Hon Dr NICK SMITH (Minister for ACC) Link to this
I relish the opportunity to debate Part 1, both to flush out some of the nonsense that Labour members have been running on this issue and also to put the case fairly and squarely about the sensible and balanced reforms in this bill. I make no apologies for the core driver behind the bill being the need to improve the affordability of the accident compensation scheme, and to reduce the pressure on levies this year and in coming years.
There can be no question that Labour allowed accident compensation costs to get out of control. Over the past 4 years claim costs have risen by 57 percent, or by over a billion dollars extra per year. This rate of claim cost increases is five times the rate of inflation. Labour somehow pretends that we can have those sorts of increases in claim costs, but that it will not cost so much as a penny for motorists, for workers, and for the businesses that pay the levies. But that is fairyland stuff, and it illustrates just how financially illiterate Opposition members are.
The last annual report of June 2008, a report signed by the previous Minister for ACC, Maryan Street, declared a loss of $2.4 billion 6 months prior to there being any change of Government. For that member to then stand in the House last week and say that Labour left accident compensation in good financial shape was just a nonsense, and it is untrue. Then just months later, after that $2.4 billion loss, Labour engaged in an irresponsible and reckless pre-election lolly scramble. Labour made over a dozen changes to the scheme to make it more generous and to extend entitlements without making any provision to fund them. Part of this bill is unwinding some of those unfunded extensions.
Members opposite have referred to this bill as a complete dismantling of accident compensation, as breaking the social contract, and as ripping up the Woodhouse report, but that is all just political hyperbole. Let us just go through and debate what is in the bill. Firstly, this bill pushes out the full funding date from 2014 to 2019, in order to take the pressure off levies, and, secondly, the bill pulls back on those extra entitlements that Labour added in the dying days of its Government but never funded. I am really looking forward to debating the clauses on holiday pay, on seasonal workers, on the tests for rehabilitation when people go back to work, and on the provisions about self-inflicted harm and suicide. I think that fair-minded New Zealanders, on weighing up the rights of injured claimants and the rights of levy payers, will come to the conclusion that what is in this bill is fair.
Let me put a few essential questions that we need to debate in these Committee changes. The first is whether people should be better off on accident compensation than they were when in work. Was that what the Woodhouse report and our accident compensation scheme was all about? Members on this side of the Chamber say no; members on that side of the Chamber say yes, they should be. It is a very simple question. Should criminals be able to get accident compensation lump sums and income compensation for injuries they suffered when committing crimes? Members on our side of the Chamber say no; members on Labour’s side of the Chamber say that accident compensation should be for crims. A third question that is at the core of this Committee debate is whether businesses with a good safety record should get a lower level of levy than those businesses that have a bad safety record. Members on my side of the Chamber say yes, they should, whereas Labour members say they should not. Again, I say I am looking forward to debating all of those issues.
The changes in this bill are about securing for New Zealand an accident compensation scheme that is fair for levy payers and fair for claimants—a scheme that is affordable in the long term and does not just pass the bill on to some future generation, or, worse still, pretends that nobody pays, which seems to be where Labour is at. This bill is about securing a fair accident compensation scheme, and one that is affordable.
I have tabled a Supplementary Order Paper. One of the first changes I want to make is to call this bill what I think all members in the Committee would call it, and that is the Accident Compensation Amendment Bill. You see, in 2001, in that sort of stroke and fever for political correctness, we changed the name of the Act to the Injury Prevention, Rehabilitation, and Compensation Act. The most interesting thing is that going back to 2001, do members know that rehabilitation rates have got worse in every single year since? Do members know that injury prevention has been so unsuccessful that injury prevention rates have got worse over the succeeding 9 years? You see, members opposite somehow believed that if we just changed the name of the Act, we would fix the problem. Members on this side of the Chamber say that we should call the Act what it was called for all those years, and not play these silly games of political correctness and of renaming Acts away from what ordinary New Zealanders would prefer them to be called. Let us call accident compensation what New Zealanders call it, albeit there is not a member of the Government who does not believe that rehabilitation and injury prevention are important. It is just that we have to do more than change the name of an Act to make some progress.
The last point I note in respect of the Supplementary Order Paper is the change that we are making with regard to the safety levy for motorcycles. The reality is that the record of motorcycle safety over the last decade is a tragedy for dozens of New Zealand families. At the same time that we have seen a 20 percent decline in the overall road toll, we have seen a 20 percent increase in the number of motorcycle accidents and fatalities. The state of Victoria has gone down the track we are taking, and it is the only state in Australia that has been able to reverse the trend of motorcycle accidents. My view is that the provision in the Supplementary Order Paper, which came as a consequence of discussions with leaders of such organisations as the Bikers Rights Organisation of New Zealand and the Ulysses Club, is a very constructive way in which we can make progress on injury prevention and try to reverse that trend in motorcycle accidents. The trend is not only costing the scheme a great deal of money but causing a great deal of heartache for dozens, if not hundreds, of New Zealand families.
This is a fair, balanced bill. The Supplementary Order Paper improves this bill; the Committee should pass it.
Hon DAVID PARKER (Labour) Link to this
The Minister who has just resumed his seat has misrepresented the Labour Party position in a number of ways. I do not, in this first call, have a chance to respond to all of the accusations he made as to the Labour Party position that were incorrect. I think history shows that through the more than 30 years that we have had the accident compensation system in New Zealand, Labour has consistently stood by the principles that lay behind its foundation, because those principles are fair—and we continue to do so. The Minister made it clear that his justification for the changes that are made to the scheme is that it costs too much as it is, and therefore cannot be afforded. Yet not one submitter—or the department in its original submission—presented any evidence to the select committee to show that it is more expensive for employers in New Zealand than it is for employers in overseas schemes. Indeed, it took the Opposition’s questions of officials to get some information as to cost comparisons. We would think that if cost was being used as the basis of the justification for drastically reducing the entitlements that people have and need following an accident in New Zealand, robust information would be provided to the select committee. It was not.
I was also disappointed that neither business submitters like Business New Zealand—and I name Business New Zealand not to be pejorative; I value its submission to the select committee—nor any other business representative who made submissions gave us any information as to comparative costs. That surprised and saddened me. Amongst its members are multinational companies that operate not just in New Zealand but also in Australia, Canada, and other jurisdictions around the world. Those submitters would have had, had they desired to get it through their contacts, information on the relative costs in New Zealand and overseas. From their failure to do so, we cannot conclude anything other than that the New Zealand scheme, even in its present state, is cheaper than alternatives overseas.
We explored that a bit through the officials. They provided us with the best information they had as to comparisons with Australia. This came from information that was presented to the Workplace Relations Ministers Council in 2008, which I understand is a meeting between Australian and New Zealand officials. It showed that the cost per $100 of earnings was significantly higher in Australia in 2006-07 than in New Zealand. That year was chosen because I think it was the last date for which they had comparable information. The average for Australia was $1.73 per $100 of earnings, whereas in New Zealand it is 94c per $100 of earnings.
That excludes motor vehicle accidents on both sides of the Tasman. In terms of the advice that officials gave us, it was full costing for the year of claims in the 2006-07 year. It excluded the tail—
I say to Dr Smith, if he does not already understand this—and as he says, “Oh!”, using the microphone to his advantage, as he is not meant to do as the Minister in the chair—that it excludes the historic tail because, of course, the historic tail is a different pool to be funded. In terms of the full cost of 2006-07 accidents, they were meant to be fully paid in New Zealand at 94c, and the comparative cost was $1.73 per $100 of earnings. So where is the justification for reducing entitlements compared with Australia?
We hear from the Government that New Zealand is always a poor performer compared with Australia. In some areas that is true, but in the area of accident compensation it is not. We have a more efficient scheme. It is cheaper to administer. We know from the PricewaterhouseCoopers report—and, again, the select committee had this information—that the administrative costs of the accident compensation scheme are amongst the lowest, if not the lowest, in the world. That is one of the reasons why levies are lower compared with the service that is provided than is the case in overseas jurisdictions.
We know that, at least currently, it does not make a profit. At present, the Government-owned Accident Compensation Corporation (ACC) is the provider of cover for risk. It does not make a profit. It covers its costs, including the full costs of accidents. There is a problem in New Zealand with a declining rate of rehabilitation. That is a matter the Minister referred to, and I acknowledge it. Rehabilitation rates for long-term injuries have declined at approximately 1 percent per annum over recent years. That is a trend that is also true in overseas jurisdictions. We know that it is, in part, a consequence of aging populations. As people age they both break more easily and take longer to recover after they are injured. Both of those things are realities. That does not mean to say that we should not strive to do even better in terms of achieving better rehabilitation rates. Labour certainly does not oppose measures to improve rehabilitation rates.
None the less, it remains true that costs for employers are significantly lower per $100 of earnings in New Zealand than in Australia. Of course, Australians earn higher wages as well, but I am not making a comparison on total wages. I am making it, for that reason, on the basis of per $100 of earnings. Even on that basis, rates are lower for New Zealand employers. I ask the Minister how it can be justified to decrease further the rates for New Zealand employers, effectively at the cost of injured people and the State. We already know that even under existing rules, many of the people who are exited from the accident compensation scheme end up on unemployment benefits, at a cost to taxpayers rather than employers. We already know that many of the people who are exited from the scheme do not get back into work and are left languishing on benefits.
No system is perfect. We readily acknowledge that there are always ways in which the scheme can be improved, but there is no justification for changing the threshold from 35 hours per week to 30 hours per week. That is the number of hours at which people will be deemed to be work-ready for full-time work. Currently they have to be able to work 35 hours a week; that will go down to 30 hours per week. This will be amplified by other contributions later, in concert with the fact that now accident compensation will not have to have regard to pre-accident earnings.
Effectively, someone could be earning quite a good income on a salary. The example given by a submitter was a bank teller, who might suffer an occupational overuse injury and cannot work for some period. If the bank needs someone to fill that person’s role and he or she is effectively laid off work, so becoming reliant on accident compensation, that person can be pushed off the scheme when deemed to be work-ready because he or she can work for 30 hours per week, even if he or she was working 40 hours per week previously—and ACC will no longer have to have regard to that person’s pre-accident earnings. So effectively such a person could be forced off the scheme when he or she is able to be a shelf-stacker at a supermarket or something like that, working for the minimum wage. Of course, the levies will go down for the employer, but the level of compensation received by the injured worker will be completely inadequate, and that is unjustified.
Hon Dr NICK SMITH (Minister for ACC) Link to this
I want to gun straight down into the debate on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill because the speech made by Mr Parker showed exactly the sort of area where we do need to have a free and frank debate.
