Accident Compensation (Interest on Instalment Plans) Amendment Bill

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

The bill does two things. First it amends the Accident Compensation Act to explicitly allow for ACC’s charging of debit interest on instalment payments for levies payable to the work account. Secondly, it validates the past use and current charging of debit interest on payments of levies by instalments to protect ACC from legal challenge to this practice.

Charging debit interest on payments of levies by instalments is a prudent thing to do. ACC forgoes any interest it would have earned from investing the funds when it allows businesses to pay that way. It would, effectively, be a cost to ACC if it could not charge debit interest.

From the point of view of businesses and self-employed levy payers, being able to pay levies in instalments is a valuable option. That is especially true for those that may otherwise struggle to pay their levy invoice in a single payment on the due date. If the option did not exist, these businesses may have to access alternative sources of borrowing that would cost them more or be unable to pay their levies at all. Debit interest also ensures fairness between levy payers. With it, businesses paying their levies in a single payment on the due date may be subsidising businesses paying in instalments. We need to ensure that businesses continue to have access to this instalment plan option when they need to. Charging debit interest is a fair and prudent way to do that.

The amendment bill will provide clarity that ACC can charge this debit interest lawfully. The initial rate of debit interest on instalment plans set in the amendment bill would be at the current rate of 2.73 percent for 10-month plans and zero percent for six- and three-months plans. That means a smooth transition where nothing will change for businesses as the bill comes into force. The rate then could be varied through amendments to regulations as necessary, which would only happen after public consultation on the matter. Regulations would also set out under which circumstances debit interest charges could be waived.

The bill will also retrospectively validate the historic and current charging of debit interest. Validating the practice of charging debit interest in this way avoids the risk of ACC being legally challenged on its charging of debit interest on instalment plans and the money charged over the last 20 or more years needing to be refunded. This bill is validating something that was understood by ACC to be unlawful and is a reasonable practice that ensures neither levy payers paying on the due date nor ACC are disadvantaged by the offering of instalment plans. But it’s open to legal challenge, because the Government considers that charging interest is not clearly authorised by the Act.

Everyone—ACC and levy payers—will benefit from this issue being clarified in the amendment bill. I commend this bill to the House.

Thank you, Mr Speaker. It’s a pleasure to taker a call at the beginning of the second reading of the Accident Compensation (Interest on Instalment Plans) Amendment Bill. I wanted to take some time at the beginning just to clarify the reason why these instalment plans are in place, particularly for our friends—and they are our friends—in the Green Party. But I do just want to talk through why we do these instalment plans and why there is debit interest charged, and, actually, even though we have this practice in place, other options for small businesses could actually cost more. The Minister has mentioned that, but I want to go into just a little bit more detail.

Currently, for businesses that wish to, they can pay their ACC levy in an instalment. When the bill arrives at the beginning of a financial year, instead of paying the entire bill at that point, what businesses can choose to do—and it’s primarily small businesses, sole traders, those who for cash flow purposes can’t pay the entire bill in one hit—is to have an instalment plan of either three months, six months, or 10 months.

Now, one of the things when you read through the regulatory impact statement that’s really clear is that if businesses didn’t have an instalment plan through ACC, they would actually have to access some other form of finance in order to pay. So, say they had a really large bill that for cash-flow purposes they wanted to smooth across a 12-month period, which is very common—particularly for small businesses—they would have to access, potentially, finance from, say, a bank in order to pay for that. What ACC does is they charge a small debit interest fee of 2.73 percent, which is less than what a small business would have to pay if they sought finance through the usual means. So, actually, what it does is it means it is beneficial to those businesses. It allows them to access an affordable instalment payment plan.

The other thing I think we need to be mindful of is that there are businesses who do pay up front. Actually, we also have to remember what the purpose of the levies that ACC collects is, and ACC collects these levies in order to provide services to New Zealanders who are injured. So any money that is lost to ACC through allowing instalment plans is actually revenue that is lost to ACC, and that revenue lost to ACC is to actually provide treatment and support to New Zealanders through things like rehabilitation, through things like remuneration, through things like injury prevention. I note that this is an area where ACC is doing some trimming back, which we are concerned about, but we can talk about that another day. The levies that we pay actually support ACC to continue to be the taonga it is. So I think this is a really pragmatic way and it appears that most of the House believes it’s a pragmatic way for ACC to allow small businesses, sole traders, those who have cash flow challenges to pay their ACC levies in instalments.

Now, we’ve had some commentary during the first reading tonight about the fact that this practice has been in place for 20 years, since 2004, and I do just want to acknowledge my colleague, the former Minister for ACC the Hon Peeni Henare. This work began when he was the Minister. What has occurred is that ACC—

💬 Hon Chris Bishop: Great man—great Minister.

