Accident Compensation (Interest on Instalment Plans) Amendment Bill

I present a legislative statement on the Accident Compensation (Interest on Instalment Plans) Amendment Bill.

ASSISTANT SPEAKER (Maureen Pugh): That legislative statement is published under the authority of the House and can be found on Parliament’s website.

I move, That the Accident Compensation (Interest on Instalment Plans) Amendment Bill be now read a first time.

The Accident Compensation (Interest on Instalment Plans) Amendment Bill makes it explicit that ACC can charge debit interest where levies are paid by instalments. Some businesses choose to pay their ACC levies in instalments. ACC offers a range of instalment plan options and is able to charge the businesses that use them an administration fee. Being able to pay levies in instalments is a valuable option for many businesses and self-employed levy payers, especially those that may otherwise struggle to pay their levy invoice in a single payment on the due date. Right now, businesses that use 10-month instalment plans are charged debit interest as the administration fee. The practice dates back to at least 2004.

ACC has charged debit interest on the understanding that the Accident Compensation Act 2001 allowed it to do so. The Government considers it not clearly allowed for in the Act as part of the administration fee. While other parts of the Act could be used to support the practice, that too is uncertain. The practice is therefore vulnerable to legal challenge from levy payers have paid debit interest in the past.

ACC charging businesses debit interests when they use an instalment plan is the reasonable and prudent thing to do. By allowing businesses to pay their levies in instalments, ACC is foregoing any interest it would have earned from investing the funds. If it could not charge debit interest on instalments, this would, effectively, be a cost to ACC. It would also mean that businesses paying their levies in a single payment on the due date may be subsidising those businesses paying in instalments. This would be unfair for those paying their levies in a lump sum on the due date. Debit interest also disincentivises opting for payment by instalments as a cheaper source of finance.

Being able to pay levies in instalments is a valued and well-used option for businesses that might otherwise struggle to pay the levy invoice in a single payment on the due date. To support this further, the amendment bill will enable ACC to waive debit interest charges under certain circumstances set out in regulations. I believe we need to ensure businesses and self-employed people continue to access this instalment plan service when they need to, particularly as alternative sources of borrowing would cost them more. There is therefore a need for clarity in the Act to ensure that the charging of debit interest is lawful. The amendment bill will provide that clarity.

This Amendment Bill will explicitly allow for ACC’s charging of debit interest on instalment payments for the work account in the Act. ACC would also be able to charge debit interest on any other instalment plan options it offers in the future. This would initially be the current rate of 2.73 percent for 10 months, and 0 percent for three- and six-month plans. The rate would then be varied, through amendments to regulations, as necessary, to reflect changes in interest rates.

The amendment bill also validates ACC’s past practice of charging debit interest. This is to contain the risk of a legal challenge from levy payers who have paid debit interest in the past. ACC acted reasonably in charging the interest and it would likely be operationally very difficult to refund the debit interest charged over the extended time span of 20 years or more. The bill makes sure that ACC can continue to apply this reasonable charge, and protects ACC from challenge for having charged debit interest in the past.

In summary, this bill makes important changes to ACC that will ensure that ACC is not disadvantaged for offering options that make it easier for some businesses to pay their levies, that there is fairness between levy payers paying in lump sums and those paying in instalments, and that ACC is protected from legal challenge for charging debit interest on instalment plans. Thank you, Madam Speaker, I commend this bill to the House.

Thank you, Madam Speaker. As Labour’s ACC spokesperson, it is a pleasure to take a call on the Accident Compensation (Interest on Instalment Plans) Amendment Bill. This is a technical bill that amends the Accident Compensation Act to formalise the charging of debit interest charges to businesses who pay their ACC levies through a payment plan.

ACC is a taonga. Just recently, we celebrated 50 years of ACC in New Zealand, and, from time to time, we will bring technical amendments to the House, which, in my view, should be supported by all parties when that opportunity arises. Labour will be supporting this bill tonight. A lot of the work towards this bill was undertaken under our former ACC Minister and my colleague Peeni Henare, and so we are pleased to see this legislation introduced tonight and to see these changes made to ACC.

As the Minister has pointed out, and I will just cover off some of these points in my contribution, this particular practice has occurred at ACC since 2004. So, for the last 20 years, ACC has offered levy instalment plans to businesses. As part of that practice, they have charged debit interest, and what the bill will do tonight is ensure that that is included in legislation so that there is clarity in legislation about ACC’s right to do this.