I have some questions for the Labour members. In 2001, they changed the law to the 35-hour test from the 30-hour test. They changed it so that it went up. My simple question to those members is around the fact the Department of Statistics, during the entire period of the previous Labour Government, said that people were in full-time work when they worked 30 hours, and in the Work and Income office, in respect of the invalids benefit and the sickness benefit, it is a matter of Labour policy that 30 hours a week is full time. So why should the person who suffers from cancer and is talking with the Work and Income officer about whether he or she is able to go back to full-time work have the test of 30 hours a week, but an accident victim has a test of 35 hours a week?
Hon Dr NICK SMITH Link to this
That member needs to be able to answer that key point. We see from the Government that the Inland Revenue Department, Statistics New Zealand, and Work and Income New Zealand are all saying 30 hours a week. Why should the Accident Compensation Corporation (ACC) be any different?
The second point, in response to Mr Parker’s contribution, is that he puts a great deal of weight on the data between New Zealand and Australia, but only in relation to the work account. Every time Labour members get to their feet to talk about accident compensation the only thing they want to talk about is the work account, which is about a quarter only of the accident compensation scheme. The earners account, I say to Mr Parker, is in the most trouble. The earners account is paid for by ordinary hard-working New Zealanders and is quite a regressive tax. As people go on to earn higher incomes, they are not hit as hard by the earners account. So it is ordinary workers who are paying for these sorts of costs.
But the real issue I want to gun in on is why is it that Labour members think crims should get accident compensation. I think every New Zealander has sat back, looked at Graeme Burton, seen the way in which accident compensation has provided him with a free leg, and then seen the way that he has gone on and attempted to murder others, and, overwhelmingly, New Zealanders have said that is not right. Labour members say that the law as it is, is OK. Do they know how many cases there have been when a person committing a crime has not gone under the accident compensation scheme in the last 10 years? It is true that such people can apply to the court, and the court can make a ruling. How many in the last 10 years? It is zero—absolutely zip. So Labour members are arguing that the current law works fine, yet in 10 years there has not been a single case where the court has imposed disentitlement. The last court case involved a person convicted of dangerous driving that resulted in very serious injuries. ACC took it to court and asked that the lump-sum payment that that person was entitled to not be provided. The court said that the test in the current law is so high the person should receive his or her lump-sum payment. So, effectively, Labour members are saying that law is OK and crims who injure themselves should be able to get lump-sum payments, income compensation, and full rehabilitation. In my view, that is wrong.
Let us go back to the founding of the accident compensation scheme. It was about losing the right to sue. If I commit a criminal act, who do I sue? Who will I sue to try to get some compensation payment? National members say that the community does not owe compensation to those who injure themselves when committing serious crimes, and that, along with the hundreds of letters that I have seen from New Zealanders, is why I say there is support for that sensible change.
Hon MARYAN STREET (Labour) Link to this
There was so much that was wrong with that last speech from the Minister for ACC that it almost beggars belief. I will start at the beginning of this process. The accident compensation system is one that, we all know, is second to none in the world. It is something that other countries aspire to; they wish that they had been visionary enough to put it in place 40 years ago, as New Zealand did. The Injury, Prevention, Rehabilitation, and Compensation Amendment Bill offends against each and every one of the five principles that the accident compensation system is predicated upon. Not one fundamental principle of our accident compensation system is not infringed, broken, or damaged by this bill. The first of the principles underlying the accident compensation scheme is community responsibility. They also include real compensation, complete rehabilitation, comprehensive entitlement, and administrative efficiency. I will deal with each of these.
The community responsibility principle was the one that Owen Woodhouse and his commissioners outlined beautifully in the Woodhouse report. It was about the fact that workers should be compensated for injuries because they cease to be productive economic units when they are out of the workplace. He extrapolated beyond that to include women. In fact, if one reads the Woodhouse report, one sees that the mores of the time are reflected in it in that the expectation was that women would be at home and that men would be in the paid workforce. In order to accommodate women who were supporting the productive worker—to use the old term—the accident compensation system was extended to non-work injuries. That was how it came to cover non-work injuries. The community responsibility principle meant that everybody shared. If we all paid a little, we all would get a lot. The motorcyclist who comes off his or her bike is welcome to my share of the earners levy, because there may be a time when the amount that he or she pays is of benefit to me when I have a motor accident or a non - work-related accident, for example. What everybody pays in as an earner or as a motor vehicle owner benefits everybody. I am happy to work on that basis. This legislation offends that principle by the fact that it is predicated on a private insurance model. National cannot get past the idea that we are talking about State-funded insurance, and it would like to hand it over to the private sector as soon as possible.
The second principle is real compensation. Clause 55 offends against real compensation. I ask members and the Associate Minister for ACC, who is sitting in the chair, to think about that. Clause 55 addresses compensation for casual workers. If anything in this bill does not look like real compensation, it is this clause. It reduces the kind of compensation that a casual or part-time worker can expect to get. I will elaborate on that a little bit later.
Clause 4 offends against complete rehabilitation. There is reference to the move from 35 hours to 30 hours. The Minister was talking about workers who had worked 35 or more hours a week being considered to have worked full-time; that is because they were working 35 or more hours prior to their accident or their injury. What we will have now is not complete rehabilitation back to working 35 hours in the job they were working in before, but partial rehabilitation back to working 30 hours in some other occupation. So that is another principle offended against, and infringed by, this legislation.
The fourth principle is comprehensive entitlement. Let us look at clause 6 in Part 1 to see whether it refers to comprehensive entitlement. Clause 6 refers to hearing loss of 6 percent or more that has been caused by a personal injury. According to audiologists, and also, I believe, submitters who came before the Transport and Industrial Relations Committee, 6 percent represents considerable hearing loss. I ask why people who, because of injury, have a hearing loss of just under 6 percent should not be able to access hearing aids and devices to allow them to hear comprehensively, which they were able to do before their injury. That infringes and offends against the principle of comprehensive entitlement. Now one cannot have a 1 percent, 2 percent, 3 percent, 4 percent, or 5 percent hearing loss; it has to be 6 percent or more to get compensation. That is not comprehensive entitlement.
The fifth principle that is offended by this legislation is administrative efficiency. What was broken? The overseas comparison that was done by PricewaterhouseCoopers showed, in fact, that our accident compensation scheme worked at a higher level of efficiency and rate of return than any comparable system overseas. So it was not broken. What this bill will do is create disputes. It will create a crowd of people who want to sue. It will open the door to pressure to sue and will create an administrative nightmare. In that respect, this bill offends against the principle of administrative efficiency.
When an organisation is deemed to be as efficient as the Accident Compensation Corporation is in administering the scheme, then there is no need for the comprehensive, wholesale reduction represented by this legislation. This legislation is about people paying more and getting less. It is about increasing levies where they did not need to be increased—and I will come back to that point in a later speech—and, at every turn, depriving New Zealanders of entitlements that allow people time to recover, time to rehabilitate, time to get back into the workforce in their original occupation where that is humanly possible, and time to get back into the earning stakes that they were in previously. That is also offended against by this legislation. There will not be any consideration of previous earnings, under this bill. It will not matter what workers earned before their injury; it will matter only that they can do 30 hours’ worth of something, which may not be remotely connected to or anywhere near as well paying as the job they had before their injury. And that is meant to be satisfactory for New Zealanders.
This is appalling legislation. It is founded on a misunderstanding—that is the most complimentary way that I can think of saying it—of every single one of the principles in the Woodhouse report, which gave us a first-class and a world-class worker compensation system. This legislation is destroying something that is profoundly precious to New Zealanders. My colleagues will take up some of the individual points in a moment, but it is clear that not one single principle of the accident compensation system in the Woodhouse report is not broken, damaged, or offended against by this legislation. It is a travesty. I feel sorry for the officials who have had to front up and try to prepare something along the lines of the Minister of ACC’s wishes. They cannot have their hearts in it, because most of those I know are committed to the accident compensation system.
DAVID BENNETT (National—Hamilton East) Link to this
I will follow on from that speech from Maryan Street by thanking the officials for their hard work on the Injury Prevention, Rehabilitation and Compensation Amendment Bill. It is a large bill, and they did their work on it in a very timely manner, so I thank them very much for their work. I also thank all the submitters throughout New Zealand who took an active interest in the bill. Many submitters related their personal circumstances to the Transport and Industrial Relations Committee, but many also represented points of view in relation to accident compensation and what they see as the fundamental concept behind the scheme.
Following on from the previous speech, in which the member talked about the Woodhouse principles, I think it is important to remember that some of the changes made in this bill relate to things that have occurred subsequent to the adoption of the Woodhouse principles on which the accident compensation system was set up. It is not right for members opposite to say the bill is against the Woodhouse principles, because many of the recommendations in this bill relate to things that have been done subsequent to the Woodhouse principles being invoked in the original legislation. I think that members and people out in the community who are listening to this debate need to be aware that the Woodhouse principles are firm, and that the accident compensation scheme is here to stay. In this bill we are making sure that the scheme can survive and be there in the future, to deliver on the Woodhouse principles and to deliver what people expect from it. That is the nature of being in Government at the moment. The Government has to deal with some issues. We have to deal with the financial circumstances that the scheme is in and provide a platform for it to go forward, so that it can deliver the kind of comprehensive care that people expect in order to get back into the workforce.
The measures contained in this legislation are not mind-boggling in the sense that they change the fundamental approach to accident compensation or worker compensation in New Zealand. In fact, many of the things in the legislation relate to something that most political parties are in alignment on—that is, the extension of the full funding date. Most political parties, in the select committee, were very supportive of doing that. Only one party, the Green Party, was not supportive of it. Those members see the situation in a different light from the other parties. But the Labour Party is very supportive of extending the full funding date; it is that party’s policy to extend it. Those members want to extend it as much as the National members do, but they will not vote for it. It is something that they want to do, but they will not vote for it. It is very disappointing to see the Labour members not voting for something that they believe in, but I ask what one would expect other than that at this stage of the legislation. Those members are denying support for this legislation on the basis of what is in vogue. They are doing so because they think the appropriate way forward is to put up a fight, but we actually need to look at what the best thing is for the accident compensation scheme, and I say this legislation delivers the changes that are best for the scheme.
I will now look at some of the changes that have occurred. Changes have been made with regard to casual workers, part-time workers, and non-earners, and to do with the abatement of holiday pay. There are some changes to vocational rehabilitation. Changes have been made to the eligibility threshold for hearing loss, and to the provisions to do with wilfully self-inflicted injury and suicide. There has been a strengthening of the disentitlement provisions for criminals. The bill allows some safety incentives for employers and vehicles. There are also changes to the financial reporting provisions. All those provisions deal with trying to provide a stronger accident compensation system going forward.
When I look at some of the changes, such as reversing the entitlements for wilfully self-inflicted injury or suicide, or strengthening the disentitlement provisions for criminals, I find it amazing that Labour members come into this Chamber and want to strengthen the entitlements for criminals. Those members want to see criminals get a better result than other New Zealanders do. They want to see criminals be supported and the accident compensation system go down the tubes, which would hurt ordinary New Zealanders who do not have criminal convictions or a criminal record. When we look at the provisions on allowing safety incentives for employers and vehicles, we see that they will lead to a stronger accident compensation system. We are setting up a situation where we can take into account workplace history.
