Sorry Seems to Be the Hardest Word”. I think there are a couple of members on the other side who might reflect on whether “sorry” is such a hard word to say for the things that they have said inside and outside this Chamber. But the biggest apology should come from the party and from the previous Labour Minister for ACC, Maryan Street, for the total mess that that party when in Government left ACC in. It seems like it is a broken record, having to remind the public and members of this Committee what that mess was: $2.4 billion in 2008 and $4.2 billion in 2009. The member who has just resumed his seat talked about the almighty hash of ACC. I kind of agree with that; I just do not agree with the time frame that he was talking about. And I can think of a few worse Ministers for ACC in its history than the previous Minister, Nick Smith. In fact, I would suggest to that member that it is not quite mission accomplished, but given the financial mess that this Government has inherited and the $7.2 billion—

💬 Sue Moroney: Ha, ha! What a joke.

See, they chuckle, they laugh, and they think it is a joke. They think that, somehow, reporting a combined deficit of $7.2 billion is something of a joke.

💬 Andrew Little: It wasn’t a deficit.

And that member, when not a member of Parliament, accused everybody else of a jack-up—accused the Minister—

💬 Andrew Little: This member can’t read accounts.

I am sorry, did the member say I cannot read an account? Well, I am sorry, I am only a member of the Institute of Chartered Accountants. Apparently, a union hack now can read accounts better than a chartered accountant. Well, I am sorry, but I think it is worth repeating something in this Chamber: how many times have you been an accountant—

The CHAIRPERSON (H V Ross Robertson): Order!

—has that member been an accountant? I apologise. We have heard that a bit before.

💬 Hon Member: How many times has he been sued?

That is right. Clearly, if you think that a $7.2 billion loss is OK, then somebody needs to go back to accounting school, do they not? If they do not think the loss was real, here is what was real: the 55 percent increase in levies that the levy payers of this country were faced with, on average, had the turn-round not been put in place—a 55 percent increase. That is not mythical. Every single levy payer in this country—every employer, every employee, every motor vehicle user, every person who uses those services—was faced with a 55 percent increase. And why? Well, it is a simple reason. The previous Labour ACC spokesman, David Parker, seemed to think it was because of the economic downturn. There is no doubt that the investment returns in ACC were lower as a consequence of the recession, but that is only half the story. The simple fact is that ACC had budgeted for that and had built it into its levies. In fact, its investment returns were higher than budgeted, and certainly higher than the average returns being enjoyed by other institutional investors. Here is why—

💬 Hon Maryan Street: No, they had not built it into their levies, Mr Woodhouse.

Ah, welcome to the debate. It is a simple word, I say to that member; it is just a five-letter word: it is “sorry”. And here is why: rehabilitation rates plummeted. Exit rates at 90 days, 180 days, and 12 months dropped. For every percentage that the rehabilitation rate at 1 year dropped, that was $500 million more on the levy payer—$500 million more. The cumulative effect of that on the net present cost of the claims into the future was billions and billions and billions of dollars. It is absolutely not acceptable to say that ACC had a few billion dollars in the bank. It had a $24 billion liability. Thankfully, it is being turned round. I congratulate this Government on being able to return half a billion dollars of levies back into the pockets of hard-working levy payers. There are some issues with privacy, I accept that, and I have a lot of sympathy for those who have been affected by the privacy leaks. But I am very, very confident that the Minister is able to articulate very clearly what this Government’s expectations are for ACC. It is about restoring trust and confidence, because no doubt they have taken a dent, but I can tell the members they are much, much higher than they were 3½ years ago when this Government inherited the mess and took office; it is continuing to fix the mess. I look forward to that continuing under this Minister.

Thank you for the opportunity to speak on this matter of Vote ACC. I have enjoyed the contributions tonight, particularly those from Mr Woodhouse, and I was interested in some of the comments made by Mr Little. I thought I would come back to the estimates, because, after all, this is actually the debate on the estimates, and see just how important Mr Little thought this area of ACC was. I found out that it was not at all important, obviously, because there is no transcript and there is no report; it is simply all accepted. Not one question was asked of me in the estimates hearings. That tells me that the crocodile tears that we have referred to tonight were, in fact, absolutely there, present, this evening.

I also noted his comments describing my predecessor, Dr Nick Smith, as—what was it—the worst Minister for ACC. Oh no, I beg to differ. The worst Minister for ACC was the Minister who completely forgot about the injury prevention programme and who got caught drink-driving. I think that was the worst Minister for ACC. That was the Hon Ruth Dyson, who, as I recall, after a wee while out in the cold was brought back in as a Minister in the Helen Clark - led Government. What was that about standards I heard them talking about today? I actually think she was the worst Minister for ACC, and I thought that was a stunning—stunning—comment from Mr Little, given that he must know about Miss Dyson’s problems and yet he continued to go down that road.

I think it is a very serious issue to actually look at the service agreement, and I notice that Mr Little referred to only one of the areas where I said to ACC that I expect to see improvement. I thought I would speak to the Committee tonight about some of the areas. Apart from improving public trust and confidence, which I believe is an absolutely paramount important issue for ACC, I expect to see improved management and security of private information. I believe that that has not been given the priority that it should have been given, primarily because the board and the organisation of ACC were so focused on having to fix up the financial mess they inherited.

The next one is to maintain a focus on levy stability and financial sustainability. That is absolutely crucial. ACC is an icon in this country. This is the only country in the world with accident compensation. It is a world leader, and we are pretty much out on our own. Some countries and jurisdictions have things similar to ACC—

💬 Andrew Little: How much in funds under investment?

—but nothing to the extent that it is here. I see that Mr Little is now going to be a big lion. He was a real mouse in the select committee, I understand.

The other focus is to provide high-quality services for clients, and to ensure early resolution of disputes. Mr Little was talking about the reviews in that. He forgot to mention that to the Committee—he has forgotten a few things. It is about ensuring early resolution of disputes and providing high-quality services for clients. What is there to argue about with that?

💬 Andrew Little: Why have you cut the funding for vocational rehabilitation?

Did he mention that? No, he did not. Oh, he is talking about vocational rehabilitation. Of course, Mr Little does not like Australians. We found that out tonight. We already know that the Labour Party does not like Chinese—we heard that today in question time—but now it does not like Australians. I did not hear a peep out of him when he was a trade union official and he realised just how much money ACC pays to the trade unions to provide health and safety assistance.

💬 Hon Tony Ryall: How much?

I understand that it is around $1 million a year—around that. It is all contracted, of course, to provide that. So Mr Little, when in his New Zealand Amalgamated Engineering, Printing and Manufacturing Union organisation, might have received some of that. I am not sure whether he did. Did your organisation receive any of that, Mr Little? He does not want to answer that one. We do know that Mr Little does not want to answer it, because he does not like Australians. We already know that the Labour Party does not like Chinese, and now it does not like any organisation that might take some of the business away from trade unions. I have got no problems working with trade unions on this. I am happy to be able to do so. I met with Helen Kelly the other day, who is very good to deal with. I am happy to work with them, but I think we do need to be just a little bit up front about some of the financial realities in this.

💬 Hon Tony Ryall: What did she say about Andrew Little?

Oh, she did not say a thing.

Vote agreed to.

Vote Justice