He was a fantastic Minister and a very, very good MP, and, yep, I’m sure he’s looking forward to getting back into a ministerial role, Mr Bishop. What was acknowledged was that ACC, in good faith, had been operating under the belief that the practice was lawful and in line with the Act, and I think we’ve foreshadowed that we are keen to ask the Minister some questions about this in the committee of the whole House stage. What has occurred is that the Ministry of Business, Innovation and Employment (MBIE) has said, “Well, actually we don’t read the legislation in quite the same way.”, and so we do have a difference of opinion between the two agencies. What that has led to is the need for us to get that legislative clarity, and that’s actually an important thing for this House to do.

I think it should be acknowledged that for the most part, all of the House agrees that we are in that position where we need to get that clarity so that we reduce legal risk in terms of challenge to ACC, but also it’s important that ACC is operating within the law. So if the law is not fit for purpose, it should, therefore, be updated.

I did just want to talk through that a little bit because I’m very keen to ask the Minister some questions about his views and the advice he’s received on that interaction between section 234 of the Act and section 333(1)(b)(i) of the Act, because MBIE’s view is that when you read them together, you wouldn’t consider the debit interest fee to be a real version of an administration fee or the cost of collecting—that is MBIE’s view. ACC holds a different view, and so we are keen to just make sure that that has been tested out thoroughly, because, as some of my colleagues have mentioned in previous speeches, it is appropriate for us to ask those types of questions. What the regulatory impact statement did state was that at a minimum, the difference in views is evidence around uncertainty, and actually as a House and as a Parliament, if we see that uncertainty in law, then we should be bringing it to the House to update it so that we don’t have that uncertainty going forward.

There will probably be a few other questions about how the regulations will be put in place. What the bill does is until such time as regulations are set, because the bill sets out the process for stipulating regulations through secondary legislation, that until that time—as I mentioned earlier in my first reading speech—that standard percentage of 2.73 percent will be applied for the 10-month instalment plans. It won’t be applied for those on shorter plans, which, again, is pragmatic. For those people who are able to do a three- or a six-month instalment plan, those particular plans won’t be required to pay the 2.73 percent debit interest payment.

I also just did want to clarify—and I note my colleague did this, as well—that this bill is primarily around instalment plans for paying levies. There has been some commentary tonight around coverage for ACC. As the Labour Party, we are very proud of the work that the previous Minister prior to Peeni Henare undertook—the Hon Carmel Sepuloni—to include birth injuries, and that was supported across the House, as well. So I do want to acknowledge that I think that with ACC, it is such an important institution for New Zealanders. It has been operating for 50 years and it was set up by Labour 50 years ago. It’s one of those agencies where it’s important that as much as possible, we can approach changes to what we do with ACC in a bipartisan way, because it needs to be an enduring organisation and provide services in an enduring way. So it is pleasing to see most parties come together tonight.

I did also just want to touch on the element of retrospective law change tonight, because the House should always be concerned when we make changes to the retrospective. That’s natural and that’s something we should ask questions about, and, again, I would probably expect we will ask questions of the Minister in the committee of the whole House about things being retrospective.

I guess the fact is that this has been in place for 20 years. We have had businesses been quite willing to undertake the instalment plans, been quite willing to pay the debit interest. We’ve had ACC operating in good faith. The pragmatic situation is if we don’t make this legislation retrospective, what will then happen is we will then have the potential for 20 years’ worth of challenge from those businesses who have been paying the instalment plans and paying the interest. Of course, that provides a risk to the Crown, but it also would potentially have a cost to ACC if there was a situation where those debit interest payments had to be repaid. We wouldn’t want to see that, because, again, that would actually take away from the moneys available to ACC to actually provide the services to New Zealand that New Zealanders expect from ACC.

I’m really looking forward to further debate on this tonight. It is an important bill. It’s surprising to see it right at the end of urgency, but Labour is supporting this bill, and we are looking forward to engaging in a good debate tonight.

Thank you, Mr Speaker.

💬 Hon Member: We’re going to be for ever.

💬 Hon Matt Doocey: We’ve still got Tuesday.

Yeah, we still got quite a few more to go, but everyone is doing well. First of all, can I just say that this is my first time going under urgency and I do find the whole process of having to go from first reading straight into second reading kind of odd. It’s almost kind of like how are you going to make things a little bit more interesting the second time around, and more nuanced. The first—

💬 Hon Chris Bishop: Well, you don’t have to speak.

Oh, but I do love to. You know, the first reading is about painting the picture of what we would like to see when it comes to ACC—or agency for comprehensive care—and also what the levy could be used for and the way that it could be expanded.

I would like to pick up on something that has been said. I would like to point out that what I said in the first reading is that our previous spokesperson for ACC, Jan Logie, was instrumental—I did not say that she was the one who passed it. I think it’s unfair for both Jan Logie—and I think Carmel probably wouldn’t be happy as well to underplay the importance—

💬 Ingrid Leary: Point of order. Sorry, Mr Speaker, I don’t have the particular provision, but—

ASSISTANT SPEAKER (Teanau Tuiono): Yes, I’m thinking the same.