KEVIN HAGUE (Green) Link to this
I would like to begin by sharing the thanks that David Bennett has just expressed to submitters and officials. I thought David Bennett was a very fair chair of the committee, and I appreciated his performance.
The Minister has raised the matter of the initial bargain that New Zealanders struck in creating accident compensation: the social contract. I refer to the submission of the ACC Futures Coalition about that social contract: “The significance of the social contract cannot be overstated. In giving up the right to sue for covered injuries, the public necessarily gave up all the Court-ordered remedies which flow from civil suits. These included: complete compensation for lost earnings (both past and future), compensation for pain, suffering and loss of amenity, compensation for loss of congenial employment, compensation for handicap in the labour market, compensation for loss of pension, as well as compensation for the cost of treatment and/or rehabilitation.”
The Government is now seeking to renegotiate unilaterally the terms of that social contract. The Government cannot, simply by expressing a commitment to the Woodhouse principles, pretend that this bill is upholding those principles. I want to work through them in a couple of speeches, beginning with the community responsibility principle. Over the years Governments have moved towards a model for accident compensation that did not resemble the original form for accident compensation but instead resembled a private insurance model. This bill takes accident compensation further in that direction.
The bill provides for new regulatory powers to introduce experience rating and risk sharing into the accident compensation scheme. This will facilitate the introduction of no-claim bonuses, higher or lower levies for individual employers based on injury record, and risk rating for motor vehicles and owners of motor vehicles. It sounds like insurance to me. As Sir Owen Woodhouse pointed out, provisions such as these run counter to the community responsibility principle and have no place in the no-fault scheme that accident compensation is meant to be.
The community responsibility principle recognises that the various activities we undertake in society are interrelated, and that benefit and harm flow on to others. The community responsibility principle recognises, for example, that even though a disproportionately high number of motor vehicle injuries involve motorcyclists, a significant proportion of those injuries are caused by someone other than the motorcyclist. The community responsibility principle also recognises that increased use of motorcycles, where practicable, has environmental benefits if single occupant car usage is consequently reduced, as the greenhouse gas emissions generated by motorcycles are significantly less than from cars.
Experience rating and risk rating run counter to this principle. The experience rating of employers was found to have negative impacts when it operated in the 1990s. In particular, it had a negative financial impact on the accident compensation scheme. More funds were paid out in levy rebates resulting from positive experience ratings than were received in loadings on levies due to negative experience ratings. It seems particularly bizarre that when the Government is attempting to paint a picture of financial strife in the scheme, it proposes to introduce a policy that will have a negative impact on its financial performance.
The formula for experience rating changed each year in an attempt to address the above problem, resulting in year-to-year uncertainty for employers. Experience rating placed pressure on Accident Compensation Corporation staff to remove costs by moving claims from the work account to other accounts, and increased the likelihood of employers contesting whether an injury was a work injury, with the resultant uncertainty and delays in cover and rehabilitation for the injured person. The Accident Compensation Corporation was required to spend significantly more time and money in defending cost allocation through the dispute resolution process, rather than focusing on the rehabilitation of claimants.
I come now to the principle of comprehensive entitlement. Maryan Street has already spoken a little about the issue of the removal of cover for hearing loss. The removal of the right to be covered by accident compensation for people who suffer a hearing loss of less than 6 percent erodes one of the core Woodhouse principles upon which the scheme was founded—that of comprehensive cover.
Hearing loss has only ever been covered by the scheme if it has been caused by an accident, by the work environment of an employee, or by medical treatment. A claimant does not get accident compensation cover if it is caused by a natural process or by disease or infection. But even if hearing loss is caused by an accident or by the work environment, this bill will deny accident cover to someone who is only a little bit deaf due to that cause.
The Transport and Industrial Relations Committee heard from very many submitters who said that a 6 percent hearing loss is very much more than just being a little bit deaf. So claimants with low-level hearing loss caused by industrial deafness will have to meet the cost of hearing aids and any other costs arising from it themselves, even if their overall hearing loss attributable to all causes is significant. This is like denying people cover if they have only small fractures or only minor ligament damage. Given the stocktake now under way, this has the potential to be the thin end of the wedge for removing cover for injuries that are considered minor. In going down this path, what is next? Who is next? Will a person be denied cover if he or she has only a small fracture?
The disentitlement provisions of this bill also erode the principle of comprehensive entitlement. The Minister has made much of the disentitlement provisions in relation to criminals. I made the point at the select committee, and I make it again now, that the disentitlement for this category of persons amounts to a double penalty. A person who commits a crime is punished for his or her crime. The punishment is proportional to the crime the person commits. By denying people cover from injury rehabilitation and compensation, that person is effectively punished a second time, but punished in a way that is disproportionate to the crime they have committed, whereas the “repugnant to justice” provision in the existing law actually deals with that perfectly adequately.
I want to talk about the disentitlement resulting from intentional self-harm or suicide, because at the very core of accident compensation is the principle of no fault. The punishment that this bill seeks to impose on the families and dependents of those who have harmed themselves at their own hand is a fundamental breach of that no-fault principle.
I come now to the principle of complete rehabilitation. I agree with the ACC Futures Coalition that the existing vocational independence provisions are already a breach of the Woodhouse principle, but the provisions in this bill take that breach further and rip it further apart. The bill removes the requirement that the vocational assessment of suitable work takes into account a claimant’s earnings before his or her incapacity, and we have already heard about that in this debate.
A claimant who is earning, say, $1,500 a week before his or her injury will have that weekly compensation stopped if he or she is found to do be able to do some job for 30 hours a week that pays only the minimum wage. This runs counter to the purpose of the Act, which is to rehabilitate injured claimants to the greatest extent possible. It is an exercise in cost transfer. It transfers the cost of rehabilitation from the State—from the Accident Compensation Corporation—on to Work and Income, to the injured people themselves, and to their families. So that is a fundamental breach of yet another Woodhouse principle.
I come now to the Woodhouse principle of real compensation, and, in particular, to the provisions of the bill in relation to holiday pay and the erosion of cover in the bill for seasonal and casual workers. The bill will result in holiday pay paid on the termination of employment being treated as earnings for the purpose of abating weekly compensation. This proposal is both unfair and an erosion of workers’ rights. Holiday pay accrues in respect of time when a worker, subsequently injured, has not yet sustained an injury.
Hon Dr NICK SMITH (Minister for ACC) Link to this
I want to respond to a couple of points about the Injury Prevention, Rehabilitation, and Compensation Amendment Bill raised by the Green MP Kevin Hague, when he talked about a fundamental attack on the Woodhouse principles. Let me firstly deal with the awful and tragic issue of suicide, where he said the bill breached the Woodhouse report. The opposite of that is true; it is absolutely the opposite of that. The Woodhouse report dealt with the sensitive issue of self-harm and suicide. Owen Woodhouse concluded that it was not right that an accident compensation scheme provide cover for that situation. That cover was only included as an add-on to the scheme during the term of the previous Government. It was only an add-on put in place by the previous Government; it was not recommended in the Woodhouse report.
The simple question I have for Mr Hague is this. If a family loses a loved one from heart disease or from cancer, what is the entitlement of the family who is bereaved? The answer is that they are eligible for support from Work and Income. So the real question I have for Mr Hague and the Labour members is why people who take their own life should have their families treated more generously than the families of those who tragically die from heart disease, cancer, and many other ailments. That is the real question.
Hon Steve Chadwick Link to this
Does the member understand about blame and family blame? That’s so sad.
Hon Dr NICK SMITH Link to this
The second challenge I would give to the member who is chipping in is this: why, when Labour extended the scheme to include suicide and self-harm, did it not fund that?
Hon Dr NICK SMITH Link to this
The member says “For goodness’ sake.” If the Labour members want to extend schemes like the accident compensation scheme, someone has to pay for it, and we should be honest and upfront about that. It is dishonest for Labour members to argue in this Chamber that we can have those extensions to the scheme, but that nobody has to pay for it. That is not true.
The next question I want to deal with is the issue of the limits in respect of the questions—
Hon Dr NICK SMITH Link to this
That is Maryan Street again. Let me show members where she is being quite dishonest. She signed the accounts for the Accident Compensation Corporation (ACC) in June—
Hon Dr NICK SMITH Link to this
That is right. Maryan Street signed a set of accounts that showed a $2.4 billion loss when she was the Minister. That was based on a model of full funding, not the cash-in, cash-out model that she is trying to drag us into now. She said, when she was the Minister, that the proper accounting rules for ACC were for full funding. I acknowledge that the Green members are quite upfront and honest about the fact that they do not support full funding; they want “pay as you go”. That is fair enough. I do not agree with them, but at least they are consistent.
I have a simple question for Labour members. Labour members are saying that when they were in Government, they supported full funding. In fact, they actually extended full funding to other accounts. But when we get into the debate on this bill, they suddenly want to change their tune and use the numbers on a “pay as you go” basis. So I have a simple challenge for Labour members: are they in favour of full funding or “pay as you go”? Is Labour in favour of “pay as you go” or full funding? We are in favour of full funding, the Green Party members said they are in favour of “pay as you go”, but what is Labour’s position? Here is a fundamental policy issue about accident compensation. The spokesperson on accident compensation, David Parker, says Labour is in favour of full funding, and Maryan Street, who was in favour of full funding when she was the Minister, does not know what she favours. Members can only conclude that Labour members have no idea what they stand for in respect of accident compensation.
Then we come to a further issue, around holiday pay. The Green member argued, and Labour members have also argued, that people should somehow be able to receive accident compensation and their holiday pay entitlements at the same time. For goodness’ sake, in building our welfare State and social provisions such as holiday pay, accident compensation, and benefits, whenever did we say that people should be better off when they are off work after an accident than when they were working? That is what that means. The Labour and Green members are arguing that people should be better off after an accident than they were when they were working. That is not sensible; that is not sound. They say people have earned their holiday pay. Of course they have, but nobody is denying them the right to their holiday pay. We are simply saying they cannot receive holiday pay and accident compensation at the same time if they are not returning to work.
Let us be very clear what the provisions of this bill do. If people are off work temporarily—let us say they are off work for a month—this bill makes it absolutely plain that they keep their holiday entitlements. They do not have to use them as a substitute for accident compensation. But if people are to receive accident compensation permanently, they cannot get both. I think that is fair. Members are saying we can have these double add-ons because they are totally unbalanced in their view of the levy payers who actually have to pay for that.
