Accident Compensation (Financial Responsibility and Transparency) Amendment Bill

At this point in the debate, I want to focus my contribution on clause 1, the title of the bill, which is, as we have mentioned before in the debate, the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill 2015. I think we have alluded a number of times already to the fact that the Labour Party absolutely agrees with the title of the bill. We wanted a bill that would do exactly that. But, unfortunately, the course of this debate and some of the votes that have been taken, particularly in Part 1, show that the Government is not really prepared to be transparent, and we would say that the opportunity to get true financial responsibility into this bill was lost when the Government voted against the amendment that would have delivered exactly that.

How can the Government argue that it is financially responsible to allow a situation in which ACC levies can be collected for purposes other than accidents and injuries? If Government members believed that to be the case, they would have voted for my amendment. My amendment did simply that. It made sure that in the ACC levy-setting process only matters to do with accident compensation could be regarded and considered. Yet the Government has failed to support that initiative. That tells me that the financial responsibility and transparency that is set out in the title of this bill has not truly been there as this bill has passed through the Committee stage.

I want to ask the members opposite to tell us how they believe it was financially responsible for the Government to use the current provision for the public interest to be taken into regard when setting ACC levies—how it was financially responsible to use that provision in the legislation—to allow more than $350 million to be collected in ACC levies that was not needed? It was demonstrably not needed in 2013, when the then Minister for ACC, Judith Collins, ignored the recommendation of ACC and set levies at a higher level because, in her words, the Government wanted to get to surplus. That was transparency. Judith Collins was proclaiming loud and clear—and was probably proclaiming quite proudly—that she, as the former Minister for ACC, was using the ACC levy-setting process for purposes other than accidents and injuries, other than treating accidents and injuries, other than preventing them, because those are the right purposes.

The CHAIRPERSON (Hon Trevor Mallard): Order! I am going to do again what I have done previously. This is a very narrow bill. It is prospective, not retrospective. The history has been well covered in the first and second readings, and, as a result of that, this is very narrow now and the member, in getting historical, is outside the requirements.

Thank you, Mr Chair for that direction. The point that I will come back to is that the Government and the Minister have missed an opportunity to truly make good on the title of this bill—the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill—because if they had really wanted to stay true to the title of the bill, then they would have supported that amendment. After all, what it did was seek to clarify ACC levies when they are being set through the new provisions that this bill brings in—that is, the Minister setting out a funding policy direction before ACC even gets to think about it. This is the process that ACC needs to go through in its consultation process with regard to setting levies. This is the way that the Government gets to determine what the levies are at the end of that process, and it would have been financially responsible to make sure that levies could be used only for the intended purpose.

I think that the members opposite—the ones on the Transport and Industrial Relations Committee, actually—expressed to us that that is what they believed the use of the public interest process was for. It was for making sure that if there were a disaster—and we have had them: the earthquakes and the Pike River mine disaster—there would be the ability for that to be covered.

I know that it is a bit trite and a bit of a cliché, in this stage of the Committee of the whole House, when we are getting on to the title clause, to litigate the precise words in the title clause and to suggest what the bill should more properly have been called. In this particular case, it does tempt the speaker—in the case of a bill where the very title of the bill is a provocation to any sense of integrity about the process of naming bills.

The very use of the words “financial responsibility and transparency” in the bill title is such a blatant attempt to repair, by bringing in a bill that purports to introduce a set of principles and processes for the good management of ACC and to introduce more financial responsibility and transparency, the political damage that has been done by the Government’s handling of the Accident Compensation Corporation. As we have rehearsed in this debate, no sooner had the bill gone to the Transport and Industrial Relations Committee and, as Jonathan Young so candidly explained, no sooner had the Insurance Council shown up at the select committee and expressed some reservations about this, did we see some pretty rapid back-pedalling from the very principles that underpin the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill.