💬 Ingrid Leary: —members are required to call members by their full name, not first names.

ASSISTANT SPEAKER (Teanau Tuiono): Yes, please call members by their full name. Also, please don’t refer to members when they’re absent as well. OK, continue.

Oh, awesome. Thank you so much. Thank you for that, Mr Speaker—that’s well noted. I think that we shouldn’t under-appreciate the contributions that the previous Green Party spokesperson for ACC, Jan Logie, has played on that important bill. I thank you, Ingrid Leary, for the correction and I thank you for the point of order, for making me aware of that particular nuance.

When it comes to this bill, we talked about some of the specificity around it in terms of the two main provisions, which, one, allow for businesses to have the ability to have an instalment plan when it comes to levy invoice—and the second one is around the retrospective amendment and the retrospective validation of ACC’s past practice. I think this is something that our colleagues—my colleagues—have already mentioned, which is around the fact that when the IT system was first introduced, ACC was not sure when the practice of charging interest started. But it’s confident it has been charging interest on instalment plans of various lengths and—like the previous speaker Rachel Boyack said—for the last 20 years. I think this is really significant when we are looking at the IT system that ACC is currently working on, particularly in light of the current public services cut—into ACC as well, where a huge chunk of the IT team is being cut alongside other core teams such as the preventative team.

This is really important in this context: when we are looking at these sort of IT hiccups, what additional things could have been teased out, and does ACC currently have the ability or the confidence to reassure the Minister for ACC that there isn’t anything else that we haven’t been made aware of and that we would have to create retrospective legislation for because they have done something ultra vires? Again, I appreciate the reminder—from one of the previous speakers—of that particular legal nuance as well.

These are some of the questions that will be really interesting to tease out during the committee stage around the interactions and the capacity that ACC currently has in terms of managing or mitigating some of these errors that could be decades in the making.

I think the other element in here that’s also really interesting to tease out is that the ministry for business, innovation and entrepreneurship—I think; I only ever know it as MBIE.

💬 Scott Willis: Innovation and enterprise.

And enterprise, not employment.

💬 Hon Member: Employment.

Oh my God! Yeah, so the Ministry of Business, Innovation and Employment—thank you. MBIE and ACC have a disagreement around this particular thing, and it also highlights the really important issue when it comes to multi-agency collaborations and multi-agency discussions that take place. Again, something like this—if it happens, what other things could potentially be highlighted as a result of this legislation. Again, ACC is something that covers such a broad area.

Now, I want to address the main reason why the Green Party is not supporting this bill, which is the retrospective element of it. I think, in general, we hold this principle that, you know, agencies, if you do make a mistake like this—and I appreciate what the previous speakers have mentioned in terms of the potential repercussions that this will have if we don’t retrospectively remediate it. However, I would like to point out that—in this case, what about those businesses who have been paying it? It is an assumption that we make when we’re saying that these businesses are OK with paying in instalments and are already paying the interest that’s being charged on the instalment for the levy. However, there has been no consultation that has been taking place when it comes to this and whether businesses—particularly I’m thinking of small businesses, individual employers—are actually happy with the fact that they have been charged this for the last 20 years. I think this is something that is also really important to tease out as part of the committee stage.

I understand the importance and the cost this potentially will incur if we don’t retrospectively fix this issue—that is, if we don’t fix this issue, there may be a fiscal implication in terms of the revenue that is generated by ACC. However, I know that people from across the House, and particularly on the other side of the House, have questioned some of the relevance around this. My question for this is: in the context of why we are here, in the context of the fact that we are talking about this particular bill, which people have said is a minor and technical bill—again, we have seen a number of minor technical bills which have much broader consequences and much broader repercussions that would have been teased out if we had gone through a select committee process and allowed people to submit on it, so that, even as parliamentarians, even as MPs, even as spokespeople, we’re able to learn more and understand more of the stories, the individual stories, of our communities. But my question here is—and this is something else I would like to tease out during the committee stage—around the relevance of this particular bill in the context of the Budget urgency. I think that’s also something that I’m really looking forward to asking the Minister on.

So, when we are looking at this bill, we have mentioned the implications around the ability of, and the confidence that we have in, ACC to not have any other major issues or any other repercussions that are highlighted by this. We have talked about the Ministry of Business, Innovation and Employment—thank you—and the lack of agreement that they have with ACC. So these are going to be some of the areas I’m going to be really, really interested in.

The last thing I want to mention—I just want to go back to talking about the fact that we haven’t been able to have consultations on this bill. In this case, I’m thinking of and sympathising with small and medium enterprises and, again, those small employers who may be paying instalments over this because they are unable to pay the full amount and the annual amount in one go. I know that there are different reasons why people choose to pay in instalments, but I would really like to know some of the advice and some of the data around how much they were being overcharged, and, again, whether they are happy being overcharged for this amount.