What was most extraordinary from the Green member was the argument that crims should get accident compensation income lump sums, because otherwise—
Hon Dr NICK SMITH Link to this
This is very interesting. The Labour members are arguing that crims should be able to get compensation. The most interesting part in the minority report is this: “Labour members agree that … an offender like Graeme Burton should not receive lump-sum or earning-related compensation.” But who was in Government when Graeme Burton committed the awful tragedy against Karl Kuchenbecker? Who was the Minister? It was Maryan Street. Did ACC apply to the court to have him disentitled? No. Well, who is to blame? It is Maryan Street.
Hon Dr NICK SMITH Link to this
That is a good question. Who was the Minister at the time? It was Maryan Street. You know, during Maryan Street’s time as Minister there was not a single occasion when there was disentitlement for any criminal.
I am looking forward, as all members of the Government are, to getting out on the traps to argue that a vote for Labour is a vote for accident compensation for crims, and a vote for National is a vote for a party that takes a more balanced and reasonable perspective than that. We say that whether or not people commit a crime, they should get medical care. But I find it offensive that a person who has committed a criminal act then gets a lump-sum accident compensation payment, and that is why we are making that change.
The last point I want to note is in respect of the issue of hearing loss. Both the Labour and Green members effectively say we can have a limitless scheme. They argue against levy increases, but say we can have a scheme that goes for ever. I went along to my local audiologist and had a test, because I wanted to have a feel for these provisions. I did a lot of tractor work in my student days, and I was advised by my audiologist that I have a hearing loss of about 1.9 percent, which is within the frequency that is work-related. Those members say I should be able to claim accident compensation for that, because they believe in a limitless scheme. National members say that is not possible. When we look at the huge increase in cost associated with hearing aids, it is our view that there need to be some sensible limits. Australia has a minimum hearing loss limit of 5 percent in some states, and of 6 percent in others. The UK, other developed countries such as Canada, the US—
Hon Dr NICK SMITH Link to this
The member says it is heartless. I just think that is left-wing mumbo-jumbo from a member who is disengaged from the real issues of cost in respect of accident compensation and the fact that someone has to pay for it.
The simple question is whether the Labour members believe that I should be able to get an accident compensation scheme - funded hearing aid? We say no to that on this side of the Chamber. My hearing loss is not bad enough, at only 1.9 percent, to need a hearing aid, but if the hearing lost is over 6 percent, then people do. The members opposite do not want to acknowledge that accident compensation cannot be limitless. They want to promise everybody every little entitlement out there and somehow pretend that someone does not have to pay for it. That is not the case, and that is why members opposite are incorrect.
MOANA MACKEY (Labour) Link to this
I am happy to stand and take a call in response to some of the comments of the Minister in the chair, the Hon Dr Nick Smith. He said in his first call on the Committee stage of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill that he really wanted to have a proper debate about this legislation. I say to the Minister for ACC that if he is genuine about that, then he should stop misrepresenting what Labour members have said and believe, and he should stop misrepresenting the information that the Transport and Industrial Relations Committee was given. If he is genuine about having a proper debate about accident compensation, then he needs to tone down his hyperbole and his rhetoric. I say to that Minister that if the only way he can make his arguments is by misrepresentation and exaggeration, then he has to seriously question how strong his arguments are. That is all I have heard from that Minister, and it is disappointing. It is very disappointing, because this bill is immense in its impact on New Zealanders and on their families.
I find it incredibly offensive when David Bennett and the Minister in the chair get to their feet and say that Labour likes criminals, that it thinks that criminals should get a free ride, and that it thinks that criminals should have all their accident compensation paid for. The Minister knows that that is not true. In fact, he read out the part of Labour’s minority view, attached to the bill, in which we said we do not believe that Graeme Burton should have received that funding, that there is a problem, and that it is up to the Accident Compensation Corporation (ACC) to take action if it believes that that is appropriate. It is not up to the Minister, and the Minister knows that. He accused Maryan Street of not stopping that happening, when he knows full well that she did not have the power to do that when she was the Minister for ACC. Again, I say to the Hon Nick Smith that if he has to misrepresent the law to that extent, then that throws into doubt his credibility and his arguments.
ACC has the power to disentitle people now—it does. And if there are reasons why the corporation is not doing that, then the Minister should find out what those reasons are. As the corporation has said, sometimes it does not know whether those people have been convicted. It does not know if they have been found guilty. It assumes they are innocent until proven guilty. If there is a problem with information sharing, then the Minister should address that, and Labour members have said they would support his action. But the Minister should not introduce—
I tell the Minister we are opposing everything else in this Draconian legislation, but I say there is no need to go that far.
The Minister talks about Graeme Burton. I want to take the debate back down to the other end of the scale, and ask the Minister about people who face large fines and reparation. Under the Minister’s legislation, wealthy people, who can pay those, do not lose their entitlements. But they have done the same thing as poor people who cannot pay, and who have had to go to prison. Wealthy people who can pay their way out of that are not disentitled, but poor people, who have had to go to prison because they do not have the money to just pay the fine or reparation, are disentitled. I ask the Minister how that is fair. How is it fair that someone who can pay that is not disentitled, and someone who cannot pay it is, for exactly the same offence? Let us be clear: when we are talking about this, we are not only talking about the Graeme Burtons of the world. Most people agree that it would have been an appropriate action to have him disentitled for that.
But we are talking about someone who is driving home from work after working three shifts, who is really, really tired so should not be driving, and who causes an accident that harms someone else, and harms himself or herself in the process. That person would be disentitled, and his or her family would be disentitled. But someone who does a stupid manoeuvre on the road and overtakes unsafely—[Interruption]—they would be disentitled, I say to the Minister. Under his law, they would be. But people overtake unsafely, they speed, and they cause an accident. It is wrong, it is bad, and they should not do it, but those are also the people we are talking about. We are not just—
You see, this is what worries me—what I am saying is absolutely true, but the Minister is just shaking his head and saying that it is not true. What concerns me about the approach of this Minister—and he knows what he is talking about—is that this is not someone who is not intelligent. This is an intelligent Minister, who knows that what I am saying is right.
Dr Ashraf ChoudharyRight. Well, Mr Woodhouse has decided that what I am saying is not appropriate enough or relevant enough for him to take seriously. He has just said that David Parker and Maryan Street are not intelligent. I thank Mr Woodhouse for his contribution to the debate—stellar, as usual!
I am trying to say that this Minister knows that what I am saying is true. Under his legislation such people would be disentitled, because their offence can result in a sentence of 2 years or more. They would be disentitled; their families would be disentitled. We will point out the section to the Minister where that clause is. So if a worker causes an accident and harms someone when driving home when really tired because that person works three jobs and should not be driving, then he or she is disentitled.
MICHAEL WOODHOUSE (National) Link to this
I am very happy to take a call on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill during what will be a pretty long evening, I think. I will start firstly by acknowledging the honourable member Kevin Hague for his contribution to the Transport and Industrial Relations Committee, as well as to the debate in the Committee of the whole House today. He is not a permanent member of the committee, but he made a very considered contribution. I strongly disagree with many of the principles that underpin his view, but I certainly acknowledge the clarity of his position. I also acknowledge the officials. I do not feel sorry for them; I do not think they need anyone to feel sorry for them. They are a very intelligent bunch. They discharged their duties well, dispassionately, and in accordance with the policy framework that the Government set them.
I come back to the member Mr Hague’s questions about breaches of the Woodhouse principles as set out in the royal commission report. He mentioned community responsibility as an example of a breach by the Government in this bill, and he used the example of experience rating. I suggest to the member that we already have experience rating. It is in the form of industry classifications. It is not a question of whether that is a form of experience rating; it is a question of degrees. We accept the principle of community responsibility. Everybody pays. The member Ms Street talked about the example of the motorcyclist who had been prepared to pay a levy. It is insurance 101. It is accident compensation 101, even if one does not want to call it an insurance scheme. However, I think that even Mr Hague would reject the notion that workers in the forestry industry, the fishing industry, and the other very high-risk industries should pay the same premiums as office workers or casual cleaners. That is a form of experience rating. What I am trying to point out is that we can have community responsibility, but we are talking about degrees.
I think the member Lynne Pillay’s interjection on the Minister in the chair, the Hon Dr Nick Smith, summed up the attitude of the members on the other side of the Chamber. She said that Labour’s changes that moved away from the Woodhouse report principles were improvements, but that the Government’s changes were somehow breaches of the report. I think that sums up the attitude of the Opposition on this matter. It is not rational. The finance-change deniers continue to think that we can have a scheme without constraint, and that simply is not possible. They think that we can continue to have cost increases five times the rate of inflation, and expect there to be no consequences. The levy payers, the insured, and the people who are claiming have a right to clarity about what they can expect and how much they can pay. The member Mr Parker goes on and on about comparisons with Australia. Those comparisons cannot be made; they are different schemes. I suggest that, if this is such a fantastic scheme, if the principles that underpin this scheme are so sacred, why, in 42 years, has not a single Western jurisdiction followed them?
MICHAEL WOODHOUSE Link to this
Absolutely, but what I am saying is, members should not deify it, say that it cannot be changed, and suggest that it is world leading, when not a single Western jurisdiction has followed it. In relation to levy increases, there is an idea that somehow, because Australia’s levy rates are a bit higher than ours, that that is OK, we can continue to lump cost increase on top of cost increase on employers and expect them to pay. Well, that is simply not the way business works, but I would not expect members on the other side of the Chamber to understand that.
I will move into an area, though, where I think we did agree. The Minister is not sure and I am not sure, but I think it is still Labour policy that full funding continue. The Greens have been very clear in their principled stand against full funding, and I think the committee respected that. They would like the scheme to go back to a “pay as you go” basis. That must be incredibly awkward for Labour, because their members say they support the concept of full funding, but just about every single union came to the select committee and said that they did not. The Service and Food Workers Union, the Council of Trade Unions, the Maritime Union, the Rail and Maritime Transport Union, the New Zealand Nurses Organisation, the New Zealand Educational Institute, the Public Service Association, and FinSec all said they did not want full funding. But here is the thing: in response to questions about when they had previously articulated that view, they could not say. Did they oppose it in 1998, when full funding was first proposed? No. Did they oppose it in 2001, when Labour made amendments to the bill? No. Did they oppose it in 2008? No. Not a single representative of the unions had previously said that they did not support full funding. Why would they? Full funding was working.
I want to segue back to the second reading, when the member Ms Street said in her call: “They were meant to be fully funded by 2014, and the National Government at the time”—that is, 1998—“picked the period of 15 years out of the hat. The number was arbitrary. It could have been 10 years, it could have been 20 years, but National said that it would split the difference and make it 15 years.” That is nonsense. I worked for the corporation at that time; I know the people who made those calculations. The calculations were very, very soundly based, they were scientific, and they were intended not to impose an undue burden on employers and other levy payers while we moved towards full funding. Guess what? The scheme was working.
