11. CHRIS HIPKINS (Labour—Rimutaka) Link to this
to the Minister for ACC
Does he believe that the Government’s recent decision to introduce competition into the ACC work account will result in cost savings for employers; if so, why?
Hon Dr NICK SMITH (Minister for ACC) Link to this
Yes; and that is the official advice from the Department of Labour. To quote the advice directly: “Over time, overall prices are expected to be lower in a competitive environment, due to the incentives on employers to improve workplace health and safety (thereby reducing the incidence and severity of injuries) and the incentives on both private insurers and ACC for efficient claims management (improving rehabilitation outcomes and reducing costs).” That is the official advice of the Department of Labour.
Why does he believe that New Zealand employers will pay less for accident cover if competition is introduced, given that in Australia, where a competitive model exists, employers pay on average twice what New Zealand employers pay?
Hon Dr NICK SMITH Link to this
I am not sure where the member got those figures from. I suspect the figures are from the PricewaterhouseCoopers report commissioned by Labour in 2008. There was a fundamental problem there. ACC made a loss that year of $2.4 billion, which was not included in the analysis. There is a second difficulty with the member’s comparison with Australia, which is that motor vehicle accidents in Australia that occur when people are working are included as workplace accidents in Australia. In New Zealand those accidents are not included; they are included in the motor vehicle account. Given the number of people injured and killed on the road, that variation makes a substantive difference to the comparison.
Can the Minister name any other country in the world that provides cover for work-related accidents as cheaply as ACC does in New Zealand and at an equivalent level; if so, could he name it?
Hon Dr NICK SMITH Link to this
Each jurisdiction is quite different, but the stocktake report led by the Hon David Caygill noted that the most common model internationally was for both State and private insurer provision alongside each other. That is the option the Government is going through.
Hon David ParkerHon Dr NICK SMITH Link to this
Members interject that it will cost more. I think they underestimate. When employers have a choice of ACC or a private insurer, if members opposite are correct, why would an employer change?
Will he guarantee that the Government will not prevent ACC from competing for the work account in the future; if not, why not?
Hon Dr NICK SMITH Link to this
The Government has made quite clear—both in the announcement last December and in the release of the discussion paper—that our policy intent is for private insurers to operate alongside ACC. We believe that will improve the performance of ACC. Given the mess we inherited from Labour of humungous losses, we as a Parliament should be focused on ensuring there is ongoing pressure on ACC to perform well.
Dr Jackie BlueHow many workplace fatalities were there in 1999 and 2000, when there was competition, and how does this compare with the numbers of deaths in the years before and after?
Hon Dr NICK SMITH Link to this
There were 52—[ Interruption] Members opposite should listen to this, because it is important. There were 52 workplace fatalities in 1999 and 2000—the lowest of any period on record. The average in the years preceding the introduction of competition was 73 per year, and in the subsequent 8 years, when Labour was in Government, the average was 86 fatalities per year.