The bill will retrospectively validate ACC’s past practice of charging debit interest, and it will provide an explicit legal authority for the ACC to continue to charge debit interest. There are many reasons why businesses will seek to take up an option of paying off their levies in instalments. For many businesses, it will be a matter of cash flow and not being able to be upfront with the payment when it is due. Currently, these businesses, including the self-employed, can spread their payments over three, six, or 10 months. In order to ensure fairness to ACC and to other businesses who pay all of their levy up front, ACC does charge a small debit interest payment. The power for ACC to accept the payment of a levy is covered for under the Accident Compensation Act, in section 234. However, the Ministry of Business, Innovation and Employment (MBIE) have identified that there was a risk that ACC may have been acting outside its legislative scope. So one of the reasons why this bill needs to be introduced is to ensure there is that legislative clarity going forward.

I do note that MBIE and ACC have differing views about whether ACC has been acting outside its legislative scope, and I will foreshadow that we will have questions for the Minister around the process that has been undertaken during the committee of the whole House, so that we can be assured that all of the legislative interrogation has incurred through that process. The advice from MBIE is to amend the Act in order to provide that needed clarity.

I will just note the two parts of the Act that work together, which, according to MBIE, lead to that lack of clarity. The first, as I already mentioned, is section 234, which states that ACC “may charge a reasonable fee to recover its costs of collecting any levy by instalments.” Alongside this, in section 333(1)(b)(i), the Act states that, “the matters in respect of which fees or charges [are] payable under this Act, including any administrative fee payable in respective of levies paid in instalments”. And what the regulatory impact statement states is that reading these two clauses together, MBIE does not consider that it is reasonable to recover the cost of collecting through a debit interest fee. So what this bill will do when it becomes an Act is it will retrospectively allow for this to occur.

In an interim phase, there will be rates set in this legislation until regulations are made, and so going forward, the debit interest payments will be undertaken through secondary legislation—so through regulations. Until that time, under this legislation, ACC will continue to use the percentage payment that has been used in practice—that will be in the law that we pass—and that will apply only to the 10-month instalment period, which is 2.73 percent. It will not apply to those businesses who use a three-month or six-month instalment period.

So, as I stated, this is a technical bill. Labour will be supporting this bill and we look forward to further debate and to seeking further questions from the Minister during the committee of the whole House.

As the Green Party’s ACC spokesperson, I will be speaking on the Accident Compensation (Interest on Instalment Plans) Amendment Bill. I have to say that that is probably the first time I’ve actually spoken on something that is relevant to my portfolio today. Although this is a technical bill, the Green Party will not be supporting this bill, however. I will lay out why we will not be supporting this bill.

For this bill, we’re looking at charging debt interest on levies that are being paid under instalment plans, both in terms of the instalment plans that are collected by instalments but also on past levy collections. Now, we know that levies are incredibly important for the function of ACC. I echo what others have said in terms of celebrating the 50th anniversary of ACC. I remember reading the original Woodhouse report and the white paper on why we introduced ACC in the first place, which also had bipartisan support. It is one of those things that is quite unique to Aotearoa New Zealand, having such a scheme. The Green Party understands the importance of the levies that we collect through ACC. These levies help pay for key things that we do see that ACC is being used for. The Green Party has called for further coverage for ACC and branding ACC as the agency for comprehensive care.

Under the previous Governments, one of the acknowledgments I would like to give is to the Green Party MP Jan Logie, who did so much work in her ACC portfolio, particularly being able to pass having traumatic birth and birth injuries being recognised by this.

💬 Rachel Boyack: That was us.

That was Jan Logie. You had your chance. You can correct that later if you would like, but Jan Logie did an enormous amount of mahi on this, and I remember watching her giving speeches on the experiences that people had as part of this.

But, as part of the agency for comprehensive care, we would like to see greater cover for the use of ACC. Partly it’s around extending ACC to cover all workplace injuries, including gradual injuries, and having ACC cover mental injuries, not only as a result of physical injuries. It is very explicit how mental injuries are covered in the legislation; they are paid for by the levies that we’re currently discussing in this bill. Also, we are ensuring that all disabled people must be covered in this. All of these are being paid for by the levy and the interest that we are discussing right now.

However, drawing back to the bill, the first thing around this bill is the fact that it will give ACC the ability to charge interest on levies that are collected by instalments. We have no issues with that. The problem here—and here is the crux—is having the recognition of past levy collection.

We are looking here at retrospective legislation. I quote, in the explanatory note, the “Bill retrospectively validates the ACC’s past practice”—which was dubious, legally speaking—“and provides an explicit legal authority”, which means that they currently do not have legal authority for something that they are already doing. That is concerning to me because it means that ACC is currently doing something they shouldn’t have been doing, and the Government is allowing that to be passed so that way there are no consequences to what the ACC has been doing. So although there are parts of this bill that we do support, and we do like to see the use of ACC and the use of the levy going to greater coverage in this enormously important scheme, we cannot support it.