I have shown the graph I have here to members in the Chamber; I want to show it again because it is really important. This shows the path that the scheme, from 1999 to 2014, would have taken to get to the point when 100 percent of the assets matched the liabilities. Not only were we on track until about 5 years ago, but we were actually ahead of the game. The red line shows the actual proportion of assets to liabilities against where we would have needed to get to, to get to 100 percent by 2014. We were ahead of the game. But it is pretty easy to see where the downturn came in. Was the downturn in 2009, when we had the largest recession in 80 years? No. Was it in 2008, when we had the wobbles and went into what Mr Cullen called a technical recession? Was it in 2007, when things were not great but also not bad? Actually, the downturn, when we were at 70 percent and then tanked, was in 2006. It was at a time when the rates of return on the corporation’s investments, and on the sharemarket generally, were at a really, really good rate.
So let us not pretend that being thrown off the path to full funding in 2014 has anything to do with investment returns. Yes, we had had problems with investment returns, but in my view it had everything to do with sloppy management and oversight at a policy level, which allowed the corporation to take its eye off the rehabilitation ball, and the finance-change deniers on the other side of the Chamber to think there did not need to be any fiscal constraints—the come-one, come-all policy.
I wonder what those 42,000 people who were callously thrown off district health board waiting lists thought they would do to get their surgery and their hearing aids. Well, I know what they did. They went back to their general practitioners, faced with absolutely impossible odds. They had a craps-shoot with the corporation, and some of them won. Why did they win? Private insurers said that the corporation had to give a “decline” letter before the private insurer would pay for their surgery. What happened? Surgeons would put the application to the corporation, and the corporation would accept it. Why? That was the culture that was set up. But there needs to be more fiscal constraint, and I think the Opposition supports the move to extend full funding. I know that Opposition members do not agree with why, and that they will still come up with that trumped-up privatisation agenda that I know the Minister will refute soundly in this Committee stage. But I would still like a member for Labour, from the other side of the Chamber, to take a call and say “We support full funding and here’s why.”, because I do not think we have any notion of whether they do or do not.
DARIEN FENTON (Labour) Link to this
I have news for that member: unions and the Labour Party sometimes disagree. We do not always agree on everything, just as I hope that Business New Zealand and the National Party do not always agree on everything.
Or the Business Roundtable—who knows?
I will talk a little bit about Part 1, but I want to explore the issue of privatisation, given that the member has raised it. I look forward to the responses of the Minister in the chair, the Hon Dr Nick Smith, to my comments.
Part 1 contains some pretty miserable provisions—the so-called cost containments—despite the fact that just about all the Government departments advised the Minister, and the select committee, actually, that these provisions would primarily affect low-income Māori, Pasifika, and other workers, and the vulnerable, and would shift costs to health and welfare, and to the injured workers themselves.
Part 1 creates the platform for returning to the past—or back to the future—and for the privatisation of the scheme. The Government says that the bill is about cost containment and saving our accident compensation scheme, but we know that the changes in this bill are a prelude to privatisation, which National has admitted it is working on; it is part of the deal with the ACT Party. National wants to reduce the accident compensation costs in order to make the scheme attractive to private insurers.
Merrill Lynch (Australia) says that privatisation of the work account means $2 billion in revenue for Australian insurers, with a profit of $200 million a year. New Zealanders will pay for that. New Zealanders are already paying more and getting less, and that situation will only get worse. So Labour opposes this legislation, and I will go into why. First of all, I say that the scheme is not broke—
Hon Dr Nick Smith Link to this
I raise a point of order, Mr Chairperson. We are dealing with Part 1. There is no clause anywhere in this bill that has provisions for competition or privatisation. The member says she will go into great detail about it, but it is not one of the provisions in the bill.
I do want to recall what happened the last time National played with accident compensation. National has been in Government before, and it created a nightmare for workers in the past. I see Part 1 as a repeat of that.
That is true. The language of the Government is about providing choice. We have heard from the Government in this debate that this bill is about providing choice for people.
That is right. The last time National had the reins of power it used exactly the same language, but the only choice we are talking about here, really, is choice for employers—to choose between insurers competing for business. There was no choice for injured workers. So what happened? Well, it was inevitable. We saw what happened the last time the National Government had a go at privatisation. Privatisation is on this Government’s agenda. It is not in the bill, but the bill creates a platform, through the arguments about funding and about cost containment, for making the scheme much more attractive to private insurers.
There are several things in this bill that we will talk about as we go through Part 1, and I am happy to address them. But I make the comment that others have expanded their comments way beyond Part 1, so I am a bit disappointed that I cannot do that. The provisions in Part 1 that Labour members will be addressing are things like the lack of focus on the importance of accident prevention.
The fact that the Government is now proposing to change the bill’s name from the Injury Prevention, Rehabilitation, and Compensation Amendment Bill to the Accident Compensation Amendment Bill says that this is not about injury prevention; it is about accidents. We are getting something that is all about accidents. There is nothing in the bill about injury prevention. The previous Labour Government was very big on injury prevention, but now we are seeing cuts to health and safety training, and provisions—cuts here and cuts there—that are cutting back injury prevention.
The other things we will talk more about in Part 1 are the changes to vocational independence. I am really looking forward to exploring why the Minister does not understand that 35 hours of paid work a week is not the same as 30 hours of paid work a week. It is 5 hours a week less. That is a problem for people—
Well, that is true, but that is a real problem for people who are trying to get back into the workforce, and who are trying to make ends meet. We will also talk about the cover for work-related gradual process injuries. That is also an issue, as changes to the three-part test are blatantly unfair. We will also talk about holiday pay; I am looking forward to debating that.
Hon Dr NICK SMITH (Minister for ACC) Link to this
I challenge the previous speaker, Darien Fenton, over the proposed change of the name for the Act. Opposition members are very offended that the Supplementary Order Paper I have tabled states that we should call the legislation, when passed, the Accident Compensation Act. Actually that was the name of the Act from 1974 until 2001. Are they saying—
Hon Dr NICK SMITH Link to this
No, I am simply saying that we should call it what it is. Darien Fenton is concerned to point out that the legislation is about injury prevention, but let me tell members the record: in the time during which the name of the Act was changed to the Injury Prevention, Rehabilitation, and Compensation Act, the number of injuries was 1.34 million. In the 8 years that the Act has been called the Injury Prevention, Rehabilitation, and Compensation Act the number of injuries has actually gone up by 300,000. So my question for the member is whether by changing the name of the Act and calling it the Injury Prevention, Rehabilitation, and Compensation Act, we have prevented any injuries. The record is awful. If I look through the 1990s, I see that in the last 5 years when the Act was still called the Accident Compensation Act—which I think most New Zealanders would call it—the rate of injury increase was a whole lot less. So that shows that changing the name of an Act actually does not change much, at all. It is an exercise in politically correct nonsense.
Kelvin DavisHon Dr NICK SMITH Link to this
Let me tell the member exactly why we should change it. If the average New Zealander out there wanted to know what his or her rights were under the accident compensation scheme, and looked up the Act on the web, what would the person look for? I would look for the Accident Compensation Act, but how many people would know that the Act is called the Injury Prevention, Rehabilitation, and Compensation Act? I say that very, very few would. So in answer to the member, I ask: why not call it what it is? Why do we have an Act that is principally about accidents but that does not mention the word “accident”? Why is the word not—
Hon Dr NICK SMITH Link to this
Well, this is simply about rejecting the politically correct nonsense that drove the previous Labour Government for 9 years, when it believed that if it changed the name of the Act, suddenly that would fix things. The truth is that over the last 9 years when Labour was in Government, rehabilitation rates got worse every single year. When Labour changed the name of the Act, injury prevention failed, and the number of injuries increased in each and every year. This Government is a pragmatic and common-sense Government that says we should call the Act what most New Zealanders would look for—that is, the Accident Compensation Act.
Hon DAVID PARKER (Labour) Link to this
I want to take the Minister in the chair, the Hon Dr Nick Smith, to task with his misrepresentation of Labour’s position in respect of criminals. This is really populist policy on the part of National: “Let’s kick the criminals, again; let’s make it look like Labour’s in favour of criminals, and unfair compensation to criminals.” The first point is this example that is given with Graeme Burton. What a load of rubbish! Under the existing law the Accident Compensation Corporation (ACC) could have applied to disentitle Graeme Burton from any lump-sum compensation or earnings-related compensation. That is absolutely clear, I tell Dr Smith. The existing legislation provides for that. I do claim some expertise in this: I am a lawyer. ACC told us that ever since this provision has been in there, to the extent that it can go back in its records, it has only ever applied to the court in 12 cases. In nine of those cases the court agreed and said the person should be disentitled. In three of those cases the court said: “No, that’s wrong. It’s too tough. You’ve had your criminal penalty.” I would almost guarantee that if Graeme Burton had any earnings-related compensation or lump-sum compensation, and ACC had applied to the court and said that he should be disentitled, then the court would have made a wise decision and it would have disentitled him.
But then, really, the Minister went even further than that and complained that Graeme Burton had been given a prosthesis, as he had lost his leg. Now, this is where I disagree with National. What a miserable, inhumane society he stands for if National stands for people like Graeme Burton walking around on crutches. Although Graeme Burton is a bad person, National would have him eventually re-enter society with a stump and no false leg. Does the Minister really want to live in a country where we not only take away a person’s accident compensation and give the person a serious term of imprisonment—and a person like Graeme Burton may never get out of there—but then we stop him getting a false leg? That is what the Minister stands for, and other members in the National Government stand for that too.
I have recently travelled to some Third World countries. One of the most distressing things for me is to see beggars, without legs, on stumps and inadequate crutches. If we as a society stand for not only taking away people’s compensation and giving them a criminal penalty but also have the Minister saying things like: “Look, it’s terrible; he’s had a prosthesis.”, what sort of a country would we be? That is the difference between the National Party and the Labour Party. I tell Dr Smith that that might be popular policy but it is wrong. It is just wrong.
The existing law is adequate. It is not the fault of the Minister or the previous Minister if ACC sometimes does not apply to disentitle when it should in terms of earnings-related compensation or lump-sum compensation. I agree with that. I also agree that there might be problems with the data that ACC relies upon, and that it ought to have more access to criminal justice records so that it can turn up these cases and make the appropriate application. But this change goes far further than that, and, as Moana Mackey says, it applies to anyone who has any sentence of imprisonment in respect of an imprisonable offence that could have a maximum period of imprisonment of 2 years. It does not have to be someone who is imprisoned for 2 years; the person could be imprisoned for a week.
That is where her example about how this causes injustice is most apparent. Someone could lead a blameless life all of his or her life, and make a stupid mistake driving home from work and injure someone coming the other way. The person is charged with careless use causing injury or careless use causing death. The maximum penalty for that is more than 2 years’ imprisonment. The person might be a low-income person and might have other fines that have not been paid because he or she cannot afford to pay a fine. The person gets sent to prison for a month, so not only does the person suffer the criminal penalty but he or she loses all accident compensation. That does not affect just that person; it affects the family. Again, that is not the sort of society I want to live in. I am happy to leave that issue to the jurisdiction of the courts to judge what is just. What is being done here is unjust, and just takes the country in a poor direction.
