Accident Compensation (Interest on Instalment Plans) Amendment Bill

Members, we come now to clause 5. This is the debate on the amendments to section 329—regulations relating to levies. The question is that clause 5 stand part.

Thank you, Mr Chair. I’ve got a lot of questions around clause 5 because, actually, in my view this is the most detailed and substantive part of the bill. So the main question, I think, that we just want to get some really strong answers around is why the Minister has chosen to exercise regulations instead of putting the interest payments plan into the primary legislation. I think it’d be fair to say that there are always concerns when secondary legislation is used in this manner. That’s what the Minister is looking to do, and, just, reading through the regulatory impact statement here, to make changes in the Injury Prevention, Rehabilitation, and Compensation (Interest Rate for Late Payment of Levies) Regulations 2002 as a transitional arrangement. So making a direct change to the regulations to have a sunset clause to then go through that fee-setting process and then include the levies—what they are—as part of the standard consultation due in 2024. So, obviously, there’s a process that’s going to go through here.

I guess the concern I just wish to put on record is because we’re not going through that select committee process, usually a select committee would receive a report from the Regulations Review Committee on any secondary legislation that’s introduced. I just can see Mr Penk there—very fond of the Regulations Review Committee—and Mr Meager; “Mr Eager Meager” is also quite—Ha, ha! Is also—[Interruption]

CHAIRPERSON (Greg O’Connor): It’s a tribute to the food at Copperfield’s that there’s this much energy still going at this time of night. Carry on, Rachel Boyack.

RACHEL BOYACK: I come back to the role of the Regulations Review Committee, and just note that, I guess, this would be where we would put some concern on record that we are going to be moving to a long-term provision of what is, essentially, a permanent interest payment that can be added to a levy through regulation. And given the sensitivity around this and the opportunity for the House to actually set these levies, whether the Minister actually took some advice around putting the payments into the primary legislation. I think it’s an important question that we get an answer to.

The other matter—and, look, I do note that our colleague from the Green Party raised this under clause 4, but it actually does come under clause 5, where we amend section 329—the regulations relating to levies. In amended subsection (2A), “The Minister may not recommend the making of regulations under subsection (1)(hb)(i) unless the Minister has first received and considered a recommendation from the Corporation made in accordance with section 234(1B).” My question to the Minister on this is: in what form will that recommendation take? What will the process be for him to both receive and consider that recommendation? Because, again, when we are setting payments that New Zealanders are making if they are undertaking an instalment plan, there is, I think, a fair understanding, particularly when we’re talking about, often, small businesses who do come under cash-flow pressures—I think it’s fair for them to have an understanding of why we’re using regulation to set these payment terms. And then, also, what will the process be for the Minister to receive those recommendations? Because I think people need to have that trust and confidence in the system.

Just lastly, before I finish my contribution, and I’ll probably come back to make a further one shortly with some more questions, I do just want to acknowledge the Amendment Paper that has been tabled by my colleague Ingrid Leary, and I’m sure she will be seeking a call on that very shortly to add a new clause 5A. There’s been quite a conversation tonight about the provision of instalment payments, which I think the House, for the most part, is in support of. And I think Ingrid Leary has made a very sensible suggestion here around making sure that ACC must provide instalment plans and, actually, it’s probably a fair thing to include in the Act. So I know that my colleague will be seeking a call shortly on that particular matter.

Thank you, Rachel Boyack, for those questions. The question around why regulations: because they provide flexibility and are in line with the Legislation Design and Advisory Committee guidelines. Of course, she highlighted a very important area around the pressures on business and cash flow. I suppose that is why the regulations will provide those instalment opportunities.

Thank you, Mr Chair. Thank you for allowing me to take my first call on this bill. I just have a very quick question around clause 5(1)(hb)(ii), and then I’d like to ask for some clarifications around the regulatory impact statement (RIS), which I would have been able to do if this were a normal select committee process.

So my quick question around clause 5(1)(hb)(ii) is: can I invite the Minister to elaborate on what are “the circumstances in which the payment of the whole or any part of the interest may be remitted or waived?” Because it would be very good, you know, to have it in the Hansard, just to know what those circumstances might be for anyone that this legislation might apply to and sort of what the criteria might be.

The clarification that I’m seeking for the RIS is, I guess, on page 8. It kind of says—well, it literally says that there’s about 32,000 people that are in that kind of 10-month period in 2021. There is a breakdown which seems to apply across all the categories. So my question is: is there a more granular breakdown of that 10-month category across the 32,000 people around, like, what the exact figure amounts are and what component of that is the interest?