These are all of the questions that I have when we go into the committee stage. I’m, again, really looking forward to engaging with all members of this House, and particularly the Minister for ACC, on this. For the last little bit of time I have left, I just want to reiterate that because of the retrospective nature of the second part of this—there are a lot of good things in here and a lot of good things we can tease out. Simply for the fact that the Green Party has never wanted to align with any sort of retrospective legislation unless it’s an absolute emergency, we cannot support this bill.

I’m taking this call on behalf of ACT to support the second reading of the Accident Compensation (Interest on Instalment Plans) Amendment Bill. We really want to see that ACC is able to offer this instalment option for stakeholders—for those who are not able to pay their levy as one amount on an annual basis. With this instalment option, those people who have cash-flow issues, especially small businesses that the Green member talked about—they can take advantage of it. We really want to see that small businesses are able to afford it and this option is available to them, but, on the other hand, we want to make sure that this is not unnecessarily costing ACC, because we want to see that ACC is able to provide the accident compensation services that they provide. So that balance is needed.

I do understand the retrospective argument that is coming from that side of the House, but in this case we can clearly see that this is not to provide advantage to any one particular individual, and in that regard, it is quite safe. This has been happening for the last 20 years, and I really believe and the ACT Party really believes that this needs to be validated. That’s why the ACT Party supports this bill.

Look, it’s important that current legislation is solid and sound, and we have seen that there is a need for a technical change to avoid any potential legal challenges on ACC’s current practice. So, given that, New Zealand First will support the Accident Compensation (Interest on Instalment Plans) Amendment Bill. Thank you.

The next call is a split call.

Thank you, Mr Speaker. It’s a pleasure to take a call on this bill, the Accident Compensation (Interest on Instalment Plans) Amendment Bill.

I think with the current speed of some speeches, it’s probably good that we just—

💬 Hon Simon Watts: Don’t read your speech.

Oh, trust me, my friend—trust me, Mr Speaker. You can assure that member that I will not be reading my speech. That would be far too fast. As I was saying, the current speed of some of the speeches concerns me. It makes me think that possibly, at the speed that people are standing up, they should be wearing a seat belt, and at the speed that they’re crashing back down into their seats, they possibly need airbags because the speed is far too fast. To bring it back to, ultimately, what the role of ACC is—because of the speed those members are moving at, they may well need their services.

ACC—just to remind us—provides cover for everyone in New Zealand who is injured in an accident. I’m just reminding us because having some people not taking the time to speak on it makes me concerned that, possibly, that’s not known. It’s the safety net to get people back on their feet.

Now, I’ve had some personal experience with ACC. Thankfully, it was only minor injuries, back in my much fitter days, when I made the mistake of running a half marathon and ended up spending the next six weeks in a moon boot, whereas now, thanks to my belt, I just model the squeezed middle quite frequently. As an employer, I’ve also known that our ACC levies are crucial and important.

There’s a few things that I want to single out about what this bill does. One of the things that I really want to look at here is the retrospective validation factor, because that’s where we get into tricky ground. That’s where we get into an area where it’s crucial that we take the time to get this right because we’re not just talking about a plan for the future; we’re talking about going back over the past.

On this side of the House, we are very committed to making sure that we take the time to address this very thoroughly and look at the issues very specifically, because in the regulatory impact statement—and this is where it’s a concern that we’re really skipping out the proper select committee process. There’s two points I’d like to raise on page 8 in paragraph numbers 27 and 28. Paragraph 27 states that “There is likely to be some negative reaction to the legislation as it will highlight that ACC’s past and continuing practices may not be lawful. That said”—it goes on; I am reading now for that member who queried earlier—“we would expect businesses to be supportive of the principle that a levy payer’s choice to use an instalment plan should not advantage or disadvantage them compared to other levy payers.”

Now, that kind of concern being raised in a regulatory impact statement would suggest to me that there are multiple players and multiple layers who deserve the respect of the select committee process to put their cases forward, and for that tidily summed up in one paragraph issue, which really is the tip of the iceberg, to get the attention, the focus, and the cross-party scrutiny of the select committee forum—not doing that seems, to me, like a very, very rushed process and not like good process. So I really think—

💬 Hon Member: Tell us what you think.

—thank you for reminding me—that the opportunity here is to give this process the respect that it deserves and take the time that we need—

💬 Todd Stephenson: You’ve had 20 years.

—to do this properly. If we’ve had 20 years, as that member piped up, it’s probably not a huge issue if we take 20 more minutes, or 20 more days, to get it exactly right, rather than trying to rush it through in 20-second calls, where the greatest risk is that the microphone isn’t turned on by the time the member sits back down. Thank you, Mr Speaker.

So we are here. Saturday night. Is it 1 June, King’s Birthday weekend? Yes. It’s International Children’s Day today and I am actually the Green Party spokesperson for children and I know that ACC does wonderful things for children. I know my children have benefited from ACC because they are lovely active kids—as have I. You know, I’ve got six metal screws in this arm from that cool snowboarding accident I had; I’ve got a couple of screws in my foot down here; broke my tailbone; this collarbone. Yeah, me and ACC are great friends and I really appreciate the mahi that they do to ensure that New Zealanders can get the healthcare that they need when there has been an accident or a big trauma in their lives.