Hon Dr NICK SMITH (Minister for ACC) Link to this
I welcome the opportunity to have the debate about the criminal disentitlement provisions of this bill, because Labour members are effectively arguing that the provisions in the law as they stand are fine and do work. But if that is the case, why has there not been a single case of disentitlement in a decade? Why has there not been a single case? Those members are standing up in this Chamber and saying that the Minister is being disingenuous, the Minister is being dishonest, because there are provisions in the law right now that allow criminals to be disentitled. Well, I simply say to them that that may be so in theory, but members like me on the Government side are actually interested in what happens in practice. The current provisions do not work; the legal threshold is too high.
Why do we know that? We know that from case law. If we take the most recent example—
Hon Dr NICK SMITH Link to this
How many were there in the last decade? I tell Mr Parker that what has happened—
Hon Dr NICK SMITH Link to this
I gave Mr Parker the decency of hearing him out, so perhaps he might also do the same for me, if he wants to have this debate. In the most recent case where the corporation did go to court, the case was thrown out and the person received lump-sum compensation. Labour members cannot argue about that.
The second thing was that Ms Mackey argued that I was saying that anybody who was convicted of an offence with more than 2 years’ imprisonment would automatically be disentitled—
Hon Dr NICK SMITH Link to this
The member says: “That’s right.”, but she misses out on a key point, and that is where Labour members are not saying what the proposed law says. The provision states that not only do people need to be found guilty of committing an offence with a penalty greater than 2 years, but they need to be sent to prison or have home detention—both those tests.
Hon Dr NICK SMITH Link to this
That is not what Moana Mackey said. The issue and challenge I have is when members opposite point out minor offences and say that a person will lose his or her entitlement. I challenge those members to go to the practical decisions of the court. Do we really think that the average law-abiding New Zealander—the exact example that Moana Mackey gave was of a person who was overtired, crossed the centre line, and was involved in a serious accident—in a court of law will be sent to prison under our current legal system? Not on your life!
Hon Dr NICK SMITH Link to this
No, that is not true, and Mr Parker knows better than that. The reality is that our judges are under enormous pressure. The reality is that most people who drink and drive do not go to prison on a first offence. It is only when there are multiple offences one after another, and gross irresponsibility, that our judges send people to prison or require them to have home detention. That is where Labour members are being quite disingenuous about these criminal disentitlement provisions.
The last bit they are not mentioning—quite deliberately, I suspect—is that there is also a provision for the Minister, if he or she believes that the disentitlement is unfair, to provide an exemption. The further point that Labour is not acknowledging is that there is no question on the part of members on this side of the Chamber that this is a humane society, and that people should get emergency and other care funded by the accident compensation scheme. What we are saying, and what I make no apologies for saying—
Hon Dr NICK SMITH Link to this
Absolutely—Mr Parker wants to raise the Graeme Burton case. I say that Graeme Burton did not get lump-sum compensation, to the best of my knowledge; nor did he get income compensation. The issue there was his prosthesis. I make no apologies for the fact that this bill says that unless a medical practitioner provides that a prosthesis is essential for his day-to-day life, he will not get it. Do I think that New Zealanders welcome the fact that they provided that man with a prosthesis that enabled him to go on and commit a further attempted murder? I have to say, for my part, that I am disgusted that my compensation scheme levies gave that man the mobility to again attempt murder. That is where we do differ.
Hon Dr NICK SMITH Link to this
No, no. What David Parker is ignoring—and I challenge him to look at it—is the video of Graeme Burton in prison, with that prosthesis, attempting to commit another murder. Mr Parker is arguing that we need to provide Graeme Burton with that mobility so he can continue to consider those sorts of acts of thuggery. I make no apologies for saying no to Graeme Burton in that case.
LYNNE PILLAY (Labour) Link to this
I want to start by congratulating the Minister for ACC, because every time he jumps to his feet on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill we see the National Government’s true agenda. I want to take him up on what he said, not in this round but in the round before it. He said the bill is to be renamed with the words “accident insurance”, because that was what the legislation was called in 1990. It used to be called that. That epitomises the back to the future approach of this Government. We did not used to have a lump-sum payment, so maybe we should go back to that situation, too. We used to have only 3 weeks’ holiday pay, so we should go back to that, too. We did not use to have Working for Families, so let us get rid of that, too. Let us go back to all those things. We did not use to have cheaper doctors’ visits, so let us go back to that, too. We did not use to have workers’ rights in this country under a National Government, so let us go back to that, too. There is no excuse whatsoever for the Minister in the chair to get to his feet and say to members in this Chamber that it is OK to do certain things because that is what used to happen. That is the argument that that Minister is running in this Chamber.
I will talk a little more about dog-whistle politics, which is just typical of that Minister. Again, as has been discussed by my colleagues before me, the issue relates to prisoners’ compensation. Nick Smith said a couple of speeches ago that the Government knows that is not right. I say to this Minister that if he had gone out to the steps of this Parliament last week, he would have heard a lot of Kiwis talking about things that just are not right.
That is right; the Minister can laugh. He sits in the chair and laughs. He laughs at people who use their democratic right to come to this Parliament to tell this Minister that the Government’s lousy bill is an insult, and that the Government’s application of the accident compensation scheme is an insult to workers and New Zealanders—to claimants and New Zealanders. That Minister sits there and laughs, with a big smirk on his face. I tell the Minister that that is an insult to all New Zealanders.
But what about the people who rallied outside Parliament? What about the biking community, who said the big hikes in the cost, the lack of support, and the “pay more, get less” campaign were not right? Why is the Minister not listening to them when he talks about what is not right? What about the survivors of sexual abuse, who have been denied their rights by this Government? What about them? They came and said that was not right. Did the Government listen to them? Does the Minister stand in this Chamber and say that is not right, so we should not do it? No, that Minister does not do that. What about the many, many people who have suffered so much stress and anxiety over waiting for their claims to be heard, to be looked at, under this Government, and who in many instances then find, when the claims are heard, that their claim has been denied and they have to go to review? Does the Minister listen to them saying that is not right? No, the Minister does not do that. What about the submitters who came to the Transport and Industrial Relations Committee and opposed the bill in droves—those who came to the select committee, and said this bill is not right? Did the Minister listen to them? No, the Minister did not listen to them.
The other thing that I want to call this Minister to task for is his attitude towards suicide. I find that personally to be absolutely offensive—absolutely offensive. When the Minister was speaking, I was saying that things move on and improve. All New Zealanders are incredibly proud of New Zealand’s accident compensation scheme. It is a social contract, and it is something that we all hold dear. But surely as politicians, as activists, and as people in our communities, we want to improve the situation for all New Zealanders. That is what this Parliament is about. Well, that is what those of us who are now in Opposition understand, and certainly what the Green Party understands, Parliament to be about. When caring New Zealanders are very concerned about suicide in this country, when the previous Labour Government invested so much into suicide prevention initiatives—so much into promoting support for people, and into promoting an understanding of mental health issues—what does this Government do? This Government does exactly the opposite of what Labour did.
When a family suffers the loss of a loved one through suicide, it is an absolutely devastating occurrence. Let us be really clear that if a family suffers that, this new bill sets it out that in that instance, the surviving spouse or partner of the deceased claimant, any child of the deceased claimant, and any other dependant of a deceased claimant are not entitled to any compensation.
The Government is saying “That will teach them; that will teach them. This is punitive. How dare they commit suicide?”. What I find even more offensive is that I was looking at an article entitled “Suicide danger in ACC delay: expert.” Here is the irony: we have a Government whose accident compensation policy is making experts become very concerned that claimants will consider committing suicide, and the Government is saying “Oh yes, but if people do that, there will be nothing to assist their families.” I will tell members something: we hear some pretty reprehensible stuff from the Government side of the Chamber, but I think that this one absolutely caps it all. I think that this one caps it all. I would urge the Minister to stand up and try to explain again to the Committee why he thinks that measure is acceptable.
I also want to talk very briefly about independent accident compensation reports referring to “draining the swamp” in cutting back services. Under the National Government, reports are saying accident compensation has gone too far towards having a customer focus and the Government needs to begin tightening the gateway, by reducing the levels and the costs of treatment provided. I think that using the term “effectively draining the swamp” says it all of this Government’s attitude towards accident compensation claimants and what is supposed to be a comprehensive rehabilitation and compensation scheme. It certainly is not.
We are seeing Labour’s accident compensation scheme, which was the pride of the world and that put New Zealand up there, along with women getting the vote and our nuclear-free policy—which, oops, would have been gone by lunchtime, and which could well go under a National Government—be reduced now to a shoddy insurance scheme, one that, if its terms and conditions were laid out, no one would sign up to.
I also want to talk about people who have hearing loss. [Interruption] I think the Minister’s position is more one of having a closed mind than a lack of hearing. To acknowledge the submitters in this Chamber and the people who gave very comprehensive submissions to the select committee, but for them to see the only acknowledgment of what they said to the select committee in the Green Party’s and Labour Party’s minority view report is an insult to them. I want to talk about the hearing loss provisions, because under the new proposal in the bill hearing loss does not count if it is just a bit of hearing loss. If it is just a bit of hearing loss, irrespective of whether people need hearing aids—irrespective of whether they need that assistance—if it is less than 6 percent hearing loss, then they are not entitled to any assistance. That is just absolutely ridiculous.
There are many, many other things like that. Under Labour, casual and seasonal workers were covered, but under this Government’s bill they will become another group of workers who will miss out on having assistance and coverage. That is an insult to workers.
The CHAIRPERSON (Lindsay Tisch) Link to this
Before I call the next member, the comments made by Miss Pillay related to Part 2. Hearing loss comes under Part 2. I just remind members that we are on Part 1.
The CHAIRPERSON (Lindsay Tisch) Link to this
OK, but certainly hearing loss is mentioned in detail in clause 52. I call the Hon Ruth Dyson.
Hon RUTH DYSON (Labour—Port Hills) Link to this
I want to talk to just three points in relation to Part 1. The first is the repeal of section 31 under clause 8, the second is the disentitlement for people who wilfully injure themselves or commit suicide, and the third is the great leap backwards that the Minister has decided to take in terms of work capacity. Let me start from that issue.
I will make three points in relation to the changes of work capacity. I am reminded of the good old days under Bill Birch, whom I must say Nick Smith is making look quite good in comparison—he is certainly making Murray McCully look good in comparison. In the old days of work capacity, people used to say “work cap; kneecap”. Workers who were quite seriously injured got minimal rehabilitation, then went through a shonky assessment process, were told that they were fit to work for 30 hours a week, and were moved to independence, which is what accident compensation was in the olden days of the previous National Government.