There was back-pedalling and dilution of the principles of financial responsibility and transparency, so they are no longer required of the Government. This is the difference between treating a stop sign or a red light as a rule or as a mere suggestion, and, in this case, the changes that have been made in the select committee—the last minute watering down that is coming to be a bit of a behaviour pattern with this Government—basically suggest that those core principles that are enshrined in the title of the bill are a suggestion or a guideline rather than a requirement. So it would be much better if the bill were called the “Accident Compensation (Financial Responsibility and Transparency If You Feel Like It) Amendment Bill”, because that is basically the guts of what this bill does. It sets down some useful principles. It delivers transparency that is long overdue—and that is why we are supporting the bill—but, unfortunately, the Government has significantly weakened the provisions of the bill, and, as a result, it is delivering a lot less than it could have.

I believe that this bill should be named the “Accident Compensation (High Time They Paid Back) Amendment Bill”, because in the Budget debates of both 2014 and 2015, it was clear, from Treasury advice, that there has been a surplus on the ACC accounts, and Treasury has recommended to the Government that that be returned to taxpayers in a transparent and equitable way. This bill finally goes some way towards achieving that aim, but it is worth noting in passing that at Budget day, the Government’s accounts for both of the last two Budgets would have been seriously worse off—seriously deeper in deficit—had these surpluses not been held on the Crown account to try to achieve surplus. Even then, of course, history has shown that that was a vain hope—a forlorn hope—and surplus was not achieved.

Let us reflect, in the title and commencement part of this Committee stage debate, on a specific point that goes to the solvency position in Part 2, which we have previously traversed. When changes are made to the cost structure of payments under ACC, to payment rates, or to the way that claims are managed, and when that impacts on the operating balance of the fund, that balance is then magnified, through the actuarial process, into the valuation of the fund. In turn, it is that actuarial valuation that, as you know, shows up changes in gains and losses on the Crown’s operating account, and those can be big numbers. It is not without cause that a Government of the day might wait—when those numbers are bouncing around between positive and negative—for a period of time to allow the trend to be clear. What has happened in this case, however, is that the waiting has gone on for at least 2 years longer than officials recommended was necessary. So we welcome this part of the bill—Part 2, essentially—because the earners account as of December 2014 was at close to 130 percent of fully paid; 130 percent. In January 2015 it was 121 percent. In February 2015 it was 128 percent. The work account was up to 140 percent, trending to 141 percent, and those numbers are just too high.

The other name that is tempting for this bill is the “ACC Financial Return Off The Backs Of Suffering Kiwis Bill”, because I have had—and I am sure, Mr Chairperson, that you and others have also had—cases of people who have been the subject of ACC reviews coming in. I can still picture one woman who came into my electorate office and could barely walk. She could barely walk, and she had been thrown off ACC after a period of time because the injuries to her legs were deemed, retrospectively, to be a pre-existing condition.

I will come back to the bill. The reason for this example is that the individual case decisions affect the cash flows, which affect the operating balance, which is then magnified into the actuarial surplus—

The CHAIRPERSON (Hon Trevor Mallard): This is a lovely long bow, but I think the member had better come back to the bill.

In the end, those are human circumstances. Those are New Zealanders—they could be the family of anybody in this House or out there—who, through no fault of their own, have come across an accident or hard times, and there is the debate about how that is interpreted and how onerous or punitive the review system should be.

I think most Kiwis are fair people. They want a review system that does not allow rorting—

The CHAIRPERSON (Hon Trevor Mallard): OK, the member will resume his seat. He has again taken—I think I indicated it—quite a long bow to this. This is not about the review system. This is quite a narrow debate on these clauses. This speech would have been a wonderful speech at the second reading or the introduction, and it is probably relevant on the third reading, but not in the technical stage now.

Thank you, Mr Chairperson, for your guidance, and I will reflect upon that. I had thought that one was allowed, in the title and commencement clauses, to summarise some of the arguments that the previous clause-by-clause parts of the Committee stage had touched upon.

The CHAIRPERSON (Hon Trevor Mallard): If they had done it relevantly, yes.

I would have done, had I been lucky enough to get a call on the previous part—thus, the summary has occurred under the title and commencement clauses. Be that as it may, I take your guidance.

We support the passage of this bill in the Committee stage. We do it with reluctance in respect of Part 1 because the transparency has been watered down. We do support Part 2. We think that the legislation is overdue. It has been several years now that this payment has been due to New Zealanders. Thank goodness it is finally happening.