Now, ACC charges levies on everyone who works or owns a business in New Zealand, and this covers the cost of supporting the recovery of people in injuries and accidents. So the levies can be paid by instalment, as we have heard, rather than of that lump-sum payment. Now, as the child of two parents who were both small-business owners, I know that having this flexibility is key to keeping that cash flow going and to making sure that they can sustain their businesses onward.

My dad is a te reo Māori teacher and I know one of the National MPs here has also been one of his students, so that’s a nice little whakapapa there, and my mum ran a maths and English tuition centre—so really important mahi that they were doing there. To have this flexibility for them and for those other small enterprises in New Zealand is a really good thing.

This bill allows ACC to charge debt interest on instalment payments starting with the current existing interest rate and it can be updated by regulations, subject to public consultation. This bill also retrospectively validates the past and current processes of charging debit interest on instalments.

The reason that the Greens are opposing this bill today is that the interest is justified by ACC because they’re missing out on investing that levy revenue in ACC’s investment fund because of the delayed payment plan. We all understand this, and this interest helps fund important ACC cover—just like those metal bars in my arm. This bill will not change the current experience of businesses and self-employed people when paying their levies.

However—and this is the big thing, however—we are against the retrospective validation of actions that were against the law unless the circumstances are exceptional, and this does not meet that threshold of charging retrospectively. Like I said, as the child of two small-business owners, we know that this change in this bill will disproportionately affect small and medium enterprises in New Zealand. We want to make sure that we aren’t disadvantaging and disproportionately affecting those small and medium businesses; those mums and dads who are just wanting to put food on the table, who are doing things like teaching te reo Māori to National MPs, who are doing things like teaching our kids maths and English—kia ora, member David MacLeod—now I can mention who my dad taught that te reo to. Tihei mauri ora!

Now the Greens do have a vision for ACC in New Zealand and that is for a holistic social security, health, and disability system focused on the wellbeing of the people of Aotearoa. I know that we can achieve that, and if we have public consultation on this with stakeholders who really understand this and who will be affected by this, we could really tease this out and improve this bill. But until then, we will be opposing it.

Thank you, Mr Speaker. Look, I am slightly confused by the previous member, Kahurangi Carter’s contribution, as to whether they do or don’t in fact support this bill. However, what I am certain of is that I do support this bill, and with that I commend this bill to the House.

Thank you, Mr Speaker. What the member who has just resumed her seat, Katie Nimon, lacked in longevity, I will make up for in the next 10 minutes. So never fear; ACC won’t be going anywhere soon.

💬 Grant McCallum: Neither will you.

Neither will any of us. A little fun fact before I start and provide you with a bunch of fun facts. Talking about technical fixes and technicalities and things like that, it was mentioned earlier that it was 1 June but, of course, because we’re in urgency, it is still the 30 May. Therefore, many things remain the same, including the fact that it is still Mike Butterick’s birthday, so he is a very lucky man. I hope that his colleagues have been showering him with gratitude, attention, presents, and all those sorts of things.

💬 Hon Members: And cake.

And lots and lots of cake. It is incumbent upon them to do so.

We are now on the second reading debate of the Accident Compensation (Interest on Instalment Plans) Amendment Bill, which we are supporting. We are entering into this process under urgency, so it feels a little bit weird to have to read a regulatory impact statement, sort of digest everything, and quickly see if there are any issues before we have the Minister in the seat—and I can see him preparing, doing some deep meditation over on the other side of the House before he before he regales us with all his wisdom on ACC. But that’s good. There’s nothing wrong with preparation and a calm attitude. We have several questions for him so that should be good.

Some of the contributions have been very brief, so it feels like it’s been a bit of a long time before we’ve actually just got back to basics, so let me cover off some of the basics now. The problem with this is that essentially ACC have been doing something and only now has it come to light that probably not everybody would agree with the correct interpretation of how they should be doing it. I think that the lack of clarity or the issue has arisen because of the definition of what an administration fee is versus what the debit interest on the instalment plan is.

When paying by instalments, the Act allows for ACC to charge a reasonable fee to recover its costs of collecting any levy instalments. And as Rachel Boyack pointed out, I think earlier, or it may have been Ingrid Leary, section 234 of the principal Act is where you’ll find that information. Once a levy payer agrees to use an instalment plan, then the fee becomes part of the associated levy for collection purposes, which is perfectly fine and makes sense.