Thank you, Mr Speaker. I am taking this call to support the first reading of the Accident Compensation (Interest on Instalment Plans) Amendment Bill.

First, I would like to address some of the points that were made by the Green member Lawrence Xu-Nan. This bill is not about including or excluding any injuries. This bill is about simply fixing something that ACC has been doing for a number of years—around 20 years. We want, through this bill, to validate that because, at the moment, we know that what ACC has been doing is not covered in any legislation.

We know, as the member also acknowledged, that our accident compensation scheme works really well. It’s quite unique, and it is the envy of many, many countries around the world. We want to make sure that it’s able to deliver for businesses, for its stakeholders, and for that, we need to make sure that it is complying legally as well. This is about making sure that people are still able to opt for the instalment option and, in the instalment option, ACC is able to decide if they want to include the interest in the instalment or not. So we want to give authority to ACC to decide that.

The Minister the Hon Matt Doocey has already described what this bill is about, so I won’t go into a whole description of this bill. This is a bill that we really need. This should pass under urgency. It’s a very important bill. That’s why the ACT Party is supporting this bill. Thank you.

Mr Speaker, thank you. Look, this ACC invoice arrives, and it’s one of those invoices that many business owners forget about, and they go, “Oh, geez! I’ve spent all my money.” So it is a very good thing to be able to offer them instalments. All this bill does is it just changes a few technical things to ensure that the legislation is validated, so of course it’s common sense. We’re a party of common sense, and, of course, New Zealand First will support this bill.

Thank you, Mr Speaker. It’s a pleasure to take a call on the Accident Compensation (Interest on Instalment Plans) Amendment Bill. Now, as a previous speaker, our spokesperson on ACC Rachel Boyack stated, we will be supporting this bill. But that doesn’t mean we don’t have some questions for the Minister that we will need to go through at the committee of the whole House stage, and just some issues that I think are important to raise during this first reading.

I don’t think there’s disagreement that the fact that ACC charges this debit interest is a necessary part of their business model. But, you know, it’s not an ideal situation to have a bill which imposes retrospective validity on actions taken by a Government department that the regulatory impact statement states quite clearly are in order to avoid legal challenge by members—by businesses. And yes, they are businesses. They are not technically, necessarily, individual people but they could be single director companies. They could be individuals whose right to take legal action—I think is probably as far as I would go with this particular advice—is taken away.

I’ve looked through the information provided, although obviously having this through urgency means there’s not a huge amount of time to go through all of that information. There isn’t a New Zealand Bill of Rights Act vet. But I think we can all agree that retrospectivity in legislation is not a great place to be. And that’s not putting the blame on the Government, necessarily. The Government relies on ACC to independently conduct its operations legally and, obviously, this is an issue that has traversed different Governments of different colours over the years. But the Government does have a responsibility to make sure that the legislation they put up is addressing something in an appropriate way. And as I’ve said, we are supporting this, but there are a few issues in relation to that.

I think the main issue, really, that I wanted to highlight is the difference in opinion—which I think was foreshadowed by Rachel Boyack—between ACC and the Ministry of Business, Innovation and Employment (MBIE) in relation to the need for this legislation. Now, that is also not ideal. Ideally, you’re getting advice and there’s a clear way forward in regards to a situation where you have MBIE, who’s offering policy advice, and ACC, who’s the agency involved. Ideally, you’d have them having the same opinion. In this case, perhaps it’s not surprising that ACC thinks that it acted, you know, perfectly legitimately—

💬 Hon Matt Doocey: Ha, ha!

—and there is an argument to say that they did. I don’t know if that’s necessarily that funny, but it’s not surprising, is it?

💬 Hon Matt Doocey: Well, of course they’re going to have the view they acted lawfully.

Exactly. The Minister is interjecting and, in fact, reemphasised the point that I was making, which is of course ACC has that view. MBIE has a different view and they have provided advice in the regulatory impact statement to say that, potentially, there does need to be a change.

There were really two options provided to the Government moving forward. The option one was status quo, no action—you know, ACC takes the risk. It may be that someone takes a case, it may be that they’re successful, it may be that they’re not successful. That’s legal risk. I mean, that happens all the time in business, it happens in Government, it’s not surprising in and of itself. That risk, by this legislation, is being taken away. But there’s also downsides to that as well, and the downside is kind of what I’m bringing up. Rachel Boyack has set out the policy reasons why it is a good idea to address this, but it’s not a perfect situation. I’m sure the Minister feels the same way. It’s not why he wanted to be the Minister for ACC, I’m sure, to bring these types of bills to the House, tidying up a somewhat messy situation.