That meant that they either went on the dole, or they received no income at all if they were married to an income earner and did not meet the criteria for any income from our social security system. This scheme is a great leap backwards to those old days. We have seen a change to the consideration of a person’s pre-injury earning capacity. If somebody who is in a high-income job—it might be a Minister of the Crown—suffers a serious injury, he or she is not able to take on that responsibility any more; he or she is not able to do his or her job. That person is assessed for work, and it is determined that he or she is able to work for 30 hours a week, as a cleaner in a Minister’s office. There is a big income gap between the earnings of a Minister and the earnings of a cleaner in a ministerial office, but that will now meet the criteria for being assessed as fit to work, because that person’s pre-injury earning capacity has been biffed out. Instead of the assessors having a “requirement” to consider someone’s pre-injury earning capacity, the word has been changed to “may”. The officials confirmed to the select committee that the word “may” means the assessors may or they may not consider someone’s pre-injury earning capacity. That is an absolute outrage. It is outrageous to forget what a person has lost as a result of an injury, in terms of how much income he or she is able to attract because of his or her skill and hard work. That is the first great leap backwards in the work capacity.
The second is the move from working 35 hours a week, which provides a liveable wage for most people, to working 30 hours a week. How can the primary income earner afford to keep his or her family on 30 hours of work a week? I guess the Minister can, because actually a Minister does not have to work any hours a week, and I would not be surprised if some of them do not work any hours a week. But for a wage earner, working 30 hours a week does not provide a living wage if one is the primary income earner for a family.
The third great leap backwards, just in this single clause in Part 1, is the requirement that the job for which the person is being assessed is a real job that exists in New Zealand. Let me give an example of what used to happen, and what this legislation says can happen again. In the olden days I used to get people coming into my constituency office, saying that they had been assessed as being fit to be a car-park attendant, but there is not one single job as a car-park attendant in New Zealand. Another one had been assessed as being competent to be a lift operator. I remember the days when department stores like James Smith’s, Kirkcaldie and Stains, and Ballantynes in Christchurch had lift operators. I do not know that I went into the lifts in Smith and Caughey’s, to be honest. The lift operators would ask people which floor they would like to go to, sir or madam, and they would push the button. When people arrived at the floor, the lift operator would tell them what was on that floor, just to make sure people got it right. We do not have those sorts of jobs any more. Having an assessment that says one is fit to be a lift operator means nothing.
Hon Dr NICK SMITH (Minister for ACC) Link to this
I challenge both Ruth Dyson and Maryan Street, in the sense that they have decided to get quite personal in this debate on the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. Let us just talk direct. During the period that Ruth Dyson and Maryan Street were Ministers for ACC, the unfunded liabilities grew by $13 billion. It is all very well to wear one’s heart on one’s sleeve, but the truth is that we cannot provide accident compensation security for ordinary New Zealanders if we are driving the scheme broke. That is exactly what those two Ministers did, and it is a matter of public record.
Hon Steve Chadwick Link to this
I raise a point of order, Mr Chairperson. The Minister’s comments have no bearing at all on Part 1 of the bill.
The CHAIRPERSON (Lindsay Tisch) Link to this
I know this is a robust debate; words are flying around. We cannot call someone “chicken”. I heard that from somewhere. We will not have that sort of language. This is a robust debate. If the Minister wants to refer to some points that have been made previously, that is fine, but the Minister cannot concentrate his 5-minute speech on those rebuttal points. I ask him to come back to Part 1.
I raise a point of order, Mr Chairperson. I used the word you refer to, and I withdraw and apologise. It was inappropriate.
Hon Dr NICK SMITH Link to this
The issue is that the member Ruth Dyson has just got to her feet and said—[ Interruption] I raise a point of order, Mr Chairman. You have insisted that during the course of contributions from members, I do not interject. Every time I have attempted to answer, after members opposite have challenged me to get to my feet and answer their points, I have been shouted down by members who have moved their seats—
The CHAIRPERSON (Lindsay Tisch) Link to this
I will determine the level of interjections, and whether they are acceptable or not.
Hon Dr NICK SMITH Link to this
Members opposite have argued that it is inhumane for the work test in this bill to be 30 hours. They argue that it is not reasonable for the Accident Compensation Corporation (ACC) to tell somebody that if he or she can work for 30 hours a week, that is a reasonable requirement. The simple question I have for Labour members is why it is OK for the test to be 30 hours for someone who is on a sickness or invalids benefit, but not for someone on accident compensation. During the entire period of the previous Labour Government, 30 hours was the test used by the Statistics New Zealand, the Inland Revenue Department, and Work and Income. Why would we have a different definition when it comes to accident compensation?
The last point I want to cover is very sensitive, and it is related to suicide. We have had those arguments. I think it is going way beyond the margins to blame people for causing suicide. It is an awful tragedy. There are far too many suicides in New Zealand.
Hon Dr NICK SMITH Link to this
I simply challenge Ruth Dyson that if she and members opposite really believe that the accident compensation system should cover suicide, they should note that Owen Woodhouse, the architect of the scheme, did not include suicide in it.
Hon Dr NICK SMITH Link to this
I ask Ruth Dyson whether she, with all her passion, is giving an absolute commitment that a future Labour Government will put suicide back into the scheme.
Hon Dr NICK SMITH Link to this
Will she put it back in? It is a simple challenge. I have been in this House a wee while and I have heard all sorts of passionate debates, but the real test for Labour members as to whether they really believe that is whether they will give an unequivocal commitment they will put it back. Members can see that they are silent, are they not? Is it not interesting? It shows it is all puff. I think they know, and in fact I am sure the Labour spokesperson for ACC, David Parker, knows in his heart of hearts that it was a mistake for Labour to extend accident compensation without the funding—
Hon Dr NICK SMITH Link to this
The member Ruth Dyson says it was a mistake, just like it was a mistake when she extended free physiotherapy into the scheme. [ Interruption] Mr Parker says that was a mistake. I am looking forward to seeing Ruth Dyson stand up in this Chamber and apologise for introducing free physiotherapy. Does Labour now accept that it was a mistake?
Hon Steve Chadwick Link to this
I raise a point of order, Mr Chairperson. This is the Minister’s eighth call in this Part 1 debate. He has not referred to Part 1 yet. He has made personal allegations, and they have gone far of the mark.
The CHAIRPERSON (Lindsay Tisch) Link to this
I hear what the member says. I will determine whether we have gone outside the scope of the debate, but I ask all members to concentrate on Part 1. When we look at Part 1, there are a number of clauses on which I have yet to hear any debate. There is a lot of material here that can be debated. I ask for the debate to be concentrated on Part 1.
Hon Dr NICK SMITH Link to this
A key part of Part 1 is the decision that suicide and self-harm is a tragedy but not an accident. It is a very simple point, and it is a point on which there is a difference in the Committee. My simple challenge to members—
Hon Steve Chadwick Link to this
Tell family members that. Tell family members who have to live with the blame and the shame.
Hon Dr NICK SMITH Link to this
I ask the member Steve Chadwick where the funding was when the previous Labour Government extended the scheme to include suicide and self-harm. I searched under the desk; I searched in every corner. In fact, in the first year I became Minister, the accident compensation scheme made a loss of $4.8 billion. Members of the Labour Party are in denial that there is any sort of issue. The simple fact is that if expenses rise—when we extend the scheme and do not fund it—we end up in financial difficulty. Change is required; that is what Part 1 is about.
JOHN BOSCAWEN (ACT) Link to this
It seems to me that this is a very fundamental debate. The one very fundamental issue driving this debate is that this country has an accident compensation scheme that we literally cannot afford. It comes down to that very basic fact. When we look at why we cannot afford it, we see that in the last 4 years, claims paid by the Accident Compensation Corporation (ACC) have increased from $2.2 billion to more than $3.5 billion. Claims have increased by 57 percent over 4 years and, as we have heard, that is five times the rate of inflation.
What choices does the Government have? It can leave the scheme as it is currently, and costs can go up next year, the year after, and the year after, but what will happen eventually is there will be protests on the steps of Parliament, as we had with the motorcyclists late last year. People will rise up in protest when what they are being asked to pay for the service that is being provided becomes too great. We see a parallel right now in Greece. That country is verging on bankruptcy, and we see a Government there that has not made the hard decisions that are required. This Government is accepting the fact that we have a scheme that the country cannot afford.
I ask myself what has driven the increases in the costs of claims, and I break those issues into three areas. We have heard that the scope of the accident compensation scheme has been significantly widened since it was first introduced, and after the Labour Party came into Government in 1999.
Mr Parker talks about 6 percent of the liabilities. I am not sure exactly what he is talking about, but I read in the select committee report that the payments for claims paid out by ACC over the last 4 years have increased from $2.2 billion to $3.5 billion. What country can sustain a 57 percent increase over 4 years? If nothing is done about it, we will end up in exactly the same situation as Greece now finds itself, and Spain will likely find itself. That is right; that is exactly what we will find ourselves in.
During its term the Labour Government obviously extended the scope of the scheme in many ways. We have heard this afternoon about extensions to cover suicide—compensation for members of a person’s deceased family. We have talked about the extension to physiotherapy services, and the change from 30 hours to 35, and now the proposal to change it back to 30 hours. There have been a significant number of entitlement increases, and that is one of the reasons that drive the cost of compensation increases.
There have been demographic and technological changes. During the second reading debate, Maryan Street talked about advances in medical science. She talked about the fact that 20 years ago people who had accidents and might have died now live, and they live on at great cost. Life is precious, but if we can save a person’s life and give them any sort of meaningful life, then I support that. But that is a cost paid by society. We also heard from David Parker that as people age, their bones become more brittle. I think he said that they break more easily. As our demographics change, as our society grows older, we will have bigger costs relating to accident compensation claims. Without any changes to entitlements, but just from the simple ageing of society and through the development of medical technology, the costs of those claims will increase.
I believe there is a third reason why the costs of claims have blown out, and I put the responsibility for this clearly back with the previous Labour Government. Yes, entitlements are being reduced. There is a move in this bill to wind back entitlement. I put the claim fairly and squarely with the members of the previous Government who are sitting on the Opposition benches.
One of the fundamental changes that the previous Labour Government made when it first came to power was to scrap choice in accident compensation cover. The previous National Government opened up the work account to competition. Five separate insurance companies were offering cover, in addition to ACC. There was a choice in the provider, and premiums dropped by some 30 percent. But more important, when the account is opened up to competition, the competing providers of accident compensation have a massive incentive to try to rehabilitate people to get them back to work.
So if you are an insurer in private business, you would be happy to have the claim go on, year after year? Let me explain. If you open up the work account to competition—
I apologise, Mr Chair. The previous Labour Government closed down choice; it closed down competition. The tragedy of that is that we did not see the continued reduction in rehabilitation rates and prevention rates; we saw a blowout in increases. In fact the Minister in the chair, the Hon Nick Smith, spoke about the increasing rate of accidents.