I just want to raise a little concern that I had when reading the RIS. Page 3 of it says that “Administrative limitations, particularly a series of IT changes since 2004, mean that ACC does not have clear and accessible information regarding the debit interest component of the instalment plan fees it charges.” So does that mean that that 32,000 figure is unreliable or—I mean, I could just be totally misunderstanding this. What is the kind of accuracy of that actual figure? So thank you for allowing me the opportunity to ask these questions and take this call, Mr Chair.

Thank you, Mr Chair. Just while I’m seeking advice on that last question from the advisers, that member raised his first question around potentially what might trigger a waiver, and that would be around hardship and an application of hardship to ACC.

Thank you, Mr Chair. I do have three questions for the Minister. The first one I won’t labour because it picks up a little bit from the previous section, but I do want to have on the Hansard my concern that the same language is used, which is in new section 329(1)(hb), inserted by clause 5. It uses the word “or” instead of “and”. So the particular words here are: “the rate of interest payable on any levy collected by instalments under section 234 or the method by which the rate is to be calculated”.

Now, that does follow logically, given that the Minister has declined the invitation to change the wording in the previous section, but what it does do is reinforce my concern that this is quite loose for the consultation that needs to happen for something like a levy, where it would be preferable, I think, to make it an “and” so that it’s both a quantum and a methodology that is consulted on. So I’d just like that on the record.

The second point is under subsection (2)—and it picks up on the previous speaker’s question but asks a new question. It was really helpful, actually, to hear the Minister mention hardship. My question was whether it was even appropriate to have the word “circumstances”, which is quite a broad test. I’m assuming from the wording that it’s an objective test. That’s another question for the Minister: is it an objective test?

It just says here that it’s sitting in the regulations, and yet the Minister himself has brought up the word “hardship”. Now, those types of equity provisions, in my view, should be in the primary legislation, because that has a very purposeful intention, which is to make sure that it is fair and equitable. If it’s left to regulation, it is not this House enshrining the equity that the Minister is anticipating. It is being left a little bit to chance, and so I think in the hierarchy of legislation, an equitable consideration like that belongs better in the primary legislation.

It’s difficult to know, especially with the wording, “the circumstances”. That’s quite broad wording, and so it doesn’t really give any guidance to the wording that should be used in the regulation. That’s where my concern is. So I’d really like the Minister to consider whether perhaps we should redraft that or whether we could have the words “hardship” somehow put in there or if we could clarify. If we can’t, then hearing him say it in the Hansard is at least one step closer.

My final question to the Minister is about the proposed amendment, and Rachel Boyack has said what it is, so I’m not going to repeat that. I’d just like to have on the record again that when it comes to equity, there is nothing like having it in primary legislation. We’ve heard that there is a practice of ACC to make these instalment arrangements available. It’s very much at their whim. They are the Goliath here and they’ve done that in good faith and that’s great.

There could be natural justice considerations for somebody who was declined an instalment situation to be able to say, “Well, this is a practice.”, and, therefore, probably judicially review that, but it would be much cleaner and clearer to have a section in that actually says, “ACC is to provide instalment payments.” It just makes it clean and clear. It puts the obligation on ACC. It confirms what has already been happening for 20 years, and because we have a retrospectivity in this legislation, it kind of gives it a nice continuity, but it cleans it up.

What’s happened, I think, with this practice is that the word “may” has enabled ACC to create a practice that is not really pinned anywhere in law. We’re trying to clean that up, but we’re not really providing certainty about who will be able to have the instalments, just like we’re not having certainty about who will be able to claim hardship. So I’d really like the Minister to consider my tabled amendment and respond to my three questions, please.

Thank you, Mr Chair. Off the back of the Minister’s response to my earlier question, I did have a further question alongside some other questions that I still had around the introduction of levies through regulation. The Minister mentioned that the reason for using regulation instead of primary legislation was flexibility. If I’m honest, the use of that word did cause me some concern.

Just noting, of course, that those who use these payment plans—and you know, I think there’s some agreement between myself and the Minister that these are people who potentially can be in quite vulnerable situations, and acknowledging that for small businesses at the moment, being able to pay things in instalments is really important, which is one of the reasons why the word “flexibility” did give me some concern. I’m interested in whether the Minister would consider adding a clause into the bill to define what that flexibility meant and how that would operate in practice. Because, of course, my concern would be that, given we have regulations in place, we don’t have the same level of scrutiny on those regulations that we do through the House. So it could give rise to regulations being amended quite frequently—

Ingrid Leary: That’s right. It’s not certain.