Alternatively, if the levy isn’t paid by the due date and an instalment plan hasn’t been agreed to ahead of time, then penalty interest begins to accrue, and obviously that’s a situation that’s not ideal. When we think about ACC, when we think about our businesses, our small businesses, our sole traders, the breadth of people that pay ACC instalments, it’s incumbent upon all of us to make sure that it’s something that people buy into, that people contribute to, and that they do in a timely way, and that it’s not onerous on them and it doesn’t put their business at risk and, therefore, doesn’t put at risk a system that we all rely upon. If people are paying penalty interest because the instalment plan is not the favourable option, then I think it’s perfectly proper for us to fix up anything that could cause that confusion. So as Rachel Boyack said earlier, the fee for the 10-month instalment plan is currently inclusive of debit interest, and we’ve established that; that’s fine. ACC has interpreted the Act as allowing it to charge that particular debit interest where reasonable.

It’s interesting—I find it interesting, and others may agree—that due to the changes in IT systems, and, obviously, staff turnover—and we’re talking about a period of 20 or so years, and people come and go. So due to changes and staff turnover ACC can’t actually be sure when this practice of charging interest started. At first read, you may think that feels a little bit odd, but when you think about it, that’s not that uncommon as things change. But it is confident that it has charged interest on the instalment plans of various lengths since at least 2004.

The other thing is that, as I think we mentioned earlier, the view of the Ministry of Business, Innovation and Employment (MBIE) is that they don’t believe that the relevant sections of the Act provide for ACC to actually charge that debit interest as part of the instalment fee. As we’ve talked about, it’s not unusual—and the Minister has pointed this out himself—for ACC or anybody to think that what they’ve been doing isn’t necessarily the correct interpretation. So it is important for us to be here tonight—or not necessarily tonight. It’s interesting, because I imagine it has to be done in a timely manner, and maybe Rachel Boyack will talk about that later, but it’s interesting; I would have expected that it was done maybe a bit sooner.

💬 Hon Chris Bishop: Well, you were in Government and could’ve done it, and you didn’t.

Well, no, a little bit sooner in this urgency process—[Interruption]

ASSISTANT SPEAKER (Greg O’Connor): Patience; you’ll all have your turn.

It’s fine. I’m more than happy for people across the aisle, particularly Ministers, to make a contribution and soak up some of that time. I think that was about 15 or 18 seconds, so, Chris Bishop, you’re on fire.

Thinking about ACC, though—and it’s a bit relevant to the previous outburst—there are plenty of things that ACC do not cover and there’s lots of things that they do, and we’ve had some discussion tonight that isn’t technically part of this but I think it’s worth thinking about as we prepare the questions for the Minister in the next stage of this process, and I know that my colleagues will be looking at various other bits and pieces of that as well.

MBIE have, obviously, done the work. A regulatory impact statement has been produced, and, as people know, they have to look at options, counterfactuals, and various other considerations. MBIE have recommended the approach we’ve taken tonight, but they’ve also warned, as my colleague Reuben Davidson said, that it could attract some public scrutiny around ACC’s past and current charging of those instalment plan fees. I think there’s always a risk when something comes to light, and the first rule is to make sure that we correct something as it comes to light, but we also need to be mindful that public confidence can also take a bit of a tumble in that process. So this could lower public confidence in ACC, so I can see why we need to do this and we need to do it now. So MBIE considers that this approach is justified because it ensures that ACC’s past and current practice is validated, according to the regulatory impact statement, to remove any legal risk and so that any future instalment charges are able to be appropriately set in those regulations.

I know that the Green Party have said explicitly that they won’t be supporting this bill as it goes through the House under urgency tonight on 30 May because of the second part, which is about the retrospectivity. I’m sure they will have a host of questions for the Minister and that the Minister will be able to elucidate and maybe allay some of those concerns if he’s on top of his game, which I’m sure he is. So I think that it’s good—

💬 Grant McCallum: That’ll do.

No, no—I think it’s good to value our ACC institutions, to have the chance to think about all the wonderful things it contributes to our society, and as we sit here in the House tonight, we’re presented with an opportunity to make a technical fix on something that will ensure it is in tip-top shape to lead us into the future. For that reason, I’m happy to commend this bill to the House at its second reading.

Sitting here this evening, you understand two things: firstly, why the last Government got nothing done, because they take so long to get to the point, and secondly, that this bill is actually pretty simple, and if we got to the point, we would get it done and be able to focus on the next thing, and that is that we just need to commend this bill to the House.

ASSISTANT SPEAKER (Greg O’Connor): A five-minute call—the Hon Jenny Salesa.

Talofa lava, Mr Speaker. It is indeed wonderful, and I’m humbled to give a speech on the Accident Compensation (Interest on Instalment Plans) Amendment Bill on a Saturday night under urgency.

This is a bill which amends the Accident Compensation Act 2001, the principal Act, which primarily will enable ACC to change interest on levies that are collected by instalments, and it will also validate interest that has been charged by the ACC in the past on levies collected by instalments. Labour supports this bill and I want to cover a few reasons why we are supporting this bill.