In the regulatory impact statement, we do have the acknowledgement that this particular approach would attract some public scrutiny around ACC’s past charging of instalment plans on debit interest, and this may lower public confidence in ACC. Now, obviously, none of us in the House want that. We want ACC to have a lot of have public confidence, we want ACC to have good practices, and I think this is a bit of a lesson for them to make sure that all of the procedures that they are going through in relation to charging are legitimate and are within the law. And I suppose the fact that this has been picked up at this stage, prior to a legal challenge, indicates that they do have some way of looking at their practices in order to identify that and obviously bring that to the Ministers.

Just in the last few seconds, I did just want to suggest to the Minister I will be asking a few questions at the committee of the whole House stage just to make sure that the scrutiny occurs.

Thank you, Mr Speaker. Look, this is a quite simple administrative change. It’s something that we very much support—good tidying-up measure—and thank the Minister for ACC for his work getting this done. So, with that, I commend this bill to the House.

Thank you, Mr Speaker. Thank you for the opportunity to make a contribution tonight on the Accident Compensation (Interest on Instalment Plans) Amendment Bill. As my colleague Camilla Belich has just noted, I suppose, I don’t think that the Minister Matt Doocey necessarily thought that during this urgency period this was going to be his major piece of work. I’m sure he’s got more up his sleeve as we as we go through.

Nevertheless, as previous speakers have said and stated, Labour will be supporting this bill because it is needed. It’s a technical bill that fixes up some stuff and that’s important to do. That is what we are here for, after all. As Rachel Boyack, who’s our spokesperson for ACC and who, I know, is quite passionate about the ACC portfolio and has lots of interesting stories to tell about all of the intricacies of ACC legislation, noted, it is a taonga and we do have to do our best to make sure that it’s fit for purpose, that it’s in good shape, it’s raring to go, and it’s able to do and provide the services and the assurances and the safety nets and all of the wonderful things that it does for the people of Aotearoa New Zealand.

So it’s important for us here tonight to ensure that it is compliant, that it’s doing its job, and, as people have also alluded to, it’s also important—given that we’re now doing it in urgency—that we get it right. So there will be some questions through the committee stage. If we’re going to have a look at something, it’s important whilst it’s in front of us that we take the opportunity to make sure that we go through several of the issues that have been highlighted in the regulatory impact statement and raise them with the Minister tonight and give us some peace of mind that we’ve done our job properly to make sure that that’s all good.

Now, as Camilla Belich also mentioned, when you look at a regulatory impact statement—and we haven’t had a lot of time to do so—one of the first things you notice is if there is some difference of opinions between bodies. The Ministry of Business, Innovation and Employment (MBIE), and ACC obviously have some differing views but, as the Minister has pointed out, that’s not uncommon when an organisation has been used to doing something a certain way and then it’s pointed out to them that they may have a somewhat different interpretation of the way that they’ve applied the legislation that they act under.

But, essentially, it is our job to ensure that the ACC levy collection power is fit for purpose. It’s an important power that they have because it’s an important programme that’s in place. Businesses—be they small, large, sole traders, individuals, all sorts of people—I think in a modern world need to be able to take advantage of an instalment payment plan because that makes sense. We just need to make sure that it doesn’t come at a cost to ACC.

Looking at the regulatory impact statement, as I said, MBIE’s recommendation was the option that obviously has been taken because it provides the clarity that we’re looking for and it kind of promotes the fairness between the levy payers because if you’re able to—well, it validates and makes it compliant. But part of paying something by instalment means that you haven’t had to make those up-front costs, so it’s important that the people who choose to not make the payments and not use instalments aren’t—that there’s fairness and equity amongst those two options. So I think that that’s fair enough as well.

MBIE also recommends that the past practice of charging the instalment plan fees as part of that debit interest charge is retrospective. I can see where people are coming from—it’s almost an automatic sensitivity we have to anything that has the word “retrospective” in it, because it’s something that we should be in tune to. We know that nine times out of 10, it’s not necessarily something that is good and it can lead to outcomes that are not as good as we might hope for, but sometimes actually it’s really sensible. I think that when we get into committee stage, there will be people that want to talk about that a little bit more—not necessarily to disagree with it, but to make sure that we’re all on the same page and we understand why that is important, if it is so, to include that as part of the measures here tonight. So I’m happy to support this bill.

I have particular interest in this bill, and therefore I commend it to the House.