We can talk about the cost of compensation, but what about the human cost? What about the cost to workers? What about the cost to ordinary New Zealanders who have accidents? What about the cost to ordinary workers who have accidents that could have been prevented, whether or not they occurred in the workplace? The great tragedy of what happened in 2000, when the offer of choice and of competition was taken away by the previous Labour Government, is that it resulted in an increase in accidents and a further contribution to the blowout in claims.
There has been a huge blowout in the cost of claims. The reality is that the Government has to do something. We have a choice. Either we can continue to accept that accident compensation claims will go up by 12 or 13 percent per annum ad infinitum and take the consequences of that, or we can seek to address it. I believe the National Government has done a very good job of trying to address the fundamental cause of accident compensation claims increasing at five times the rate of inflation, in the way that they have. Thank you, Mr Chair.
Hon RUTH DYSON (Labour—Port Hills) Link to this
I took a call earlier in this debate, which is, with respect to Mr Boscawen, on Part 1 of the Injury Prevention, Rehabilitation, and Compensation Amendment Bill. It is not a general debate on the history of the Labour Party and ACT’s view of it. When I took an earlier call in this debate, I said I wanted to talk about three points in Part 1 of this amendment bill. The third point was about work capacity—the great leap backwards that the Minister of ACC is instigating. Unfortunately, the Minister took a call as I was just about to make a point that I had hoped he would agree with and say “You’re right. We’ll change this and make it fair.” But because he interrupted me, he did not get a chance to do that. So, perhaps, he might.
The point is this: under the amendment that the Minister is putting through the House under urgency, there will no longer be a requirement through the work capacity assessment procedure to ensure that the job that the person is determined to be able to do is a real job. I started giving examples of real-life New Zealanders who, under the old system that is now being brought back into our society by this amendment bill, were determined to be fit to be a car-park attendant, a lift operator, or, in one tragic example, a person was assessed as being able to work for 30 hours as a tap dancer. This is not a made-up story; I really wish it were. I wish it were funny. I wish that that person had not had to go through the humiliation not only of being fit to be able to be a tap dancer for 30 hours a week and getting the letter from the Accident Compensation Corporation (ACC) congratulating that person’s move to independence, but also the humiliation of appearing on the Paul Holmes show with one leg, showing that that person would be really hard pushed to be a tap dancer. That person had one leg, but because that had not been the result of an injury, it was not classed as being an issue for the assessor.
That is the shonky nonsense that that Minister, his Government, and his supporting ACT and Māori Party members will bring back into this House. Why would members do that? Why would members do that to good, hard-working, ordinary New Zealanders who happen to have had the misfortune of being injured at work? Why would the Minister, his colleagues, and his supporting parties want anyone to have to go through the humiliation of having an assessment for a job that does not exist? Why would they want them to have the humiliation of being told they are fit to be a car-park attendant or a lift operator and then have no income and no job to go to? Being fit to do a job that does not exist is no help when one has to go and pay one’s grocery bill.
I urge the Minister in the remaining stages of this debate to put in a little Supplementary Order Paper so that we do not have to put good, hard-working, injured New Zealanders through that humiliation. Review and appeal by Paul Holmes and John Campbell should be a thing of the past. We should have legislation that is fair, that treats injured workers with respect, and that gives them the support and rehabilitation they deserve in order to get back to a job so they can support their families. This legislation does not do it. It is a disgrace and it hurts people who do not deserve to be hurt by our law. All they have done is to be injured; I cannot imagine why anyone would want to make their life worse for them.
The other two points I want to talk on in the remaining time—perhaps I will have time for only one—are in relation to clause 8 in Part 1, which repeals section 31. Section 31 relates to the ministerial advisory panel on work-related gradual process disease or infection. I am puzzled to know why the Minister thinks he has enough knowledge, given that it is clear that medical experts internationally look to each other for help. But the Minister thinks, for some reason, which is of a puzzle to every single person in this Parliament, let alone to the public, that he knows better than every medical expert around the world. The evolution of understanding about gradual process disease and infection has been rapid. If our legislation is not based on the best possible advice to the Government, then people who are affected at work, who have asbestosis, lung cancer, hearing loss, and brain injury because they have been exposed to solvents, may not get the compensation and rehabilitation that they deserve.
In this area, New Zealand is woefully ignorant. The establishment of this ministerial advisory panel sought to move us to a place where we could be part of the international debate and where we could look at young men whose brain cells have been turned to mush by exposure to solvents when they have been doing their apprenticeships as spray painters. We might be able to stop future young men having that damage occur to their brain cells. But, no, the Minister knows better. “Let their brain cells turn to mush.” is what he says. He does not need any advice. He knows better than any other person what is wrong.
Before we adjourned for the dinner break, I was talking about the work capacity process, which has been significantly amended in Part 1 of this legislation. The work capacity process determines whether people, having been injured and gone through some rehabilitation and perhaps treatment, are able to be exited from accident compensation—or moved to independence, as this process used to be called—because they have recovered from their injury and have been rehabilitated to the point where they can now be moved off the scheme. In order to determine that exit, those people go through a work capacity process. Currently, the work capacity process requires people to be determined as being able to work for 35 hours a week. That is about the level that we would consider that somebody would be able to keep his or her family. On a 35-hour a week wage, it would be a bit of a struggle if it were a low wage, but that is the minimum at which we can expect that to happen.
Those people have to be determined as having a real job, and I will come back to that in a minute, because I want to explain the difference between what Nick Smith and his colleagues in National, ACT, and the Māori Party are proposing to do to the integrity of this assessment, and what the situation is currently. The third part is that, under the current legislation, what a person was earning before the injury is taken into consideration. So if one is in a very high-earning job and one has a significant injury, one cannot be determined as fit to work in a very, very low-paid job. I use the example of a Minister of the Crown. Ministers of the Crown get paid quite well compared with the rest of the country. If a Minister has an injury, currently the Minister could not go through the work capacity assessment process and be determined as being fit to be a car-park attendant, because that is not a real job in New Zealand as there are no car-park attendants; he could not be determined as being fit to be a lift operator, because we no longer have lift operators in New Zealand; and he could not be determined to have any other capacity to do a job unless that job was one that a person could get in New Zealand. We are real about what capacity we have and about what jobs people might be able to get.
But the other consideration that is currently in the law is that the earning capacity of the Minister is taken into account. So not only could the assessor not tell a Minister of the Crown that he is fit to be a lift operator—because there is no such job, so he could not do that—but also the assessor could not say that the Minister is currently earning around $200,000 a year but that in the work capacity assessment process, the assessor has decided that the Minister could get a job cleaning a Minister’s office. The assessor could say that you are able to do that and that your injury has left you in such a state that you can do that job. Well, you could not currently do that, Mr Chairman—not you personally—unless you were a work capacity assessor. But an assessor could not say that one is off accident compensation and able to do a job that was well below one’s current earning capacity. That is a fair way to treat injured people.
Under this amendment, that goes. A person can be determined to have any job at all, whether or not it is real, so we could see the Minister having an injury and being determined as being fit to be an interplanetary traveller. That might be the job that he is determined fit to be in, and I hope that he does well on that galactic travel. He will not have to be assessed on only 30 hours, as currently the situation is for 35 hours a week. That is not bad on a Minister’s salary, because it does not matter how many hours a Minister works, but if one is on a minimum wage, then the difference of 5 hours a week is huge. Nor does the assessor have to take into that calculation pre-injury earning capacity.
The work capacity assessment process is, in a word, unfair. That is what Nick Smith is responsible for doing to injured workers in our country, and Labour will oppose this every step of the way because it is just wrong.
The final point I will make in this contribution to Part 1 is with regard to the clause that I most resent. It is the clause that I have found the Minister in the chair, the Minister for ACC, has inclined himself towards making the most distasteful comments on, which are the comments that I personally know, from holding conversations with people outside this Parliament, have been extremely hurtful to them and their families. It is clause 10, which inserts new section 119 in the Injury Prevention, Rehabilitation, and Compensation Act. This part of the Act allows people who have wilfully inflicted an injury on themselves or people who have attempted or committed suicide to have entitlement granted to them, if they are still alive, or their family if they are dead. I would just ask the Minister one question, and that is what he has against people who commit suicide. I ask what it is about their families that makes them less worthy of recognition under a comprehensive injury prevention, rehabilitation, and compensation scheme. I ask what it is about people who are dead because they have deliberately committed suicide, who have deliberately considered that they wanted to end their life, had had enough of this world, and had nothing to live for, quite literally. Why do those people’s families not deserve their earnings-related compensation and support for the funeral grant in the same way as the family of a person who falls asleep, loses control of his or her car, accidentally smashes into a tree, and dies deserve that funeral grant? Why is that family more deserving than are the families whose husband, wife, son, or daughter chose to take their life?
How can that be fair? Well, it is not fair. It is a huge insult to people who have ended their lives, for an often inexplicable reason. It is made even worse, because the family members of someone who has chosen to end his or her life always ask themselves whether they should have done something more to try to prevent that. They ask whether there was something that happened today, yesterday, last week, or last year that they could have done differently that would have stopped their husband, wife, brother, sister, son, or daughter from taking their own life.
On top of the huge question that they have as to why they lost that person, on top of the guilt they feel, and on top of asking themselves what they could have done better—questions that cannot be answered, because their family member is dead—the Minister is saying that because their brother, sister, son, or daughter deliberately took their life rather than the death just happening in a car crash or in a plane crash, or when that person was walking across the road, this family is worth less to New Zealand society in terms of what support we should give them, than the family that lives down the road. That is just a total disgrace. The Minister had the audacity to quote Sir Owen Woodhouse. Well, Sir Owen may well have a comment to make, and he is more than capable of making it directly to the Minister. But I have to say to the Minister that, by saying that Sir Owen Woodhouse said originally—
JOHN BOSCAWEN (ACT) Link to this
Ruth Dyson asked the Minister in the chair, the Minister for ACC, what he has against people who commit suicide. My response to that is to ask Ruth Dyson what she has against people whose loved ones die of cancer or of heart disease. The Minister said earlier this evening that there is no basis for that distinction. Someone who is struck down with cancer or with heart disease at a very, very early age does not get the income that—[ Interruption]
Hon Dr Nick Smith Link to this
I raise a point of order, Mr Chairman. During the course of Ruth Dyson’s contribution, despite portions of her contribution being quite offensive, members on the Government benches, including Mr John Boscawen, who clearly did not agree with her listened to her courteously. From the moment that John Boscawen has attempted to answer the very questions that Ruth Dyson challenged members of the Government to answer, she and Maryan Street, who is sitting next to her, have shouted a barrage of remarks, to the point where I could not hear a word of what Mr Boscawen was saying. I think that interjections need to be rare and reasonable.
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