8. Hon DAVID PARKER (Labour) Link to this
to the Minister for ACC
Did he tell the Transport and Industrial Relations Committee on Thursday, 24 June 2010 that ACC was in a stable position with $2 billion of surpluses?
Hon Dr NICK SMITH (Minister for ACC) Link to this
That is an inaccurate summary of the transcript of my comments at the select committee. I noted that the accident compensation scheme’s investments had turned round dramatically but were still quite volatile, that the scheme’s liabilities had grown dramatically under Labour but are now stabilised, and that after losses of $2.4 billion and $4.8 billion I was expecting a surplus of about $2 billion this year. I urged caution at the select committee over the projected surplus, because the accident compensation scheme still has liabilities of $25 billion and assets of only $14 billion, such that ongoing surpluses will be required to close the gap and meet the legal requirement of full funding by 2019.
Given that, to use the Minister’s own boastful words last week, the accident compensation scheme has made enormous progress, is in a stable financial position, and is expecting a $2 billion surplus this year, and that that has all been achieved by the Accident Compensation Corporation (ACC) as a publicly owned and operated entity, does the Minister not see that that fundamentally undermines his case for privatisation?
Hon Dr NICK SMITH Link to this
I note that National’s policy of investigating competition in the work account was announced long after we knew of the huge mess that Labour had left in accident compensation, where costs grew by 57 percent—or by over $1 billion in claim costs—and in which administrative costs were out of control. On the issue of competition, I say that this Government and the Prime Minister have made plain that the test for this Government will be ensuring the best quality of service and efficiency for our accident compensation services.
Does the Minister now accept that he exaggerated problems and beat up a crisis so as to justify his plans to cut cover and to privatise accident compensation?
Hon Dr NICK SMITH Link to this
Absolutely not. We need look only at the more than $10 billion increase in the liabilities of the accident compensation scheme, the breach of the Public Finance Act, and the increase in claim costs of 57 percent to know the sort of incompetent governance the previous Government had in respect of accident compensation.
Michael Woodhouse Link to this
What savings has the Government been able to achieve in the administration and claims management costs of ACC, and how does that compare historically?
Hon Dr NICK SMITH Link to this
In the last year ACC has made savings in its own costs of $35 million—a saving of 7 percent. This includes savings of 52 percent in domestic travel, 45 percent in international travel, and savings in communications, in sponsorship, and in the corporate office. In contrast, I note that during the previous 4 years ACC’s administration costs grew from $302 million to $494 million—an increase in admin costs of $50 million each and every year during the last years of the Labour Government. That is typical of the sort of mismanagement that occurred right across the public sector, which this Government is now having to deal with.
Why has the Minister refused to release under the Official Information Act the two stocktake reports on the accident compensation scheme he has had for months? Is it because they would be useful for critics of his privatisation plans? If he has no such worries, why not just release them now?
Hon Dr NICK SMITH Link to this
The full stocktake report has not been received by the Government. It is exactly the same practice that has always operated, and that is that reports will be released after the Government has made a decision. Neither Cabinet nor any Cabinet committee has given any consideration to the issue of competition in the work account and will not do so until such time as it receives the full stocktake report.
Is the Minister embarrassed that he was forced to admit at the select committee that his earlier statement that self-insuring large employers have a better rehabilitation record, which he has used to justify privatisation, was based on no evidence whatsoever and was merely an assertion?
Hon Dr NICK SMITH Link to this
The member is making it up. The transcript shows that the claims he is making about what occurred at the select committee are quite incorrect, and the interesting part—
Hon Trevor MallardHon Dr NICK SMITH Link to this
If Mr Mallard would like me to table the transcript from the select committee I would be more than happy to so that people can see what was said. I assure the member that National is not ideologically opposed to the private sector having a role in accident compensation. We will do what is best for New Zealand, for claimants, and for those who pay the accident compensation levies.