First, this bill seeks to enhance financial flexibility for businesses, and it does this by allowing more manageable interest rates on ACC levy instalment plans. This can especially be advantageous for small businesses, and we support small businesses.

In addition, this bill may reduce the financial burdens by lowering interest rates, and this may encourage more levy payers to choose instalment plans in order to pay their ACC levies. This can enhance compliance and timely payments, which may lead to revenue streams for ACC that is more stable, so we hope. Also, in light of the economic challenges brought on by the recent global events like the pandemic, it is probably wise to offer a more accommodating payment structure at ACC which can assist those who are still recovering financially, because it is in no one’s interest to cause undue financial issues for our small businesses.

There are some concerns and I want to cover some of those concerns. Because, on the flip side, there is a potential for revenue loss. I say “potential” because we don’t quite know yet. But those who do not agree with changes to ACC argue that interest rates on instalment plans could potentially be reduced, thereby reducing ACC’s revenue. Now, unfortunately, a significant decrease in interest collected on overdue payments may result in budget constraints at ACC and this may in turn affect ACC’s ability to serve people. It is my sincere hope that this does not happen, Minister. I’m just saying that there is a potential.

Also, it is likely that when a new interest calculation method is introduced, there will probably be some administrative costs. So it is crucial to ensure that any new system that is introduced is managed efficiently, and I’m sure the Minister will ensure that this happens.

Another risk is the fact that if interest rates are indeed lowered, it may actually reduce the incentive to pay what is owed to ACC in a timely manner, and this might lead to some businesses or individuals delaying payments intentionally. I hope this does not happen. Especially if they are aware that penalties are going to be less severe financially for them, some people might choose not to pay on time.

Overall, though, we are very supportive of this bill. My colleagues on this side of the House have already covered some of the risks or some of the issues that came through, especially in the regulatory impact statement (RIS). One of the things that we see on the RIS is there are two parts to the problem that this bill is trying to address.

First, it is trying to ensure that ACC’s levy collection power is fit for purpose. Second, the bill is also trying to address the risk that ACC has been acting outside of its legislative scope. Now, also on the RIS, we see that there are two Government agencies that don’t quite agree on this issue—ACC and the Ministry of Business, Innovation and Employment—and one of the things that we’ve already signalled to the Minister is there will be a number of questions around this issue, because we do want to ensure that ACC, not only in the future, currently, as well as in the past, has been acting within its legislative scope.

Under the regulations that will be made in the future, the interest rate payable on levies collected under a 10-month instalment will be 2.73 percent. However, there is no interest payment charged on a three-month instalment period or, indeed, a six-month instalment period, and we would like to ask the Minister more questions on this.

Thank you, Mr Speaker. Well, 30 May has been the gift that’s just kept on giving. It’s actually given to a lot of other New Zealanders as well, which is great. This bill is about a simple, technical fix and it’s as simple as that. I commend it to the House.

I was wondering how I could best use the 10 minutes I have available to contribute to this conversation, because the other side of the House might think that this is about filibustering, but when we have a piece of legislation that has a very grey area in it, it is really important that we get this right, and there’s a few reasons for that. One is simply because we have got a number of competing arguments from two different agencies where it’s pretty easy to see the rationale on either side, and so we need to make sure that whatever decision we make this evening, it is rational, logical, justified, and clear, not just for this case but also because of the type of precedent it may set for other agencies wanting to embark on a similar exercise. So it is very, very important that we are clear for the Hansard that any precedents we set as we make these laws—because that’s indeed what we’re doing this evening—are going to be able to inform future decisions in the Public Service in a way that is in the best interest of New Zealanders and is consistent with jurisprudence.

I think, also, it’s important to get this right because we’ve heard that ACC is a taonga and the jewel in the Crown, but there are many people who are quite weary of ACC. As an electorate MP in Taieri, I’ve certainly spent a large number of hours dealing with cases where people have had to fight ACC to have an injury recognised. One of the previous speakers spoke about the fact that some things are covered and some are not, and, indeed, the question of coverage and what is and isn’t covered is the most controversial part of this wonderful scheme. It was always going to be that way, but for some people there has, in the past, been a sense that they are in a situation of David and Goliath. So they’re not starting from a position of trust, and it’s really important that we are clear that ACC’s intentions this evening about setting this levy are appropriate and that it can build trust with the public, because without that trust, the mana of this taonga is diminished, and as with all good public institutions, trust is actually really important to their longevity and sustainability.

The final reason that I think it’s really important is because I perhaps would not have recognised the questions and the unpicking and unpacking that we need to do here had it not been for the excellent paperwork that’s been provided by whoever has prepared the regulatory impact statement (RIS). It’s about 15 pages long, and it details really, really methodically the logical process that officials went through to come to the conclusions that they did. In fact, the conclusion they came to is not a clear one, because it says, “This uncertainty suggests that the current legislative settings are not fit for purpose.” and that it isn’t a sort of clear-cut decision; it’s a line call. That raises a whole lot of questions, not only about how this came to pass, that suddenly we are thinking about this when for 20 years it hasn’t been on people’s minds, but also just going through the really clear analysis, that does raise a bunch of questions.

