1. CRAIG FOSS (National—Tukituki) Link to this
to the Minister of Finance
Has he seen any recent reports relating to the Public Finance Act 1989?
Hon BILL ENGLISH (Minister of Finance) Link to this
Yes, I have. A ministerial inquiry around the disclosure of funding shortfalls in the Accident Compensation Corporation (ACC) non-earners account has found that under the Public Finance Act the previous Labour-led Government should have revealed a projected $300 million a year shortfall in the account in the run-up to last year’s election. The report found that the shortfall was known to the ACC, the Department of Labour, Treasury, the previous ACC Minister, Maryan Street, and the previous finance Minister, Michael Cullen.
Evidence presented in the report shows that on 14 April 2008 the chairperson of the ACC board met with the Minister of Finance to discuss the issue of non-earners account funding. On 22 April 2008 an ACC board paper warned the Department of Labour that it would need to look carefully at that, given that the ACC was anticipating a significant deficit in the next year. That deficit, which requires the Government to put in $300 million before the end of this financial year to keep the account going, has now grown to $384 million.
Hon David Cunliffe Link to this
Has the Minister seen reports from Treasury accepting responsibility for this error, does he accept that admission, and does he accept the report’s finding that the reason for the information not being disclosed at the pre-election fiscal update can be attributed to Treasury’s interpretation of the Public Finance Act? Does he further accept that as at the October pre-election fiscal update, the Department of Labour had also failed to provide Ministers with a recommendation on whether to accept the ACC’s numbers?
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I am concerned that the Minister is misrepresenting Treasury. I have a copy of its press release—
Mr SPEAKERThe member is an experienced member. That is not a point of order, and the House does not have to suffer that behaviour.
I accept that Treasury has taken responsibility for the error that it had made in not including this issue in the pre-election fiscal update. However, the pre-election fiscal update is signed by the Government, and the Labour Government knew 6 months before the election that there would be a significant shortfall in the non-earners account, which is the ACC account that provides for the care of the most vulnerable New Zealanders. The previous Government did not care enough to fix the problem or tell the public about it.
Hon David Cunliffe Link to this
Does the Minister agree that if any adverse finding against either Minister had been proposed by the experienced independent reviewers at Martin, Jenkins, and Associates, natural justice would have required them to discuss that with the Ministers concerned; and as there was no consultation nor interview with either Minister, and as no Official Information Act requests were granted, does he now accept that both Ministers must have been exonerated?
What the paper trail shows is that the ACC was regarded as a political plaything by the Labour Government, which actively worked to hide a deteriorating performance at the ACC, with the effect that the incoming Government now has to find $384 million before 30 June, and a further $1.2 billion over the next 3 years, to fill the hole that the previous Government left behind and hid.
Hon Sir Roger Douglas Link to this
Does the Minister intend to refer the previous Minister of Finance and Treasury to the police for what can only be described as a blatant breach of the Public Finance Act; if not, why not?
It is now clear that this $384 million should have appeared in the pre-election fiscal update. However, I have to say that the issues with regard to the ACC are now very significant, with the liability growing rapidly, and it has now been revealed that the ACC’s performance has been deteriorating significantly for the last 3 or 4 years. That is much more important than a theoretical constitutional discussion about whether previous Ministers can be prosecuted.
Hon Sir Roger Douglas Link to this
How, given the $9 billion growth in ACC liabilities to 2009 and the increase in employer premia of over 50 percent, can the Government not take action?
The Government will be taking action, because we must correct, quite quickly, the debacle that was the Labour Government’s stewardship of the ACC. Liabilities are blowing out, rehabilitation rates are dropping, claims costs are out of control, and levies are going through the roof, and that will continue unless we make significant changes.
Hon David Cunliffe Link to this
Will the new-found acolyte for the former Minister Mr Douglas confirm—
The honourable member knows the question should be framed a little more carefully than that. Please start again.
Hon David Cunliffe Link to this
Will the Minister confirm that the real reason this political charade is going on is that he is softening the ACC up for privatisation, on the grounds of an international equity slide that—
Hon Gerry Brownlee Link to this
I raise a point of order, Mr Speaker. Even with all that theatrical sort of addition, there was no question from the Minister.
Hon Gerry Brownlee Link to this
No, there was not. A question should not contain a supposition. I ask that you require the member to simply ask the question.
Hon Dr Michael Cullen Link to this
This case could be described as the Triumph of the Will! The question started with the word “will”.
Hon David Cunliffe Link to this
Will the Minister confirm that the real reason for this political charade is that he is softening the ACC up for privatisation on the back of an international equity slide that has affected every comparable institution?
I wish the facts presented to the new Government were not true, but, unfortunately, it is the case that between now and 30 June this Government has to find $384 million to put into the non-earners account, because, if we do not, the ACC will be unable to pay for the care of the most vulnerable people in our community. The record shows that as early as 18 April and as late as 15 August 2008, former Ministers knew exactly—
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I expect that you already know what the point of order is. The member has not sought to address the question of privatisation; he is simply reading out elements from the report, telling us what everybody knows—
The member has made his point. The question was a somewhat political question; it got a somewhat political answer.
What actions is the Government taking to ensure greater transparency in the disclosure of financial risks?
Systems were put in place under the Public Finance Act to ensure transparency in the position of a Government in the run-up to an election, but in this case, for various reasons, they did not work. The Government is committed to implementing the report’s recommendations in full in order to ensure there is no repeat of a situation where a significant risk in the Government’s books, and a major risk to New Zealand households, is concealed from the public in the run-up to an election.