RACHEL BOYACK: Exactly—just responding to Ingrid Leary: that need for certainty for small businesses is quite important, especially in current time frames.

I’m also concerned because the other matter that’s clear in the bill is that the rate of 2.73 percent will only apply to those who are on a 10-month plan, but there will be no payment interest charge added to those on a three-month and six-month plan. I guess my question to the Minister on this is whether that would be something that he would look to entrench in the law, in the primary legislation—that you could actually only apply the 3.73 percent, or whatever that rate was, to the 10-month plan, so that there would actually be a permanent approach to keeping those shorter payment plans with no debit interest charge. I think, given that that is something we’re agreeing in the law tonight for a temporary basis, could we actually make that particular part permanent?

The other matter I just wanted to note around that 2.73 percent is—you know, we’ve had a lot of discussion in the first and second readings about the fact that, if people are exercising the use of the plan, they get access to that 2.73 percent, which we would all agree, at current rates, is lower than standard interest rates that are offered through, say, a bank or another financing organisation—whether we would also write into the legislation. I know we are getting to the point where we probably need to write some amendments, but it’s late—but whether the Minister would consider putting some guidelines into the legislation around having an actual assurance that that 2.73 percent will be lower than what is offered by a bank.

Obviously, at the moment, we have high interest rates—we know that—but at some point, they’ll drop back down. They will drop back down at some point. If we see banks offering 1 percent or 2 percent, or whatever that may be, in the interest of ACC being able to continue offering these plans in a way that is actually useful—because I think for small businesses having to go back out to the bank and say, “This year we’ll go to the bank; next year we’ll do it through ACC.” Actually, wouldn’t we want to have the ability for those regulations to be based around the official cash rate or what banks are doing, in order to make sure that levy payers are getting the best deal? So I’ve got quite a few questions there for the Minister. I think this is actually the substantive part of the bill, and I’m hoping he might be able to answer some questions.

I thought Rachel Boyack raised a good point about the interest charge for three-month and six-month instalments. That will be looked at in the next levy round.

Thank you, Mr Chair. So when we’re looking at clause 5, I have a question around inserted subsection 329(2A), “The Minister may not recommend the making of regulations”—I will touch on some of those regulations in clause 6. Now, one of the things in terms of the context that we’ve been discussing between clause 4 and clause 5 is that clause 4 is coming from the perspective of the corporations, but, as opposed to the regulations, clause 5 is coming from the perspective of the Minister for ACC. I think that distinction is really important. If the Minister could answer my previous question around the use of the word “may” in clause 4, inserting subsections 234(1A) and 234(1B) into the principal legislation. The question I have, and the clarification that I would like from the Minister, is around the use of the word “may” in subsection 329(2A) inserted by clause 5(2), and particularly the term “may not”.

Now, I’m not an expert when it comes to the drafting of legislation and the use of the positive and the use of the negative in terms of the grammatical form. But in clause 4 inserting subsection 234(1A)—where we are looking at “may” instead of “must”—we are offering flexibility to the corporation, that, if they don’t want to, they don’t need to charge the levy on the interest payment. But what I want to know—and the clarification and the guarantee that I need from the Minister—is that for inserted subsection 234(2A), the “may” will not be interpreted in the same way where the Minister then may make regulations without the consultation process of the corporation, or without factoring in the consultation of ACC.

This is really crucial. The Minister mentioned before that the duration—when I was asking the question of subsection 234(1B), the Minister has answered that there is a four-week consultation period that we’re looking at when they are consulting levy payers on the proposed rate. So we are looking at people, businesses, who are going to be consulted and who will be going out of their way to respond to the consultation of the corporation. Then, the corporation package it up, deliver it to the Minister, but it says in subsection 329(2A), inserted by clause 5, that “The Minister may not recommend the making of regulations”. Again, I would like to note that the negation negates the fact that before making changes to subsection 329(1)(hb)(i) the Minister still has to take into the consideration the recommendation made by the corporation.

So that guarantee—from the Minister—that the Minister will seriously consider and take on board the recommendation of the corporation is absolutely vital to the entirety of this clause. So if the Minister wouldn’t mind shedding light or providing some sort of confidence or some sort of reassurance that there is going to be no point at which he will make alternative recommendations or alternative decisions against the consulted recommendations of the corporation—after all of the things that they are doing with the levy payers and all of that—that that’s not going to happen. So if the Minister could answer that question on the words “may” and “may not”, and whether negation plays a part in this, I would be really, really grateful.