I’d just like to let you know that when we get to the committee stage, and given that we’re under urgency and given that this is retrospective and that there won’t be a select committee phase, given that it’s a grey area of law and given the need to protect the precedents that we are setting and all of these elements, I’ve got about 30 discrete questions—absolutely discrete questions—that I would like to ask in a back and forth with the Minister for ACC. It will be an absolute pleasure to engage with him in his ACC capacity, because I’m used to engaging with him more through the media in his mental health capacity, So it’ll be great to start with a clean slate on ACC and to be able to really get across, particularly, his thinking, because at the end of the day that is what is going to inform the Hansard. So we need to have a clear record of what the Minister is thinking.

So I will save my contributions around those 30 questions, which I do hope I get through in the committee stage, just to go back to why we have this grey area. Some people have referred to it, but I think it’s really important to look at the two sections again, because that’s essentially what we are going to be interrogating here: sections 234—of the ACC Act—and 333(1)(b)(i), which need to be read together. As you’d be aware, anytime we read clauses together in an Act, it makes it doubly complicated. Reading one clause is difficult; reading two together requires a bit of extra thinking, which is another reason that we need to be forensic in how we approach this in the committee stage.

The first one says ACC “may charge a reasonable fee to recover its costs of collecting any levy by instalments.”—and that’s under section 234. So the elements of that we have: that they “may”, so there’s no requirement to do that, and some of the questions will be about the, I don’t know, natural justice issues of whether, given that they’ve been doing this for 20 years, there could be a requirement in natural justice and public expectations that even though there is a “may” there, perhaps that needs to happen. A “reasonable fee”: what is the test of a reasonable fee and what is a fee, and how does that include penalties, because we’ve got a reference in a table somewhere to penalties, and it’s the only time that I see that referred to, although I will have a closer look at the legislation to check that, given that we’ve just had this dropped on us pretty much today.

💬 Hon Chris Bishop: You’ve seen it on Thursday. You’ve had two days with it.

Then we’ve got the—it’s still the same day though; Mr Bishop is saying that it’s dropped on us. It’s still the 30th.

💬 DEPUTY SPEAKER: It’s still Thursday!

It’s been a long day—it has been a long day. We’ve also got the other section there, which talks about them being able to have an instalment plan and to be able to charge “any administration fee payable in respect of levies paid in instalments”. So I think that the word that we need to look at there is “any”, and as I said previously in the first reading speech, a generous interpretation of that would mean that that would include an administration fee, would include a penalty fee, potentially, but certainly an interest fee. So we need to decide: is it an interest fee and a penalty fee, is it just an interest fee, or does it not include it, in which case we wouldn’t support it, but I think we’re going to? Then “fee payable in respect of levies paid in instalments”, and there are some questions, as the Hon Jenny Salesa has mentioned, about why those particular interest charges and levels were reached. What was the evidence base for that? So there will be a lot of questions.

The final thing I’d say is that also in the RIS, there’s lots of assumptions about drivers of behaviour—why people might choose to take an instalment or to pay their ACC levy or go to an alternative source of finance—and I think it’s really important to learn from the Minister what the evidence base for that is. I understand that there’s a logic around the drivers and the incentives, but it may not simply be enough, because we don’t know, for example, without evidence what the charge, the alternative charge, would be if somebody went to the private sector and thought, “I’m just going to get a loan, pay this up front.” So I think we do need to see very clearly how the RIS has been formed. If the officials have done what I think they may have done, because they’ve done such a great level of detailed work, perhaps they have gone out and done that consultation and got all of those numbers and that data. I think that would be really interesting to find out and would certainly provide us with some assurance given that we’re going to be supporting this.

The other thing is the penalty: there is a table on page 10 that I’ll be asking questions about, because there’s an average business levy of $7,276. The fee on a 10-month instalment plan currently at 2.73 percent is $198.63. When there’s a total penalty interest over a 10-month period, assuming the levy’s not paid, that lifts it right up to $761.23. That’s quite a jump, and so I think it will be important for us to understand how the penalty is justified over and above a standard interest fee, whether there is any compounding element to that, and how that fits in with the purpose as stated in the bill, which is that this is about fairness. There’s a whole deconstruction of fairness that we can go into, because penalties sound like, actually—it might be a part of deterrence or drivers, but it could also be about punishment, and so really unpacking that in the committee stage would be great. I could go on all night, but I’m sure that we will come to that—

💬 DEPUTY SPEAKER: Yeah, you can’t, because the member’s got two seconds left.

So, two seconds left—thank you, Madam Speaker.

I commend this bill to the House.

This bill is set down for committee stage immediately. I declare the House in committee for consideration of the Accident Compensation (Interest on Instalment Plans) Amendment Bill.

In Committee

Clause 1 Title