Thank you, Mr Chair—it is the quick or the dead before we stop for some dinner very shortly. I will be doing my utmost to stay standing throughout these proceedings and to make sure that I stay on cue. I think that the Accident Compensation (Financial Responsibility and Transparency) Amendment Bill would have to be far more aptly renamed the “Accident Compensation (Financial Compensation For Those Overcharged And Sincerely Sorry) Amendment Bill” for New Zealand First to be able to support it as it stands here today. Nothing of what we have seen in here redresses the issues that have been going on for a number of years—the overcharging of ACC levies to those small and medium sized businesses, and, in fact, to all businesses and people involved around the country. That is one of the biggest issues that we have some severe issues with.

I think the other apt name that we could actually come up with, in light of how quickly this has been turned round through the select committee and been rushed through Parliament, is the “Whiz, Boing, Bang, Bounce Amendment Bill”, which, of course, was a game that we used to play in the surf lifesaving movement when we were young kids and which is a very fast paced game. That would certainly summarise the speed at which this bill has been brought through all stages to be here in front of us today. Without any further ado, Mr Chair, I bid you a farewell and a thankyou.

I move, That the Committee divide the bill into the Accident Compensation (Financial Responsibility) Amendment Bill and the Accident Compensation (Residual Levies) Amendment Bill, pursuant to Supplementary Order Paper 124.

The question is that the motion be agreed to. Those who are of that opinion will say Aye—

💬 Sue Moroney: Is it a debatable motion?

The CHAIRPERSON (Hon Trevor Mallard): Yes.

💬 Sue Moroney: I am seeking the call, Mr Chair.

The CHAIRPERSON (Hon Trevor Mallard): Well, the member did sit down. Have I put the question? I think I have. Yes, I have.

💬 Sue Moroney: I think you were halfway through.

The CHAIRPERSON (Hon Trevor Mallard): I am going to ask for just a little bit of tolerance on the part of the Committee because I might have done this a little bit quickly. I am going to seek the leave of the Committee for Sue Moroney to take a call on her motion, which she is entitled to do because it is debatable, and I may have cut her off. Is there any objection to that? There is no objection.

I do want to take just a short amount of the Committee’s time to explain why I have put Supplementary Order Paper 124 forward in my name. It is a little unusual. It is normally the Minister in charge of the bill who seeks to divide the bill but on behalf of the Labour Party, I am seeking to divide the bill for this purpose.

Increasingly, it has become a tactic of the Government to put forward bills of which the Opposition will support one part but not another. This is the situation that the Labour Party finds itself in with regard to this bill. We are strongly of the view that Part 2 should proceed, and we have voted in favour of Part 2. So we are seeking for Part 2 to be divided off as its own separate bill—as its own entity—so that we can bring forward our full support for that bill at the third reading. However, we do have some strong objections to Part 1. That is the reason why I sought to amend Part 1. The Government may have felt that it was some sort of political trickery that the Opposition was up to, but, in fact, what we were trying to do was to actually strengthen Part 1 and to make it the sort of bill that we could truly support. We attempted to do that by putting forward an amendment that would make it absolutely clear that ACC levies, in this financially responsible and transparent way, could not be used for any purpose other than to treat injuries and accidents or to prevent injuries and accidents. After all, that is the purpose of the Accident Compensation Act, which this bill amends, and we were simply wanting to clarify that.

The Government has blocked that clarification. It probably has its own reasons for doing that, but it certainly has not explained them to this Committee. This leaves the Labour Party in the situation where we are not in support of Part 1—we have voted against it—but we are in support of Part 2. That is the reason why I have sought, on the Labour Party’s behalf, to divide the bill so that the parties across this Parliament can express what they firmly believe in with regard to the two quite distinctly different parts of this bill. It is a tactic that we find the Government is using more and more frequently. It puts some measures into a bill—sometimes it calls them an omnibus bill—that it knows the Opposition does not want to support, alongside ones that the Government knows the Opposition will want to support. I want to make that very clear by dividing this bill into two distinct parts, as two distinct bills, so that the Labour Party can express its votes appropriately when it comes to the third reading.