Thank you very much, Mr Chair, and I thank the member Dr Lawrence Xu-Nan for his contribution. Just to assure him that the word “may” is drafting consistency throughout the Act.

Thank you, Mr Chair. It’s great to finally get to be able to take a call. I’m very enthusiastic about scrutinising this legislation in the time we have available.

The question I have for the Minister is really in relation to the existing powers which are referred to in clause 5. So I’ve gone back to the primary piece of legislation, and I’ve had a look at the existing fee and collection powers that can be made by people already under the existing ACC legislation. It does come back to something that I didn’t get an answer to before, which was the nature of the legal advice. I felt that, when I read through that, there was already an ability to collect a fee in the legislation, and there’s quite a lot of detailed sections there about how exactly that can be done within the existing law. So I wanted to know from the Minister: did he consider maybe changing the interest on instalment plans into some sort of fee when payments were made late? Because that already exists within the legislation. You wouldn’t need to use urgency. We wouldn’t need to waste Parliament’s time. It might be that that answer is in the legal advice that I did ask for the Minister to provide to the House. It’s not too late, Minister.

Hon Member: He didn’t say no?

CAMILLA BELICH: He didn’t actually answer specifically about legal advice. I would like to put that question to him again. It seems to me there is a power for ACC to charge a fee. Why not let them do that, and if you’ve had advice to suggest that that’s not the correct way to do it, can we please see that advice, because I think that would be quite important to check?

In terms of the details on the other sections of this, I think people have asked can we have more details on what exactly would be likely to be remitted or waived in this particular section. I think that is really important to know because the other thing I saw when I looked at the sections which are in the section we’re debating—which I know is limited, but it is in clause 5—is that there is an existing requirement for payments to be made within the month that they are due. My question is: if there’s an existing duty for payments to be made in the month that they are due within the existing legislation, has the Minister received any advice essentially implying that their inability to make these instalment plans might undermine the collection of the amounts that are payable? There is a clear duty currently.

What you’re suggesting here, as we all know, is, essentially, making something which may or may not be currently legal legitimate under this piece of legislation that does have retrospective effect. I do have a question about that—just to let the Chair know—specifically about retrospectivity in the next section. So I’ll leave that to that because I think it’s more appropriate for there. But I do want to know from the Minister if he has received advice on that point. Is this in any way undermining the general payable within the month that the payment is due section, which exists within the current ACC legislation?

I move, That debate on this question now close.

Thank you, Mr Chair. Thank you. I just note I thought those were some excellent questions from my colleague Camilla Belich, and I’m looking forward to the Minister giving a response. We’re also still, I believe, waiting for a response from the Minister on whether he will support my colleague Ingrid Leary’s excellent Amendment Paper, which is to add a new clause 5A, which is “ACC to provide instalment payment—ACC must provide instalment payments to levy payers on request.”

But my specific question to the Minister—before I do that, though, I did have some questions earlier about the flexibility and whether there’d need to be a definition in the Act and a new clause inserted around that flexibility and—

Hon Member: Repetition.

RACHEL BOYACK: Well, the reason we’re raising this is we haven’t had an answer. And so I’m just reminding the committee that under urgency, we do need those answers, because we don’t have the opportunity to scrutinise through a select committee. But where I just wanted to make another question to the Minister is, if you look at section 329 being amended and inserting after section 329(2B), it does state here—and I’ve raised this concern earlier, but I just wanted to bring it into the legislation—that regulations made under subsection (1)(hb)(i) may prescribe different rates of interest. And that is actually of concern, because we do have a practice here where the three-month has a zero percent rate, the six-month has a zero percent rate, and the 10-month has a 3.73 percent rate of interest.

So we do want to actually have some certainty that there isn’t that intent to start adding interest to those lower rates, because, actually, I think that’s a matter that levy payers would want to actually be able to submit to the whole House on for a select committee process. But, further, what interested me were the different methods by which rates are to be calculated. So I’m quite interested to know what those different methods could be, because obviously we have a specific rate being put into the legislation tonight that is coming off the back of a retrospective application. But I’m very interested to know if the Minister’s received specific advice and what that advice is around the different methods that could be used to determine how to calculate those rights. Thank you.

In response to Rachel Boyack’s question around the three and six months, I just assure her that this bill is about validating past and current practice.

I move, That debate on this question now close.

Ingrid Leary’s tabled amendment inserting clause 5A is out of order as being outside the scope of the bill.

Clause 6 Schedule 1AA amended