Thank you, Mr Speaker. I’d just like to preface my contribution with a clarification on the record that the Green member Dr Lawrence Xu-Nan had talked about the Greens having introduced the birth injuries changes to the ACC laws. In fact, it was the Hon Carmel Sepuloni, on 27 September 2022, when the word “accident” was extended to include “a force or resistance internal to the human body at any time from the onset of labour to the completion of delivery”, and that was the provision—that small, little change—that has enabled 28,000 birthing parents to be able to access ACC. So it’s quite a significant change and a great change for women, and I would just really like to acknowledge my colleague because I feel it was a bit unfair. Of course, the Greens did sign a petition, which is great, but it was under the Hon Carmel Sepuloni that that came into force.

The other thing I’d like to say is we are supporting this bill, and, for me, it really does encompass a little bit of a grey area of law. We have the ACC on one side, trying to be incredibly fair and say that whatever interest they charge needs to be able to—or the justification is that people who are using instalments might actually end up better off than people who pay the fee up front. There has to be a kind of netting-out so that the equity issues are included for those who may need an instalment payment—particularly, say, for smaller-business owners—but also that people don’t take advantage of it and use instalments and somehow rip off others just by making sure that they can take advantage of the future value for money. So it is a grey area.

I think the Ministry of Business, Innovation and Employment have said, “Well, this is problematic. We don’t see certainty in the law.” ACC have said, “Yes, we have.” I don’t think they’re trying to scrape or skim the top; I think they’re really trying to come down in a fair-minded way, and it’s to do with the provisions in sections 234 and 333(1)(b)(i). The first one is that ACC “may charge a reasonable fee to recover its costs of collecting any levy by instalments.” That’s section 234, and section 333(1)(b)(i) says, “the matters in respect of which fees or charges are payable under this Act, including any administration fee payable in respect of levies paid in instalments”. Now, I can see, as a lawyer, how both of those might be relevant interpretations, and I think it’s important to note the word “any” in section 333(1)(b)(i), including “any administration fee”. That would suggest, in my view, that there is scope to be able to add the interest rather than to assume that it is corrected.

It is a debate; it is arguable. So what errs me to that side is that we do have a situation, as alluded to by other speakers, that it appears that the ACC has been acting ultra vires the Act. That is never ideal, just as cleaning something up retrospectively is not, either. But cleaning it up retrospectively is always better than allowing that ultra vires action to continue and to expose the Crown to risk of litigation. I think the risk of litigation may perhaps be overstated, so I’m not sure about the use of urgency, and that’s something I’d like to interrogate as we get into the committee stage. But, for those practical reasons, I think this House could take either side of the debate. It’s probably important to say that it’s justified to add the interest in there, and then to be able to clean the whole thing up nice and tidily with this Act.

Having said that, there are legal principles at stake here to do with retrospectivity, as colleagues have alluded to, but also how the relationship between those two provisions might set a precedent for other legislation with similar types of conundrums. So I think it is really important that we do take the time to unpick this and have a very clear and technical explanation from the Minister recorded on the Hansard through question time at the “de facto select committee process”, because we’re not going to have one—and I can see that Minister Doocey is getting ready by having a swirl of water. It looks like he’s going to go into the ring.

We’re all on the same side here. We want it to go through, but we need to be very, very clear and accurate about our reasons. So, for that reason, I’ll commend this to the House and look forward to asking my questions.

Point of order, Mr Speaker. I just wanted to raise that, quite unusually in the House tonight, I’ve seen two members in the Chamber using their phones—the phone function on their mobile phones, not just looking at their phones, which we know happens quite often. I’d just to draw your attention to Speaker’s ruling 19/4—

💬 Hon Matt Doocey: Have you seen your colleague?

I can’t actually see—

ASSISTANT SPEAKER (Teanau Tuiono): The member will finish her point of order.

It’s the phone function, Mr Doocey, and points of order, additionally, under the Standing Orders, are to be heard in silence, as I understand.

💬 Stuart Smith: Speaking to the point of order, I didn’t know we had class monitors in the House. I think it’s getting a bit extreme doing that.

ASSISTANT SPEAKER (Teanau Tuiono): That’s enough of that.

💬 Hon Member: Cell phone ban!

ASSISTANT SPEAKER (Teanau Tuiono): Calm down. Speaker’s ruling 19/3: “The telephones in the Chamber should be used rarely and not so as to interrupt the business of the House.” And Speaker’s ruling 19/4: “Members do not use the phone function of cellphones when the House is sitting. There are a number of members who have phones at their desks for particular purposes—senior members and whips—and my ruling is that members can use those phones, but not cellphones, while the House is sitting.” So please put your phones away, members.

This bill is a common-sense bill, and there is plenty of common sense on this side of the House, so I commend it.